Nike Investors Escalate Workers’ Rights Action

The global sportswear brand has so far failed to fairly compensate garment workers in Cambodia and Thailand, despite engagement efforts and resolutions.

Shareholders at Nike have filed a series of proposals ahead of the company’s September annual general meeting (AGM), seeking transparency on the firm’s supply chains and aiming to promote the implementation of worker-driven social responsibility principles in high-risk countries.

This escalation builds on a letter sent by 70 of Nike’s investors – representing a collective US$4 trillion in AUM – in the lead-up to last year’s AGM. The letter demanded the sportswear giant pay more than 4000 Thai and Cambodian garment workers US$2.2 million in wages and benefits that are legally owed to them since 2020.

Shareholders including CCLA Investment Management, which co-led the letter sent to Nike, and the Shareholder Association for Research and Education (SHARE), have become increasingly frustrated with Nike’s failure to remedy violations of worker rights across the business. In particular, the world’s largest sportswear company’s has been accused of wage theft, which investors say has not been addressed satisfactorily.

“CCLA did not receive a response to our letter sent last year, so we chose to co-file with this other group of investors, led by Domini [Impact Investments],” Martin Buttle, Better Work Lead at CCLA, told ESG Investor. “As investors, we have a right to engage with Nike and to receive a response. It is concerning that Nike has not responded, [and] we would like to see other investors vote in support of the shareholder resolution asking [the company] to take action.

This year, one of the proposals demands a supply-chain management report, including methodology and metrics to track and measure performance on forced labour and wage theft risks – demonstrating consistency with Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises on Responsible Business Conduct, UN Guiding Principles, and Sustainable Development Goals.

Another one, co-filed by CCLA and SHARE, calls for a report evaluating how the implementation of worker-driven social responsibility principles and supporting binding agreements would impact the company’s ability to identify and remediate human rights issues in sourcing from high-risk countries.

Nike has recommended shareholders vote against both proposals at its AGM, which is set for 10 September.

“Providing effective remediation where human rights abuses occur is a key element of any serious commitment to respecting human rights in a company’s value chain,” said Sarah Couturier-Tanoh, Director of Shareholder Advocacy at SHARE. “By failing to pay workers, Nike exposes itself – and by extension, its shareholders – to legal and reputational risks that could ultimately damage [its] value and depreciate investments over the long term.”

A pervasive problem

Human and worker rights issues in the supply chains of shoe and apparel companies have become an increasingly thorny issue for investors.

Nike has faced significant scrutiny over two violation cases over the past four years, with 58 activist groups (including Human Rights Watch and Oxfam) jointly demanding the issue be resolved. A public petition to that effect was also signed by more than 125,000 people.

An estimated 98% of Nike’s products are currently manufactured outside the US, with Thailand accounting for 6% of the company’s shoe production.

“This type of human rights abuse is sadly common in the garment industry, but investors expect better from a high-profile company with explicitly stated commitments,” said Couturier-Tanoh.

Fellow sportswear giant Adidas – the second largest globally – has also faced allegations of wage theft in Cambodia, and of leather used in its products being linked to deforestation and exploitation in the Amazon rainforest. Shareholders also launched legal action over the company’s handling of antisemitic comments made by American rapper Kanye West, who was creatively involved with the brand.

There are, however, some better performers in the sector. For example, Puma – the world’s third-largest sportswear brand – was named in the World’s Most Sustainable Companies ranking by US magazine TIME earlier this year, based on its environmental data and transparency on factors including human rights due diligence in its supply chain.

In the late 1990s, Nike had already faced allegations of forced labour in its supply chain, compelling it to double down on sustainability practices, but for many, these efforts remain insufficient. “It’s becoming clear that companies like Nike are stuck in the past when it comes to human rights due diligence,” said Couturier-Tanoh.

Last year, more than 20 garment sector unions across six countries launched the Fight the Heist campaign alongside US activist group Global Labor Justice and the Asia Floor Wage Alliance, demanding Nike ensured fair pay in its supply chain.

Additionally, unions representing Nike factory workers have filed an OECD complaint with the US National Contact Point over alleged severe human rights impacts and failure to address those in line with the OECD Guidelines.

Last month, Nike said it expected its quarterly revenues to plunge 10% in the face of heightened competition from sector rivals such as On and Hoka. Between the start of the year and 28 June, shares had already dropped 13%.

The company has already announced plans to cut approximately 2% of its global workforce – the equivalent of more than 1,600 jobs – to lower expenses following falling demand for its products. However, this figure could be as high as 5%.

Since sending the letter, CCLA has commenced collaboration with some North American investors engaged with Nike on related matters.

“They are concerned that there is no evidence of Nike considering any worker-driven social responsibility initiatives, such as established international accords – for example, Nike is sourcing from Pakistan and hasn’t signed up to the Pakistan Accord,” said CCLA’s Buttle. “There seems to be an absence of Nike joining any of these binding agreements.”

Last week, the World Benchmarking Alliance’s Collective Impact Coalition led a group of investors, NGOs and religious groups in calling on companies in the agriculture and apparel sectors to tackle violence and harassment in their supply chains. According to the coalition, just 5% of firms identify violence and harassment as a salient risk, while only 20% require suppliers to have remediation processes in place to address violence and harassment grievances.

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