In its second corporate responsibility (CR) report, Nike became the first in its industry to voluntarily disclose the names and locations of the more than 700 active contract factories that currently make Nike-branded products worldwide. This information, along with its report, is posted on Nike, Inc.'s website at www.nikeresponsibility.com/reports.

The 108-page report was Nike’s first public corporate responsibility report since it made the decision to stop reporting in October 2002 when it petitioned the U.S. Supreme Court to hear the Kasky v. Nike First Amendment case.

“We’ve been fairly quiet for the past three years in corporate responsibility because of the Kasky lawsuit. So we’re using this report to play a little catch-up and draw a more complete picture,” said Philip H. Knight, Nike founder and chairman, in his opening letter in the report. “It makes for a long report, but I urge you to read it from cover to cover. And then some; because probably the most significant piece of disclosure linked to this report is actually on our website. It’s a listing of all factories that produce Nike-branded products, worldwide.”

Nike said it believes full disclosure of its contract factory base producing Nike-branded product ultimately will provide greater visibility into shared suppliers and more efficient monitoring. It also supports the company’s long-term strategy of building shared ownership of compliance directly with contract factories. Since 1999, Nike has disclosed its contract factory base producing Nike-branded products to the Fair Labor Association. In 2000, Nike became the first company to disclose publicly online the names of its suppliers making college and university licensed products.

“While we cannot say with certainty what greater levels of factory disclosure will unleash, we know the current system of addressing factory compliance has to be fundamentally transformed to create sustainable change,” said Hannah Jones, Nike’s vice president of corporate responsibility. “We believe disclosure of supply chains is a step toward greater efficiencies in monitoring and remediation and shared knowledge in capacity building that will elevate overall conditions in the industry. No one company can solve these issues that are endemic to our industry. We know the future demands more collaboration among stakeholders, not less.”

Report Review Committee

For advice in preparing the report, Nike invited experts from the trade union, NGO, academic, investor and business communities, acting in their capacities as individuals, to participate in a Report Review Committee.

The Committee's statement says in part, “We recognize Nike for this candid and comprehensive report…The report's candor on the significant challenges of addressing labor standards within its global supply chain is welcome, and may facilitate discussion on how to tackle these challenges. While noting that monitoring is not a sufficient or long-term solution to raising labor standards, the report presents Nike's extensive and evolving efforts to manage monitoring, integrate compliance into its business strategy through the Balanced Scorecard, and pursue multi-stakeholder initiatives that could lead to more systemic industry-wide improvements.”

“Working with an external CR report review committee accelerated our learning process, and we are deeply appreciative of their time and contributions to this report,” Jones said. “While we’ve been quiet, we’ve been busy since our last report, and the breadth and depth of this report reflects that. Reporting is an essential element in driving continuous improvement. We now need common reporting standards so stakeholders can compare companies across industries.”

The report relies heavily on the guidelines issued by the Global Reporting Initiative (GRI) and covers primarily Nike’s 2004 fiscal year (FY04), which began June 1, 2003 and ended May 31, 2004.

The Future

The report also outlines the company’s three strategic corporate responsibility priorities going forward:

• To effect positive, systemic changes in working conditions within the footwear, apparel and equipment industries;
• To create innovative and sustainable products; and
• To use sport as a tool for positive social change and to campaign to turn sport and physical activity into a fundamental right for every young person.

In FY05 and FY06, Nike plans to establish key performance indicators and timelines to gauge progress and measure performance and impact for each of its CR goals. To that end, the company intends to strengthen its data collection and information management systems as well as identifying appropriate metrics to track progress. Nike continues to work toward common reporting standards through its support of the GRI and participation in the reporting sector supplement for the apparel and footwear industries. In addition, Nike plans to develop a timetable for addressing CR in all of its brands and subsidiaries.

To see the full report, go to www.nikeresponsibility.com/reports.