At NIKE, we are committed to respecting human rights. As mentioned, we define human rights based on the Universal Declaration of Human Rights and the ILO’s Declaration on Fundamental Principles and Rights at Work and look to the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises as best practice for managing related risks and impacts.
According to the ILO, Walk Free and the International Organization for Migration (IOM), approximately 27.6 million people are in forced labor situations globally, and migrant workers are three times more likely to be at risk for forced labor than non-foreign migrant workers. Mitigating these risks is a key component of a resilient and responsible supply chain.
As part of our compliance program, we conduct annual audits on Tier 1 finished goods suppliers and Tier 2 materials suppliers representing 90% of total footwear upper materials and apparel textile production. The suppliers we audit employ almost 19,000 foreign migrant workers across Thailand, Malaysia, Jordan, Taiwan, Egypt, Brazil, Japan and South Korea.
One of the driving factors of heightened forced labor risks for foreign migrant workers is the difference in recruitment and employment processes versus those for non-foreign migrant workers. Considering this, we take a holistic, four-pillar approach to addressing forced labor risks:
- Strengthening Standards: We regularly evaluate and update our supplier standards and expectations, identify risks and collaborate with cross-industry organizations to prevent and remediate issues of concern.
- Identifying and Mitigating Risk: We use multiple tools to identify and mitigate risk related to forced labor and foreign migrant workers.
- Building Supplier Capabilities: We support suppliers to drive more responsible recruitment practices and identify risks in their operations. Where risks related to foreign migrant workers exist, we encourage suppliers to take ownership in addressing them and pursuing employment best practices.
- Engaging Partners and Advocating for Change: We partner with organizations dedicated to addressing labor risks, promoting adoption of the Employer Pays Principle and driving positive change across our industry.
In FY21, we updated our Supplier Code of Conduct and CLS to align more closely with our labor, health and safety and environment priorities. Among these updates included more explicit definitions of employment fees that suppliers are responsible for, as well as stronger requirements and oversight of both labor recruiting agents and the processes used to hire foreign migrant workers. NIKE continues to evaluate and update our Code of Conduct and CLS regularly.
A key component of our efforts to develop a more responsible supply chain is NIKE’s adoption of the Employer Pays Principle, which prohibits workers from paying fees for their employment. We also encourage wider external adoption to reduce forced labor risks across the footwear and apparel industry and beyond.
Foundational and Global Risk Screening: Cumulus Forced Labor Screen
Since FY19, we have used the CUMULUS Forced Labor Screen™. This due diligence tool maps cross-border labor supply chains and recruitment agents back to foreign migrant workers’ countries of origin, proactively screening for ILO forced labor indicators. The tool also includes a feature for verifying that employers pay all fees and costs associated with foreign migrant worker recruitment.
We use the tool to annually assess Tier 1 finished goods and Tier 2 materials suppliers hiring foreign migrant workers in the countries and regions mentioned above. Risks identified through the screen are used to inform overall forced labor risks and to prioritize suppliers for our Enhanced Due Diligence Assessment.
Enhanced Due Diligence Assessments
In FY23, we launched a Foreign Migrant Worker Enhanced Due Diligence program to identify risks specific to foreign migrant workers and forced labor. This includes working with the Responsible Business Alliance (RBA) and Verité, Inc. to deploy specialized assessment tools, like the Specialty Validated Assessment Program that helps identify forced labor risks at specific supplier facilities or labor providers, including recruitment agents.
As of the end of FY24, we conducted the Foreign Migrant Worker Enhanced Due Diligence program with suppliers that, collectively, employ over 40% of foreign migrant workers in our supply chain. Some examples of identified risks include:
- Recruitment fees and related costs paid by foreign migrant workers: passports, monthly fees, repatriation costs, transportation costs from and to the worker’s home, medical check costs
- Mandatory savings program for foreign migrant workers where deposited monies are only returned to the worker upon completion of the work
- Employment contracts not provided in a timely fashion, not available in workers’ native languages or inaccurately translated
- Insufficient due diligence for recruitment agents and sub-agents, and service agreements with recruitment agents lacking details that help to ensure no fees for workers
- Dormitory with unreasonable curfew practices and not equipped with individual, safe and secure lockable storage for workers
- Discriminatory criteria on job advertisements
- Insufficient overtime compensation calculation, and monthly salary lower than agreement with sending country or region government
When these risks are identified, we work with suppliers to address them and improve management systems. For example, assessments in Jordan identified a concern related to repatriation costs. The facilities were operating in accordance with Jordan’s industry-wide tripartite agreement, maintaining policies that called for pro-rating repatriation funding provided to workers based on the length of their employment. We worked closely with these facilities and the local ILO, International Finance Corporation (IFC) and Better Work teams to enable alignment with NIKE’s industry-leading expectation.
In cases where suppliers need additional support, we engage with experts from RBA, who provide consultation and guidance on specific findings and remediation measures. Nearly 70% of suppliers in the Enhanced Due Diligence program with findings were enrolled in the remediation program by the end of FY24, and the remainder will aim to be enrolled throughout FY25. Upon completion of remediation, we will use closure assessments to verify all concerns are remediated.
Regional Specific Risk Screening: Issara Institute Tools in Thailand
In FY21, NIKE partnered with the Issara Institute on a Strategic Partnership Program that includes the Issara Worker Voice program. Designed to help suppliers strengthen HR management systems, this program was implemented with all Thailand suppliers that are both in-scope for our Foundational Expectations Program and employing foreign migrant workers.
During FY24, the Issara Worker Voice multilingual hotline received 520 calls from workers asking for information or raising concerns. These calls were then grouped into 14 areas of concern requiring supplier engagement. Examples of concerns include:
- Delayed or improper handling of grievances
- Delayed updates on legal document issuance or renewal
- Supervisor demeanor
- Interpreter integrity and misconduct
- Discriminatory practices between local and foreign migrant workers
- Recruitment fees and related cost reimbursement
- Working shift arrangements
Issara shares anonymized workers’ concerns with suppliers and provides support for each supplier’s improvement process. All 14 areas of concern have been addressed and verified with workers.
Our efforts to help build supplier capabilities start with foundational training about responsible recruitment. We aim to deliver this training broadly, reaching suppliers employing foreign migrant workers. We also deepen our efforts by deploying a program that incorporates training, practical exercises and coaching to suppliers in higher-risk areas.
We partner with Verité and the Responsible Labor Initiative (RLI) to deliver foundational responsible recruitment trainings to suppliers employing foreign migrant workers. In previous years, the trainings were conducted in Malaysia, Thailand, Taiwan and Jordan; in FY24, they were conducted in Egypt and Japan. This included expanding Verité training on commonly identified risk areas such as selecting ethical recruitment agents and determining recruitment fees and other related costs.trainings were deployed to countries or regions based on identified risk and, by the end of FY24, the foundational trainings on responsible recruitment had been provided to suppliers employing nearly 99% of foreign migrant workers in NIKE’s Tier 1 finished goods and strategic Tier 2 materials supply chain.
We have also worked with RLI to develop an in-depth Responsible Recruitment capability building program, built on RLI’s existing Responsible Recruitment Due Diligence Toolkit training. Previously launched in Taiwan for suppliers and their recruitment agents, in FY24, we introduced the program to Thailand for suppliers employing foreign migrant workers. As a first step, suppliers complete a training that provides the tools to identify and address gaps in foreign migrant worker recruitment processes. Suppliers are then invited to join the first phase of the capability building program where they use those tools to identify gaps in their foreign migrant worker recruitment systems. By the end of FY24, this in-depth capability building program was launched with suppliers who employ 43% of foreign migrant workers in NIKE’s Tier 1 finished goods and strategic Tier 2 materials supply chain.
Peer-to-Peer Learning
Learning from experts is key to building capabilities, but we also recognize the importance of peer-to-peer learning. We frequently convene supplier learning communities to share information on NIKE expectations, local policy and legislative developments and other sustainability and labor best practices. These learning communities include topics related to management of migrant workers. For example, in FY24, a learning community meeting was organized for suppliers employing foreign migrant workers to discuss best practices in facilitating full coverage of return tickets and other challenges related to fully covering repatriation following early contract termination. Suppliers also discussed preventative practices like confirming candidates are fully informed about the country or region’s working conditions prior to departure from their sending country or region.
We work with external organizations to elevate our efforts toward wider industry change. NIKE is a member of the Leadership Group for Responsible Recruitment—an Institute for Human Rights and Business initiative that aims to drive change in the international recruitment industry by advocating for adoption of the Employer Pays Principle.
NIKE also continues to work with multi-stakeholder organizations such as the Fair Labor Association (FLA) and the ILO/IFC Better Work program to address supply chain labor risks. In FY23, we reaffirmed our support for the Commitment to Responsible Recruitment after it was relaunched by the American Apparel & Footwear Association and the FLA.