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Nike: Not guilty of leaving anything out

By William D Alessandro on February 09, 2010 at 2:20pm.

Content:

Nike’s new corporate responsibility report is a 176-page behemoth, covering the fiscal years 2007, 2008, and 2009.  The report is the last one Nike will release like it.

“With this report we have made the decision to shift away from producing comprehensive reports every two to three years and move toward a more continuous stream of reporting,” the company states without further ado.

Social investors and fund managers in the US have begun to demand the mandatory, annual release of standardised sustainability information alongside the traditional financial report.  But Nike says without hesitation (or clarification), “Moving forward, we plan to be less focused on reports and more on reporting timely and relevant data and perspectives.”

Corporate reporting has never come easily for the world’s largest athletic footwear and apparel retailer.  Its first attempt to communicate on sustainability in a systematic way happened in 2001.  Founding CEO Phil Knight admitted the initial stab at reporting was a ‘bit of a mishmash’.

Then Nike was bludgeoned into silence.  In 2002 the highest court in California ruled against the company in a suit filed years earlier by a citizen activist.  The supreme judges decided that remarks made by a company about its labour and worker safety practices should be held up to the same standard of truthfulness and completeness as commercials are.  When defending profits, Nike and others cannot assert all the protections of free speech otherwise guaranteed to them in the US Constitution.

Fearing liability for misstatements and omissions, Nike went into a communications shell.  It emerged less than three years later with a corporate responsibility report, including one element unprecedented in its industry.  The company revealed the names of more than 700 contract factories that manufactured its brands worldwide.  Management said Nike wanted to stimulate a race to the top in the apparel industry.

At a workshop on corporate reporting, the company admitted to several other reasons for the change of heart.  Nike had to resume disclosing environmental and social information to keep pace with its competitors and be taken seriously.  Furthermore, management wanted to anchor the continuing debate about its behaviour on the facts rather than on perceptions.

In the interim, the company came to see reporting as a valuable tool for internal accountability.  The primary audience for the new report, however, is “those who seek a deeper understanding of the issues that Nike, Inc. faces and our strategic response to them… .”

Nike hired the non-profit consultancy Business for Social Responsibility to collect stakeholder comments on the draft report.  Many found the volume of information to be overwhelming.  The report says, “Given this feedback, Nike reworked the report structure to clarify and remove non-core information.”

The fruits of that labour are not apparent. 

The introductory chapter gives perspectives on the scale, influence, and impacts of Nike’s operations — alone a sizable task.  The company employs 32,800 people directly (none covered by collective bargaining agreements).   It contracts with approximately 600 factories that hire more than 800,000 workers in 46 countries.

There are six more chapters - page after page of wall-to-wall type and densely packed charts presenting performance information on distinct topics: strategy; workers and factories; environment; communities; people and culture; and public policy and advocacy.  The effort is truly a decathlon of sustainability reporting.   It tests the endurance and acumen of the readers on all matters related to social responsibility. 

The PDF version of the final report, as lengthy as it is, does not even contain the index, which is located elsewhere on Nike’s Web pages.  It hot-links the third generation (G3) guidelines from the Global Reporting Initiative to the appropriate pages.   In addition, Nike has posted 51 minutes of supporting videos, and created an interactive map charting regional corporate demographics.  

The detail offered on policy implementation measures, management systems, and corporate procedures is unparalleled.  The report provides abundant examples and case studies about the multiplicity of programs, tools, and initiatives Nike uses to integrate sustainability into its global operations.

A helpful feature: the sections throughout the report called “On the Horizon”.  These paragraphs contain precise statements of intent about exactly what Nike plans to do next.
 
Communication:

Those with enough time and perseverance will find what they are looking for, sooner or later.  The discussions of visions, policies, and procedures should satiate everyone’s appetite.

The menu of quantitative information is like the breakfast buffet served at fancy hotels in Stockholm.  For instance, CO2 emissions are tabulated 17 different ways.  The Web site includes functions to retrieve only the targets and performance charts, or only the charts section by section from each of the chapters, or individual chapters in their entirety.

Credibility:

Nike has a lot to say about assurance that speaks for itself.

“In 2008 we explored long-term third-party assurance and audit systems with leading providers.  At the time, available approaches appeared to be very cumbersome and had the potential to lock us into systems of reporting that are less nimble and less able to address the fact that this is an evolving practice area.” 

In a final word Nike says, “We still see value of external assurance around key areas of impact, but believe we have internal steps to complete before undertaking this kind of robust review.” 

Recommendations:

Edit the headings and captions in every chart and table.  Many do not convey information clearly or concisely.  Also give more thought to the graphic device of having four variations of arrows to signal progress (or lack thereof).

Looking randomly at just one of 10 rows on a single chart:  It states a goal of “100% of all footwear products, newly developed out of WHQ, will reach baseline Considered standards by FY11”.  The accompanying result states with confounding precision “10 percent of spring 09 models and 17 percent of seasonal production volume achieved baseline Consider ranking.”  Impossible to grasp any of that without digging deeper into the report, if only to determine what “considered standards” means.  Adding a half-broken arrow indicating “on track” does nothing to improve the situation. 

William D’Alessandro is president of Victor House News Co., an independent agency reporting on law and the environment for trade publications and executive newsletters.  He also edits Crosslands Bulletin http://www.crosslandsbulletin.com covering strategic corporate environmental management and sustainability issues.