Social responsibility has a heavy weight in the investment field. Both ethical and moral views are put on the forefront when investing in a company. They are weighed by the stakeholders as well as companies. Social responsibilities could potentially make or break a company and their shareholders. Social responsibility investing represents the ethical and core beliefs of a company and its publics. With the ability to withhold funds from a company the shareholders are able to restrict business with that company and limit there ability to run effectively. In conclusion a company's share price may be negatively affected if these unethical behaviors are being carried out. This leads the company to take in to consideration the core values of their company and publics.
Nike has been at the forefront of social responsibility scandals. Being one of the leading brands in the world in 1992, Nike was accused of disregarding social responsibilities within their factories throughout the world. The first case came up in a 1992 edition of Harpers magazine. A young Indonesian worker named Sadisah was questioned about the conditions of the Nike working factories. Sadisah was working 6 days a week for 10 hours a day. Her wage was for 14 cents and hour. With a company being owned by the sixth richest man in the world, stakeholders and customers were outraged by the working regulations. After exposing the company, Nike had began to receive negative publicity. This scandal spanned out for the course of five years. Protests against the company had begun, and Nike retail stores were suffering immensely. Groups were formed to protest against the slave like conditions, while many sports teams pulled their sponsorship deals with the company.
ESPN covered as story about St. Johns University that withheld their 3.5 million dollar sponsorship deal with Nike. Jim Keady an assistant soccer coach at the University refused to wear the Nike product and in return the company suffered. Slave wages, abuse, and neglect were just some of the terms used to describe the market leading brand. With dominating the market for so long, Nike was under severe criticism and needed to implement crisis control tactics. The report includes a section regarding workers and factories. This section provides information about how the company reaches out to the workers and how they regulate what is now going on in the factories. Given by a third party survey the employee satisfaction survey was administered to workers in 24 factories in China and Vietnam. The survey was composed of questions regarding: training and development, living conditions, working conditions, work hours, compensation and supervision. The company also implemented a 6 point plan which would help Nike monitor conditions while raise minimum wages and work requirements. Following this, Nike also set up a CSR department which communicated directly with Phil Knight along with publics which heavily criticized the company.
Over the years, Nike has attempted to slowly rebuild its reputation. In order to continue, Nike must be able to communicate to the public and its stakeholders their ethical responsibilities. Nike reported in 2005 that they have been working with factories to builds their human resources skill san improve the environment. Since the ongoing scandals that erupted in 1992, Nike has still continued to emerge as a company that suppresses its factory workers. Articles continue to emerge about Nikes treatment of workers in factories across the world . A recent article in 2011 stated that workers in Nike factories were physically and verbally abused.
In terms of future development, the company must continue to work with factories throughout the world. Nike must directly monitor these factories in order to ensure they are running safely. Nike must be able to communicate their efforts to their stakeholders as well as customers in order to rebuild a relationship. They must gain trust back from these publics in order for them to invest in the company.
It is evident that the Nike controversy has continued to drag on. Being one of the market leaders Nike continues to be a powerhouse. It is evident that there main goal is to gain a profit from their customers regardless of the negative publicity. In order to gain a positive reputation, the company must be able to directly oversee workers and factory conditions. Nike must import jobs back to the United States to ensure that the company is able to oversee the production rather than shipping jobs over to a third party. Though this could potentially affect the company? profit, it will positively affect their image and the shareholders trust with the company. It is the concept of weighing ethical values against profit.