Nike's Greenwashing Sweatship Labor
By Sharon Beder
Following years of criticism over its poor labour and environmental standards,
Nike claims to have cleaned up its act, even signing onto the Global Compact
to prove it. But the truth is rather different, and the company's recent
behaviour is a textbook study in greenwash.
Nike spends more money on advertising and promoting the reputation of
its products than most other companies in the world - $1.13 billion in
1998. Celebrities, such as Tiger Woods, Michael Jordan, Andre Agassi,
John McEnroe, Monica Seles and Carl Lewis are paid huge sums of money
for their association with the company's products. In 1998, for example,
Nike paid Tiger Woods $28 million and Michael Jordan $45 million.(1)
Contrast these vast sums with the money Nike spends on philanthropy in
the countries where its products are made. In Indonesia, for example,
it has spent $100,000 since 1998 on continuing education programmes for
Nike workers and $150,000 on small loans to unemployed and disadvantaged
These payments are also dwarfed by the amount the company spends on strategic
philanthropy and cause-related marketing in the US. It gives millions
of dollars to US schools and universities for sports equipment and scholarships.(3)
It has also donated millions to children's television and to the Boys
and Girls Club of America,(4) as well as giving excess inventory, sample
products and used office equipment to charities.(5)
At the 1997 meeting of Business for Social Responsibility a Nike representative
showed a video of happy workers in a Vietnamese factory. 'Unfortunately
for Nike, two days later - while the conference was still going on - a
story appeared on the front page of The New York Times about conditions
in Vietnamese Nike plants where workers were being exposed to carcinogens
at 177 times safe levels, and were being paid just $10 for a 65-hour work
week (far longer than the local law [allowed]).'(6)
Nike now embraces the rhetoric of environmental responsibility - including
what it calls the 'triple bottom line'.(7) This approach supplements the
financial/economic bottom line with a stated concern for environmental
and social responsibilities. To this end the company is making efforts
to recycle excess rubber from factories, converting to water-based solvents
and recycling used shoes. It has developed a tank top made of 75 per cent
recycled plastic and the T-shirts it sells in the US contain 3 per cent
organic cotton. It promised to be able to make 90 per cent of its shoes
without toxic glues, cleaners and solvents by 2001. As a result it was
chosen as one of the companies to be included in the Dow Jones Sustainability
Index.(8) However, despite these environmental improvements, Nike's reputation
in the areas of social responsibility and human rights has continued to
come under attack.
HEAL OR HEEL?
Nike does not manufacture its own products. It only designs and markets
them. About 550,000 workers are employed in 700 factories in 50 countries
to make Nike products, the majority in Asia.(9) The contractors tend to
pay close to the minimum wage.(10) This cheap labour enables Nike to spend
a great deal on design and marketing, pay large executive salaries, maintain
large profits, and still keep the cost of the shoes affordable to the
middle classes in affluent countries. Shoes that cost $16.75 to manufacture
are sold for around $100 in the US.(11)
Since Nike spends so much on marketing and so little on the product itself,
it is clear that the reputation of its brand is all-important. The writer
Naomi Klein has noted: 'In many ways branding is the Achilles heel of
the corporate world. The more these companies shift to being all about
brand meaning and brand image, the more vulnerable they are to attacks
on image.'(12) So Nike was in trouble when its contractors were accused
of manufacturing Nike products in sweatshop conditions, using child labour,
paying less than the minimum wage, enforcing overtime, subjecting employees
to verbal abuse and sexual harassment, and running factories like prison
In 1991 the UK's Thames TV, The Economist and Knight Ridder reported
on conditions in Nike factories in Indonesia. US television network CBC
reported in 1993 that workers suffered physical and sexual abuse on top
of their low wages and an exhausting quota system. It reported that Nike
workers in Vietnam earned an average of 20 US cents per hour, and were
subject to physical punishments such as being hit on the head by supervisors
and being forced to kneel on the ground with their hands in the air for
periods of time. The New York Times, The International Herald Tribune
and The Economist also reported on Nike's Asian factories in 1993. Further
bad press in 1994 included investigative reports in The Rolling Stone,
The Boston Globe, The Los Angeles Times, The Chicago Tribune and a book
by Donald Katz called Just Do It.(14)
By 1997 Nike had become a symbol of sweatshop labour in the Third World
and was the target of several protests outside store openings and by students
against their universities' links with the company. In October 1997 anti-Nike
rallies were held in 50 US cities and 11 other countries.(15)
All the while Nike continued to defend its wage levels with commissioned
studies(16) and rhetoric. CEO Phil Knight claimed that working conditions
in Asian factories had improved drastically since Nike had begun business
25 years before. He said that if a shoe factory worker had gone to sleep
just 10 years earlier and woken up in the late 1990s they would have thought
that they had 'died and gone to heaven'.(17)
By 1998, however, the damage to Nike's reputation was beginning to be
felt in the account books. Share prices were dropping and sales were weak.(18)
Knight admitted: 'The Nike product has become synonymous with slave wages,
forced overtime and arbitrary abuse'.(19) To counter this Nike poured
its marketing expertise into its own corporate reputation and sought to
portray a caring company that was concerned about working conditions in
its contractors' factories. It hired a former Microsoft executive to be
vice president for corporate and social responsibility, and expanded its
corporate responsibility division to 70 people.(20)
This public relations campaign also included upgrading its own code of
conduct and participating in a range of coalitions. These included the
Global Alliance for Workers and Communities (aimed at helping workers
in Third World shoe and clothing factories)(21) and other business coalitions
with a stated social responsibility agenda like the aforementioned Business
for Social Responsibility.(22) The company, however, continued to oppose
labour and human rights linkages to trade agreements.(23)
STITCHED IN TIME
In response to the ongoing criticism, Nike formulated a code of conduct
for its contractors. The code, first formulated in 1992 and amended in
1997 and 1998, is supposed to apply in all factories producing Nike products.
It includes recommendations for minimum wages (as set in the host country),
maximum mandatory working hours of 60 per week, a minimum age for workers
of 16 years old, a ban on forced labour and minimum safety and environmental
Nike also repeatedly referred to its membership of the Fair Labor Association
(FLA), which was set up in 1998 with the help of the White House, the
US Department of Labor and the apparel industry - purportedly to safeguard
working conditions in factories contracted to US companies.(25) Although
a number of NGOs were involved in the FLA's formation, two unions, a department
store and the Interfaith Center on Corporate Responsibility pulled out
because they disagreed with the final agreement and were concerned that
the FLA was little more than a public relations exercise.(26)
The FLA has a voluntary code of conduct and member companies can attach
a 'No Sweat' label to their goods.(27) The code says that companies will
pay the minimum wage or prevailing industry wage of the country in which
they are operating, but makes no provision that companies should pay a
wage that workers can live on. Since many poor countries compete for international
investment by keeping the minimum wage low, the minimum wage is often
below a subsistence income, especially for supporting a family.(28)
The code limits mandatory overtime so workers cannot be made to work
more than 60 hours a week. However, a compulsory 60-hour week is excessive
and there are no limits on voluntary overtime above and beyond this. Furthermore,
the very low wages ensure that workers need to work overtime in order
to earn enough to live on.(29)
The code gives very limited support for the right of workers to organise
in unions. It merely says that corporations will not 'affirmatively seek
the assistance of state authorities to prevent workers from exercising
these rights'. According to Alan Howard from the Union of Needletrades,
Industrial and Textile Employees (UNITE), this means 'you can let the
army into the factory to put down a strike, as long as you don't pick
up the phone and call them.'(30)
As Medea Benjamin of Global Exchange has pointed out, according to this
agreement companies could still pay their workers 20 cents an hour, coerce
them into countless hours of 'voluntary overtime', use accounting firms
that have no connection to workers as their external monitors and be rewarded
for this behavior with a 'no sweatshop' seal of approval.(31)
For companies like Nike, whose financial bottom line does not allow it
to deal with the deep-seated causes of its poor reputation, the UN now
offers additional support to bolster their reputations. In 1999 the UN
sponsored a partnership with corporations centered on a code of principles
entitled the Global Compact.(32) The compact commits corporations who
sign up to uphold nine human rights principles. These include the right
to join unions, the elimination of child labour and the development of
However, critics argue that the compact is merely a means by which companies
that have been accused of human rights violations can 'win UN endorsement
and use the UN emblem to give their corporate activities a branding makeover,
while doing nothing of substance to clean up the conditions in their factories
and industrial sites'.(34)
Furthermore, the compact is voluntary and has no monitoring or enforcement
mechanisms. All that is required of companies is that they place information
on a UN website about the steps that they are taking to improve working
conditions and reduce environmental degradation. Joshua Karliner, executive
director of the Transnational Resource and Action Center, says: 'It allows
companies like Nike... to wrap themselves in the UN flag without any binding
commitment to change.'(35)
In order for its code and internet pronouncements to have credibility,
Nike needed to have them endorsed by parties that are seen to be independent
and to have integrity. The UN is just one of many organisations and individuals
that have filled this role. A number of other NGOs have also participated
in the compact, so adding to its credibility. These include Amnesty International,
the World Wide Fund for Nature and labour organisations such as the International
Confederation of Free Trade Unions. However, this is no guarantee that
the material posted on the website will be more than empty rhetoric, as
these organisations are not expected to do any monitoring of the claims
In 1997 Nike paid former UN ambassador Andrew Young to visit its contractors'
factories in Asia and report on working conditions in the hope that he
would provide a much needed independent endorsement. However, human rights
groups criticised his tour as a public relations sham.(37) The company
also gave handpicked students and journalists tours of selected factories.
Nike's attempt at getting the endorsement of NGOs and unions for the FLA
agreement was similarly unsuccessful. It therefore encouraged many university
administrations to join the FLA so as to give it credibility. Well over
100 did so, but student activists remained concerned about the involvement
of companies like Nike and the effectiveness of the monitoring process.
In response they formed their own alliance together with unions and human
rights groups in October 1999 - the Workers' Rights Consortium (WRC).(38)
The WRC promotes a 'living wage' rather than a minimum wage - that is,
that workers be paid enough to meet their basic needs of food, clothing
and shelter and be allowed a little extra for discretionary spending.(39)
Phil Knight has called the requirement for companies to pay a living wage
'unrealistic',(40) but Benjamin estimated in 1998 that if Nike doubled
the wages of workers in its Indonesian factories from 10 cents per hour
to 20, it would only cost an extra $20 million a year. This is what Nike
spends on sponsoring the Brazilian football team, and is less then 3 per
cent of the company's annual advertising budget.(41)
Nike has 'partnerships' with over 200 tertiary US colleges and universities,(42)
many of which involve cause-related marketing deals providing them with
a financial reason for supporting the company. Increasingly, however,
under pressure from student activists, universities have been joining
up with the WRC rather than the FLA. To the dismay of Nike, some 50 universities
have joined up so far,(43) thus undermining the credibility of the FLA.
The company has retaliated against some of the universities that have
joined the WRC. It has withdrawn from a contract to supply hockey equipment
to Rhode Island's Brown University and has also withdrawn $8m in funding
from Michigan University after the latter joined the WRC.(44) When the
University of Oregon joined, Phil Knight, who had personally given what
is his alma mater $50m over the years, announced he would not be making
any further donations 'of any kind' to the university. He claimed that
'by joining the Worker Rights Consortium, the University of Oregon inserted
itself into the new global economy where I make my living, and it inserted
itself on the wrong side, fumbling a teachable moment'.(45)
Nike's efforts to boost its reputation and get third-party endorsement
have been more successful in the environmental area. In 1998 Nike joined
20 other major US companies that committed themselves to no longer using
or selling wood and paper products made from 'old growth' forests. The
agreement was negotiated by a coalition of environmental groups including
Greenpeace, the Natural Resources Defense Council and the Rainforest Action
In 1998 Nike promised to phase out the use of polyvinyl chloride (PVC)
from its shoes. It enrolled Greenpeace, which has a worldwide campaign
against PVC, to publicise the promise. In a press conference in Oregon,
Nike's home state, Greenpeace read a Nike company statement which said
that the search for a suitable substitute for PVC had 'barely just begun'.
It was unable to predict when its shoes would be PVC-free.(47)
Nike stated that the 'action was not intended to divert attention away
from criticism it [had] received over its labour practices in low-wage
countries'.(48) Nike director of corporate responsibility Sarah Severn
stated that it did not choose to publicise its decision to remove PVC
from its shoes because it would have been accused of greenwashing.(49)
Apparently, Nike believed that if Greenpeace did the PR for it the greenwashing
label would not be used. Severn was speaking at a Greenpeace Business
and the Environment conference in Sydney in July 2000 at which Nike had
been invited to be present as a model of corporate environmental progress
SWOOSH OR SHUSH
Recent surveys continue to find that workers making Nike products suffer
inadequate wages, abusive treatment and excessive work hours as well as
intimidation if they try to form unions. Huge disparities remain. Chinese
workers receive about $1.50 per pair of shoes that sell for $80-$120.(50)
The rewards for those who manufacture the products (an average of $786
per year in Indonesia)(51) are minute compared with the remuneration for
those who endorse them. 'In one year, Nike paid Michael Jordan [pictured
above] as much (about $25m) to pitch the shoes as its subcontractors paid
35,000 Vietnamese to make them.'(52) Nike executives are also very well
paid. Knight is a billionaire, one of the richest men in the world, who
in the year ending 31 May 2000 earned a salary of $1.2m and a bonus of
$1.3m - up 26 per cent on the previous year.(53)
Community Aid Abroad in Australia points out: 'As the company with the
largest profit margins Nike could more easily afford to ensure decent
pay and conditions in its suppliers' factories.'(54) Instead Vietnamese
workers making Nike products earned less than half of what other foreign
companies (apart from Reebok) pay their least skilled factory workers
Nike's response to all the criticisms directed at it has been largely
superficial. It has employed reputation management rather than instigated
real reforms that addressed the underlying issues. It is the appearance
of social and environmental responsibility that Nike has aimed for, and
it has employed the classic public relations tactics of codes and pledges
with third-party endorsements to achieve this.
JUST DO IT
Reputation is more important than ever to sales, shareholder value and
attracting employees. And corporate responsibility is an increasingly
vital element of reputation. But this does not mean that we can depend
on the enlightened self-interest of corporate management and boards of
directors to ensure that human rights and the environment are safeguarded.
It is for this reason that community groups that concentrate their efforts
on consumer boycotts, shareholder activism and partnerships with business
will often only be able to achieve superficial reforms rather than fundamental
change. Real long-term change will involve the cultivation of grassroots
power to oppose the muscle of companies whose fundamental products or
ways of doing business need to be changed.
1 Holger Jensen, 'Low pay, high desire: a tale of 2 swooshes in Indonesia',
Denver Rocky Mountain News, July 2, 2000 p. 41A; Esther de Haan and Vivian
Schipper, 'Nike Casefile', (Clean Clothes Campaign, www.cleanclothes.org/companies/nikecase99-11-2.htm),
2 Nike, 'Responsibility', (Nike, nikebiz.com/social/index.shtml), 2000.
4 Cynthia Cotts, 'A study in Synergy', Village Voice, 19-25 July, 2000.
5 Nike, 'Responsibility'.
7 Sarah Severne, 'Nike's Journey to Sustainability'Paper presented at
the Business and the Environment: Solutions for the new millennium, Sydney,
20-21 July 2000.
8 Michelle Cole, 'Nike sporting a new color: green', Oregon Live, August
9 'Nike pledges to improve conditions in Asian factories', Asia Pulse,
July 18, 1997; Jensen, p. 41A.
10 Community Aid Abroad Australia, 'Frequently asked questions', (CAA,
www.caa.org.au/campaigns/nike/faq.html), 2000; Jeff Ballinger, Nike: Hot
Air, Multinational Monitor, December, 1994; de Haan and Schipper.
11 Jensen, p. 41A.
12 Naomi Klein in CBC Entertainment,'Activist Naomi Klein on her new
book No Logo', (CBC, infoculture.cbc.ca/archives/bookswr/bookswr_01182000_naomikleininterview
13 'Nike to sever ties with Indonesian companies', Wisconsin State Journal,
September 23, 1997, p. 7B; Bob Herbert, 'Nike factory in Vietnam marks
women's day with brutality', Minneapolis Star Tribune, March 31, 1997
p. 13A; Scott Sonner, 'Lawmakers contrast Nike CEO's billions, Asian workers'
pennies', The Columbian, November 11, 1997 p. B2.
14 Clean Clothes Campaign, 'Nike's Track Record 1988-2000', (Clean Clothes
Campaign, www.cleanclothes.org/companies/niketrack.htm), 2000; Tammara
Porter, 'Teens find alleged Nike labor practices unfair, but wait to act',
Minneapolis Star Tribune, July 7, 1997 p. 6B.
15 Bob Baum, 'Study shows wages for Nike workers in Vietnam, Indonesia
more than adequate', The Columbian, October 17, 1997 p. C10; Clean Clothes
16 Baum, p. C10.
17 Nike to sever ties with Indonesian companies', p. 7B.
18 John H. Cushman Jr, 'Nike pledges to end child labor and increase
safety', New York Times, May 13, 1998.
19 Quoted in Bob Herbert, 'Nike Blinks', New York Times, May 21, 1998.
20 Cushman, Jr.
21 Andy Dworkin, 'Nike's Phil Knight starts at top to plead case on labor
practices', Oregon Live, July 30, 2000.
22 Press for Change et al.; Human rights organisations, unions and academic
researchers, 'Open letter to Phillip Knight, CEO of Nike', (Clean Clothes
Campaign, www.cleanclothes.org/companies/nike-99-9-22.htm), 1999.
23 United Students Against Sweatshops, 'Anti-sweatshop group calls Nike-sponsored
inspection tour a sham', (Corporate Watch, www.corpwatch.org/trac/nike/news/usas.html),
1999; Press for Change et al.
24 'Nike pledges to improve conditions in Asian factories.'
25 'Falling off the tightrope', Oregon Live, 25 April, 2000.
26 Julie Light, 'Sweatwash: The apparel industry's efforts to co-opt
labor rights, (Corporate Watch, www.corpwatch.org/greenwash/sweatwash.html),
1998; Jeffrey St. Clair and Alexander Cockburn, 'Phoney Sweatshop Reform
Plan', (Counterpunch, www.corp.watch.org/trac/greenwash/4sweat.html),
27 St. Clair and Cockburn.
28 De Haan and Schipper.
29 Medea Benjamin, 'No sweat for companies to agree', Los Angeles Times,
April 17, 1997.
30 Quoted in Light.
32 United Nations, 'The Global Compact', (United Nations, www.unglobalcompact.org),
33 Katherine Butler, 'UN offers firms 'logo for human rights'', Independent,
July 26, 2000 p. 14.
36 Butler, p. 14; Colum Lynch, 'Companies, U.N. agree to rights compact;
environmental, labor criteria set, The Washington Post, July 27, 2000
37 'Nike to sever ties with Indonesian companies', p. 7B.
38 De Haan and Schipper.
39 Community Aid Abroad Australia, 'Frequently asked questions'.
40 Phil Knight.
41 Quoted in de Haan and Schipper.
42 Bill Workman, 'Stanford seeks ways to reverse trend of commercial
sponsors', San Francisco Chronicle, February 20, 1998.
43 'Future of worker rights group questioned', Oregon Live, July 22,
44 Campaign for Labor Rights, Press for Change and Global Exchange,
'USA: Nike uses bullying tactics at Brown University', (Corporate Watch,
45 Phil Knight.
46 Danielle Knight, 'Corporate giants abandon 'old-growth' forest products',
Inter Press Service English News Wire, December 10, 1998.
47 'Nike agrees to stop using PVC for shoes', Los Angeles Times, August
26, 1998, p. D4. 'Nike to remove substance from shoes', United Press International,
August 26, 1998.
50 Press for Change et al.; Human rights organisations, unions and academic
researchers, 'Open letter to Phillip Knight, CEO of Nike', (Clean Clothes
Campaign, www.cleanclothes.org/companies/nike-99-9-22.htm), 1999; Community
Aid Abroad Australia, 'Frequently asked questions'.
51 Jensen, p. 41A.
52 Julie Schmit, 'Nike's image problem', USA Today, 4 October, 1999.
53 'Nike CEO Knight pulled in $2.5M in salary/bonus for 2000', News Traders,
August 16, 2000; Clean Clothes Campaign, www.cleanclothes.org/companies/niketrack.htm;
Sonner, p. B2.
54 Community Aid Abroad Australia, 'Frequently asked questions'.
56 Steffan Heuer, 'Six Degrees of Co-optation', (The Standard, www.thestandard.com/article/display/0.1151.16192.00.html),
57 Nike, 'Responsibility', (Nike, nikebiz.com/social/index.shtml), 2000.
59 Corporate Watch,' Exposing Nike's Sweatshops', (Corporate Watch, www.corp.watch.org/trac/nike/),
2000; William McCall, 'Nike says Vietnam
factory woes being fixed', The Columbian, September 11, 1997 p. B2.
60 de Haan and Schipper.
61 Corporate Watch, 'Exposing Nike's Sweatshops'.