NIKE SUPPLY CHAIN DISCLOSURE
NIKE, Inc. Statement on Forced Labor, Human Trafficking and Modern Slavery for Fiscal Year 2017
At NIKE, we believe we have a responsibility to conduct our business in an ethical way. We expect the same from our suppliers, and focus on working with long-term, strategic partners that demonstrate a commitment to engaging their workers, safe working conditions and environmental responsibility. This includes working to combat risks of forced labor, modern slavery and human trafficking.
For more information on NIKE's sustainable engagement in our supply chain, please see our Sustainable Business Performance Report that details some of the drivers we have in place to transform our working relationships with suppliers to incentivize changes that benefit their workers.
The following information is to provide information required under the UK Modern Slavery Act of 2015 and the California Transparency in Supply Chains Act of 2010 as it relates to NIKE’s business practices, and specifically how we address issues of forced labor.
II. NIKE OVERVIEW and SUPPLY CHAIN STRUCTURE
NIKE is the largest seller of athletic footwear and apparel in the world. We sell our products to retail accounts, through NIKE-owned in-line and factory retail stores and NIKE-owned internet websites and mobile applications, and through a mix of independent distributors, licensees and sales representatives in virtually all countries around the world. Virtually all of our products are manufactured by independent contractors.
We are focusing on quality, long-term supply agreements with fewer factories, that are committed to our strict standards of sustainability and product excellence. Our sourcing strategy prioritizes and favors these suppliers that show demonstrable leadership in corporate responsibility and sustainability and who seek to move beyond minimum standards. As part of our growth strategy, we seek partners who are developing agile and resilient management systems which enable them to drive sustainable business growth through minimizing their environmental impacts, fostering a strong culture of safety and developing an engaged and valued workforce.
NIKE has disclosed a list of the independent factories contracted to make NIKE products since 2005. An interactive map of NIKE’s current suppliers including information about the factory and its workers can be found here: http://manufacturingmap.nikeinc.com/. The map includes the supplier group, location of the facility, type of products produced, number of workers, and information on the workforce profile including percentage employment of women and migrant workers.
NIKE’s commitment to ethical practices in our own operations and our supply chain begins at the highest level – from our CEO and Board of Directors. NIKE, Inc.’s Corporate Responsibility & Sustainability Committee of the Board of Directors review significant strategies, policies and activities and make recommendations to NIKE’s Board of Directors regarding sustainability (including labor and environmental practices), community impact, and charitable activities. NIKE’s Performance and Disclosure Committee – composed of our Chief Administrative Officer, Chief Communications Officer, Chief Financial Officer, Chief Operating Officer and Chief Sustainability Officer reviews and confirms all company-wide sustainability policies and targets, reviews performance toward targets, receives updates on key issues and emerging trends, and provides oversight for efforts to improve data, transparency and disclosure.
III. NIKE’s CODE OF CONDUCT & STANDARDS TO ADDRESS FORCED LABOR
NIKE takes seriously national and international efforts to end all kinds of forced labor – whether in the form of prison labor, indentured labor, bonded labor, human trafficking or otherwise.
NIKE’s requirements for suppliers are contained in our Code of Conduct and Code Leadership Standards. The Code of Conduct lays out the required minimum standards we expect each supplier factory or facility to meet in producing NIKE, Inc. products and includes strict requirements around forced and child labor, excessive overtime, compensation, and freedom of association amongst other requirements. The Code Leadership Standards specify how the Code of Conduct must be implemented. The document also articulates how we measure factories’ compliance efforts and progress against our Code of Conduct including specific requirements on the management of key forced labor risks.
We have progressively raised expectations for our factory partners through evolving standards of our Code of Conduct and Code Leadership Standards, most recently updated in 2017. This includes adding specific requirements to address key risks of forced labor including prohibiting workers paying fees for employment, requiring worker freedom of movement, and prohibiting requirements to post bonds or make deposits as a condition of employment. The Code Leadership Standards also contain specific provisions related to management of workers with unique vulnerabilities to risks of forced labor such as foreign workers and interns.
IV. DIRECT SUPPLIERS' CERTIFICATION OF MATERIALS
NIKE requires its finished goods suppliers to verify they are sourcing materials from vendors that are compliant with NIKE's Restricted Substances List (RSL) and with the NIKE’s Code of Conduct. NIKE's Supply Agreements also explicitly require suppliers to comply with all local and country-specific labor laws and NIKE’s Code of Conduct and Code Leadership Standards.
V. DUE DILIGENCE, RISK ASSESSMENT & MONITORING
NIKE continually evaluates and updates its systems to identify and address risks in its supply chain, including those related to slavery and human trafficking. This process includes information from external sources such as risk assessments for key human rights risks, supplier specific risk profiling based on location including the employment of vulnerable worker groups and areas of improvement identified in audits, as well as information on key and emerging risk areas identified through our engagement with external stakeholders. NIKE is also working towards mapping and understanding impacts further up the supply chain and to expand its engagement with upstream suppliers of contracted manufacturers where additional risks of forced labor may occur.
We regularly audit contract factories, which are monitored on a schedule based on their performance. These assessments take the form of audit visits, both announced and unannounced to measure against the NIKE Code of Conduct, Code Leadership Standards and local law.
NIKE uses both internal and external third-party audits to assess compliance with our requirements and local law. We also monitor conditions at contract factories through audits and assessments by independent organizations, including the Fair Labor Association and the Better Work Programme, a joint project of the International Labour Organization (ILO) and International Finance Corporation (IFC). In 2017 we conducted 406 total audits and assessments.
NIKE audits include detailed criteria to look at risks for forced labor or human trafficking including the employment of vulnerable worker groups such as foreign migrants, interns and temporary workers and high risk practices such as payment of recruitment fees or restrictions on freedom of movement.
NIKE works with internal, external, and independent monitors to carry out audits and help in remediation and capability-building efforts. If we are alerted to an issue of non-compliance within one of our contract factories by a third party, we investigate it immediately and, where improvements are required, we seek to drive ownership by factory management of correcting and identifying issues and improving systems to address root causes in order to prevent future reoccurrences. If the factory fails to make progress against that plan, it is subject to review and sanctions, including potential termination.
VII. TRAINING and ACCOUNTABILITY
NIKE believes suppliers that successfully address the well-being of their workers, by engaging with them directly to understand their needs, will improve factory performance. However, we know that our ability to influence our supply chain is dependent in part on how we build the right incentives and sanctions into our business relationships. Our Manufacturing Index (MI), introduced in 2012, scores factories on sustainability – including labor practices – on a par with traditional metrics of cost, quality and on-time delivery.
To more fully integrate our sustainability criteria into sourcing decisions and to help employees and management who have direct responsibility for supply chain management, NIKE provides training to enhance understanding and compliance with our sustainability policies and requirements including our Code of Conduct. That training is required annually for individuals who manage production relationships with suppliers.
VIII. COLLABORATIVE SOLUTIONS
NIKE believes addressing critical human rights risks, such as forced labor, often requires a collective approach. NIKE has long partnered with multi-stakeholder and external organizations such as the Fair Labor Association, Sustainable Apparel Coalition, the International Labour Organization’s Better Work Programme, and the Better Cotton Initiative to address labor risks in our supply chain. Through our partnerships with these and other organizations we work on a wide range of human rights risks, including those related to forced labor and human trafficking.
One area of emerging risks over the past few years has been related to the flow of migrants and refugees into Europe. NIKE has been involved in a number of regional activities seeking to address these risks. In April 2017 we co-signed a letter to Turkish President Recep Tayyip Erdogan advocating for revisions to the work permit structure for refugees in Turkey. The intention was to make it easier for refugees to seek and gain employment and to provide greater protections from exploitation. This was an extension of ongoing work on integrating Syrian refugees into the Turkish labor market with the UN High Commission on Refugees, the FLA, brands, suppliers, local organizations and the government.
NIKE has also been involved with leading brands and retailers in Europe developing an approach to supporting factories to recruit and manage a modern day multinational workforce, with the aim to enable manufacturers and their workers to adapt best practices in recruitment, integration and end of service.
We will continue to expand our collaboration with other peers, NGO, organizations to increase respect for human rights and to accelerate positive impact in the countries where we and our suppliers operate.
This statement covers June 1, 2016 to May 31, 2017, and has been approved by Boards of NIKE (UK) Limited and NIKE Retail B.V.