Nike Under Fire Over Wage Theft Claims Ahead of AGM

Nike is beneath hearth from a gaggle of traders forward of the corporate’s annual assembly on Tuesday for failing to handle allegations of wage theft at two provider factories.

In a letter despatched to the sportswear large late final week, a coalition of shareholders led by Dutch financial institution ABN Amro and UK-based moral fund supervisor CCLA Funding Administration urged the corporate to assist settle claims of excellent funds value an estimated $2.2 million made by garment staff at factories in Cambodia and Thailand.

At current solely a handful of traders have publicly signed on, however extra shareholders are anticipated to affix this week.

The letter ratchets up the stress on Nike to handle criticism of its dealing with of labour complaints in its provide chain. In July, in an uncommon transfer focusing on a single firm, almost 60 labour and human rights advocacy teams printed a statement calling on Nike to make sure staff obtain the compensation they declare to be owed in the identical Cambodian and Thai instances.

In current days, Nike board member Thasunda Brown Duckett’s LinkedIn has been peppered with requires her to push the corporate to handle the instances as a part of a marketing campaign by labour rights activists. Brown Duckett didn’t reply to a request for remark.

“Now we have a accountability as traders to get entangled in [supporting] entry to treatment and that’s one thing that has been missing,” stated Kees Gootjes, enterprise and human rights advisor at ABN Amro. “This… [is] a basic case of entry to treatment not having been supplied.”

‘Clear’ Violations

In June of 2020, greater than 1,200 staff on the Violet Attire manufacturing facility in Phnom Penh, Cambodia, have been abruptly dismissed with lower than per week’s discover and with out compensation, in accordance with an investigation by Employee Rights Consortium, an organisation that screens labour rights in attire provide chains.

The manufacturing facility was owned by Ramatex, a key Nike provider, and whereas Violet Attire was not listed as a direct producer for the sportswear large, employee testimony, images and manufacturing facility data point out Nike items have been being produced within the manufacturing facility till no less than December 2019, in accordance with WRC. Three years on, staff are nonetheless owed an estimated $1.4 million in unpaid advantages, the organisation’s investigation discovered.

Nike stated that its personal impartial investigation discovered no foundation for the claims and that it had not sourced from Violet Attire since 2006. Ramatex didn’t reply to a request for remark.

Of their letter, the group of traders stated there appeared to be “credible and constant proof” that Nike-branded garments have been being produced on the manufacturing facility. The scenario raises questions on Nike’s provide chain oversight, due diligence processes and adherence to its personal insurance policies, they stated.

The group was equally vital of Nike’s strategy to claims made by staff on the Hong Seng Knitting manufacturing facility in Thailand, who allege they have been illegally denied furlough pay that now quantities to an estimated $800,000 when the manufacturing facility shut down in the course of the pandemic in 2020.

“Nike appears to assist its provider’s place that staff voluntarily ceded owed wages to the manufacturing facility despite staff documenting coercion and intimidation,” the letter stated. “These instances seem like a transparent case of suppliers violating Nike’s requirements, worldwide norms, and Cambodian and Thai legislation.”

Nike stated all staff within the Hong Seng case had been correctly compensated, following a third-party investigation and authorized overview that it commissioned.

Reputational Threat

The rising criticism of Nike’s place presents recent reputational danger at a time when scrutiny of labour circumstances in trend’s provide chains is rising.

Nike was amongst a gaggle of attire corporations asked by US lawmakers in Might to offer data on whether or not they’re importing items that might be linked to compelled labour in China’s Xinjiang area. New due diligence rules into consideration in Europe would additionally make large manufacturers extra accountable for what occurs of their provide chains.

At its AGM on Tuesday, Nike is facing a shareholder proposal put ahead by activist investor Tulipshare calling for the model to evaluate the effectiveness of its present provide chain administration programme and contemplate implementing mannequin provider contracts developed by the American Bar Affiliation. Nike has beneficial shareholders vote towards the proposal, as has influential proxy advisor Glass Lewis.

Whether or not this wave of shareholder activism features broader assist stays to be seen, but it surely reveals that labour-related provide chain dangers are transferring up the agenda for no less than some traders.

“Traders are getting extra actively engaged on these matters,” stated Martin Buttle, higher work lead at CCLA. “Corporations simply want to grasp that is one thing they should take care of.”

Of their letter, the coalition of Nike shareholders referred to as on the model to assist full compensation of the employees at Hong Seng Knitting and Violet attire, in addition to commit to making sure accountable buying practices and offering staff with entry to treatment in any future instances.

The intention is to guard shareholder worth by making certain Nike is ready for incoming rules, stated ABN Amro’s director of sustainable banking Richard Kooloos. “We wish the shareholdings our purchasers spend money on to be future prepared,” he stated.