Nike Shareholders Reject Pay Equity, Supply Chain Disclosure Proposals

Nike shareholders on Tuesday voted against two resolutions aimed at improving at the company’s disclosures in pay equity and supply chain management.

The pay equity proposal, brought forth by shareholders Arjuna Capital and Change Finance, suggested that Nike report unadjusted median pay gaps, which address job opportunity and pay biases facing women and minorities. That disclosure would be in addition to Nike’s current process of reporting statistically adjusted gaps, which analyze pay between minorities and non-minorities and men and women in similar roles.

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According to the proposal, the UK and Ireland mandate the disclosure of median gender pay gaps.

“Median pay gaps show, quite literally, how Nike assigns value to employees through the roles they inhabit and pay they receive,” read the proposal. “Median gap reporting also provides a digestible and comparable data point to determine progress over time.”

Nike’s board of directors recommended shareholders to vote against the proposal, arguing that Nike’s current methods of disclosure address the underlying reason for the proposal. Shareholders ultimately rejected it on Tuesday.

Nike shareholders also rejected a proposal from Tulipshare Ltd., which requested that the board issue a report regarding the “effectiveness of its existing supply chain management infrastructure in ensuring alignment with Nike’s equity goals and human rights commitments.” The proposal requested a report from Nike that details if the company’s supply chain upholds its committments to human rights — and asks Nike to use specific metrics to track performance on forced labor and wage theft. Tulipshare also asked Nike to consider using a model contract clause from the American Bar Association (ABA) that protects human rights for workers in the supply chain.

Tulipshare said previously that Nike’s current reporting methods, including its annual Impact Report, do not adequately analyze how it addresses potentially using Uyghur forced labor in its supply chains.

While the shareholder proposal was rejected, CEO and founder of Tulipshare Antoine Argouges described the meeting as “another step in the right direction” in a statement.

“Whilst a majority in shareholder support was not achieved for our proposal requesting that the board issue a report that accurately assesses Nike’s existing supply chain management infrastructure, the company can no longer ignore the demands of shareholders for more transparency around the legitimacy of the company’s equity goals and human rights commitments,” Argouges said in a statement.

He added that the team will continue to engage with Nike to “resolve these issues at their earliest convenience.”

In a statement, Nike said it is “deeply committed to ethical and responsible manufacturing and making sure everyone who makes our products are valued and treated fairly and with respect.”

Nike has continuously faced pressure from activists who want the brand to protect human rights for its garment workers. Earlier this week, a group of shareholders sent a letter to Nike urging the company to address wage theft allegations. The letter, which was signed by several investors, asked Nike to specifically address an alleged $2.2 million owed to garment workers at the Violet Apparel factory in Cambodia and at Hong Seng Knitting factory in Thailand.

In response to this letter, Nike told FN it “conducted independent investigations of both these allegations in 2020 and in the case of Violet Apparel we found no evidence to support the claims.”

“Nike has not sourced product from Violet Apparel since 2006 and they are not authorized to manufacture Nike product,” Nike continued. “In the case of Hong Seng, after an independent third party investigation and legal review, all workers have been compensated in accordance with local law and Nike’s Code of Conduct and there is no evidence that workers are owed back-pay or compensation.”

In 2021, the European Center for Constitutional and Human Rights (ECCHR) filed a complaint in the Netherlands, alleging that Patagonia, Nike and two other brands may have benefited from forced labor among the Uyghur population in China’s Xinjiang province.

Nike has previously stated that it does not source products from the Xinjiang Uyghur Autonomous Region (XUAR) and said its Code of Conduct and Code Leadership Standards prohibit forced or indentured labor. Nike has previously said it has found no evidence of Uyghur or other ethnic minority from XUAR employment in its supply chain. In its 2022 Impact Report, Nike said that 100% of facilities in its extended supply chain met its standards for foundational labor, health, safety and environment.

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