Nike faces unprecedented annual meeting revolt over failure to respect worker rights

Ahead of tomorrow’s Nike annual meeting, CEO John Donahoe is faced with major investors defying his recommendation to ignore worker rights concerns. Instead ever more investors are coming out in force to demand that the sportswear giant fixes its failure to accurately monitor human rights violations in its supply chain. These investors are joining the chorus of rights organisations, unions, consumers, and students who have urged Nike to end its cruel and unnecessary four-year stand off with thousands of vulnerable unpaid workers. Investors claim that these millions in wages still legally owed to workers in Nike’ supply chain pose a sizable risk. Students protested this weekend at the University of Michigan's American Football game against University of Texas, both hold contracts with Nike.

A proposal asking Nike to shift its failed approach to human rights monitoring has gathered considerable investor interest. Beyond the expectation that the 70 investors that signed an open letter to Nike on the issue before will come out in support of the resolution, now also investor giants Norges Bank, AXA and Cardano have spoken out in favour.

The investors that filed the proposal claim that Nike’s reliance on top-down audits by parties that lack independence from Nike have repeatedly failed to pick up on rights abuses. They cite an example where 26 separate audits in a Nike factory in Vietnam failed to pick up any violations while a single worker-centered investigation revealed gross rights violations and extensive wage theft which Nike then dragged its feet for years on remediating. Now investors are again sounding a warning bell that the company is being pulled back into its 1990s image of being a brand that is synonymous with exploitation. Nike continues to ignore more than 4000 garment workers who have been owed a collective $2.2 million in unpaid, legally owed wages and severance for four years. Nike is now seen as an outlier in the industry; several other brands have urged suppliers to pay or even directly paid millions of dollars to avoid denying workers wages. Nike, however, has dug its heels in and denied the abuses even exist, just as the company was renowned for doing in the past.

Instead, Nike has hidden behind a plethora of lies and excuses which are only confirmed by the bogus ‘investigations’ it commissions in attempts to clear its name. Investors have raised that in high risk countries where Nike sources its clothes, like Cambodia and Thailand, workers do not enjoy full freedom to organise and face intimidation and coercion if they speak out. Research shows that in this context they are coached to tell auditors there are no problems even as their rights are being abused. Yet Nike has doubled down on its failed approach, even sacking 20% of its staff that was supposed to ensure Nike’s compliance with its own stated commitments to respect rights.

A former Violet Apparel worker said: “If I am paid the money I am owed by Nike and [supplier factory group] Ramatex, I will be able to pay off this debt that is hanging over me. I am counting on getting the money that I am owed, I pray that they will let us have peace and end our long wait for this so I can finally escape the loan sharks.”

The amount owed to workers pales in comparison with the $51.4 billion in annual revenue that Nike reported at the end of the last fiscal year. Alongside Proposal 6, that is calling on Nike to respect workers’ rights, are proposals on executive compensation including the approval of CEO John Donahoe’s personal paycheck of millions. In fact, during the same period that his own supply chain workers have been denied their wages since 2020, Mr Donahoe has amassed $177 million in personal wealth from Nike while continuing to ignore the women of colour that make his clothes and cynically using other women of colour on billboards to cover up the exploitation.

Other voices in support of Nike’s workers include students of universities that hold licensing agreements. At campuses across the US, students are organising pickets and solidarity protests ahead of the AGM, in solidarity with the workers who made their collegiate apparel.

Brandon Wu, student activist at New York University (NYU) with the Students for International Labor Solidarity: “Students in the US are wising up to the labor violations enabled and caused by Nike, with more and more SILS campaigns appearing on an increasing number of campuses. SILS students are focusing on the Hong Seng Case, where over $800,000 in wages were stolen from garment workers who produce collegiate apparel during the pandemic through coercion and intimidation. Solidarity campaigns at various campuses across the US demand that Nike and the Hong Seng Knitting factory pay their workers. We are in a unique position as students, with our universities and colleges each having contracts going into the tens, sometimes hundreds of millions of dollars with Nike. Nike must realise that just one of these being cut would be magnitudes more damaging than if Nike simply ensured that workers in factories were paid fairly and promptly. Workers have the basic right to be paid what they are owed for work they have put in, and Nike's lack of respect for this fundamental concept is very telling.”

Additionally, over 25 people signed an open letter from artists' and museum professionals raising the fact that Nike put potentially millions into a partnership with the Centre Pompidou (and the museum accepted this) refusing to ensure its workers are paid. They join over 126,000 citizens and potential Nike customers, and counting, who signed a petition urging the company to pay up and dozens of international rights organisations which already last year laid down the facts that Nike is denying in an open letter. Nike is surrounded by voices telling it to pay its workers, it is time it takes action.

More information

The Nike investor proposal can be found here: https://www.sec.gov/Archives/edgar/data/320187/000121465924014213/o812245px14a6g.htm and https://beta.unpri.org/group/22906/stream. The proposal suggests that Nike rely less on third-party audits and instead join worker-driven binding agreements to monitor and improve supply chain issues, including the International Accord on Health and Safety in the Textile and Garment Industry.

More information about the Violet Apparel case is available on https://www.workersrights.org/factory-investigation/violet-apparel-co-ltd/ and https://cleanclothes.org/file-repository/stitched_under_strain_-_long_term_wage_loss_across_the_cambodian_garment_industry.pdf/view. A rejoinder from workers on the Violet Apparel case is available here: https://www.business-humanrights.org/en/latest-news/violet-apparel-workers-rejoinder-to-nikes-response/

More information about Hong Seng Knitting is available on: https://www.workersrights.org/factory-investigation/hong-seng-knitting/. A recent rejoinder from Worker Rights Consortium to Nike on the Hong Seng case: https://www.business-humanrights.org/en/latest-news/worker-rights-consortiums-rejoinder-to-nikes-response-re-hong-seng-knitting-case/