Nike Inc

Is Nike ethical?

We look at several ethical issues including workers’ rights, climate change, tax conduct and sustainable material sourcing. 

Our research highlights allegations of wage theft in Nike’s supply chain and suggests that the company is failing to switch to more sustainable fabrics. Meanwhile, it is accused of avoiding tax payments, and pays its directors over £25,000,000. 

Below we outline some of these issues. To see the full detailed stories, and Nike's overall ethical rating, please sign in or subscribe.

People

While the company has a relatively strong code of conduct on workers’ rights, Nike has received multiple criticisms in recent years over abuses in its supply chain. 

In December 2022, for example, The Guardian reported that more than 400,000 garment workers in Karnataka, India, had been receiving wages below the legal minimum at more than 1,000 factories since April 2020 - including those working in Nike’s supply chain. The following month, corporate ethics watchdog the Business and Human Rights Resource Centre criticised multiple companies for failing to adequately respond to the abuses. Nike stated, "We are monitoring the situation in Karnataka. Nike expects all suppliers to comply with local legal requirements and the Nike Code of Conduct.”

The company has also been criticised by the Workers’ Rights Consortium for failing to adequately support Cambodian factory workers in its supply chain, who were made redundant during Covid-19. A total of 1,284 workers lost their jobs at the Violet Apparel factory in Phnom Penh, Cambodia, when it shut in June 2020. According to the advocacy group, the mostly female workforce was owed an estimated US$1.4 million in compensation as the factory failed to give them the legally required notice.

Nike pointed to a decision by Cambodia’s Arbitration Council, the country’s labour dispute settlement body, which denied damages to the workers. It stated that it did not source from the supplier – although the Workers’ Right Consortium said the work had been subcontracted by one of Nike’s suppliers. 

The company received 30/100 in Ethical Consumer’s workers’ rights rating. 
 

Environment

Nike performs well in Ethical Consumer’s climate category – receiving full marks at 100/100. The company reports on emissions throughout its supply chain, has set comprehensive targets in line with international climate goals, and is moving away from air freight and supporting suppliers to install solar energy. 

However, the company scored just 20/100 for its sustainable material use. While 46% of its polyester is recycled, just 12% of its cotton is organic. 

There was no or minimal evidence that the company was taking steps to reduce or recycle water or reduce water pollution from fabric production. It had a target to reduce freshwater use by 25% by 2025 from a 2020 baseline, but its usage was 800 million litres higher in 2022 than 2020.
 

Politics

Nike is a dubious company in terms of financial ethics and political activities.

In 2023, Nike’s highest paid Executive Officer received an astonishing $32,789,885 – around almost £26,000,000. 

The company has also been criticised for tax avoidance and received 0/100 in Ethical Consumer’s tax conduct rating. A report by the Institute on Taxation And Economic Policy dated April 2021 said that Nike paid no federal income tax in 2020 in the United States on almost $2.9 billion income. The report named 54 other large companies who had also paid no tax.

An article in the Guardian dated April 2023 also reported on an investigation by People2.0, a workforce services specialist, which found that Nike may have been incorrectly classifying workers as freelancers and could therefore be liable for potentially huge fines from tax authorities. The company did not reply to the Guardian’s request for comment. 

Nike is also involved in lobbying. Nike was listed as a member of the US Council for International Business (USCIB), American Chamber of Commerce (AMCHAM) and the Business Roundtable – all considered to be corporate lobby groups promoting free trade at the expense of the environment, animal welfare, human rights or health protection.

Animals

Nike scored 0/100 in Ethical Consumer’s animals category for use of animal products such as leather without the relevant animal welfare policies. 

The text above was written June 2024, and most research was conducted in February 2024.