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1.5 – 2 Pages with APA style (Font: Times New Roman 12 and 2.0 Line Spacing)
– Just “Recommendations and the actions to take” for Mcdonalds to overcome, solve, or at least reduce the problem about “Obesity”
– At least 4 References!
Due Date: Friday, June 7th , 2013 (before 11.59 PM)
Ps. I also attached an example of full-paper about Nike and Sweatshops. However, I only want the recommendation part, which is Page 12.
Running head: SWEATSHOPS TO SWEATWASHING 1
SWEATSHOPS TO SWEATWASHING 4
From Sweatshops to Sweatwashing:
An Analysis of Nike’s Corporate Social Responsibility
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Subject
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Introduction
Nike, Inc. was founded in 1964 by Philip H. Knight, who acted as President and CEO (Arnold & Hartman, 2003, p. 11). Knight named his successor, William Perez, in 2004 (Holmes, 2004, para. 1); Perez only lasted 13 months in the CEO position. He was then replaced by Mark Parker in 2006 (Holmes, 2006a, para. 5). The brand is distributed in 52 countries and possesses 550,000 workers. Nike produces 175 million pairs of shoes per year. It has 500 contract suppliers, half of which are located in Asia (Arnold & Hartman, 2003, p. 11). This paper will examine the sweatshop scandal of the 1990’s that Nike was involved with. The effect of the sweatshops on people, planet, and profits will also be addressed. The paper will explore the company’s current CSR practices. The paper will also examine what greenwashing is and the types of greenwashing. A culminating theme of this paper is an analysis determining whether or not Nike is indeed greenwashing. Lastly, the paper will provide recommendations based on the analysis.
Overview of Nike’s Sweatshop Practices
In 1984 Nike closed its last United States factory. With no more domestic factories, the majority of its facilities were located in Asia, which is where sweatshop and labor issues are most prominent. This decision cost 65,000 American workers their jobs (Glenn, 2004, para. 3). Most workers in the foreign factories are generally teenagers or unmarried mothers, whose ages range from 17 to 30 years. On average, each worker makes about 4.3 pairs of shoes per day (Glenn, 2004, para. 5-10). Nike’s Asian factories are located primarily in China, Thailand, Pakistan, Vietnam, Cambodia, and Indonesia. The company moved its operation abroad in an effort to cut labor costs (Levenson, 2008, p. 168-170). In some cases, Nike was able to reduce its labor expenses by paying workers a mere 20 cents an hour, to work in factories that had poor ventilation and similar unsafe as well as abusive environments (Bernstein, 2004, p. 1; Sage, 1999, pp. 216-217). The factory workers in Indonesia earn a wage of $2.50. The reported livable wage in Indonesia is about $4.00, making the $2.50 wage insufficient. It is a similar situation for Chinese workers, who make about $1.60 per day; some workers claim they do not receive the entire $1.60. Three simple meals in China cost about $2.10. Clearly, it can be seen that Nike factory workers are not paid enough to live a basic life. It is reported many of these Asian factory laborers are unpaid for any overtime they perform (Glenn, 2004, para. 5-10). Because they cannot afford boarding costs on their own, 60-70% of Nike workers in Asian countries are financially forced to rent rooms from the company. Rooms are identical and one-story. These rooms feature concrete walls and floors and are three-by-three meters in size. Multiple people live in one room. All workers share a bathroom and laundry room with everyone else (Glenn, 2004, para. 5-10).
It is has been documented that workers have been sexually and physically abused in the Nike factories. Some are said to be beaten for poor workmanship, called derogatory names, or have their mouths taped shut for talking. Some women claim they have been sexually harassed in the form of unwanted touching and groping. The more attractive women tend to be greater targets for sexual harassment and therefore are more likely to be promoted (Glenn, 2004, para. 15). An incident in Vietnam at Nike’s Bien Hou plant involved numerous women being forced to run laps around the perimeter of three warehouses. The exercise was meant a punishment and caused some of the women to faint. One female worker stated, “The manager wants us to meet the regulated number…When we don’t and there’s a gap, they force us to work extra to meet the quota” (Saporito, 1998, para. 4).
In 1988 a journalist shed light on Nike’s Asian suppliers. Public accusations arose stating that the company was paying such low ages that it was not sufficient for supporting everyday life. The New York Times also reported that one of the factory workers had been convicted of abusing the factory’s workers. The release of this information in the media caused a feeling of infuriation with consumers (Arnold & Hartman, 2003, p. 12). According to Arnold and Hartman (2003), most consumers felt that Nike was focusing more on its public image and marketing rather than focusing on the welfare of its workers:
Rather than crack down on the abusive conditions in the factories, Nike has resorted to an elaborate international public relations campaign to give the appearance that it cares about the workers. But no amount of public relations will change the fact that a full-worker who makes $1.60 a day is likely to spend a fair amount of time hungry if three very simple meals cost $2.10. (p. 12)
The criticism of Nike, Inc. continued through the 1990’s. It was not until 1998 that Philip Knight finally accepted responsibility for the poor treatment and low concern for factory workers (Arnold & Hartman, 2003, p. 13). Nike did not feel that the working conditions its foreign workers dealt with were its responsibility because of the fact that they were not directly employed by Nike (Locke, Kochan, Romis, & Fei, 2007, p. 5).
The Workers Rights Consortium (WRC), an independent organization that works to protect those individuals who sew various forms of apparel, conducts investigations of major companies and brands to ensure that those who work within its factories have protected rights and are not undergoing abuse. Support for the WRC comes mainly from the students of colleges and universities. Each year, Knight donates millions of dollars towards the University of Oregon, the school in which he graduated from. However, in the year 2000 ceased its donations to the university. This is because the University of Oregon had become a supporter of the Workers Rights Consortium. Had the donation been made, it would have supported the cost of renovations for the school’s athletic stadium, which had a total price tag of $80 million. Knight cancelled the donation because the WRC tends to be harsh towards apparel and footwear companies and did not approve of the University of Oregon’s support for it. Nike is a part of the Fair Labor Association, which is similar to the Workers Rights Consortium except it allows for major companies to be on its board. In Greenhouse’s (2000) article, Randy Newman, a senior at the University of Oregon in 2000, stated the following:
It’s kind of amusing, considering that he’s upset that we joined some labor-monitoring body. He keeps claiming that his company is socially responsible and they don’t use sweatshop labor. If that’s the case, why is he so upset that we joined this monitoring group? It kind of implies that something isn’t quite up to par. (para. 7)
Nike Inc. has experienced controversy because of its sweatshop practices. The company tried to amend its situation through marketing efforts and a revision of its policies towards foreign workers. However, it seems suspicious that Nike stopped making its donations to the University of Oregon because of the institution’s support of the Workers Rights Consortium. One would think that it would benefit Nike to support the school and its WRC efforts, considering the WRC makes an effort to protect factory workers and their rights (Greenhouse, 2000).
The Effect of Nike’s Sweatshops on People, Planet, and Profits
Without any question, Nike’s sweatshop practices affected people the most. Its profits were also hurt by its irresponsible practices. Although to a much lesser extent than people and profits, the environment was also impacted by Nike’s sweatshops abroad. The company’s irresponsible labor practices in the 1990’s were most notably criticized for poor and unsafe working conditions, small wages, and not unionizing employees. The organization often produced its products in nations such as China because it the wages there are among the lowest in the world, and also because the Chinese government does not permit employees to form unions (Bernstein, 2004, p. 1).
But China was not the only nation where Nike established its sweatshop factories. The child labor crisis in Pakistan was a huge problem for Nike. In the mid 1990’s, the company had sourced soccer balls from Sialkot, where children were being put to work to manufacture the balls (Boje & Khan, 2009, pp. 12-13). The story of Nike’s child labor practices in Pakistan aired on CBS, and the company frantically tried to cover up its mistakes. The company claimed that it had taken steps to prevent situations like that from occurring. In a contradictory statement, Donna Gibbs, the spokesperson for the company stated child labor was “…an ages old practice [and] the process of change is going to take time” (Boje & Khan, 2009, pp. 13-14). Clearly, the company knew that it made a mistake, and did not want to confront the issue face-to-face. It evidently did not take much regard for its employees, other than claiming that it was doing a social good by keeping children and adults off the streets and employed (Boje & Khan, 2009, p. 14; Sage, 1999, p. 219).
In response to the poor working conditions, small wages, and child labor practices of Nike’s sweatshops, many labor and human rights organizations took a stance on the company’s irresponsible practices. The non-government organizations were concerned with worker health and safety, wages, and fair treatment (Sage, 1999, pp. 219, 227). The Nike Network created a powerful agenda that exposed the working conditions in the company’s sweatshops, and increased consumer awareness about the labor and human rights issues. The campaign increased awareness about mandatory unpaid overtime, abusive treatment of workers, extremely small wages, child labor, and health and safety hazards in the factories (Glenn, 2004, para. 5-10; Sage, 1999, pp. 226-227). Consequently, consumers responded by avoiding Nike’s products that were produced in such poor working conditions where laborers were not given a day off for more than two weeks, while being paid a non-livable wage (Levenson, 2008, p. 169-170; Sage, 1999, p. 227). Was it worthwhile for Nike to mistreat its international employees just to improve profits for the short-term? Most would agree that it was not.
Nike’s profits were certainly affected by its sweatshop scandal. Until the later 1990’s, the company was quite profitable. In 1998, Nike reported a nearly 50% drop in its profits, relative to the prior year. The organization ultimately reported a net loss of nearly 70 million dollars in the last three months of 1998 (Sage, 1999, p. 226). The financial damage continued. During the first quarter of the following year, the firm’s revenues decreased by nearly ten percent, while its income dropped another 35%, on top of the 50% in the prior operating period (Sage, 1999, p. 226). Although the Asian economy was weak during those years, much of the firm’s financial losses were the result of the Nike Network’s campaign against the company, raising consumer awareness about the company’s irresponsible labor practices (Sage, 1999, p. 226). Nike’s CEO at the time, Phil Knight, felt that its products were recession proof (Sellers & Schiff, 1998, p. 27). However, it is unlikely that any product is safe from adverse consumer perceptions about an organization and its irresponsible practices. The company’s stock price took a hit, amid the falling revenues and net losses. Nike’s stock price fell 30 dollars in 1997, from its peak of 76 dollars in 1996 (Sellers & Schiff, 1998, p. 26). Clearly, consumers lost faith in the company, and the brand was tarnished. Nike ultimately had to refurbish its brand to effectively regain loyalty from its targeted consumer segment, 12-27 year olds (Sellers & Schiff, 1998, p. 27).
Nike also affected the environment by producing shoes in sweatshops. One of the most significant environmental impacts was in its footwear that integrates an air pocket in the design. Along with air, there was sulfur hexafluoride (SF6) in the pockets. SF6 is present in cooling devices such as air conditioners and refrigerators, and creates an environmental problem when the substance is released into the air. It breaks down the atmosphere, contributing to global warming (Holmes, 2006b, p. 1). Amid the sweatshop scandal, the company peaked its production of shoes that used the air pockets with SF6 present in its products. In 1997, the firm had an environmental footprint of “…7 million metric tons of carbon dioxide,” which is equivalent to the exhaust that is emitted from a million automobiles (Holmes, 2006b, p. 1).
Nike’s Current Corporate Responsibility Practices
Nike has since resolved its greenhouse gas issue in regards to the SF6 being present in its shoes (Holmes, 2006b, p. 2). The company’s corporate responsibility report has extensive information regarding multiple areas that it is taking responsibility for, such as the environment, working conditions, employees and labor issues, and community investments (“Nike, Inc.”, 2010, p. 3). Nike’s CSR report states that the firm is working towards innovation and sustainability, as well as addressing labor and environmental issues (“Nike, Inc.”, 2010, pp. 22-25).
The company has implemented a system to grade its factories on a number of labor, and health and safety related metrics. Scores range from an A, which indicates that factories are fully compliant to the metrics, to a D which means that the company may halt production if problems are not resolved (Bernstein, 2004, p. 1; “Nike, Inc.”, 2010, p. 44). According to its CR report, in 2007, most of its factories scored between an A and a C, with a concentration around a B. In 2009, the majority of Nike’s factories scored in the B to C range (“Nike, Inc.”, 2010, p. 45). A grade of C is an indicator that major issues are not being resolved in a timely manner (Bernstein, 2004, p. 1). It appears that Nike has room for improvement in the area of its factories and labor relations, since the correlation of its scores worsened from 2007 to 2009 (“Nike, Inc.”, 2010, p. 45). The company does acknowledge that its efforts to mitigate labor abuses have not eliminated the issue entirely (Levenson, 2008, p. 166). However, Nike is being more transparent in the sense that it publically releases information about its factories such as names and plant locations. It began this initiative in 2005, and was the first company in the industry to implement such a plan (Levenson, 2008, p. 168).
Nike is taking steps to reduce its environmental footprint. It is reducing the amount of adhesives in its products, along with using recycled materials to manufacture its goods. The company has also implemented a system called the Considered Index, which measures the environmental impact of its decisions regarding how products are made. Design proposals for new shoes tend to receive higher scores on its Considered Index if the pattern uses less material and environmentally friendly components (Levenson, 2008, pp. 166-167). Nike has also set goals for itself to reduce its carbon footprint by reducing harmful carbon dioxide emissions into the atmosphere in an effort to lessen climate change (“Nike, Inc.”, 2010, p. 29). Although Nike has improved its corporate social responsibility since the sweatshop crisis, many people ask if the company is doing the right things and taking responsibility for the relevant issues in the appropriate areas.
What is Greenwashing?
According to CorpWatch, greenwashing occurs when socially and environmentally destructive corporations attempt to preserve and expand their markets by posing as protectors of the environment and leaders in the struggle to eliminate poverty. Companies participate in greenwashing by misleading the public and creating an insincere concern for the environment, just as a food manufacturer might exaggerate the flavor of its newest product to draw in customers. Some corporations purposely spread misleading information in an attempt to create a competitive advantage for the firm itself, while other organizations unintentionally greenwash through the sloppy collection of exaggerated information producing overblown environmental claims (Lamb, 2008). Greenwashing is an action that corporations have been participating in since the environmentalist movement of the 1960’s (Greenwash Fact Sheet, 2001). It was not until 1986 when the term was coined by Jay Westerveld, a New York suburban environmentalist (Bradshaw, 2009).
Greenwashing can be categorized into four different forms: classic greenwashing, bluewashing, sweatwashing, and deep greenwashing (Greenwash Fact Sheet, 2001). Classic greenwashing is the action of corporations that partake in practices that are environmentally destructive, spreading misleading information to create an environmentally responsible public brand image (Bruno, 2002). Bluewashing is the action of corporations advertising their brand in unison with the United Nations to reap the association with UN themes of human rights, labor rights, and environmental protection although their practices do not align with UN values (Bruno, 2002). Sweatwashing is the action of corporations participating in socially responsible activities in effort to divert attention away from controversial and/or unethical factory practices (Greenwash Fact Sheet, 2001). Deep greenwashing is the action of corporations participating in political efforts to avoid democratic control of corporate behavior through a combination of PR and lobbying muscle (Greenwash Fact Sheet, 2001). Deep Greenwashing, perhaps the most concerning form of greenwashing, is a corporate strategy that strives to weaken national and international environmental agreements while promoting voluntary measures.
Is Nike Greenwashing?
Based on the analysis of Nike, one is lead to believe that Nike is participating in three out of the four forms of greenwashing: classic greenwashing, bluewashing, and sweatwashing. Nike is classic greenwashing by emitting millions of metric tons of carbon dioxide through business operations and producing shoes that contribute to global warming all while publicly setting goals to increase the amount of organic and recycled materials in its goods, reduce the amount of adhesives in its products, creating the considered index system, and setting goals to reduce its carbon footprint. Nike is bluewashing by associating with the Global Compact in order to reap the association with UN themes of human rights, labor rights and environmental protection although Nike clearly violates Principle 3, “freedom of association and the effective recognition of the right to collective bargaining” in Vietnam, China, Indonesia, Cambodia and Mexico (Bruno, 2002, para.7). Nike is sweatwashing by following a code of conducts for its contractors created as result of their sweatshop controversy. This code was made in order to make it appear that Nike has solved all concerns regarding its working conditions in its international factories. The code of conducts for Nike’s contractors obtains positive regulations such as a minimum age of workers requirement of age 16 and a ban on forced labor and minimum safety and environmental standards however the code of conducts obtains unethical loopholes (Beder, 2002). These loopholes allow Nike to pay minimum wage (as set in host country) but not living wage and not require overtime (61+ hours). However, volunteered overtime is accepted (Beder, 2002). Nike is also sweatwashing by participating in any sort of socially responsibly activities in effort to divert attention away from its controversial and unethical factory practices. As a result of the late 1990’s sweatshop scandal, Nike has participated in many socially responsible initiatives to cover up its unethical procedures and decisions. Despite all of Nike’s efforts, it would be in the best interest of the company and its shareholders to devote most of its resources into problem areas of its operations, specifically the unethical treatment of factory workers.
Recommendations
In the most fundamental form, Nike’s CSR strategy must align with the company’s strategy and mission while taking a holistic approach to balance each of the demands from people, planet, and profit. After establishing an appropriate CSR strategy, which aligns with the organization’s mission and company strategy, the company must take immediate action to improve conditions in the factories. Recently, the factory scores have worsened relative to past years. Numerous factories scored a C which indicates that issues are not being corrected efficiently and effectively (“Nike, Inc.”, 2010, p. 45). Therefore, the company must take action to address and solve the factory issues. It would be advisable for Nike to spend more time addressing the issues occurring within its factories rather than trying to be the Band-Aid for the environment. Nike must be sensitive and ensure that it is being socially responsible in the right areas to improve its weaknesses. The company must be careful not to engage in sweatwashing, for consumers may perceive that Nike is trying to put a patina on the unethical sweatshop practices. Nike has long been regarded as an industry leader in the footwear industry and must take the initiative to inspire and encourage participation from other firms and manufacturers to enhance the ethical treatment of employees on a global scale. The company should act to influence labor regulations and policies abroad, thereby setting the standards for the legal and ethical treatment of workers in all industries in the international arena (Zadek, 2004, pp. 127-132).
Conclusion
After conducting the analysis, it appears that Nike is greenwashing, specifically in the form of classic greenwashing, bluewashing, and sweatwashing (Greenwash Fact Sheet, 2001). Acknowledging the fact that Nike has taken steps to improve its CSR practices, accountability, and transparency, the company still has much room for improvement (“Nike, Inc.”, 2010, pp. 29-50; Levenson, 2008, pp. 166-168; Holmes, 2006b, p. 2). This paper recommended that Nike first align its CSR strategy with its company strategy, improve its factory conditions, avoid sweatwashing, and inspire other firms in the footwear industry to participate in genuine corporate social responsibility and international legal reform (“Nike, Inc.”, 2010, p. 45; Zadek, 2004, pp. 127-132). If the company takes these recommendations to heart, it has the potential to sustain its strong position in the industry and brand awareness while being sensitive to the moral and ethical issues that are present in the 21st century.
References
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