The Latest: At Nike’s 2023 AGM, held on September 12, 2023, our proposal received 11.7% vote support! Tulipshare’s proposal will also be included in Nike’s 2024 Proxy Statement. We will update this page as the date of Nike’s 2024 AGM is announced. 

In the face of deteriorating conditions for garment workers, the American Bar Association has developed a set of model contract clauses (MCCs) 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 a leader 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 $3 billion. 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 $2.3 billion in dividends last year.

Nike is one of the world’s favorite 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 labor 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 1990s. 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.

Reputational harm has already materialized for Nike as it stands to lose out on lucrative contracts with major universities across the US. As recently as March 2024, Inequality.org and the Institute for Policy Studies both reported that Students for International Labor Solidarity (SILS)—a new organization dedicated to promoting the rights of workers around the world on college campuses—has put the pressure on Nike to protect the rights of its garment workers by organizing efforts across the college campuses of the University of Pittsburgh, Michigan, Texas, Berkeley, and NYU. SILS is pushing universities to drop their contracts with Nike after a 2021 report from the Workers Rights Consortium (WRC) found that Hong Seng Knitting—a garment factory in Thailand that produces Nike products for many schools—illegally withheld hundreds of thousands of dollars in wages from its workers. 

The WRC also called out Nike for the closure of Violet Apparel Co. Ltd. in Phnom Penh, Cambodia—a supplier of non-collegiate apparel to Nike— which left 1,284 workers unemployed with less than one week’s notice during the global COVID-19 pandemic in 2020. Those workers are still owed an estimated $1.4 million in pay to this day. Violet Apparel was owned by the textile and apparel conglomerate, Ramatex. Though Ramatex claimed that a decline in orders forced it to close Violet Apparel, the evidence shows otherwise. Publicly available records show that, during 2020, Ramatex hired more new workers at its other factories in the country than it fired at Violet Apparel; Ramatex also required workers at its other Cambodian factories to perform extensive overtime in the months after Violet Apparel’s closure, and Ramatex actually rejected orders for apparel from at least one European buyer. The basis for Ramatex’s refusal to pay workers an estimated $1.4 million in terminal benefits rests on an allegedly biased and legally invalid decision made by Cambodia’s Arbitration Council, the country’s labor dispute settlement body—Nike itself is on record questioning the body’s integrity according to the WRC (Nike also wrote letters calling for a probe on Cambodian police after a violent clash with garment workers in 2013, with Nike’s Vice President stating that the Cambodian government should “open an inquiry using credible, independent third parties to determine the cause of the incident”). 

Although Nike has claimed that Violet Apparel was not a Nike supplier, reporting that it ended production at Violet in 2006, workers have consistently testified that they were regularly making Nike products for years leading up to the closure, and the WRC has reviewed documentary and photographic evidence conclusively proving that Nike goods were in the factory long after Nike claims to have left. Whether Nike knew its goods were being produced at Violet or the work consisted of unauthorized subcontracting, regardless of Nike’s knowledge, the brand has a duty of responsibility under its own code of conduct (and under the UN’s Guiding Principles and Organisation for Economic Co-operation and Development (OECD) Guidance), for protecting the rights of all workers who make Nike products. This obligation applies to subcontracted factories, authorized or not. And considering Nike currently sources from 14 different Ramatex factories around the world, including all three Ramatex factories in Phnom Penh (and is undoubtedly one of the manufacturer’s most important customers), Nike has sufficient leverage to convince Ramatex to pay the former Violet Apparel workers what they are owed.

58 leading labor and human rights groups are still demanding that Nike end its standoff with Thai and Cambodian garment workers and finally fulfill its human rights commitments by ensuring its supply chain workers are paid the $2.2 million in unpaid wages and benefits they have been waiting for since 2020. Implementation of the MCCs would ensure a responsible exit going forward if any factories that make Nike products should shut down for any reason in the future.

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

2024 PROPOSAL REFILING

On March 11, 2024, Tulipshare refiled this proposal with Nike. 

We will continue to engage with the company and keep you informed on the progress of this engagement. 

PREVIOUS AGM RESULTS

At Nike’s 2023 AGM, held on September 12, 2023, our proposal received a supporting vote of 11.7%.