The Importance of CSR at Nike - Essay Example

 The Importance of CSR at Nike Introduction Corporate Social Responsibility, which is shortened to CSR in this paper, is playing an increasingly crucial role in corporate businesses. According to Price (2012: p44), CSR is the commitment of an organization to ethical behavior, as well as to the improvement of relationships with society, its immediate community, and its workforce by improving their quality of life. CSR involves realigning the policies of an organization in compliance with stakeholder expectations, of which the stakeholders include its employees, special interest groups, regulators, supplier, and society at large. In recent times, it has been observed that expectations from an increasingly informed society are gradually pushing business to prioritize CSR and embrace initiatives that seek to comply with the expectations (Hollender & Fenichell, 2014: p55). This paper seeks to study Nike’s activities as one of the leading sport equipment and wear manufacturer and distributor, aiming to discover whether Nike complies with CSR objectives. The company has faced negative publicity regarding its labor practices especially, which necessitates the objective investigation of its practices to determine whether Nike’s adverse publicity reflects general practice and philosophy at the company. This paper will seek to investigate Nike’s CSR policy, practices that are consistent with this policy, and challenges to their implementation of CSR. Nike’s CSR Policy Nike’s labor practices in Asia during the 90s were the subject of heated criticism, which threatened their position as market leaders and necessitated a redefinition of their CSR policy. The company put up a multi-functional team at the executive level to drive CSR compliance as a result, allowing for the refining of their production processes to improve environmental sustainability and cut waste (Detienne & Lewis, 2009: p362). They also turned their attention to the workforce and designed a code of conduct for their suppliers so as to ensure their suppliers adhered to Nike’s values, especially in providing healthy working conditions for their workforce. Nike has embraced CSR and tries to impress the same on all their suppliers and retailer, as well. The company also insists that its employees’ internalize their code of ethics and practice it, while also making the same code a benchmark for its suppliers. Its efforts at waste reduction won them the Gigaton Award that is awarded to companies in recognition of their carbon emission reduction efforts, as well as trying to make a difference in the fight against climate change (Detienne & Lewis, 2009: p364). Nike, in short, seeks to ensure that it pursues sustainable production with as little negative environmental impact as possible, while also making sure that its employees’ safety and wellbeing is assured. Nike’s engagement with the community is also part of its CSR policy so as to improve the communities around them with regards to their welfare. Nike Practices that Adhere to CSR Policy One area that NIKE complies with its CSR policy is in environmental conservation through product innovation, such as the Environmental Apparel Design tool, which enables Nike to create products at minimum cost to the environment (Waller & Conaway, 2011: p92). This was used in creating World Cup jerseys from recycled polyester; hence significantly reducing the amount of water bottles, which end up being, dumped in landfills and garbage heaps. By outsourcing this process to manufacturers of apparel products, Nike also enhanced the project’s impact. The MVP Trash Talk project in 2009 also saw Nike produce shoe inner soles using scrap materials, while the packaging was made of recycled fiber. Their shoes’ upper part is today created using synthetic leather waste, while the shoe laces are made of recycled polyester. Their workers welfare program is another example of CSR policy compliance; especially their partnership with CGT that agreed to offer support to Honduran workers affected by closure of a former Nike contractor Hugger and Vision factories. The company contributed over $1 million to the employee relief fund and prioritized the hiring of these workers in other ventures, as well as enabling them to undertake vocational training (Waller & Conaway, 2011: p94). Fortune Magazine ranked Nike as one of the best companies to work for, especially for its work place facilities and its culture. Nike has also instituted awareness programs in areas like the fight against cancer. They have a partnership with LIVESTRONG that promotes their product distribution to scale up the cancer fight, while also creating a LIVESTRONG collection that is made up of apparel and footwear that allow users to show solidarity with cancer survivors and patients (Varley et al, 2011: p22). Other awareness programs include highlighting PE importance for school children to fight obesity, thus contributing to a healthier and more active society. Their initiative also involves training PE teachers to offer the best lessons to their students. In addition, Nike has also partnered with Doernbecher hospital to empower young patients by training them in design. The collections made through this partnership are used in financing the hospital, especially in pediatric research, purchasing medical equipment, and aiding uninsured patients. The Nike Foundation, together with the World Bank, has also been instrumental in the empowerment of young girls in Liberia by providing technical skill training for economic empowerment (Varley et al, 2011: p24). A partnership with the NOVO Foundation has also enabled Nike to boost developing economies by empowering young girls, which has seen Nike contribute more than $100 million and help young girls avoid early marriage and the vicious poverty cycle. Nike has also embarked on developing communities using sport, such as with their N7 collection that was aimed at promoting development of sport for native communities, in America. Profits from the sale of these kits were used to support youth sports. Another program to increase opportunities for the youth and women to grow in sport has worked to sharpen their athletic capabilities and divert youth aggression to sport (Hartman et al, 2013: p32). Using their popular Jordan brand, Nike has also sought to motivate public school teachers to dedicate themselves to improving learning for economically deprived children. They offer an award in recognition of teachers who show commitment to educating less privileged children, thus ensuring that students are equipped to serve the society they live in. In addition, Nike also funds NGOs in different communities in America to enable promotion of youth activity by contributing some $100,000 every year to improve physical health (Hartman et al, 2013: p35). Finally, Nike also partners with UNHCR to raise awareness for refugees. The resources raised are used for provision of sports and education opportunities necessary in alleviating the trauma of losing homes and loved ones. Nike has also donated $175,000 in the creation of a special Olympic games for disabled youth, entailing development of skills. Nike’s Challenges in Implementing CSR In their attempt to live up to expectations from society, Nike has come up against various challenges, mainly attributed to its numerous subsidiaries and manufacturing contractors. Such instances include allegations of unhealthy conditions for employees and worker abuse at the workplace (Lair, 2012: p560). Sexual harassment allegations have also been made against its subsidiary factories. Nike has also been the subject poor practices claims, especially in the sweatshop labor case, which shows the importance of supply chain control for Nike and the results of poor control over this function. The sweatshop case caused outrage in the US and the subsequent negative publicity threatened the market leadership position enjoyed by Nike. The firm was accused of using forced child labor under hazardous conditions, which was in violation of their human rights. Their failure to pay attention to working conditions for their employees was the main crux of the allegations against Nike, while it was also revealed that Vietnamese workers worked extremely long hours in order to satisfy the high quotas that Nike’s head office had set (Lair, 2012: p560). Majority of the Vietnamese workers were also found to suffer from respiratory complications, despite the fact that they continued to be assigned to work in hazardous environments. In addition, while various governments allowed low minimum wages, society expects leading companies like Nike to pay wages that compare to living wages. Also, there was outrage when human rights campaigners discovered that Nike workers in China, Vietnam, and Indonesia were subjected to carcinogens and other harmful chemicals in their workplace (Locke et al, 2009: p32). Nike was forced to revise their outsourcing policy to require that factories had better ventilation, while they also cut working hours in an attempt to correct these allegations. However, the impact of the allegations had already created negative attitudes towards Nike, such as the rejection of $50,000 meant for construction of a basketball court by a local Canadian community. Nike was forced to correct weaknesses in its safety policy and pay added attention to working conditions in subcontracted factories. The company has also been forced to develop a code of conduct for suppliers, which governs their activities when in partnership with Nike. Nike has terminated several contracts when they are unable to agree on standards, such as the termination of soccer balls manufacturing by Saga Sports in Pakistan in 2006 after the latter failed to conform to Nike’s labor standards (Lund-Thomsen & Coe, 2013: p48). Conclusion The findings of this discussion can answer the paper’s question regarding Nike’s compliance with CSR policy. It can be seen that Nike has endeavored to accomplish its obligations and adhere to its CSR policy. Overall, Nike has maintained a high standard working environment that makes workers in the United States want to work for them, while also contributing to various community initiatives and fostering community development via sport. Nike has also achieved success in product reinvention to suit expectations of an increasingly informed society, especially with regards to environmental hazard minimization. Various innovative breakthroughs have seen the company emerge as a leader in conserving the environment via use of recycled waste to create products. However, they have also been sharply criticized for their labor practices, particularly in Asia, which have been termed unethical. They have taken actions to correct this conception and ensure that their ethical and social values comply with society’s expectations. Therefore, Nike’s actions have complied with set out CSR policies. Non-compliance has been reduced to isolated cases that have been promptly resolved to comply fully with CSR responsibilities. Thus, the outrage over their activities is not a full reflection of their core practices and philosophy. References Detienne, K., & Lewis, L. (2009). The Pragmatic and Ethical Barriers to Corporate Social Responsibility Disclosure: The Nike Case. Journal of Business Ethics. 60(4), 359-376. Hartman, L. P., Arnold, D. G., & Wokutch, R. E. (2013). Rising above sweatshops innovative approaches to global labor challenges. Westport, Conn, Praeger. Hollender, J., & Fenichell, S. (2014). What Matters Most: Business, Social Responsibility and the End of the Era of Greed. London, Random House Business Books. Lair, C. D. (2012). 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