Investor’s ‘grave concern’ over slavery risk in Nike supply chains

US sportswear giant Nike, is coming under closer scrutiny from its shareholders since it continues to say nothing in response to worries about forced labor and worker well-being in its supply chain.

In an open letter, Nike’s long-time shareholder, Tulipshare, a shareholder activist investment platform that provides online brokerage to support its corporate campaigns, expressed “grave concern” about Nike’s “unresponsiveness” to inquiries about eliminating forced labor in its business operations and throughout its value chains. Tulipshare also urged Nike to accept its corporate responsibility to uphold human rights by announcing its adoption of the UN Guiding Principles on Business.

Following the Covid epidemic, Nike has been charged with violating OECD guidelines regarding the treatment of workers in its global supply chain.

The US National Contact Point for the OECD Guidelines for Responsible Corporate Behavior at the US State Department received a complaint against NIKE from 20 unions in the garment industry, the Asia Floor Wage Alliance (AFWA), and the Global Labour Justice – International Labor Rights Forum.

The lawsuit claimed that since the Covid epidemic began in March 2020, garment workers in Nike’s supply chain have been subjected to unprecedented levels of gender discrimination, arbitrary pay cutbacks, layoffs, and terminations.

Tulipshare wrote in its letter that it first contacted Nike’s internal relations team through email on March 4 and October 21, as well as on January 27, 2023, but Tulipshare has not received a single answer. Due to its lack of response, Nike has shown that it willfully disregarded shareholder concerns about forced labor, a risk that is especially relevant to the operations and supply chains of corporations in the apparel and footwear (A&F) sector. At the production level, the industry is thought to employ more than 60 million individuals, most of whom are women and migrant laborers.

As they’ve mentioned in prior outreach efforts, they’re grateful that Nike has promised to strengthen its labor supply chain by making some changes. They are worried, however, with Nike’s disclosures’ lack of clarity over whether the business is on course to fulfill certain goals. They are also extremely worried that Nike does not have a sufficient framework in place to address the needs of displeased supply chain workers, which could result in violations of human rights like wage theft.

Tulipshare is one of the more than 160 investors who have signed the KnowTheChain statement, representing over US$7 trillion in assets under management.

The letter continues that they are really worried about Nike’s poor engagement and ranking in the KnowTheChain A&F benchmark. The benchmark assesses the efforts made by 60 of the biggest A&F firms that are publicly traded to address forced labor in their supply chains. Nike only received 62 out of a potential 100 points in 2021; this included scores of 48 for the purchasing procedures theme, 38 for worker’s voice, 63 for traceability and risk, and 70 for monitoring. In addition to ensuring that a living wage is paid in a tiny piece of its supply chain, Tulipshare is aware that a portion of Nike’s supply chain, including the final step of production, is FLA Workplace Code of Conduct certified. Despite these admirable efforts, Nike only obtained a score of 51-60% on the 2021 Fashion Transparency Index, indicating that much more needs to be done to guarantee the safety of its employees.