Is Nike ethical?
Our research highlights several ethical issues in Nike, including human rights, worker's rights, supply chain management, pollutions and toxics, habitats & resources, environmental reporting, use of controverial technologies, political activies, anti-social finance, and animal rights.
Below we outline of some of these issues. To see the full detailed stories, and Nike's overall ethical rating, please sign in or subscribe.
In February 2019 Ethical Consumer read KnowtheChain’s 2018 report which assessed 43 of the largest publicly traded clothing and shoe companies in the world.
This report captured the areas where companies needed to take actions to eradicate forced labour from their supply chains. The report stated:
Nike Inc... ranks ninth out of 43 companies, disclosing more information on its forced labor policies and practices than its peers across all themes. Compared to 2016, the company improved its rank from tenth to ninth. Since 2016, the company has improved its performance and disclosure by updating the forced labor provisions of its supplier standards, providing translations of the standards, and communicating the updates to its first- and second-tier suppliers.
The company further disclosed its second-tier supplier list, audited some second-tier suppliers, instituted a process to assess forced labor risks, and engaged with local stakeholders in Turkey and Malaysia on migrant workers and with the Mexican government on freedom of association. Additional steps the company could take to address forced labor risks in its supply chains include strengthening its disclosure and practices on the themes of Traceability & Risk Assessment, Recruitment, and Worker Voice.
Nike scored the following in the report's themed scores:
- Commitment and Governance 85 out of 100
- Traceability and Risk Assessment 50 out of 100
- Purchasing Practices 69 out of 100
- Recruitment 34 out of 100
- Worker Voice 57 out of 100
- Monitoring 70 out of 100
- Remedy 75 out of 100
Nike scored 63 out of 100 overall. As the company did not score more than 70/100, it lost half a mark under our category for Workers’ Rights.
In addition, in June 2016 we saw that the company listed subsidiaries in China, India, Israel, Philippines, Russia, Thailand and Vietnam. The company's manufacturing was carried out in Sri Lanka, Bangladesh and Pakistan. All these countries are on Ethical Consumer's list of oppressive regimes.
In 2016 Nike received a middle rating for Ethical Consumer's environmental reporting category.
In June 2016 Ethical Consumer viewed the 'Sustainable Innovation' section of about.nike.com and the company's 2014-15 Sustainability Report.
The report discussed waste, carbon emissions, energy efficiency, renewable energy use, water use, the use of toxic chemicals and the sourcing of materials. Overall, the company was felt to have a reasonable understanding of its key environmental impacts.
The report contained multiple quantified environmental reduction targets, for example, one to reach 100% renewable energy in owned or operated facilities, and another for the company to innovate and adopt new approaches to reduce water use in their supply chain, with a 20% reduction in freshwater use in textile dyeing and finishing per unit of production.
However, as the report was not externally verified, Nike received a middle Ethical Consumer rating for its environmental reporting.
According to PETA, the production of Australian merino wool involved the cruel practice of mulesing. Merino sheep are specifically bred to have wrinkled skin, which means more wool per animal. Attracted to the moisture, flies lay eggs in the folds of skin, and the hatched maggots can eat the sheep alive.
In order to prevent this condition called “flystrike,” Australian ranchers perform 'mulesing' which involves carving huge strips of skin and flesh off the backs of unanesthetised lambs’ legs and around their tails. This is done to cause smooth, scarred skin that won’t harbour fly eggs, yet the bloody wounds often get flystrike before they heal.
In June 2016 we looked at Nike’s 2016 List of Excluded Substances and saw that their section on animal skins addressed mulesed sheep. The company offered that “Nike, Inc., supports the use of wool fibre that is sourced and certified from non-mulesed sheep and will consolidate its wool sourcing accordingly, as rapidly as supplies and pricing allow”.
We deemed this statement somewhat vague, and when we identified many Nike products that contained merino wool, including a fleece running top, we found that it was unclear whether or not this wool was sourced from Australia.
Nike’s failure to guarantee that their products were sourced from non-mulesed sheep meant that it received a lost half a mark in the Ethical Consumer animal welfare category.
In 2016 we saw that Nike had a company structure which included several subsidiaries considered likely to be used for tax avoidance strategies, so it received Ethical Consumer's worst rating in this category.
In 2015 Ethical Consumer viewed Nike's 10-k Securities Exchange Commission filing Exhibit 21 which listed the companies subsidiaries. The company listed subsidiaries which at the time of writing Ethical Consumer considered to be located in tax havens.
According to its SEC filing, Nike had two holding companies in Hong Kong, three in Delaware and one finance company in Bermuda. The company also had a number of other subsidiaries in the countries listed above plus more in Singapore and Switzerland.