Transformation of Nike PDF

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Team #1 - Corporate
Rachel Grace Fritz
From Sweatshops to Sustainability: The Transformation of Nike, Inc
EAES 760: Organizational Environmental Management
Monday, October 29, 2018

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I. Introduction
The case study of Nike, Inc is critical to understand the serious and major transformation
a corporation underwent to sustainability and a circular economy, focusing on restoring waste to
be put back into the life cycle, from the concerns of their consumers. Nike was built on the
business model of finding the lowest cost of labor possible that led to child labor and exploitation
to being #16 on Fortune’s Most Admired Companies list, first in Apparel with a commitment to
improving environmental impact. This includes providing transparency and ensuring decent
working conditions in its supply chain, Nike, Inc has undoubtedly changed the public’s
perception of their brand. They have become a sustainability leader in corporate business and it
is vital to analyze this case in the hopes of understanding the importance of transformation to
sustainability. Nike, Inc was selected because they had accusations of child labor that led to
protests against the company and today they are a sustainability leader in innovation, design, and
best brand for the environment. They are an industry leader in apparel and sports brand,
surpassing its competitor Adidas and ESPN in sales at a value of $29.6 billion (PledgeSports,
2017). This is important as many companies believe they can not incorporate sustainability or a
circular economy because it is complicated to implement through the supply chain because they
are so large.
Research questions include how the corporation went from denying the responsibility of
child labor to accepting it and how they are moving forward. This is important to analyze as
other corporations can look towards this case study to understand the importance of the
consumers’ perspective of a brand and the importance of transparency. To include, many fashion
brands do not believe sustainability can promote their business and this study aims to show that
sustainability is vital for a business to thrive. This report will detail the many ways they are

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going to achieve sustainability within the company including waste reduction, water
conservation, energy savings, renewable energy, and transparency. Different key aspects in their
innovation that progressed new technologies for sustainability and how other brands could also
benefit from their innovations and processes. This case study aims to prove that a large
corporation can transform their business model to sustainability and create a circular economy
from their previous traditional models. This modification is especially important in the apparel
industry because they are a part of the product manufacturing and dye industry, the most
polluting industries (Sen Nag, 2018).
The references within the case study of Nike, Inc was taken from online resources
including reports, press releases, and news articles from websites. Each statistic’s reference was
analyzed to confirm its authenticity to ensure there is no possibility of false claims. This is
especially important in the case of Nike, Inc because of its past of denying responsibility due to
the pretense of it being a false claim.
II. Analysis
The ability for Nike, Inc to grow so rapidly during the 1970s was by outsourcing their
labor overseas in countries with the lowest wages and policies banned the formation of labor
unions while other US footwear companies still produced in America (Baker, 2016). The
exploitation of their factory workers included sweatshops that had child labor with abysmal
working and living conditions, verbal and physical abuse, forced overtime, and toxic emissions
that harmed human and environmental health. If workers tried to demand additional rights or
benefits, Nike would close the location and move the factory elsewhere to operate at the lowest
cost possible (Wilsey, Lichtig). It was not until the 1990s when Nike was criticized in the media

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and by the community for selling apparel that was produced in sweatshops. During this time,
Life Magazine published an article with a child stitching together a ball with the Nike logo on
the front of the magazine to discuss the issues surrounding the corporation during this time. They
attempted to spread awareness of the living conditions of these industries as it was a relatively
new claim during this decade. In addition to the magazine, a campaign called ‘TeamSweat’ led
by Jim Keady, who denied a multimillion-dollar endorsement deal to spread awareness of the
mistreatment of workers in Indonesia and created a video about the experience of living with the
workers called “Behind the Swoosh.” Nike’s CEO at the time, Phil Knight, and representatives
denied all claims and did not take responsibility for their malpractice until it was a global boycott
campaign towards the world’s best selling brand at the time (Timmus, 2013).
After the release of the video in 1998 and pressure from other executives in the
corporation, Phil Knight finally decided on publicly committing to changing the company’s
practices as he believed the brand had become synonymous with slave wages (Bain, 2017). Phil
Knight committed deeply enough to vow at Washington to root out child labor within his
corporation (Banjo, 2014). In an interview in 2001 with Nike’s director of compliance at the
time, Todd McKean, he stated that their initial attitude was that they do not own the factories so
they can not control what goes on (Heckel, 2001). Later in 1998, Nike took an initial step to
formally committing to sustainability by releasing the first Corporate Environmental Policy
(CSRwire, 2001). In 1999, Nike created a code of conduct to manage its suppliers to ensure they
are following strict regulations and rules to ensure no malpractice. In addition, they conducted
more than 600 factory audits over the next five years to assure the code of conducts were being
demonstrated correctly (Miller, 2014) Nike, Inc first demonstrated transparency by publishing a
complete list of its contracted factories and releasing the first version of a Corporate Social