Report - Production and CSR Nike Inc

REPORT ADVANCED ENGLISH
Corporate Social Responsibility

in the case of
Nike
Table of content
1. Executive Summary
2. Introduction
3. Corporate Social Responsibility as a feel-better concept
4. The case of NIKE, Inc.
5. Implementation of Corporate Social Responsibility Strategies
5.1 Improved standards for manufacturing firms
5.2 Nikes Vision - Sustainable principles
6. Nikes Perspective - Conclusion and Future Outlook
1. Executive Summary
This report deals with the topic Corporate Social Responsibility and illustrates the
importance of this issue in the case of the footwear, apparel and equipment
company Nike. In the past the company has been in the spotlight of much
criticism concerning their working conditions at their production plants overseas.
Countless reports in the media negatively affected the companys reputation and
performance. In order to overcome these difficulties Nike started to implement
Corporate Social Responsibility Strategies into their core business model. As a
result they managed to improve their labour and environmental performance
along the supply chain.
2. Introduction
The report starts with a short definition of the term Corporate Social
Responsibility. Afterwards one can find a short overview of the company and the
challenges it faced concerning its corporate image in the past. Especially the
criticism about the working standards in its subcontractor firms are outlined. The
following part deals with the reaction of the company concerning this long-termproblem and demonstrates the importance of a good public image. Finally the
results are discussed and the report concludes with a future outlook for the
company.
3. Corporate Social Responsibility as a feel-better concept
In the recent years Corporate Social Responsibility (CSR) has become one of the
most prominent topics in business ethics. It describes actions designed to
improve social conditions, while aiming to involve ethical standards in the
organisational decision-making process (Louche et al, 2010). Moreover, it can be
explained as corporate engagement with ecological and social issues that are
beyond
the
organisations
economic
actions
(Arthaud-Day,
2005).
Many
organisations have implemented CSR strategies to address criticism of working

and environmental conditions at their subcontractors factories (Lim & Phillips,
2008). Those strategies can include social or environmental concerns, employee
practices, supply chain approaches, marketing practices or human right policies
(Basu & Palazzo, 2008).
4. The case of NIKE, Inc.
The importance and effectiveness of the implementation of CSR-Strategies can

be examined in the case example of Nike, which is the worlds leading athletic
footwear, apparel and equipment company. Nike is manufacturing in more than
800 factories, employing over 600.000 workers in 51 countries with the
headquarters in Oregon, US. Naturally Nikes control and awareness of the factory
conditions decreased with every expansion at the production level that was
outsourced to subcontractors (DeTienne et al, 2005). Therefore the company has
been a lot in the discussion concerning ethical standards and countless negative
reports in the media affected the firms performance and reputation in the past
(Scherer & Palazzo, 2008).
The firm has received high criticism about the ethics of its business procedures of
their subcontractors. One of the most striking topics discussed in public is that
almost all of Nikes production is done overseas in low-cost-labour countries. The
majority of Nike shoes are manufactured in developing nations in South East Asia.
The firm has been accused of manufacturing shoes and apparel in Vietnam in
sweatshop conditions, including low salaries for young workers that worked
long hours in an unsafely and unhealthy environment (Herbert, 1997).
In addition to that Nike also experienced protests and consumer boycotts as a
result of child labour abuse in outsourcing firms in Asia. Therefore it is of high
importance for them to monitor and respond quickly to local CSR concerns.
5. Implementation of Corporate Social Responsibility Strategies
Being considered as the market leader, the firm tried hard to improve their
ethical standards and its corporate image. After noticing that those public
concerns are a long-term problem the company integrated CSR initiatives into
their core business strategies. In contrast to other greenwash companies Nike
did not only take detailed actions to deal with problems of poor working
conditions, but tried to solve those problems from roots by implementing an
ethical culture in the company and adjusting the company structure to ensure
that their business strategies are CSR driven (Nike, Inc., 2012).
5. 1 Improved standards for manufacturing firms
Nike addressed the criticism by introducing new rules and control mechanisms for
the production plants in low-labour countries. The new standards for its
manufacturing facilities included factory monitoring, minimum age requirements,
environmental safety standards and a greater transparency (McKee & Lamb,
2004). Moreover, Nikes factory rating system started to look deeper at contract
factories in order to elevate the labour and environmental performance along the
supply chain. Besides the company requires its subcontractors to fulfil several
requirements and allow unannounced visits by inspectors chosen by Nike. Other
sustainability targets include product design, climate and energy, labour,
chemistry, water, waste and community (Nike, Inc., 2012).
5.2 Nikes Vision - Sustainable principles

In the companys sustainable business performance summary and on their
corporate website, Nike is addressing several targets in order to improve their
ethical standards. Nikes long-term strategic vision is to further integrate
sustainability principles into its innovation processes. By doing so, the firm wants
to focus on innovative performance products that have increasingly become core
to their business approach. Therefore the Nike Better World ethos has to be
mentioned in this context, which revolutionizes sustainability in high performance
products. The campaign refers to the creation of products for superior athletic
performance with an extremely low environmental impact. It is all about the use
of environmentally preferred materials in the manufacturing process in order to
reduce waste and eliminate toxics. This involves for example to take material
from an old shoe, grind it up and transform it into the new product. For example
uniforms in the Nike Pro TurboSpeed collection consist of an average of 82
percent polyester fabric and up to an average of 13 recycled plastic bottles (Nike,
Inc. 2015).
In addition it is important to mention that Nike supports a number of sport-based
community programs around the globe. Therefore Nike helps to inspire
disadvantaged children, as well as strengthen young runners (Nike, Inc., 2013).
6. Nikes Perspective - Conclusion and Future outlook
Because of being repeatedly criticised by the public for abusing human rights in
its overseas factories, Nike has put strong effort and continuous improvement on
their business operations and is now considered as the best practice of CSR. By
restructuring its organisation, Nike achieved to incorporate CSR as a part of its
business approach. Having been in the spotlight of much criticism in the past
years, the company is continually introducing new targets and outlining its
progress against key business, labour and environmental goals. As awards have
proven that Nikes effort was yet successful, Nike earned No.1 ranking in the
Apparel/accessories sector in the Climate Counts performance ranking in 2012,
for the sixth time in a row (Nike, Inc. 2013). Despite of the fact that Nike has
made mistakes in the past it has to be mentioned that it also paved the way for
economic development in some of the countries. Finally going on like this it is
likely that the company will stay successful in the future and a benchmark for
CSR-strategies.
Sources
Arthaud-Day, M. (2005) Transnational Corporate Social Responsibility: A TriDimensional Approach to International CSR Research. Business Ethics Quarterly,
Vol. 15, No. 1, pp. 1-22. Published by: Philosophy Documentation Center. Article
Stable URL: http://www.jstor.org/stable/3857665
Basu, K. & Palazzo, G. (2008) Corporate Social Responsibility: A Process Model
of Sensemaking. Academy of Management Review. Vol. 33, No. 1, pp. 122136
DeTienne, K. & Lewis, L. (2005) The pragmatic and ethical barriers to
corporate social responsibility disclosure: The Nike case. Journal of Business
Ethics, 60(4), pp. 359-376
Herbert, B. (1997) Brutality in Vietnam. New York Times, p.8
Louche, Cline; Idowu, Samuel O.; Leal Filho, Walter (2010) Innovative
CSR. From risk management to value creation. Sheffield, UK: Greenleaf.
Nike, Inc. (2012) FY10-11 SUSTAINABLE BUSINESS PERFORMANCE SUMMARY.
Available at: http://nikeinc.com/news/nike-inc-introduces-new-targets-elevatingsustainable-innovation-within-business-strategy#/inline/10466 [Accessed 21th
December 2015]
Nike, Inc. (2013) AWARDS & RECOGNITION. Available at:
http://nikeinc.com/pages/awards-recognition [Accessed 20th December 2015]
Nike, Inc. (2015) NIKE REVOLUTIONIZES SUSTAINABILITY IN PERFORMANCE
PRODUCT. Available at: http://news.nike.com/news/nike-better-world [Accessed
21th December 2015]
Scherer, A.; Palazzo, G. (2008): Handbook of research on global corporate
citizenship. Cheltenham: Edward Elgar.

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REPORT ADVANCED ENGLISH

Corporate Social Responsibility

organisations have implemented CSR strategies to address criticism of working

The importance and effectiveness of the implementation of CSR-Strategies can

5.2 Nikes Vision - Sustainable principles

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