While working with fewer factories in the last couple of years, Nike has been auditing more of them for compliance with higher standards of labor and environmental performance. From now on, the Swoosh will integrate these standards into a new ”Sourcing and Manfacturing Sustainability Index” that will give them priority consideration for orders and for access to a range of technical assistance and education resources, next to measurements relating to production costs, quality and timely deliveries.
The new index will take into account health, safety and labor management issues as well water use, energy consumption, carbon use and waste treatment. Nike wants all its contract manufacturers to meet certain standards by 2015 or 2020 at the latest. In three years' time, they should cut back O² emissions per unit by 20 percent, as compared to the 2011 levels, improve water efficiency by 15 percent and reduce waste by 10 percent. All hazardous chemicals should be eliminated from the supply chain by 2020.
Factories will be rated according to categories ranging from gold, silver and bronze down to red or yellow. By May 2015, all the manufacturers of its footwear will have to reach silver status, and those who make its clothing will have to have at least bronze status. Those in the red and yellow categories will have to pay for third-party audits and demonstrate an ability to achieve and sustain Nike's minimum bronze-level criteria.
The new requirements were laid out in an 85-page “Sustainably Business Performance Summary” released by Nike a few days ago, which noted that many contract factories are lacking not only the commitment, but also the knowledge and the systems required to meet higher standards of compliance with environmental and ethical standards. The top non-compliance issues uncovered last year were poor wages in 36 percent of the cases, up from 17 percent four years earlier, and excessive work schedules, down to 41 percent from 52 percent. In some cases, workers were led to work 60 to 72 hours a week without a single day off.
As of May 2011, 43 percent of the factories working for Nike around the world found to be below its standards, ranked under the equivalent of the red and yellow categories. By then, Nike was working with a total of 930 factories, 10 percent fewer than in May 2009. While the number of footwear plants rose by 23 percent to 173 over the period, the numbers were down by 16 percent to 529 for apparel manufacturing and by 13 percent to 228 for the production of equipment.
In those two years, the number of workers at its contract factories declined by 11.6 percent to a total of 1,079,317, indicating higher productivity rates, particularly in the apparel and equipment segments. The biggest drop took place in the Europe, Middle East and Africa region, where the total employed workforce went down by 47 percent to 17,896 persons. Lower declines of 9.8 percent and 14.5 percent occurred in North and South Asia, respectively. Staff levels remained relatively constant in the Americas.
