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SHANTANU DUBEY
B.COM (HONS)
ENROLLMENT NO- A7004614068
(SEMINAR IN PARTIAL FULFILMENT OF THE AWARD OF FULL TIME B.Com (Hons) (2014-17)
Title of project report “Report On CSR initiatives adopted by NIKE for sustainable business
performance”
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Forwarded here with a seminar report on “Study of CSR initiatives adopted by NIKE for sustainable
Business performance” submitted by SHANTANU DUBEY Enrollment NO A7004614068 student of
B.COM (Hons) 5th Semester (2014-17)
This project work is partial fulfillment of the requirement for the degree of Bachelors Of Commerce
(honors) from Amity University Lucknow Campus, Uttar Pradesh.
(Asst. Professor)
AMITY UNIVERSITY,
LUCKNOW CAMPUS
UTTAR PRADESH
AMITY UNIVERSITY, LUCKNOW
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(Hons) Amity University as a part of his studies. The competent authority of the institute where the
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Certified that this seminar report is prepared based on the summer internship project undertaken by me in
Report On -Study Of CSR INITIATIVES ADOPTED BY NIKE FOR SUSTAINABLE BUSINESS PERFORMANCE
from 29thAugust 2016 to 26thSeptember 2016, under the able guidance of Asst. Professor Ms. Sabeeha
Fatima in partial fulfillment of the requirement for award of degree of B.COM(Hons) 5th SEM from Amity
University, Uttar Pradesh.
Date.______________
1.1 INRODUCTION
Organizations with good CSR practices are also able to raise the capital needed for new
ventures with relative ease as the investors tend to trust them more easily. CSR therefore
proves important by improving chances of expansion to the organizations. Perhaps the
most compelling reason why many companies engage in CSR is the likely backlash that
could be allocated to them by failing to embrace the CSR. Special interest groups and
activists have in recent times stepped up their investigation of business practices in a bid
to ensure business comply with a certain minimum in good corporate practices especially
as pertains to the environment and employee welfare. Companies that are found wanting
would often be subjected to adverse negative publicity that could potentially drive them
under. This is because of initiatives such as boycott campaigns against such companies
and a general negative feeling towards the company’s products by the consumers.
PROJECT
INRODUCTION
Corporate social responsibility is fast becoming an integral part of the corporate world. It has
been observed in recent times that the society's expectations on business is slowly taking center
stage and businesses are embracing various initiatives to comply with these expectations through
Corporate Social Responsibility.
This project adopts to study the activities of NIKE which is the leading manufacturer and
distributor of sportswear and equipment.
This project seeks to unveil the answer to this question: Does NIKE comply with its
Corporate Social Responsibility?
To be able to fully answer these questions this paper will seek to create an understanding
of NIKE as an organization: its scope, vision and an understanding of the business
context in which it is operating. It will further delve into understanding of Corporate
Social Responsibility as a whole: its meaning, importance and influence of organization's
practices and structure.
This project will finally seek to review NIKE's Corporate Social Responsibility Policy
seek to identify its activities that are in line with this policy and identify its unethical
practices if any.
For the purpose of this project, the letters CSR have been used in place of Corporate Social
Responsibility. Since NIKE has faced adverse negative publicity in the past regarding some of its
labor practices, it is to be objectively determined whether or not this adverse publicity is truly
reflecting on the philosophy and practice of NIKE as a whole.
CHAPTER 2
CORPORATE OVERVIEW
These questions are crucial because an understanding of its scale of operation and
environment helps understand its policy on social corporate responsibility.
NIKE is one of the world's major distributors of sportswear and equipment with its operations
spanning across the world's six continents in 160 countries. It was founded in 1972 with the goal
of using innovative thinking in product development focused on enabling athletes with various
levels of ability to maximize their potential. NIKE maintains a strong research and development
team and is constantly on the look out to create new products needed in the market. By doing so,
NIKE is able to create business opportunities that enable them create value for their
shareholders. In 2010, fiscal year, NIKE is able to turn over $ 19 billion revenue with $ 2.5
billion being the contribution for their wholly owned affiliates. These affiliates are always
reported as separate businesses and include Cole Han which mainly produces luxury wear;
NIKE Golf which distributes Golf wear and equipment; Converse Inc which mainly produces
footwear; Hurley International LLC which is known for its surf equipment; and Umbro LTD.
which tends to focus mainly on soccer wear and equipment.
NIKE's operations cover more than over 160 countries in 6 continents. NIKE is faced with
competition both on the global scale and at the country levels. Brands such as REEBOK, PUMA
and ADIDAS also command a global presence. To keep ahead of the competition NIKE uses
innovation as its tool for generating higher levels of satisfaction for their target customers. The
presence of these and other competitors limit the ability of NIKE to dictate prices and they
therefore have had to resort to strategic outsourcing in a bid to keep their costs in a check. The
population in the developed countries especially the US still forms the highest contributor's to
the company's total revenue. This market segment tends to look at not only the suitability of the
products but also the extent to which the companies embrace their social responsibility. This
includes their ethical code, their impact on the environment and their treatment of employees
among others. Where a company is perceived not to be socially responsible , it may have adverse
effects on their sales volumes and fiscal performance. This is besides the cost of legal suits that
may arise from time to time.
NIKE is arguably the leading distributor of sportswear and sports equipment in the world
with its operations covering about 160 countries.
CHAPTER 3
RESEARCH METHOLOGY
RESEARCH METHODOLOGY:
SOURCE OF DATA:
SECONDARY DATA: Websites, Academic Books and National periodicals and News
Papers.
My study is based on secondary data.
CHAPTER 4
This chapter delves deeper into the philosophy observed by Nike and seeks to establish
the level of consistency between their claims and their practices. It seeks to answer the
questions: what is Nike’s CSR policy, and do the actions and practices of Nike conform
to good CSR and its CSR policy? These questions are important in order to analyze what
level of priority Nike accords to CSR. The chapter will also shed light on various ethical
issues that have portrayed Nike negatively in the public front and how they dealt with the
challenges.
4.2 Nike’s Policy on CSR
Nike was a subject of heated criticisms in the 1990s because of its Asian labor practices.
The negative publicity from these criticisms was a threat to its market leadership and they
countered this by trying to refine their CSR policy. They established an executive level
multifunctional team with the responsibility to drive compliance with CSR and
environmental standards (Nike Inc, 2009). As a result, Nike was able to refine its
production processes to cut waste and reduce environmental degradation. Their attention
was also drawn to the workers and their responsibility to these workers. They therefore
designed a supplier’s code of conduct for all their suppliers in order to ensure the values
they hold dear including provision of healthy working environments are adhered to. Nike
has embraced a CSR policy that it observes and tries to impress on their suppliers as well
to observe.
Nike has a well defined code of ethics which it ensures is internalized and practiced by
their employees and have been advocating that the ethics benchmarks be observed by
their suppliers as well (Nike Inc, 2009). Nike’s efforts to reduce waste to conserve the
environment saw them win the Gigaton Award which is an award given to organizations
to recognize their efforts in reducing carbon emission and making a difference in climate
change. In a nutshell, Nike strives to ensure sustainable production that causes least
negative impact on the environment while ensuring the well being and safety of their
employees. Nike also embraces social responsibility and engages in community giving in
order to improve the welfare of the communities around them. Nike has a global
workforce of about 100 employees who are fully dedicated to fueling innovation and
transition of company policies and practices to be in line with their Corporate Social
Responsibility goals (CSR International, 2010).
4.3 Company practices consistent with their CSR Policy
Nike has been on the forefront in innovating products which do not adversely affect the
environment. An example of such an innovation is the Environmental Apparel Design
Tool which is a software based tool that enables the organization to create products while
keeping environmental degradation to a minimum (CSR Newswire, 2010). This tool was
used to create the 2010 world cup jerseys using recycled polyester hence using up a
significant portion of plastic bottles that would have ended up as garbage. The used
bottles were obtained from Taiwan and Japan. Nike has made this discovery even more
valuable through its decision to outsource it to other apparel manufacturers hence
creating an even greater impact on environmental conservation. Nike also launched a
Zoom MVP Trash Talk in 2009 (CSR Newswire, 2010). This is a hoop shoe made using
scrap materials. The shoe packaging is also fully made from recycled fiber. The upper
part is made of leather and synthetic leather waste. The outsole, a type of rubber that
reduces toxics, while the laces comprise recycled polyester. The development of this shoe
underscores the commitment of Nike to environmental conservation. Nike is also known
to carry out its business while endeavoring to minimize the amount of energy used in its
factories and in the contracted factories.
In 2008, Nike developed an energy efficiency program with the goal of reducing the
energy consumption levels (CSR Newswire, 2010). The efficiency program would be
used across its contracted factories to identify ways in which the energy consumption can
be reduced and conservation efforts implemented. Nike has also been at the forefront in
controlling the amount of their worn out products that end up as landfill. In 2001, Nike
launched a program dubbed ‘collect a shoe’ in partnership with various boys clubs across
America. The boys would go out in the neighborhood and collect all worn out Nike shoes
and in return, Nike would reward them by building for them a basketball court. This
initiative further underscores Nike’s commitment to sustainable environmental
conservation.
4.3.2 Workers welfare programs
Nike has also been able to demonstrate its concern for the welfare of their workers, both
present and past. A case in point is the recent partnership between Nike and CGT (the
Central General de Trabajadores de Honduras) where they agreed to support the workers
who had been affected by the closure of Hugger and Vision Tex factories which are
contracted by Nike. Nike made a contribution of $ 1.5 million to a workers’ relief fund to
be administered to the workers (CSR Newswire, 2010). In addition, Nike undertook to
prioritize hiring these former workers in their other ventures as well as taking them
through vocational training programs. Nike also undertook to cover their health insurance
costs for one year or until they found new employment opportunities elsewhere. The
provision of healthy working environments coupled with the good treatment accorded the
employees has made Nike feature as among the best companies to work for as exhibited
in a survey by Fortune magazine. Nike moved 31 positions from its 20014 ranking to be
at position 69 in 2015. Its culture and work place facilities were the two most significant
factors that lead to its improved ranking (Fortune, 2015)
Nike has recently entered into a partnership with Doernbecher hospital with the goal of
empowering their young patients where Nike staff members are paired with the young
patients to train them in design (CSR Newswire, 2010). The resultant collections generate
revenues which are then used to finance the hospital. These funds help treat uninsured
patients, buy better medical equipment, and support advanced pediatric research. Young
patients involved range between 11 and 14 years old and the program is estimated to have
generated about $ 2 million for the hospital so far. Nike has also through the Nike
foundation been instrumental in empowering adolescent girls in Liberia in collaboration
with the World Bank (CSR Newswire, 2010). The partnership sought to provide training
that would equip these girls with the technical skills necessary for their economic
empowerment. The contribution of Nike to the society in Liberia would be expected to be
magnified once the girls become economically productive and gain the ability to support
their families.
The Nike Foundation has also entered into partnership with the Novo foundation in an
effort to boost the economies in the developing world through the empowerment of the
adolescent girls. Nike has already contributed over $ 100 million for this initiative (CSR
Newswire, 2010). This initiative was also aimed at saving girls from vicious poverty
cycles that would see girls forced into early marriages and with no economic means to
support themselves. Nike also involved themselves promotion of innovation in schools
especially in public schools. This is as evidenced through the creation in 2007 of a Nike
School Innovation Fund. This was created to help schools provide quality education to
students hence making them grow into responsible and productive members of the
society.
Nike has in many occasions created opportunities for development of sport in various
communities. A case example is Nike’s launch of the N7 collection which was launched
in a bid to promote sport development in the Native American communities. Parts of the
profits from the sale of the kits are channeled to a fund (N7 fund) which supports youth
sports in these communities. Nike has also been establishing growth opportunities for
women and youth as evidenced by their introduction of a community store in New
Orleans where they established an annual grant program (Nike Inc, 2009). This program
aims at supporting community based programs that engage developing sport
opportunities for women and the youth. The development of these initiatives has the twin
effect of sharpening the athletes’ skills and diverting the vibrant youth into constructive
sporting activities. Nike has also, through Jordan Brand, been involved in motivating
teachers in public schools to offer more dedicated education to the economically
disadvantaged students who are the main population in those schools. The award
recognizes teachers that offer dedication and show absolute commitment to their students’
education. This initiative should be hailed as the sincere commitment of teachers is
crucial in ensuring students are well equipped to be of greater service to the society as a
whole. Nike also funded various nonprofit organizations within different American
communities to a tune of $ 100,000 in 2005 to enable them promote youth activity in a
bid to improve their physical health (CSR Newswire, 2010).
Through its partnership with the United Nations High Commission for Refugees
UNHCR, Nike ably participated in a campaign that was created to raise awareness and
resources for Refugees. These resources would be used to provide education and sports
opportunities for the refugees. Sports are hailed as an effective way of alleviating the
trauma and stress that many refugees face after losing their homes. They also crucial in
developing life skills and leadership skills for young refugees. By participating in this
program, Nike demonstrated their concern for the general welfare of the society.
Initiatives such as donation of funds to facilitate training of child athletes have also seen
Nike’s CSR taken a step higher. In 2007, Nike donated $ 175,000 to create a special
Olympic games that would offer youth with intellectual disabilities knowhow of certain
sports and enable them exposure to an Olympic experience (Nike Inc, 2009). This event
was a one-day clinic and entailed skills development and sports competitions. It also
entailed various activities for the families of youth with disabilities.
Nike has also been at the forefront in establishing a physical education program for
preschool children with a program called Head start. This program was aimed at
encouraging children to embrace physical activities at an early age and has been hailed as
one of America’s most successful educational program for early childhood. This came
one year after Nike had launched an after school sports program where school going
children could engage in various sporting activities after school. These activities would
be conducted at various recreational facilities and boys and girls clubs. The importance of
physical exercise in a person’s general health cannot be overemphasized and it is for the
good of society that Nike has been able to articulate its position and exerted itself in the
promotion of these ideals. Nike has also been a good donor in a bid to alleviate human
suffering especially due to the occurrence of various natural calamities. In 2004, Nike
donated $ 1 million to be channeled to South East Asia and Eastern Africa through
various nonprofit organizations already present in those areas (CSR Newswire, 2010).
These donations were aimed at alleviating suffering suffered through earthquakes and
resultant tsunamis in the respective regions.
Girl Efect
Nike’s girl effect is a corporate fable that keeps the system intact, turns girls into
consumers, expands market power and diffuses blame. Girlefect.org is managed by the
Nike Foundation. One of the activities is the Safer Cities project which has empowered over 1,000 girls to
overcome the fear of violence. The Girl Efect Accelerator, launched by the Nike Foundation and the
Unreasonable Group, will mentor a cohort of companies that are all dedicated to the hundreds of
millions of girls who live in poverty globally. They will gather to grow their businesses — but not just
because fighting poverty is the right thing to do. As research continues to show, educating, supporting
and protecting girls in the developing world is a catalyst for larger, long-term solutions in their embattled
communities.
"Today there are over 250 million girls living in poverty. The realities they confront are inconceivable to
most of us," Shaifali Puri, executive director of global innovation at the Nike Foundation, said in a
statement. "We have learned that they are not simply victims of poverty. Instead, NIKE, like them,
believes that when empowered to reach their potential, they can play a crucial role in solving the
toughest problems facing the world.”
Nike Foundation works to get girls on the international agenda and drive resources to them. It believes
the best way to do that is to prove that investment in her unleashes the girl efect.
The Foundation intends to find and support best programs for girls, including new or innovative ideas
which need to be tested and developed. In other cases, it also provides funding to successful programs
or called “hidden gems” that can be replicated elsewhere.
Nike Foundation’s support covers programs focused on the basic needs of girls such as safety, health and
education. It also looks at supporting the community which influence the choices and options for a girl.
Microfinance and entrepreneurship can be imporant means to make girls economically sustainable.
The new investments are often directed through Requests for Proposals (RFPs). The Foundation
identifies gaps in investment based on what learnings from current partners and others with expertise
on the issue of adolescent girls. The Foundation issues RFPs to specific organizations, with concrete aims
towards building the field’s understanding and innovations in girl-specific programming.
NIKE has explained that the answer to poverty should not be sought in government but in the earning
power of impoverished adolescents.
AIDS Campaign
NIKE has ofered general support for legal and policy advocacy on HIV/AIDS and related matters
in India. NIKE has launched an initiative in the name of NIKE+ RUNNING APP. They proclaim that
all one needs to do is pledge and run with the NIKE+ RUNNING APP.
FOR EVERY PLEDGED MILE YOU RUN, BANK OF AMERICA WILL DONATE 40 CENTS TO THE
GLOBAL FUND TO FIGHT AIDS WITH (RED). THAT CAN BE THE EQUIVALENT OF ONE DAY OF
LIFESAVING MEDICATION FOR SOMEONE LIVING WITH HIV*.
Magic Bus gives youth in marginalised areas hope for a brighter future. Football has the
power to create positive social change, with a special emphasis on helping girls
overcome social barriers.
Nike through its partnership with MAGIC BUS is committed to creating positive social
change around the world. We help kids get active, so they can have healthier, happier
and more successful lives. We bring inspiration to the communities where we live, work
and play. We engage our passionate and creative employees to amplify our impact. We
work with global partners to tackle some of the biggest challenges in the world today.
Nike faces various challenges in its bid to live up to societal expectations. These challenges are mainly
attributed to the practices that the subsidiaries that they contract to manufacture their products may
engage in from time to time. For instance, heated debates have arisen in the past over allegations of
unhealthy working conditions and abuse that these workers are subjected to in their
workplace. Allegations of sexual harassment have also been rife in some of the factories Nike works with
. Control, or influence over the supply chain and by extension the values and practices of the contracted
factories is crucial. Nike has been a victim of poor practices by a contracted factory in the past with the
most memorable legal suit being the sweatshop labor case. This case stirred up outrage among American
consumers and the resultant negative publicity proved to be a threat to Nike’s continued market
leadership .
The company was blamed for forcing children to work under hazardous working environment and in so
doing, violating their human rights. Nike’s lack of attention to the working conditions that the workers
producing their products were being subjected to came to the fore with these allegations. It also
emerged that workers in Vietnam were being forced to work extremely long hours due to the
requirement to fulfill the high quotas set. It also emerged that out of these Vietnamese workers, a vast
majority were sufering from respiratory problems (Hill, 2009). These workers would continue to be
assigned to work stations with hazardous chemicals despite their heath issues. It also emerged that the
workers were being paid a wage below the living wage. Even though certain governments may allow
such low wages, the society expects the organizations to be able to pay wages that are at least equal to
the living wage (Hill, 2009). Human rights activists were also up in arms when it emerged that the
workers were being subjected to hazardous chemicals such as carcinogens.
Nike later formed and implemented a policy aimed at providing better ventilation and cutting overtime
hours in a bid to correct this problem. It however remained with the burden of deep-seated negative
feelings among a cross section of consumers. For instance, the negative publicity generated by the
sweatshop case lead caused a local community in Canada to reject Nike’s donation of $ 50,000 meant for
building a basketball court . This case inspired Nike to correct its safety weaknesses and pay more
attention to the conditions which workers in the subcontracted factories are subjected to. Nike has since
developed a suppliers code of conduct that outlines various values that they are expected to observe
while in partnership with Nike.
CONCLUSIONS
Nike has an elaborate CSR policy which they have passed on to their staf members for
internalization.
They have also tried to ensure that their suppliers understand their values and have been
pushing for the adoption of these values.
Nike has been actively engaged in activities that would go beyond business regulations in a bid
to meet societal obligations.
They have engaged in various community development programs, environmental conservation
as well as making various key donations in the society.
They however have had a few challenges that have injured their image with respect to CSR
obligations.
These injurious situations have been remarkably resolved in a bid to demonstrate their
commitment to meeting CSR obligations.
REFERENCES
1. http://www.nikebiz.com/environ/com_mission.shtml
2. http://www.acaria.com/jsp/nikehist.html
3. http://yahoo.marketguide.com/mgi/busidesc.asp?rt=busidesc&rn=6446N
4. http://www.acaria.com/jsp/nikehist.html
5. http://yahoo.marketguide.com/mgi/biograph.asp?rt=biograph&rn=6446
7. http://www.nikebiz.com/community/pressgca.shtml