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Nike ‘Ignoring’ Questions About Forced Labor, Shareholder Claims

A longstanding Nike shareholder wants to know why the Just Do It firm is ignoring its questions about potential forced labor in its supply chain.

Tulipshare, which bills itself as an “activist investment” platform, published an open letter Tuesday expressing its “grave concern” about the sportswear giant’s reluctance to engage with what is a “particularly salient risk” for an apparel and footwear company. It said it reached out to Nike’s investor relations team via email on March 4 and Oct. 21, 2022, as well as on Jan. 27 this year but “has not received a single response.”

“The company’s unresponsiveness demonstrates that Nike is willingly ignoring shareholders on issues concerning forced labor,” Tulipshare wrote.

While the shareholder activism champion said that it appreciates Nike’s commitment to making certain changes to improve labor conditions in its supply chain, it’s also uneasy about what it characterizes as a lack of transparency relating to the Swoosh company’s disclosures on whether it can hit its targets.

“We are also gravely concerned that Nike lacks an adequate remediation process for aggrieved supply chain workers, which could lead to human rights violations, such as wage theft,” Tulipshare said.

Nike did not respond to a request for comment. In its 2022 modern slavery statement, it said that it “takes seriously and fully supports” national and international efforts to end forced labor, human trafficking and modern slavery. The Adidas rival also said it utilizes information from external sources and supplier-specific risks through its own programs to continually hone its efforts to identify and address risks in its supply chain, including those related to forced labor, though it’s been warned that its ongoing relationship with China could present additional dangers.

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Tulipshare wants Nike to go further, however, by adopting the American Bar Association’s model contract clauses designed to balance buyer and supplier responsibilities to identify and mitigate human rights risks. It also urged the brand to publicly disclose its responsible purchasing practices including planning and forecasting, and whether or how it ring-fences labor costs.

Tulipshare said it is one of more than 160 investors, representing over $7 trillion in assets under management, that has signed benchmarking initiative KnowTheChain’s statement demonstrating a commitment to addressing forced labor. It’s also “greatly concerned” by Nike’s “poor” rating and engagement in KnowTheChain’s apparel and footwear ratings. In 2021, the Air Jordan maker scored only 62 out of 100 possible points overall, 48 on the theme of purchasing practices, 38 on worker voice, 63 on traceability and risk, and 70 on monitoring.

While Tulipshare commended Nike for ensuring the payment of a living wage in a ”small portion” of its supply chain, it also pointed out that the sneaker purveyor received a score of 51-60 percent in the 2021 Fashion Transparency Index, indicating that “there is still a lot more” it can be doing to ensure its workers are adequately protected.

The investment organization wants Nike to work with independent local or global trade unions and other worker representatives to improve freedom of association in its supply chains. Tulipshare also encouraged the Tiffany collaborator to sign an enforceable supply chain labor rights agreement and commit to prioritizing human rights remediation over traditional financial or non-financial compensation in contracts with suppliers.

“We call on Nike to actively engage and collaborate with investors and stakeholders in identifying, assessing, and avoiding actual or potential human rights abuses that may significantly disrupt the company’s business, competitive advantage and the livelihoods of many workers,” it added.

A similar “unresponsiveness” on Nike’s part led a group of 20 garment-sector unions in Cambodia, India, Indonesia, Pakistan and Sri Lanka to file an international labor complaint with the Organisation for Economic Co-operation and Development last week. In it, they accused the brand of violating the inter-governmental organization’s guidelines for responsible business conduct by multinational enterprises.

​​“Our complaint aims to create a process where unions can directly discuss with Nike the harm to workers that Nike helps cause in its supply chain, discuss the remedy that is required and discuss a path forward to transform Nike’s supply chain,” said Sahiba Gill, a senior staff attorney at Global Labor Justice-International Labor Rights Forum, an advocacy group that helped organize the filing. “So that its garment workers have decent work and living wages, which is particularly critical to creating substantive equality for the women workers who make up 70 percent of Nike’s supply chain.”

When asked for comment, Nike, again, had nothing to say.