Today and in the future, organizations need to take social responsibility for their long-term sustainability. Corporate social responsibility is a promise to behave ethically and contribute to improve the environment we live in the community (Savitz, 2010). A corporate needs to focus on the significance among equity, environment and economic, which is called the triple bottom line within corporate practices. If a company practices in CSR providing services that are environmental-friendly and fair-trade, corporate will benefit in creating value of customer loyalty. In other words, the triple bottom line business is dedicated to cost reduction in terms of energy efficiency and waste reduction in short-term, as well as revenue return on investment in building improvements in long-term (Elkington, 1997). There is no doubt that a corporate triple bottom line practices are win-win strategies for a corporate to achieve value creations in protecting environment, maintaining existing markets as well as opening new markets in the future.
Let’s look at Nike sweatshops case during 1990s, when the public discovered Nike had sweatshops in terms of child labor, labor and human rights abuse, and environment damages (Nisen, 2013). Nike’s global reputation suffered a huge damage. At the same time, global sales dropped crazily and workers strike across the world causing company loss millions of dollars. It takes long time for Nike to rebuild its global reputation. After the event, Nike committed factory transparency program in order to ensure public awareness of Nike’s business practices, monitor global supply chain factories and make sure global supply chain factories practices follow Nike’s code of conduct. Also, Nike created the “Reuse a Shoe” program that recycles shoes and used organic cotton in clothing. Meanwhile, Nike has also partnered with “Nine Million” campaign contributed to give more than nine million children better education opportunities, sports and technology by 2010 (Nike news, 2006). Nike made a lot of efforts won back its’ global reputation and now Nike has very clear public triple bottom line.
Labor and human rights violations
In the 1990s, Nike began combat on human rights and labor violations issues within awful working condition controversy in Vietnam, Indonesia and China such as poor conditions, child labor, widespread harassment and abuse. Actually, if we date back to that time, companies would not realize what corporate social responsibility is because company’s objection was to remain competitive, keep manufacturing costs low and look for low labor costs all over the world at that time (Jones, 2015).
With the increasing awareness of labor rights within public, the public wants Nike to take responsibility on unsafe working conditions and child labor issues. The first state, Nike claimed that it is not their fault. Nike insisted that the working conditions were not their responsibilities to control, which caused huge global public outrage. From then on, Nike’s global reputation was damaged.
For labor rights, Nike needs to take rapidly methods to reconsider the problem and make sure each worker has safe working conditions and competitive wage.
Setback in global supply chain management policies
In order to maintain company’s low-cost-labor business model, Nike looked for subcontractors overseas in developing countries especially in poor Asian countries such as Vietnam, Indonesia and China as its product manufacturing. It is complicated for Nike to manage the global supply chain in factories because local vendors and existing suppliers had their own factory-management standards to minimize the factory costs by using whatever methods possible (Sharma, 2013). Therefore, in many local factories, employees suffered discrimination, hiring and firing practices. They worked under unsafe, unhealthy conditions with low wages.
In the late 1990s, Nike confronted international criticism from Non-Government Organizations about overseas contractors’ labor discrimination (Sharma, 2013). For Nike, they denied the fault insisting on damage control rather than global supply-chain policies reform. Unfortunately, under the stressfulness of the public reaction, Nike’s damage control was failed. Nike has to evolve supply-chain and labor policies. Nike promised to fix the problem what they need to do.
For overseas contractors’ policies, Nike needs to improve labor standards in each factory. Making policies to regulate the independent subcontractors not to engage in illegal activities such as child labor, excessive work hours, awful work environments, or inappropriate payments. Also, it is necessary to implement rules of conduct for all suppliers and work with global Alliance to review factories as partners.
Environmental problem in textile industry
1. Increase water deficits
2. Climate change (carbon dioxide)
3. Pollution of land, air and waterways
4. Large fossil and raw material consumption
5. Electronic textile plants expend energy
In Nike, INC’s 2011 annual report, Nike realized the importance of corporate responsibility for company’s sustainable development. Therefore, Nike has created and marked improvements of corporate responsibility within environmental sustainability in the use of water and the release of toxic substances in the dyeing process ((Jones, 2015).
Environmental sustainability
Actually, environmental sustainability presents opportunities as well as challenges. For Nike, environmental sustainability is an opportunity that can stimulate Nike for innovation. And innovation means competitive advantage within a company ((Sharma, 2013). Nike focuses on creating more innovative and sustainable products in the future.
Potential effects to Stakeholders
In 1990s, Nike began to suffer constant criticism. Initially, some of the ILO protests Nike’s suppliers are from poor areas of the world. By 1996, the US media exposed these “sweatshop” working conditions, consumers became aware of the bad working conditions about Nike manufacturer making some of them sympathize with the workers. Thus, some human rights activists began encouraging consumers’ to boycott Nike products.
However, in the face of human rights organizations, the media, consumers and other forms of accusations and protest, the CEO Philip Knight is trying to defend his company. He claimed that, Nike paid remuneration to workers not less than its competitors, and the wages of workers are beyond its minimum wage in the country. It is because of the Nike’s stronger external stakeholders that they took evasive attitude and indifference. Nike has not taken any action to improve the production conditions of their manufacturers, which led to operating losses to company. In addition, Tom McKean (Boje, 2000), the Nike director who represented Nike Inc., showed a similar attitude in 2001 as “We do not possess the production factories. We do not have power over what goes on there”. Forthrightly, that was sort of a reckless way of approaching this accusation of bad working conditions. By 1998, Nike’s US footwear market share was 47% but in the previous year dropped it to 32.9%. “Sweatshop scandals have been the subject of more than 1500 news articles and opinion columns, and its stock has fallen heavily since 1995.” (John Fahy)
Contributions to political sources
Nike has a political contribution policy that is meant to serve the purpose of governing corporate political contributions together with other incorporation’s campaign expenditures. The policy also covers other majority-owned companies that it owns. All the Nike employees are required to consult the company’s Department of Government and Public Affairs or the Legal Department on those issues that engage the local government, state government, and federal government. Only those company officers and those that are chosen by the Legal department or GPA are in a position of expressing the views of the company regarding ballot initiatives, government actions, regulations, and other legislations. Other staff members can communicate company views only with guidance from the two departments. Only the legal department and the GPA department can hire lobbyists to assist the company ("Political Contributions Policy", 2016).
Alternatives --- (Strength and Weakness)
In the manufacturing segments set up in these countries that provided cheap labor, rolls of fabric used in production were strewn on floors posing a danger in case of fire. Some of the windows in the rooms of production were also bolted shut which presented a weakness of the company to ensure safety of every employee. The company needs to clean up the hazardous acts in the industries it has in the developing nations as an alternative to improving the working conditions. This would entail having clean floors, fire safety equipment, proper clothes to be worn by employees, and having a safety department. Nike has implemented various plans to ensure safety of its staff. This has ensured that everyone is safe turning the earlier weakness to a strength of the incorporation. The experience of the company offers a lesson in difficulties encountered in managing the priorities of maintaining acceptable working conditions and controlling costs.
Recommendation for the corporation
Nike is a company that is sensitive to inventory costs. The company should aim at minimizing the costs of production to maintain high-profit levels further. To reduce the costs of production, the company needs to shift its production to areas in the continents where they can get cheaper labor. This would assist in increasing Nike’s competitiveness among its competitors further while keeping costs of manufacturing at their minimum. For instance, Nike began shifting offshore to Africa where they can be assured of cheaply available labor. After few years, if manufacturing in Africa becomes expensive, the company will have to establish countries that can provide cheaper labor. Moreover, the company needs to improve working conditions in its factories.
The environmental impacts of textile industry are swelling every day. However, some ways can be used by Nike to curb he adverse environmental impacts while increasing the positive environmental impacts together with the social implications via informed selection of materials as well as the use of intelligent designs. Nike needs to undertake extensive diversification of fiber to avoid depletion of natural resources and hold up thriving of eco-systems. This is in light of the overwhelming worldwide use of a small percentage of the range of fibers despite a mounting availability of innovative fabrics and fibers ("The Future of Fashion Fabrics – Reducing Environmental Impact | The Ethical Fashion Source", 2012).
References
Jones, H. (2015, April 16). Sustainable strides at Nike, INC. Retrieved from http://www.hbs.edu/news/articles/Pages/nike-sustainability-hbs.aspx.
Sharma, A. (2013, May 17). Swoosh and Sustainability: Nike's Emergence as a Global Sustainable Brand. Retrieved from http://www.sustainablebrands.com/news_and_views/supply_chain/swoosh-and-sustainability-nikes-emergence-global-sustainable-brand.
The Future of Fashion Fabrics – Reducing Environmental Impact | The Ethical Fashion Source. (2012). Source.ethicalfashionforum.com. Retrieved 14 March 2016, from http://source.ethicalfashionforum.com/article/the-future-of-fashion-fabrics-reducing-environmental-impact
Boje, D. (2000, January 14) Nike stock and storytelling event studies. http://business.nmsu.edu/~dboje/nikestockstories.html.
Elkington, John. (1999). Cannibals with forks: the Triple Bottom Line of 21st Century Business. Oxford: Capstone.
Hoguet, D. (2014). Sustainability and performance in textiles: can you have it all?. The Guardian. Retrieved 14 March 2016, from http://www.theguardian.com/sustainable-business/sustainability-performance-textiles-wool-environment
Savitz, A. W. (2010, April 15). The triple bottom line. Retrieved from https://the3bottomline.wordpress.com/2010/04/15/triple-is-the-new-double/
Nisen, M. (2013, May 9). How Nike solved sweatshops problem. Retrieved from: http://www.businessinsider.com/how-nike-solved-its-sweatshop-problem-2013-5.
Nike news. (2006, June 20). For Nine Million Refugee Youth, a chance to learn and paly. Retrieved from http://news.nike.com/news/for-nine-million-refugee-youth-a-chance-to-learn-and-play.
Political Contributions Policy. (2016). Retrieved 14 March 2016, from http://www.nikeresponsibility.com/report/uploads/files/Political_Contributions-Trade_Associations.pdf
