Nike Corporation Jumping the Hurdles of Social Responsibility Disclosure

1
Nike CorporationJumping the Hurdles of Social
Responsibility Disclosure
2
Background

• Nike is the biggest manufacturer of sportswear in
  the world, and employs almost 1 million people.
• Nike outsourcing contracts 500 factories in 45
  countries.

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Accusations

• In 1996, Nike was accused of labor violations and
  human rights abuses in foreign countries.

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Nikes Response

• Nike responded with
• Labor Codes
• Personal Letters
• Campus Visits
• Newspaper Releases

5
Litigation

• Marc Kasky, a San Francisco resident, sued Nike
  for false advertising, saying the statements were
  a marketing charade.

6
Nikes Response

• Nike said its speech was protected by the First
  Amendment.
• The company won the first trials, but lost in the
  California Supreme Court.
• Nike successfully appealed to the US Supreme
  Court.

7
Consequences

• If Nike were to lose on the grounds of false
  advertising, companies everywhere would be liable
  for almost any public statement, muzzling
  corporations.
• If Nike were to win on the grounds of First
  Amendment protection, companies would be legally
  empowered to mislead consumers.

8
Supreme Court Decision

• The US Supreme Court decided 5-3 to postpone
  ruling on Nike vs. Kasky.
• Groups on both sides complained about the
  decision, having hoped for a solution.

9
Charity Settlement

• Nike made a charity settlement, giving 1.5
  million to the Fair Labor Association.
• Groups on both sides of the issue complained
  about the settlement.

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Ethical Considerations

• Product advertising ethics are more lenient than
  responsibility advertising ethics. Was Nike
  ethical in the way it promoted its responsibility
  campaign?
• What methods of communication should companies
  use to promote social responsibility?

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Corporate Social Responsibility Statements A
Possible Solution

• CSR Statements would require companies to report
  labor and environmental information like the
  financial information in balance sheets.

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CSR Reporting

• CSR Information is widely sought and used
• Investors screen companies for violations
• Consumers more loyal to responsible companies
• CSR information improves corporate image
• Companies are more likely to improve if
  information is disclosed

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CSR Reporting

• CSR reporting would remove legal ambiguity from
  companies seeking to improve transparency.