The Global Compact, Human Rights, and Nike, Inc.

The Global Compact, Human Rights,
and Nike, Inc.
Olivier Serrat
2020

The Global Compact: Origin, Purpose, & Scope
With 12,000+ signatories in over 160 developed and developing countries representing
nearly every sector and size, the Global Compact is self-avowedly the world's largest
corporate sustainability initiative (UN Global Compact, 2020a).
A non-binding pact for sustainable and socially responsible corporate citizenship, the Global
Compact is founded in 10 ethical principles governing human rights, labor, environment, and
anti-corruption. Organizations are enjoined to align their strategies and operations with the
principles and to report on implementation (UN Global Compact, 2020a).
Launched in 2000, the Global Compact was mooted by then Secretary-General Kofi Annan
at the 1999 World Economic Forum in Davos, at which he entreated the business community
to help put a human face on globalization (United Nations, 1999).

The Global Compact: The 10 Principles
Human
Rights
• Businesses should support and respect the protection of internationally
proclaimed human rights (#1); and make sure that they are not complicit
in human rights abuses (#2).
Labor
• Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining (#3); the elimination of
all forms of forced and compulsory labor (#4; the effective abolition of
child labor (#5); and the elimination of discrimination in respect of
employment and occupation (#6).
Environment
• Businesses should support a precautionary approach to environmental
challenges (#7); undertake initiatives to promote greater environmental
responsibility (#8); and encourage the development and diffusion of
environmentally friendly technologies (#8).
Anti-
Corruption
• Businesses should work against corruption in all its forms, including
extortion and bribery (#10). (UN Global Compact, 2020b)

The Global Compact: The Communication on Progress
An annual Communication on Progress (CoP) is at the heart of a company's commitment to the
Global Compact (UN Global Compact, 2020c). The minimum requirements are:
• A statement by the Chief Executive expressing continued support for the Global Compact
and renewing the participant's ongoing commitment to the initiative.
• A description of practical actions the company has taken or plans to take to implement
the 10 principles in each of the four issue areas.
• A measurement of outcomes (UN Global Compact, 2020c)
Based on self-assessment, companies fall into one of three differentiation levels:
• Advanced. CoPs that qualify as "Active" and, in addition, cover the company's
implementation of advanced criteria and best practices
• Active. CoPs that meet the minimum requirements
• Learner. CoPs that do not meet one or more of the minimum requirements (UN Global
Compact, 2020c)

The Global Compact: Human Rights
The first two of
the 10 principles
uphold the
Universal
Declaration of
Human Rights
(United Nations,
1948).

Nike, Inc.: Basic Data
Established in 1964 with headquarters in Beaverton, Oregon, Nike, Inc. is
the world's largest manufacturer and supplier of athletic shoes, apparel,
and other sports equipment with 1,096 retail stores, 75,400 employees,
and a brand value of $34.8 billion in 2020 (Statista, 2020). In 2019,
footwear brought in over $24 billion and led sales revenues (Statista,
2020). Nike's supply chain involves 1.16 million workers and 518 contract
factories in 41 countries (Nike, Inc.a, 2020).
Nike, Inc.'s marketing strategy makes extensive use of sponsorship
agreements. Globally, Nike, Inc. has sponsored many high-profile athletes
(e.g., Michael Jordan, Cristiano Ronaldo, Roger Federer); sports teams (e.g.,
Futbol Club Barcelona, Manchester City Football Club); and sports
associations (e.g., the Women's National Basketball Association).

Nike, Inc.: Courting Controversy
Nike, Inc. says it holds itself to the highest standards and takes its local and global
responsibilities seriously (Nike, Inc.b, 2020). Corporations that claim moral high ground will be
scrutinized. Nike, Inc. is most commonly associated with sweatshops but the specific issues that
Ethical Consumer (2020) pointed the finger at included human rights, worker's rights, pollution
and toxics, habitats and resources, environmental reporting, controversial technologies, political
activities, anti-social finance, and animal rights, among others.
Ethical Consumer's (2020) research also contained new allegations of forced labor in Nike,
Inc.'s supply chain (notably coercive employment of Uighurs); gender discrimination towards
female athletes and parents; and failure to ensure all workers receive a living wage.
Much as other companies that have been charged, Nike, Inc. has responded in five stages: (a)
deny; (b) blame others; (c) engage in damage control; (d) reassert control over the corporate
image; and (e) give the appearance of compliance* (Bernard, 1997, as cited in Avery, 2000).
* In 2002, Nike, Inc. introduced health and safety audits in contract factories; in 2017, it wrote up a code of conduct
the company expects contract factories to meet (Nike, Inc., 2020b).

Nike, Inc.: A Superannuated Business Model?PrefiguringGlobalization
Nike, Inc. is a pioneer
of outsourcing: the
company was founded
on the principle of
finding the cheapest
labor to produce
same-quality goods. At
first, Nike, Inc.'s
contract factories were
located in Japan; but,
they were replaced by
others elsewhere in
tune with changes in
the costs of production
(Meyer, 2019).
PassingontheCosts
Nike, Inc.'s low
production costs have
been achieved at
someone's expense: the
company has a history
of controversy over the
labor practices of the
subcontractors it works
with. Nike, Inc. has also
been criticized for
refusing to eliminate
hazardous materials
from its supply chain
(Meyer, 2019).
WhatNext?
The human rights
violations that
advocacy groups,
consumers, the media,
and unions have raised
have to do with Nike,
Inc.'s business model,
which in a
demonstrable "race to
the bottom"* has
become socially and
politically
superannuated.
* In a "race to the bottom" companies compete by cutting wages for workers and production moves to where
these are lowest and workers' rights are weakest.

Nike, Inc.: Highlights of Association with the Global
Compact
Nike, Inc. joined the Global Compact in 2000 but the differentiation level for which it qualifies
remains that of an "Active" participant (UN Global Compact, 2020d).
Nike, Inc. (2020c) and UN Global Compact (2020d) give evidence that relates to Nike, Inc.
per se and only tangentially to contract companies.* Nike, Inc. (2020c) suggests the company
is a moving target that projects veneer—with taglines such as "Unleash Human Potential",
"Transform Manufacturing", and "Minimize Environmental Footprint"—to hide unsavory
activities in contract factories.
Filtering Nike, Inc.'s last online CoP and the FY19 Nike, Inc. Impact Report for action on human
rights (and the other three issue areas) by means of the Sustainable Development Goals
(SDGs), it seems the company claims activities that are not central to its business but
intentionally neglects to engage where it could make a difference. (Nike, Inc., 2020b; UN
Global Compact, 2020d).
* Outside its walls, Nike, Inc. does not promote SDG 5 (Gender equality), SDG 8 (Decent work & economic growth),
SDG 10 (Reduced inequalities), and SDG 12 (Responsible consumption & production) but it could advance SDG 1 (No
poverty), SDG 2 (Zero hunger), SDG 4 (Quality education), SDG 9 (Industry, innovation, & infrastructure), and SDG
11 (Sustainable cities & communities).

Nike, Inc.: Using the Global Compact Self-Assessment
Tool—Human Rights (UN Global Compact, 2020e)*
Human Rights Yes No F/A
Health & Safety Does the company ensure that its workers are provided safe, suitable, and sanitary work facilities? F/A
Does the company ensure that workers are provided with the protective equipment and training necessary to perform their tasks safely? F/A
Does the company actively involve workers in health and safety work?
F/A
Hours, Wages, &
Leave
Does the company ensure that the workweek is limited to 48 hours; that overtime is infrequent and limited; and that workers are given reasonable
breaks and rest periods?
No
Does the company provide a living wage that enables workers to meet the basic needs of themselves and their dependents? No
Does the company ensure that workers are paid holiday leave, sick leave, and parental leave in accordance with international minimum standards? No
Does the company ensure that all workers have an official employment status? No
Fair Treatment Does the company protect workers from workplace harassment including physical, verbal, sexual, or psychological harassment, abuse, or threats? No
Does the company respect the privacy of its workers whenever it gathers private information or monitors the workplace? No
Community Impacts
Before buying, renting, acquiring or otherwise accessing land or property, does the company ensure that all affected owners and users of the land
or property have been adequately consulted and compensated?
No
Does the company take steps to ensure that company security arrangements are in accordance with international principles for law enforcement and
the use of force?
No
Does the company engage with local communities on the actual or potential human rights impacts of its operations? No
Product Stewardship Does the company take steps to prevent risks to human rights arising from product defects or improper use or misuse of company products? No
Country Risk Does the company seek to avoid involvement in human rights abuses owing to government or societal practices? No
* This is not a self-assessment by Nike, Inc. but "guesstimates" of conditions in contract factories. "Guesstimates" across
the related issue area of labor in contract factories are likewise dismal. F/A = Further attention required.

Nike, Inc.: The Business Case for Implementing the Global
Compact (1)
In the 21st
century, no longer
can a senior Nike,
Inc. employee say:
• "I don't think the girls in
our factories are treated
badly. The wages may be
small, but it's better than
having no job." (Brookes &
Madden, 1995)
• "Well I think you should
be asking that question of
the United Nations … I
don't think it's something
you can lay at a shoe
company and say 'You
must accept responsibility
for improving the social
and living conditions of all
employees'," (Brookes &
Madden, 1995).
Nike, Inc.'s
behavior since it
joined the Global
Compact in 2000
is a textbook
study on how
international
corporations
maintain power
structures,
working with
governments that
compromise the
public good to
attract investment.
Nike, Inc. has engaged
in bluewashing. But,
corporate social
responsibility is not
about public relations.
Instead of waiting for
intervention,
mediation, and
regulation to force
their hands, companies
must anticipate
demands and move
from issue (or risk)
management to
scenario thinking for
corporate citizenship.

Nike, Inc.: The Business Case for Implementing the Global
Compact (2)
Respecting and supporting human rights is a moral responsibility and
Nike, Inc.'s business model perpetuates the power structures and social
inequities that critical psychology explicates (Serrat, 2020). Should such
an incontrovertible business case for implementing the Global Compact
need strengthening, let it also be understood that:
Advocacy groups, consumers, the media, and unions will continue to turn up
the heat on Nike, Inc.
Nike, Inc. will find ever more difficult to find cheaper locations for contract
factories.
Nike, Inc.'s sales surpassed $39 billion worldwide in 2019 (Statista, 2020):
the company can afford the cost of factory investigations.
Anticipating and mitigating threats to human rights by way of a company's
due diligence process minimizes legal, reputational, and financial risk.
In a globalized economy, there are much greater reputational advantages
from good corporate social responsibility.
The fact that Nike,
Inc. keeps
relocating contract
factories proves it
is running out of
room. Nike, Inc.
must view its glass
as half-full rather
than half-empty,
rejuvenate its
business model,
and at long last
become a better
corporate citizen.*

Nike, Inc.: Action Plan for Implementing the Global
Compact (1)
Over the
years, Nike
Inc.'s adverts
have provided
inspiration to
others. The
time has come
for Nike, Inc. to
take its own
medicine and
align vision,
culture, and
image, all
elements of
which are out
of sync.
To implement
the Global
Compact, Nike
Inc. must take
integrated
action across
organizational
and societal
dimensions of
learning.
"Believe in
something. Even if
it means
sacrificing
everything."
"If we face
our fears, it
means we are
pointed in the
right direction.
Even if that
direction is
upside down."
"Sometimes
greatness is
about
overcoming
insurmountable
adversity.
Sometimes it's
just fun."

Compact (2)
Rationale
• An action plan for Nike, Inc. to
implement the Global Compact
cannot be driven by templates. It
is in contract companies that the
power structures for domination,
oppression, and under-privilege
that affect the mental and
physical well-being of workers
are in full swing (Fox et al.,
2009). It follows that tweaking
the objectives, targets, and
measures that feed Nike, Inc.'s
online CoP and Impact Reports
will serve no purpose.
Strategy
• To integrate the Global
Compact in business strategy,
day-to-day operations, and
organizational culture;
advance the Global Compact
through advocacy and active
outreach; and take action in
support of UN goals and
issues, it is necessary to:
• Treat Nike, Inc. and its
contract factories holistically.
• Take an inside–out approach
to the SDGs.

Compact—Treating Nike, Inc. Holistically (1)
To treat contract factories as part of the company's ecosystem Nike Inc. should:
• Announce Change. Nike, Inc.'s President and CEO should declare that the company will
embed the Global Compact across its supply chain and proactively engage contract
factories on human rights.
• Build In-House Capacity. Nike, Inc. should implement the two principles associated with
human rights across its strategies and operations by developing related management
policies and procedures, mainstreaming these into corporate functions and business units,
and implementing them across the value chain. Toward this, Nike, Inc. should familiarize
itself with UN Global Compact (2012), which presents best practice at the "Advanced"
level of the Global Compact. Nike, Inc. should give a prominent role to training on how to
embed human rights in organizations and—in support of that—invite employees to
discuss and respond to the questions in UN Global Compact and ESCAP (2010).*
• Engage Contract Factories in Policy Dialogue. Nike, Inc. should with cultural intelligence
engage existing contract factories on human rights, specifically regarding adequate
standards of living; freedom of speech; health; life, liberty, and security; and privacy.
* UN Global Compact and ESCAP (2010) invites consideration of the benefits of sustainable business; draws attention
to relevant issue areas; and helps set and implement priorities for the organization to imbed into its value chain.

Compact—Treating Nike, Inc. Holistically (2)
(Cont'd) To treat contract factories as part of the company's ecosystem Nike Inc. should:
• Lend a Hand to Contract Factories. Nike, Inc. should help contract factories implement
the two principles associated with human rights across their strategies and operations (i.e.,
full coverage and integration, robust management policies and procedures,
mainstreaming into corporate functions and business units, value chain implementation);
take action in support of broader UN goals and issues (i.e., core business contributions to
UN goals and issues, strategic social investments and philanthropy, advocacy and public
policy engagement, partnerships and collective action); and engage with the Global
Compact (i.e., local networks and subsidiary engagement, global and local working
groups, promotion and support of the Global Compact). (UN Global Compact, 2020f)
• Monitor and Evaluate Performance in Contract Factories. Nike, Inc. should introduce
regular, independent monitoring and evaluation of performance across human rights in
contract factories using international accounting organizations that draw from UN Global
Compact and GRI (2009), a guide to reporting on human rights. Nike, Inc. should commit
to terminating contracts if progress to advance human rights is slow.

Compact—Taking an Inside–Out Approach to the SDGs (1)
To take an inside–out approach to the SDGs, Nike, Inc. should:
• Align with SDGs. Nike, Inc. should thoroughly align with the SDGs, viz., SDG 5 (Gender
equality), SDG 8 (Decent work & economic growth), and SDG 10 (Reduced inequalities),
that are most pertinent to human rights and its business (without completely ignoring the
rest). Nike, Inc. should use the selected SDGs as the focal points of its strategies and
operations to advance human rights.
• Formulate Business-Relevant and Actionable Targets. Nike, Inc.'s online CoP and Impact
Report should offer clear and comprehensive description of actions toward the selected
SDGs. Nike, Inc.'s plans should be anchored in logical frameworks stipulating connected
propositions (i.e., activities, outputs, outcome, and impact); performance targets with
SMART indicators as well as responsibility centers, data sources, and reporting
mechanisms; and theories of change that identify necessary preconditions.
• Report on Progress. Nike, Inc.'s online CoPs and Impact Reports should embody a
reporting process that ensures clarity, reliability, and timeliness of information and is
enriched by stakeholder dialogue, with more meaningful reference henceforth to UN
Global Compact (2008).

Compact—Taking an Inside–Out Approach to the SDGs (2)
(Cont'd) To take an inside–out approach to the SDGs, Nike, Inc. should:
• Fight Groupthink. Nike, Inc. should encourage its employees to more decidedly pause
and think, identify opportunities, join forces with others, seek out transformative
experiences, leverage learnings, and reiterate the process to imbed successes into Nike,
Inc.'s corporate culture (Schwartz & Gibb, 1999).
• Leverage Role Models. Nike inc. should require the high-profile athletes, sports teams,
and sports associations the company sponsors to do more than just display its athletic
shoes, apparel, and other sports equipment. Role models influence others: there will be
ample—and heartening—opportunities to showcase Nike, Inc.'s action plan for
implementing the Global Compact (with an accent on human rights), including its more
decided alignment with the selected SDGs.

Critical Psychology for Human Rights (1)
The year 2020 marks the 20th
anniversary of the Global Compact
and the fifth year since the launch of
the SDGs; it also opens the decade
in which humanity will either succeed
or fail in delivering on the SDGs by
2030.
UN Global Compact (2020a)
celebrated the fact that
sustainability has turned into a
strategic business agenda. But, the
document also cautioned that
policies alone make little difference
when goal setting is not ambitious
enough and the negative impacts of
businesses are significantly under-
recognized.

Critical Psychology for Human Rights (2)
Dominant cultural,
economic, and
political
institutions can
misdirect efforts
to live a fulfilling
life and harmful
institutional
power can foster
inequality and
oppression
among powerless
and marginalized
groups (Fox et
al., 2009).
Critical psychology
means to promote
social justice and
human wellbeing by
holding
organizations to
account for
delivering on their
obligations
regarding human
rights and often
looks to
fundamentally
different social
structures, not just
reform.
Of course, upholding human rights
requires the means to act upon
them in context-relevant class-,
gender-, and race-based
intervention strategies and critical
psychology suffers from lack of
openings for practical applications.
That said, the Global Compact is a
grand opportunity to help create a
better version of capitalism—
capitalism with a conscience:
critical psychology is particularly
suited to advancing that, as this
case study of Nike, Inc.
demonstrates. It is a case of "Have
theory, will travel".

The Global Compact, Human Rights, & Nike, Inc.: Coda
The apparel manufacturing sector is labor-intensive: this makes it
especially vulnerable to import competition from countries where
workers receive low wages. Phil Knight, Nike, Inc.'s co-founder,
observed that Japanese cameras had replaced German cameras
and wondered if sports shoes made in Japan could rival Puma
and Adidas in the American market. Thereafter, Nike, Inc. made
its name and fortune in a "race to the bottom".
The outcry over sweatshops is pushing many apparel manufacturers to move to
more automated factories but a more powerful driver of change is the "Buy
Now, Wear Now" business model that e-commerce powers. Nike, Inc.'s likely
move toward greater automation would lower its costs and improve its profit
margins further; it would allow the company to deliver new designs more
quickly to fashion-conscious customers, at a premium; it would reduce
employment in low-wage countries; and, it would make it even less likely that
Nike, Inc. might at last do something about human rights or any of the SDGs.

Annex: References (1)
Avery, C. (2000). Business and human rights in a time of change. London, UK: Amnesty
International UK Publications. https://media.business-
humanrights.org/media/documents/files/reports-and-materials/Avery-Report.htm
Brookes, B., & Madden, P. (1995). The globe-trotting sports shoe. London, UK: Christian Aid.
https://www.saigon.com/nike/christian-aid.htm
Ethical Consumer. (2020). Nike, Inc. https://www.ethicalconsumer.org/company-profile/nike-inc
Fox, D., Prilleltensky, I., & Austin, S. (Eds.) (2009). Critical psychology: An introduction (2nd ed.).
Thousand Oaks, CA: Sage Publications.
Meyer, J. (2019, August 14). History of Nike: Timeline and facts. The Street.
https://www.thestreet.com/lifestyle/history-of-nike-15057083
Nike, Inc. (2020a). Nike Manufacturing map. http://manufacturingmap.nikeinc.com/

Nike, Inc. (2020b). Policies. https://purpose.nike.com/sustainability-policies
Nike, Inc. (2020c). FY19 Nike, Inc. impact report. https://s3-us-west-2.amazonaws.com/ungc-
production/attachments/cop_2020/484463/original/FY19-Nike-Inc.-Impact-
Report.pdf
Statista. (2020). Nike - Statistics and facts. https://www.statista.com/topics/1243/nike/
Schwartz, P., & Gibb, B. (1999). When good companies do bad things: Responsibility and risk in
an age of globalization. New York, NY: Wiley.
Serrat, O. (2020). Development of critical psychology. Unpublished manuscript, The Chicago
School of Professional Psychology.
United Nations. (1999, February 1). Secretary-General proposes global compact on human
rights, labor, environment in address to World Economic Forum in Davos.
https://www.un.org/press/en/1999/19990201.sgsm6881.html

United Nations. (1948). Universal declaration of human rights.
https://www.un.org/en/universal-declaration-human-rights/
UN Global Compact. (2008). The practical guide to the United National Global Compact
communication on progress (CoP): Creating, sharing, and posting a CoP.
https://www.unglobalcompact.org/docs/communication_on_progress/Tools_and_Publi
cations/Practical_Guide_2008.pdf
UN Global Compact. (2020a). UN Global Compact: Uniting business for a better world.
https://www.unglobalcompact.org/
UN Global Compact. (2020b). The power of principles.
https://www.unglobalcompact.org/what-is-gc/mission/principles
UN Global Compact. (2020c). Transparency build trust.
https://www.unglobalcompact.org/participation/report/cop

UN Global Compact. (2020d). Communication on progress: Nike, Inc.
https://www.unglobalcompact.org/participation/report/cop/create-and-
submit/active/438564
UN Global Compact. (2020e). Global Compact self-assessment tool.
https://globalcompactselfassessment.org/
UN Global Compact. (2020f). Frequently Asked Questions.
https://www.unglobalcompact.org/about/faq
UN Global Compact and UNESCAP (2010). 2010 training programme: Embedding the Global
Compact and sustainability into your organization. Retrieved from
http://www.unescap.org/sites/default/files/TN4-Workbook.pdf
UN Global Compact and GRI. (2009). A resource guide to corporate human rights reporting.
https://www.globalcompact.de/wAssets/docs/Menschenrechte/Ocai/a-resource-
guide-to-corporate-human-rights-reporting.pdf

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