Nike's CSR Challenges and Recommendations: Balancing Sustainability and Social Impact Assignment Sample

Nike's CSR Challenges and Recommendations: Balancing Sustainability and Social Impact

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Introduction - Nike's Global Supply Chain CSR Issues and Solutions

Corporate Social Responsibility is the policies and activities of a company which creates and contributes positively to their stakeholders and also to the society. This study is going to discuss about the issues faced by NIKE and the recommendations for overcoming those.

NIKE was founded in 1964 and is currently one of the most recognized sports apparel companies in the world. In the beginning, NIKE was just a shoe and t-shirt maker. In the course of time, the company has grown into an international conglomerate. As per the reports of NIKE, the company is estimated to have a global brand value of $30 billion in the year 2021. The employee strength of the company is over 73,000 and is operating in 170 countries with more than 1,000 retail outlets (Nike, 2022). The business model of NIKE is based on developing game-changing technologies and products. NIKE has redefined the sports apparel industry in the world market. The company also partners with popular celebrity athletes and major sports clubs and teams across the world. 

Task 1

1.1 Regulatory framework of CSR

NIKE being a globally recognized brand follows some policies such as Commitment to core labor rights, freedom of association, Compensation, Gender equity, Healthy and safe working environment and so on. The CSR program of the company believes that sports could be the reason that can change the world for the better. The company promotes its CSR policies in three key areas: diversity and inclusion, community and investment and environmental (Jiang, 2019). In the recent past, NIKE has reported spending $81.9 million on community projects. NIKE encourages all its employees to report all violations of law or company policies, including incidents of harassment or discrimination. The various programs are: NIKE’s diversity and inclusion program, NIKE’s community support program (including covid 19 responses) and NIKE’s sustainability program. The activities performed by the company create a positive side and increases the fame and recognition of the company globally. The policies and other regulatory framework support the company to hold the market and the stakeholders in the competition with other sports apparel giants.

1.2 Environmental issues in CSR

NIKE is concerned about its carbon footprint and its impact on the environment. For some years, the company has reduced the carbon footprint by making a good investment in innovative products and operations. The company has set some targets to convert their operations to 100% renewable energy source by 2025. Pegasus and Flyknit are the two main technologies that reduce the carbon footprint and increase efficiency. The most environmental impacts are caused by the materials to make shoes. As per Lee et al, (2020), previously the production process of the company had an impact on the environment which led to environmental pollution, usage of non-degradable materials and improper disposal of wastes along with carbon footprint. NIKE has received a negative rating for their cotton sourcing policy. They lack a clear approach to the use of pesticides and herbicides. As of 2019, the average carbon footprint of the company was 7.33 kg CO2e/unit. The usage of animal-based products and its preservations and disposal process in the production impacts on the environment and followed by it the impact is also created on the stakeholders (Lee et al. 2020).

1.3 Social and community issues in CSR

NIKE, being a major and recognized company in the world, is expected to have a clean sheet in the society and community responsibility. But, the company has some serious issues related to society and community. The issue creates an impact on the CSR policies of the company which is not a positive sign. The issues are as follows: human rights, workers’ rights, supply chain management, use of controversial technologies, political activities, anti-social finance and animal rights. Besides all these, the company is also defamed for its gender discrimination and failure to assure a living to its employees (Eyada, 2020).

The company is also reported to spend huge amount of money on political lobbying every year. Along with the above mentioned issues, the company is also reported to have violated the animal rights as they retail a huge amount of products containing animal-based materials such as leather, wool, feathers and so on (Chan et al 2020). Thus, the company has many social and community issues which are expected to violate the CSR policies of its framework. There exists a controversy about whether the company is ethical or not. Though there are some violations in their policies because of some of the technologies in use and some other activities as mentioned above. The company has also been reported for financially penalizing the female athletes and employees who were pregnant. But at the present the company has amended such controversial policies.

Task 2

2.1 Benefits of CSR to employees

Corporate social responsibility not only helps the business organization in terms of enhancing the market reputation but is also effective for the employee's engagement. By performing effectively the social responsibility Nike can foster the creation of values for its consumers. It has been seen that the execution of CSR strategy helps to restructure the organizational behaviors and promotion of the higher quality relationship among the employees (Koch et al. 2019). It can be stated that when the workers feel that their organization is socially responsible, and then their sense of belonging is greatly fostered thereafter the organization benefited from the employee's motivation and the workforce’s productivity.

The performance of the corporate responsibility also helps to engage more employees and also the effective strategy motivates the employees to showcase corporate behavior towards co-workers that in turn help to build a close relationship among employees. Nike thereby can foster the building of a positive culture in their workplace, which is effective for being competitive in the market. On the other hand, employees can benefit from their individual empowerment in terms of productivity by engaging the organizational CSR initiatives (Rhou and Singal, 2020). The cycle of employee engagement also helps the worker in order to develop their own skills and also helps the company to do better in operating the business. Furthermore, CSR practices also bring about a culture of creativity in the workplace that indirectly influences the employees to be creative in their working process as well as in the area of problem-solving. Moreover, it can be stated that the execution of corporate social responsibility helps to broaden the way for employees' empowerment and also contribute to the enhancement of the workforce’s productivity.

2.2 Impact of CSR on supply chain

The supply chain of Nike focused on the approach of collaboration as they believe that collaboration is the strategy for sustained operation. Various incentives regarding the CSR policy has been designed by the company for the purpose of the optimization of the production cycle. It has been seen that CSR helps to strengthen the public image by sustainability enhancement that in turn contributes to the facilitating of more collaboration in the supply activity. Nike has recently worked with a range of partners to enhance the capability of its supply chain by measuring social performance (Purpose.nike, 2021).

Figure 1: Impact of CSR on the supply chain

(Source: Semanticscholar, 2019)

There is no cloud of doubt that the building of a CSR strategy helps Nike in terms of meeting the future needs of their business. CSR helps Nike to attract more investors and suppliers, which helps to lower the inventory holding budget and also reduces the cancellation of inventory claims in the holistic chain (Purpose.nike, 2021). Besides, CSR policy also helps the building of a road map indirectly that helps to streamline the operations of the distribution centers. In addition, it has been seen that, due to the presence of an effective CSR strategy, Nike is benefited from the market share that in turn increases the engagement of suppliers, investors, and employees which is fruitful for the retention of the continuation in the demand and supply activity respectively.

2.3 Impact of CSR policy on the business performance and senior management team

The CSR policy of Nike focuses on the leverage of the unifying power in the context of promoting the various CSR agenda of the organization. Due to the presence of a robust CSR policy helps the selected company benefit from the employee's satisfaction, and improves market image and recognition as well. It can be stated that CSR helps the company to grab the benefit of changing employees' attitudes and thereby foster the economy of sales (Riyadh et al. 2019). Company’s performance automatically improves with the rising economy of sales respectively. On the other hand, the senior management team can able to build a healthy relationship with their stakeholders and shareholders with the positive essence of CSR.

CSR policy is also effective in terms of enhancing the business recognition in the target marketplace as well as existing one that is crucial for the firm’s consumer base. Employees rising motivation for the CSR policy and its implication is also fruitful for the company as it contributes to the deriving of the various development opportunities for the company’s business (Wang et al. 2020). Stakeholders' trust is also easily gained by the CSR performance that directly affected the business performance and results in revenue inclination. On a simple note, the performing of the corporate responsibility helps the business organization in terms of accelerating their financial growth as well as employee empowerment.

Task 3

3.1 CSR policy review of NIKE

Corporate social responsibility is very important within the business in order to improve the business strategy as well as to attract the customers for their products. In addition to this, it is also important for the respective company in respect to demonstrate social responsibility. There are various Corporate Social Responsibility policies (CSR) for Nike are as follows:

1. Nike’s inclusion as well as a diversity program

Nike’s programs of corporate governance, as well as corporate social responsibility, focus on work tolerance as well as a healthy environment for all their employees. In addition to this, the respective company invests in the promotion of the working environment, which commemorates inclusion as well as diversity within the respective organization (DOMINGUEZ, 2020). In the all over years 2020-2021, the company Nike assigned the method of the five-year plan for the creation of the increased diversity in their respective workplace. In addition to this, it also includes a proper target goal of 50% of the portrayal of the women together with the representation of the ethical minorities as well as racial with 35% until the “corporate workforce” by 2025. 

1. Nike’s program community support

Nike’s program of community support deals with the expenditure of more than $ 89 million in the year 2020. In order to help the kids in the world that was 17 million across the world in respect to get active in exercise as well as sports. In addition to this, the company of Nike also helped with respect to the training of the 100,000 coaches in order to help the different communities related to the sports (Eyada, 2020). In addition, to this particular CSR policy also encourages more equality as well as inclusivity. Moreover, the company Nike also invested $ 100 million in the girl effective program between the years “2015-2020” in order to improve the lives of the millions of girls across the globe.

1. Nike’s sustainability program

The company of Nike used various sustainability programs to improve its business strategy with the program Supplier Climate Action. In addition to this, the respective company ensures the manufacturers, as well as suppliers, are nicely committed to their set goal of “carbon neutrality” by the year 2025 (Schneider and Scherer, 2019). Moreover, for the reduction of waste the concerned company has initiated more sustainable materials in their products.

3.2 Changes recommended to the CSR policy to benefit the stakeholders

The corporate social responsibility (CSR) policy is very beneficial for Nike because it helps the business to grow its strategy in a positive way. Additionally, the CSR policies of Nike are also very beneficial for the environment because it consists of a sustainability program (Petitjean, 2019). The changes in the policies of corporate social responsibility (CSR) ensure the benefits for the suppliers, customers, employees, environment as well as the community. In addition to this, the building of an effective corporate social responsibility (CSR) strategy can help the senior management team of Nike in terms of fostering supplier collaboration that might help to offer more value to the suppliers. As opined by Tang et al. (2018), the creation of the value towards the organizational people who have a stake in the organizational business helps to ease the access of more capital in business as well as boost the market reputation. On the other hand, the creation of a successful CSR strategy can help the higher management team of the company Nike in order to meet the demands of its customers. In addition to this, keeping in mind the feedback of their customers and can try to make different strategies to fulfill the demands of customers. As per the view of Jackson et al. (2020), the formation of the strategies related to the benefits for its customers makes sure to get increased profit margin in the market as well as to get more attention of their customers. The formation of the CSR strategy by Nike’s management team helps for the better training of its employees for the innovation in their manufacturing industry. Additionally, in order to make them skilled in their respective assigned work can increase the rate of efficiency of its employees and it is beneficial for Nike. The establishment of the different CSR strategies such as sustainability for the environment can be very beneficial for the respective business for a positive image that in turn help to create value for the community.

3.3 Impacts of changes in CSR on business performance

The bringing of the corporate social responsibility (CSR) changes within Nike helps the respective business to grow their profit margin in the growing market. In addition to this, it also increases the brand value in the market as compared to its competitors Adidas and Reebok. Due to the changes in the CSR, enhances engagement with the customers, which results in the improvement of the customer relationships (Eyada, 2020). Additionally, it boosts customer retention as well as customer loyalty; moreover, it increases the number of users of Nike products. Due to the various changes in the different strategies of CSR helps in the engagement of the investors within the respective company and that increases the profit margin of the concerned company in the growing market.

Conclusion

Based on the above study it can be concluded that the CSR policies that are implemented by Nike in their reputed organization and are seen to be expanding their business on word wide platform are appropriate. The main highlighting part of the study is the regulatory framework of CSR that is widely used by Nike due to its advantageous characteristics such as customer satisfaction. As a consequence of this, another important aspect of the CSR of Nike is the challenges that are faced by the environment are analyzed in detail with proper justifications as well as its application. All the shareholders of Nike, which includes customers, employees, and others, gain the benefits of CSR. Additionally, are broadcasted in the concerned study in collaboration with the activities that are performed thoroughly throughout the Nike supply chain.

References

Journals

Chan, H.L., Wei, X., Guo, S. and Leung, W.H.,(2020). Corporate social responsibility (CSR) in fashion supply chains: A multi-methodological study. Transportation Research Part E: Logistics and Transportation Review, 142, p.102063. https://livrepository.liverpool.ac.uk/3100688/1/1_CSR_20200809.pdf

DOMINGUEZ, L., (2020). Nike vs. Adidas. International Relations Journal 2020, (39), p.37. https://internationalrelations.sfsu.edu/sites/default/files/documents/IR_Journal_Final%202020.pdf#page=38

Eyada, B., (2020). Brand activism, the relation and impact on consumer perception: a case study on nike advertising. International Journal of Marketing Studies, 12(4), pp.30-42. doi:10.5539/ijms.v12n4p30

Eyada, B.,(2020). Brand activism, the relation and impact on consumer perception: a case study on nike advertising. International Journal of Marketing Studies, 12(4), pp.30-42. https://doi.org/10.5539/ijms.v12n4p30

Jackson, G., Bartosch, J., Avetisyan, E., Kinderman, D. and Knudsen, J.S., (2020). Mandatory non-financial disclosure and its influence on CSR: An international comparison. Journal of Business Ethics, 162(2), pp.323-342. https://www.academia.edu/download/71110752/Disclosure_20on_20CSR-final_20January_207th.pdf

Jiang, W., (2019). Sustainable development of supply chain in footwear industry–take Nike as the case. Asian Business Research, 4(3), p.86. https://doi.org/10.20849/abr.v4i3.690

Koch, C., Bekmeier-Feuerhahn, S., Bögel, P.M. and Adam, U., (2019). Employees’ perceived benefits from participating in CSR activities and implications for increasing employees engagement in CSR. Corporate Communications: An International Journal.pp.12. DOI 10.1108/CCIJ-12-2017-0123

Lee, S., Jung, S. and Ha-Brookshire, J.E., (2020), December. A Framework of Perceived Corporate Social Responsibility Gaps between Internal and External Stakeholders: A Stakeholder Theory Approach. In International Textile and Apparel Association Annual Conference Proceedings (Vol. 77, No. 1). Iowa State University Digital Press.

Petitjean, M., (2019). Eco-friendly policies and financial performance: Was the financial crisis a game changer for large US companies?. Energy Economics, 80, pp.502-511. https://www.sciencedirect.com/science/article/am/pii/S014098831930043X

Rhou, Y. and Singal, M., (2020). A review of the business case for CSR in the hospitality industry. International Journal of Hospitality Management, 84, p.102330.https://doi.org/10.1016/j.ijhm.2019.102330 2019

Riyadh, H.A., Sukoharsono, E.G. and Alfaiza, S.A., (2019). The impact of corporate social responsibility disclosure and board characteristics on corporate performance. Cogent Business & Management, 6(1), p.1647917. https://doi.org/10.1080/23311975.2019.1647917

Schneider, A. and Scherer, A.G., (2019). State governance beyond the ‘shadow of hierarchy’: A social mechanisms perspective on governmental CSR policies. Organization Studies, 40(8), pp.1147-1168. https://doi.org/10.1177/0170840619835584

Tang, Y., Ma, Y., Wong, C.W. and Miao, X., (2018). Evolution of government policies on guiding corporate social responsibility in China. Sustainability, 10(3), p.741. http://dx.doi.org/10.3390/su10030741

Wang, Y., Xu, S. and Wang, Y., (2020). The consequences of employees’ perceived corporate social responsibility: A meta?analysis. Business Ethics: A European Review, 29(3), pp.471-496.https://doi.org/10.1111/beer.12273

Websites

Nike (2022), CARBON FOOTPRINT OF OUR PRODUCTS , availale at: https://purpose.nike.com/carbon-footprint [accessed on 03/06/2022]

Purpose.nike, (2021). SUPPLY CHAIN INDUSTRY COLLABORATION. Available at: https://purpose.nike.com/industry-partnerships [Accessed on:06/ 03/ 22]

Semanticscholar, (2019). Corporate social responsibility in global supply chains. https://www.semanticscholar.org/paper/Corporate-social-responsibility-in-global-supply-Andersen-Skjoett%E2%80%90Larsen/0100272e297f85279b8fe9e187785d6df77df797