In the face of deteriorating conditions for garment workers, the American Bar Association has developed a set of model contract clauses designed to protect workers in international supply chains.

We are asking Nike to implement these clauses into all of its supply chain contracts, which will not only make human rights policies into “operational commitments” but also continue to allow Nike to be leaders in supply chain innovation moving forward. We are also asking them to disclose data on their Tier 2 and Tier 3 supply chains, which they do not currently provide.

Incorporating these clauses would require the buyer and supplier to cooperate in protecting human rights and make both parties responsible for the contract’s human rights performance.

Revising Nike’s supply contracts would better protect Nike and its suppliers, as well as other stakeholders, including workers, who, although not party to the contract, are at risk of being adversely impacted by it. Revised contracts would also begin to satisfy the growing body of legislation requiring human rights due diligence and public disclosure relating to human rights abuses.

Disclosing information about Tier 2 and Tier 3 supply chains would also give shareholders a better understanding of the human rights risks associated with their supply chain design

In the first three months of the Covid pandemic, garment workers around the world lost upwards of US$3billion. Cases of wage theft have increased exponentially since the pandemic, with reports of factory workers’ children surviving on just rice while factories refuse to pay minimum wage. By contrast, many apparel brands profited during the pandemic, with Nike able to pay its shareholders $2.3billion in dividends last year.

Nike is one of the world’s favourite and most valuable apparel brands, a household name fronted by heroes from the athletic world and regularly celebrated in pop-culture.

They are also supply chain innovators, as one of the first global brands to almost fully outsource their production to factories around the world. This lean manufacturing model has enabled consistent and often record-breaking profits, and allowed them to increase their dividend payouts to shareholders for the past 15 years.

However, it is the garment workers who bear the expense of this model and Nike’s name has often been entangled with sweatshop scandals and various violations of labour standards. In 2019 Nike received the lowest rating from the Tailored Wages UK report, which stated that the brand “can show no evidence of a Living Wage being paid to any workers".

In an effort to improve outcomes for workers in its supply chain, Nike has developed and maintained its own supply-chain code of conduct since the 1990’s. However, Nike diversifies its outsourcing to so many different countries and factories that Tulipshare believes it is difficult and expensive to effectively enforce this code of conduct, as evidenced by the rising wage theft and human rights violations in garment factories.

Tulipshare therefore proposes that Nike disclose information about its Tier 2 and Tier 3 supply chains, and install a set of model contract clauses designed by the American Bar Association which would better protect workers, as outlined in the Our Goal section above.