Norway's sovereign wealth fund, a significant stakeholder in Nike, has announced its support for a shareholder proposal urging the sportswear giant to investigate the potential benefits of binding agreements with workers in high-risk sourcing countries. This decision comes in advance of Nike's annual shareholders' meeting scheduled for September 10, 2024.
The proposal aims to address human rights concerns in Nike's supply chain, a topic that has been a point of contention for the company since the 1970s. Nike, founded in 1964 as Blue Ribbon Sports and rebranded in 1971, has faced ongoing scrutiny regarding its labor practices in overseas factories.
In 2023, over 60 investors collectively appealed to Nike, requesting the company to remunerate approximately $2.2 million in allegedly unpaid wages to more than 4,000 garment workers at two suppliers in Cambodia and Thailand. Labor rights groups attributed these wage losses to COVID-19 related factory closures, although Nike has refuted these claims.
The Norwegian wealth fund, which manages assets worth $1.7 trillion, holds a 0.92% stake in Nike, valued at around $1.05 billion as of June 30, 2024. This ownership position ranks the fund as Nike's ninth-largest shareholder, according to LSEG data.
In addition to supporting the worker rights proposal, the fund has stated it will back another shareholder initiative calling for Nike to reassess its sustainability strategy. This comes in light of the company's failure to meet certain self-imposed environmental targets. However, the fund will not support a proposal requesting Nike to evaluate the effectiveness of its supply chain policies in ensuring workers' rights, aligning with the company's management on this particular issue.
"The board should account for material sustainability risks facing the company, and the broader environmental and social consequences of its operations and products."
This stance by the Norwegian fund underscores the growing emphasis on corporate social responsibility and sustainable practices in the global business landscape. As a company that has been at the forefront of sports marketing and innovation, Nike now faces increased pressure to address these concerns while maintaining its position as a leader in the sportswear industry.
Nike's journey from a small operation selling imported Japanese shoes to a global brand with annual revenues exceeding $37 billion (as of fiscal year 2020) has been marked by both triumphs and controversies. The company's iconic "Swoosh" logo, designed for just $35 in 1971, and its "Just Do It" slogan have become synonymous with athletic excellence and motivation. However, the upcoming shareholder meeting may prove crucial in shaping Nike's approach to worker rights and environmental sustainability in the years to come.