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Nike CorporationJumping the Hurdles of Social Responsibility Disclosure

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Background

Nike is the biggest manufacturer of sportswear in the world, and employs almost 1 million people.

Nike outsourcing contracts 500 factories in 45 countries.

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Accusations

In 1996, Nike was accused of labor violations and human rights abuses in foreign countries.

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Nike’s Response

Nike responded with Labor Codes Personal Letters Campus Visits Newspaper Releases

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Litigation

Marc Kasky, a San Francisco resident, sued Nike for false advertising, saying the statements were a marketing charade.

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Nike’s Response

Nike said its speech was protected by the First Amendment.

The company won the first trials, but lost in the California Supreme Court.

Nike successfully appealed to the US Supreme Court.

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Consequences

If Nike were to lose on the grounds of false advertising, companies everywhere would be liable for almost any public statement, muzzling corporations.

If Nike were to win on the grounds of First Amendment protection, companies would be legally empowered to mislead consumers.

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Supreme Court Decision

The US Supreme Court decided 5-3 to postpone ruling on Nike vs. Kasky.

Groups on both sides complained about the decision, having hoped for a solution.

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Charity Settlement

Nike made a charity settlement, giving $1.5 million to the Fair Labor Association.

Groups on both sides of the issue complained about the settlement.

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Ethical Considerations

Product advertising ethics are more lenient than responsibility advertising ethics. Was Nike ethical in the way it promoted its responsibility campaign?

What methods of communication should companies use to promote social responsibility?

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Corporate Social Responsibility Statements: A Possible Solution

CSR Statements would require companies to report labor and environmental information like the financial information in balance sheets.

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CSR Reporting

CSR Information is widely sought and used: Investors screen companies for violationsConsumers more loyal to responsible

companiesCSR information improves corporate imageCompanies are more likely to improve if

information is disclosed

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CSR Reporting

CSR reporting would remove legal ambiguity from companies seeking to improve transparency.