Nike Spends $25 Million on CSR Annually; Refuses to Pay $2.2 Million in Severance to Honduran Garment Workers

Sometimes the CSR decisions of big corporations are as perplexing as a jigsaw puzzle with missing parts. Why the company would hire a 135-people CSR department, amass a 74-people compliance team and spend approximately $25 million annually on CSR efforts while simultaneously refusing to cough up the $2.2 million owed to Honduran garment workers in legally-mandated severance is beyond comprehension.

According to United Students Against Sweatshops (USAS), who are staging a heavy-duty anti-sweatshop "Just Pay It" campaign against the apparel giant, in January 2009 two of Nike's factories in Honduras by the names of Vision Tex and Hugger were closed. To boot, Nike failed to pay the 1,800 workers their severance and additional legally required benefits. Each worker is due about $1,300, which the student group says is equivalent a US manufacturing employee losing around $15,000 to $20,000. Seems Nike's talking out of two sides of its mouth. Shocking, right? It sure doesn't smell like the kind of CSR home most of us would want to be involved with. To say nothing of the bad rep it creates for legitimate corporate social responsibility programs in ethical organizations.

On one hand, Nike is apparently insisting that they're not responsible for what occurs in its sub-contracted factories. Yet they claim to be "driven to do not only what is requires by law but what is expected of a leader." Yikes. I hope ethical CSR leaders cringe as much as the rest of us when we learn of such blatant inconsistencies. And on the other hand, the company's code of conduct mandates that all of its suppliers comply with the particular country's manufacturing laws in which they operate, inclusive of legally-mandated severance payments. "In the event a Nike factory closes down, as was the case with both Hugger and Vision Tex," writes USAS's International Campaign Coordinator Rod Palmquist, "then the buck stops at Nike's doorstep." It sounds to me as if Nike would be a highly qualified candidate we could designate to the Corporate Hall of Shame ballot.

I was glad to learn of progressive community and university leaders who are putting pressure on and affecting Nike's financial bottom line because of the company's complete disregard for the Honduran garment workers. In Portland, Nike's backyard, a panel of community leaders urged Nike to enforce its code of conduct by paying up worker severance immediately. The University of Wisconsin-Madison became the first college in the country to cut its Nike contract over sweatshop abuses in April, causing Nike to lose $1 million in Badger gear yearly sales. Cornell University announced in June that it will let its Nike contract expire by December's end, unless the company steps up to the plate and pays the workers what they're owed. Extra kudos to Cornell, as Nike is the exclusive sponsor of the university's athletics program.

I'll conclude with a few more figures and a wild but plausible idea to provide more perspective. Last year, Nike's estimated spend on sponsorships was $260 million and $200 million on advertising. The likes of superstar LeBron James is getting approximately $90 million over a seven-year period, and France and England's World Cup soccer teams are getting annual amounts of $54 million and $44 million respectively. Now imagine the ripples of positive change that could take place if Nike's CSR team surprised company executives and the world by taking the company's $25 million CSR budget and re-allocating $2.2 million of that that budget to pay the Honduran garment workers for the what they're owed. It's far-fetched, I know. But Nike could do it if it wanted to.