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Nike Releases First Corporate Responsibility Report

Published 10-15-01

Submitted by Nike Inc.

Nike today released its first Corporate Responsibility Report in an attempt to assess and communicate the impact of how the company runs its business. The report includes a series of detailed reports of Nike's efforts at developing environmental sustainability; its efforts toward understanding and managing global labor compliance; its commitment to diversity and the company's involvement in local communities.

"In this report, Nike for the first time has assembled a comprehensive public review of our corporate responsibility practices," said Philip H. Knight, Nike's Chairman and CEO. "You will see a few accomplishments, and more than a few challenges."

"We offer the report as an opportunity for people interested in our corporate responsibility performance to learn more about our company," said Maria Eitel, Vice President and Senior Advisor for Corporate Responsibility. "We believe that only by being truly transparent and sharing what we have learned can we be a successful, global company while learning and improving as a corporate citizen."

Two areas – the natural environment and labor compliance – comprise the majority of Nike's first report. Throughout the report, Nike attempts to define sustainability and corporate responsibility as they relate to those two areas, while also determining how to measure the company's progress. The report reflects Nike's work and corporate responsibility efforts through May 31, 2001.

Nike adopted its first Corporate Environmental Policy in 1998, the initial step toward a formal commitment to sustainability. Since 1998, Nike's environmental sustainability goals have evolved to include, eliminating waste and potentially harmful substances from materials and manufacturing and designing products that can either be collected and re-manufactured, or safely returned to nature.

To help monitor the company's progress on achieving its environmental goals, Nike is one of four companies that has joined the World Wildlife Fund's Climate Savers program, a voluntary initiative to reduce greenhouse gas emissions. The agreement covers greenhouse gas emissions in Nike owned operations, as well as contracted manufacturing, shipping and travel.

"We have many ambitious environmental goals still to achieve, such as reducing factory waste from production, increasing recycling efforts and developing sustainable products," said Eitel. "We've made a commitment to enter a new era of commerce where human and business needs don't deplete living systems."

The report also focuses on Nike's labor compliance. In addition to external independent monitoring, Nike currently has more than 30 employees dedicated to ensuring that the workers at the nearly 750 contract factory sites throughout the world have good wages and a safe, fair and healthy work environment.

"Our approach has been to look for solutions to effective factory oversight that we can apply throughout our system. We're committed to independent monitoring conducted by Fair Labor Association (FLA) approved monitoring organizations," said Eitel. "Through the FLA, 10% of our factory base will be monitored for the first three years, which are transition years, then increased to 30% per year. We are also building on what we have learned from managing issues in Cambodia, Indonesia and Mexico around unionization, worker abuse and age verification." (see nikebiz.com for more information and an online factory tour)

"We have concluded that, while we are on track in some areas, we need to make improvements to our overall internal and external monitoring processes," said Eitel. "We will continue to implement programs, such as training for factory managers, that will help to ensure that Nike's Code of Conduct is upheld."

In 1999, Nike joined the Global Alliance for Workers and Communities (Global Alliance) with a minimum five-year commitment and a $7.8 million investment to better understand what workers think of their jobs and their lives. The Global Alliance recently completed a comprehensive research project to determine the attitudes and aspirations of 4,000 workers in Nike contract factories in Indonesia. The Global Alliance is currently operating in Vietnam, Thailand and Indonesia investing in programs that directly address the needs and concerns that workers themselves have brought forward.

Nike is currently seeking ways to define good performance in corporate responsibility, as evidenced by Phil Knight's speech endorsing the United Nations Global Compact in July 2000. In that speech, he raised the need for a set of generally accepted social accounting principles and a means of monitoring performance against those principles. Over the next year, Nike will build some Key Performance Indicators for corporate responsibility to help the company gauge how it is doing. Nike will seek input from its stakeholders on the development of these indicators.

"Admittedly, this report is incomplete. We are just beginning to truly understand what being a sustainable business means," said Eitel. "Future reports should reflect issues we have not tackled in this first version, as well as provide updates on the challenges identified in the 2001 report. For now, it offers an honest self-assessment of our progress to date and a roadmap for where we are headed in the future."

This year's report was written using Global Reporting Initiative (GRI) guidelines. A separate GRI report will be available online within the next few weeks. The GRI is a multi-stakeholder effort to create a common framework for voluntary reporting of the economic, environmental, and social impact of organization-led activity.

Please visit our Web site www.nikebiz.com to review the full Corporate Responsibility Report and find out more about the many corporate responsibility projects and efforts of Nike and Nike employees around the world.

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Nike Inc.

Nike Inc.

NIKE, Inc. based near Beaverton, Oregon, is the world's leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE subsidiaries include Converse Inc., which designs, markets and distributes athletic lifestyle footwear, apparel and accessories and Hurley International LLC, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories. For more information, visit www.nikeinc.com.

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