June 04, 2003
Nike and Others Increase Transparency into Their Global Labor Practices
by William Baue
The Fair Labor Association releases a report today on the internal and independent external
monitoring of apparel and footwear manufacturers' global labor practices.
It has become fashionable to question the global labor practices of apparel and footwear
manufacturers such as Nike (ticker: NKE). However, such
an ethical stance is often complicated by the fact that independent information verifying labor
abuses, much less reliable information from the companies themselves, can be hard for the general
public to come by.
Such information just became easier to access, thanks in part to
industry participants such as Nike, Liz Claiborne (LIZ), Phillips-Van Heusen
(PVH), and Reebok (RBK). Today, the Fair Labor Association (FLA) is releasing its
first public report on these and three other participating companies' internal monitoring as well
as independent external monitoring of labor practices in supplier manufacturing plants throughout
The report covers the first full year of monitoring from August 1, 2001 to
July 31, 2002 at the seven participating companies, which also include adidas-Salomon (ADSN.DE), Eddie
Bauer, and Levi
The FLA, which was founded in 1999, consists not only of companies in the
apparel and footwear manufacturing industries, but also nongovernmental organizations (NGOs)
advocating for human rights, labor rights, women's rights, and consumer rights. Also affiliated
with the FLA are 179 colleges and universities, many of which license apparel with school logos and
designs, and hence have a vested interest in maintaining standards.
companies and critics have taken a big step beyond talking about social responsibility and are
starting to get the facts into public view," said Auret van Heerden, executive director of FLA.
The study, entitled Towards Improving Workers Lives, reports on the monitoring of
companies' compliance with FLA's Workplace Code of Conduct, which deals with such issues as
harassment or abuse, work hours, and freedom of association. However, the report makes it clear
that "monitoring in itself does not bring about compliance."
The report strives for
transparency by also addressing companies' noncompliance, as well as tracking companies' attempts
to remedy exposed problems. Interestingly, the independent external monitors (IEMs), which visited
enough supplier plants for each company to be statistically significant (five percent), found much
less evidence of freedom of association violations than expected.
The FLA admits that
the report is a work in progress, and is more descriptive than it is evaluative. Future reports
will be more rigorous as methods mature for assessing code of conduct compliance. The value of the
current report lies not in its statistical analysis but in its case studies, which appear at the
end of each section of the report.
For example, the study reports on a January 2001 work
stoppage at a Mexican apparel contractor for Nike in response to illegal firings and forced
resignations of 25 workers complaining of low wages and seeking to form an independent union. Nike
commissioned Verité, an FLA-approved
independent external monitoring organization, to visit and monitor the plant.
evidence that the contractor was preventing workers from forming a union, a clear violation of the
FLA Code of Conduct calling for freedom of association. Nike worked out a remediation plan to
reinstate the dismissed workers, and an independent union negotiated for increased wages and
Although this example demonstrates how the process functioned successfully,
the study also reports on audits that revealed less successful remediation attempts and ongoing
noncompliance with the standards.
"This first round of audits shows that there is room for
improvement at all of these companies and in all of these factories," said Michael Posner, an FLA
board member and executive director of the Lawyers
Committee for Human Rights (LCHR), a member of FLA. "The companies deserve a lot of credit for
trusting the public with the grit as well as the gloss, on an issue that will take persistence and
struggle for many years to come."
Readers can view IEM results for themselves on tracking charts
posted on the LCHR website. Nike represents an interesting case study in the limitations of
transparency afforded by this mechanism. Nike is currently involved in a Supreme Court case that
deals with its communications about its global labor practices, and until the high court hands down
its decision, Nike is embargoing IEM reports on its operations.
In most instances,
however, these tracking charts, together with the report, represent the most in-depth look into the
positive and negative labor practices of the apparel and footwear industry afforded to the general