Nike board rejects proposal to stop sourcing from China

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Shareholders have submitted a proposal to review Nike Inc’s China sourcing strategy and whether the company should “adopt a policy to suspend sourcing of cotton and other raw materials from China until whether the U.S. government’s trade advisory is lifted or rescinded.”

The proposal noted that Nike’s supply chain transparency is evidenced by its manufacturing map, strong policies and collaboration with industry and that Nike noted that it does not source directly from the region. from Xinjiang. But it adds that these efforts are “inadequate” because its supply chain transparency mainly covers its direct Tier 1 suppliers, while forced labor risks extend to raw material sourcing and manufacturing. other levels.

“The sourcing and manufacturing of cotton from China, not limited solely to the Uyghur region, exposes Nike to legal and reputational risks,” the proposal notes.

“Other companies have not only stopped sourcing from the Uyghur region, but have eliminated cotton from China throughout their supply chain to meet supply chain commitments prohibiting forced labor.”

Fearing that the cotton used in Nike’s products might come from forced labor, shareholders proposed that the supply to China be cut off.

But the board recommended shareholders vote against the proposal, noting:

  • Nike does not source cotton or raw materials directly and is committed to responsible and sustainable sourcing of its products, including the materials used in its supply chain.
  • Nike’s CSR and Governance Committee oversees management’s efforts to ensure the company’s commitment to sustainable innovation (including environmental sustainability and human rights) is reflected in its commercial operations ;
  • Nike works with suppliers who share its commitment to responsible manufacturing, as measured by meeting the standards set forth in its Supplier Code of Conduct and Code Leadership Standards.
  • Its current initiatives are helping to drive change throughout its supply chain and promote human rights and responsible manufacturing.

“In summary, Nike continues to work tirelessly to ensure that respect for people and the planet is embedded throughout Nike’s supply chain and to disclose our sustainable sourcing initiatives and policies. so that our shareholders have meaningful insight into our progress in this area,” the proposal read said. “We believe that our decades of engagement on these issues have led to more effective and impactful solutions than those that would be achieved by banning sourcing in any particular country.

“The Board believes the company’s policies effectively articulate our long-standing support and ongoing commitment to human rights and sustainable sourcing, rendering the proposal ineffective and unnecessary.”

Last week, The Ethical Trade Initiative reiterated its calls for businesses to step up efforts to detect forced labor in their operations and expand supply chains after a report by the United Nations High Commissioner for Human Rights (OHCHR) confirmed that crimes against humanity were taking place. in the Xinjiang Uyghur Autonomous Region (XUAR) in China.

Earlier, a report by non-profit organization C4ADS warned that Chinese supply chains could be entangled in the Xinjiang crisis.

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