Ethical Audit Report
Table of Contents
Nike Ethical Dilemmas1
Ethical Audit Report1
Purpose of the Report2
A Snapshot of Nike’s Business Ethics3
Ethical Dilemma’s Facing Nike4
Nike’s Best Ethical Practices7
As globalization increases the scope of the Multinational Companies (MNCs) to penetrate the market both for cost effective labour and markets also has far reaching consequences. The question of business ethics and social responsibilities also extend to the suppliers, contractors and the work force that encompasses these new areas of operation and therefore it is imperative for companies to formulate their corporate strategies keeping in mind their competitive advantage. Nike had its share of problems when globalization first emerged when its business strategies with regard to the poor conditions of the work force in the sweatshops in Asian countries was questioned. Today with a new business strategy in place Nike hopes to deal with its obligations to its vast global labour force, the natural environment and also its bottom line. “Nike’s vision for Sustainable Business and Innovation is clear: to help NIKE, Inc. and its consumers thrive in a sustainable economy where people, profit and planet are in balance.” (NIKE, Inc.CRS Report 2007-09)
Purpose of the Report
This report will discuss some of the ethical dilemmas that have plagued Nike and how the corporate footwear and apparel leader has changed its business policy to change its working environment in response to the vast fall in brand image following the reports of the conditions of its Asian workers. “Ongoing commitment can derive from either economic self-interest (i.e., a solid business case) or from ethical grounding (i.e., the moral importance of sustainable development). Oftentimes, of course, both of these apply” (Amato et al 2009 p -11). Keeping in mind that looking after the community and the people as well as the environment will lead to long term financial gains has prompted Nike to lay emphasis on Corporate Social Responsibility and so as industry leaders Nike can help to “change the behaviours and expectations of those who work in the industry through influencing policy and encouraging collaboration between civil society, industry and government” (Nike Inc.)
A Snapshot of Nike’s Business Ethics
Ethical auditing is a fairly new process which can be used to measure an organization value base which could be either internal or external. Ethical auditing is value based and incorporates either a stake holder or an environmental scanning approach process. Once the process is in place then transparency and accountability are apparent and it then it can successfully be used to meet the ethical objectives that the organization has set for itself.
In a landmark speech at the national Press Club in 1998, following adverse media attention the then Nike CEO Phil Knight accepted corporate responsibility for labour practices followed by its suppliers and laid down six initiatives which formed the basis for Nike’s commitment to ethical practices.
o They increased the minimum age of the footwear factory workers to 18 and for lighter work in the apparel and accessories manufacturing to 16. o The indoor air quality of all footwear factories was to conform to US standards o To expand education facilities for footwear workers up to high school level o Nike would provide funding for research for issued related global manufacturing processes and for independent monitoring of factories. o NGO’s and educational institutions were to have a bigger role in monitoring Nike factories and making their reports public. o Providing micro-financing to families in Asia who were actively involved in the manufacturing process for Nike.
Building on the foundation laid by Knight...