Nike

 

Nike is a major publicly traded clothing, footwear, sportswear, and equipment supplier based in the United States. The company is headquartered near Beaverton, Oregon, in the Portland metropolitan area. It is the world’s leading supplier of athletic shoes and apparel and a major manufacturer of sports equipment.

Today we operate in more than 160 countries around the globe. Through our suppliers, shippers, retailers and other service providers, we directly or indirectly employ nearly one million people. That includes more than 35,000 Nike employees across six continents, each of whom make their own contribution to fulfill our mission statement: to bring inspiration and innovation to every athlete in the world.

Nike’s Global Government and Public Affairs team is made up of 17 professionals and support staff located around the world. The team covers the global political capitals of Washington DC, Beijing and Brussels as well as our headquarter community in Oregon. Nike Government Affairs has also a presence in Singapore, Moscow, Vietnam and Thailand. The Government and Public Affairs team leads and coordinates Nike’s advocacy with state, regional and national governments and representatives of the company in the business community on public affairs issues.

While our government relations team around the world is small by design, we maximize our impact by drawing from resources around the company. We have focused the power of our brand to drive legislative and public policy initiatives that reflect our commitment to both our business and corporate responsibility goals. Because of the nature of our business model, we currently have several key public policy issues that we focus on around the world: trade, taxation and intellectual property, employment, supply chain, sustainability and sport. We believe the key to public policy for a global company like ours- operating in complex, interrelated markets, with numerous stakeholders- to be consistent. Policies set need to be consistent around the world and across the company. That sounds easier than it is. We see intersections between different policy areas. The intersection, for example, between trade and labour, or environmental standards, trade and poverty alleviation are complex. It takes a rigorous process of education, debate and discussions to develop policies that find the balance between different interests, and that take into account local, regional, global interests, culture and political dynamics. At the end of the day, consistency is simplicity; and simplicity is good for business. Sometimes, we take policy stances that seem to be at odds with our industry, with business or with civil society. Our process for taking a strong stance on something is based on extensive internal and external consultation. We see public policy, as an integral part of business strategy, success of which also relies on consistency.

We take a stand on a wide range of issues. Some highlights include trade, taxation, intellectual property, workplace, employment, sustainability, climate and sport.

 

 

Trade/ International Trade

International trade, and the ability to move our product around the world without barriers, remains a cornerstone of NIKE, Inc’s success as a company. While the global economic crisis has resulted in a significant slow down in international trade for every major economy, in some countries the crisis has also led to a sharp rise in trade defence actions.

Despite calls by G-20 leaders to avoid protectionism measures during the economic crisis, the World Trade Organization reports that most developed and developing countries have implemented broad measures that either bail out significant sectors with government subsidies and/or loans to protect domestic sectors from import competition through imposition of a wide range of trade restrictions. These trends in global trade policy impact many sectors,; including global manufacturing and sporting goods. Along with protectionism, trade-liberalizing measures such as bilateral trade agreements or multilateral negotiations remain mired down in political uncertainty and, in some cases, controversy.

We remain active in the trade debate for two prime reasons: to challenge protectionism that impacts our business and to advocate for trade liberalization. We do so by arguing our firm belief that the greatest driver for economic growth and prosperity is when producers and consumers have open access to goods and services on a global basis. We believe that open access, creates an economic climate that encourages growth, investment and innovation- all key factors in moving the global economy forward. Our challenge is to ensure that all stakeholders are willing to promote and commit to open trade in a way that also improves people’s lives, encourages sustainability, and delivers environmental benefits.

 

Trade and Labour/Environmental Rights

One of the most difficult issues contributing to the stalemate in the passage of bilateral trade agreements, including the Doha Round of the World Trade Organisation, is the debate surrounding the linkages of trade to labour and environmental enforcement. The dispute is a philosophical one. Some believe that labour and environmental enforcement (traditional through sanctions) ought to be part of trade agreements because weak enforcement from developing countries creates a competitive advantage that injures industry in developed countries. Others believe that the link is a disguised protectionism, an effort by developed countries to imposing their standards on the rest of the world.

We believe the discussion, while vigorous has been unfortunate and unnecessary. The difficulty we see in the past debates is that the proposed remedy for failure to enforce tends to be sanctions: if the developing country has poor enforcement, the developed country has the right to trade retaliation. While many countries do not fully endorse their labour and environmental laws, the reasons for them not doing so are more complex. Many countries don’t  have the resources, expertise or, in some cases, the desire (such as countries with high unemployment that are working to attract foreign investment for job creation). Imposing or threat of sanctions won’t change this, in fact they are counterproductive.

Nike, Inc. has long believed that the debate needs to be turned on its head. Rather than sanctions, trade incentives ought to be used for enforcement.

We don’t have many answers yet, but would like to be part of a broader discussion with a wide-ranging group of stakeholders about how governments can include strong labour and environmental standards in trade agreements and, instead of trade restrictions, develop incentives for countries to abide by those standards. Some possibilities include greater development aid, capacity building or training, or greater market access for those who take enforcement seriously. Additionally, we believe that governments from developed countries ought to be more creative in how they fashion their unilateral trade preference programmes, while providing greater market access to those developing countries that have mechanisms in place and have the desire to enforce core labour and environmental standards. Finally, we would like to find creative ways, consistent with WTO, for governments to closely examine existing tariff codes, and create incentives that encourage sustainable product development and reward those products that use sustainability as a foundation to development and manufacturing through tariff or tax preference.

 

Taxation

As a multinational company, we are subject to income tax and a variety of other taxes in the U.S. and numerous foreign jurisdictions. As a result, we closely monitor proposed changes in tax laws and, where appropriate, advocate in these proposals to ensure that they do not expose us to double-taxation or unfairly and adversely affect our profitability, especially when compared to our competitors in other countries.

We recognize that we must comply with all tax laws and regulations. However, we are proactive where we believe that legislation or practice unfairly impacts Nike Inc. As such we seek to support efforts to create an efficient tax system by identifying and securing tax legislation that allows Nike to be competitive in the global marketplace. Part of this effort includes analyzing and utilizing incentive-based or other programmes. We understand that taxes on corporations such as Nike ultimately fall as a burden on working families in the form of higher prices of our products. Our objective is to minimize these costs and, as a result benefit our consumers, employees and shareholders. In all our efforts to promote tax efficiency, we prefer to work in broad coalitions with other businesses and through trade associations where our views are aligned. Some recent examples of such efforts, include work with Retail Industry Leaders Association (RILA), Oregon Business Association, SmartGrowth Coalition, and American Chamber of Commerce (AmCham) in the Netherlands.

 

Intellectual Property (IP)

Intellectual Property Rights (IPR) is one of the world’s most vital assets any business owns. IP encompasses a wide range of rights and responsibilities, designed to protect business investment in creativity, research and development and innovation. It is also the intellectual capital and future for many companies. Trademarks, patents and design are all examples of essential IPR.

Businesses make significant investments in brand equity and brand promotion, the value of the brand and the trust consumers place in branded products and services. Nike and other brands account for millions of jobs in today’s global economy and are the catalysts for the creation and health of upstream and downstream industries, from manufacturing to advertising, communications and retail. The value of consumer brands is huge, estimated to be more than U.S. $ 2.2 trillion for the top global 500 brands.

Nike Inc. believes there is a genuine need for policymakers and other stakeholders to understand issues such as innovation and creativity, brand protection and brand building. They also need to understand how to integrate understanding of the building blocks of the brands into specific IPR and more general public policy decision making.

Our four specific policy objectives of IPR are:

  • Contribute to greater awareness and understanding of IPR and brand issues and their significant contribution to the global economy.
  • Work toward more coherent, consistent and “joined up” IP policy at national, regional and global levels. Nike believes there is a strong need for policymakers to take a broader holistic view of IP, brands and their overall socioeconomic significance, and contribution to economic growth and innovation.
  • Recognize of IPR as a cornerstone of the knowledge-base economy. IP protection is one of the core enabling conditions for creativity, innovation and development of the information society and digital economy. To this end, we have partnered with Creative Commons to develop the GreenXchange, a platform for sharing IP for innovation.
  • Support policymakers’ efforts to create a supportive consistent global legislative framework to fight counterfeiting and piracy across the globe. The economic and social impacts of counterfeiting and piracy have taken on a phenomenal global dimension in the past decade. Trade in counterfeit and pirated goods now represents an estimated 7 percent of world trade.

Nike Inc. has constructively worked with policymakers, governmental IPR authorities and enforcement bodies, coalition partners and industry leaders to contribute to policy development and support responsible IP legislative change around the globe.

For example, in the U.S. Nike Inc. was a vocal supporter of the passage of the Pro-IP Act signed into law in 2008. In addition to increasing penalties for certain forms of IP infringement, this Act increases resources for the U.S. Department of Justice to enforce criminal laws protecting IP and seeks to promote better coordination among various federal and stage agencies in combating counterfeiting and piracy. The law also mandates that the President appoint the first Intellectual Property Enforcement Coordinator, informally known as the Copyright Czar.

In the European Union, Nike Inc. is a member of the multi-stakeholder Observatory on Counterfeiting, established after agreement by EU member states in early 2009. We are contributing to the Observatory’s work programme, in particular on future direction of IP policy and legislation, data collection and raising consumer awareness.

Through our membership of FESI (EU Sporting Goods Association), Nike has also been engaging with a number of national EU governments on national IPR legislative initiatives and improve IP enforcement, particularly in France, Italy, UK and the Czech Republic.

In China, Nike Inc. is a founding member of the Quality Brands Protection Committee (QBPC), a brand-owners’ coalition with more than 180 company members.  Through this platform, Nike has strengthened its position and status by participating with QBPC in the revision of various Chinese IPR laws and regulations, and speaking at IPR-related seminars and forums.

Nike is also an active member of the International Anti-Counterfeiting Coalition (IACC), whose mission is to combat counterfeiting and piracy by promoting laws, regulations and directives designed to render the theft of intellectual property undesirable and unprofitable. The IACC serves as an umbrella organization, offering anti-counterfeiting programmes designed to increase protection for patents, trademarks, copyrights, service marks, trade dress and trade secrets.

 

Supply Chain

We are updating Nike’s Code and Code Leadership Standards to make clearer the responsibility of contracted factories to respect their employee’s rights to freedom of association and collective bargaining to the extent permitted by local law. This includes the right to form and join trade unions and other worker organizations of their own choosing, without harassment, intimidation, interference or retaliation. Where national law restricts freedom of association, the contracted factories are required to facilitate alternate means to individually and collectively engage with their employees and for employees to express their grievances and protect their rights regarding working conditions and terms of employment

We are updating Nike’s Code Leadership Standards to include worker protections in the event of factory closure or retrenchment. These steps include standards for factories that include at a minimum, notice, consultation, severance and collective bargaining. Contracted manufacturers are also required to make payments to workers of retirement or severance funds, in compliance with local law. This requirement includes contracted manufacturers facilitating payments of social security provisions to which the employee may be entitled, such as unemployment insurance and accurate record keeping on payment into and maintenance of funds to ensure workers are protected. In addition, contracted manufacturers are encouraged to go beyond what is required by law or collective bargaining to provide outplacement or retraining assistance, additional financial support, medical benefits and assistance in obtaining government benefits.

Nike Inc. recognizes the need for a well-coordinated and efficient supply chain for its business and the industry. Because the supply chain spans multiple jurisdictions from raw materials, production, shipping, retail, and ultimately, to consumers, a consistent and mature public policy position is needed. We support policies that deliver efficient, cost-effective delivery of Nike Inc. products in a responsible manner. Our efforts concentrate on ensuring efficient transport, security and safety of Nike Inc products throughout the supply chain. In addition, we advocate for policies that help to ensure that Nike Inc’s supply chain- from factory to consumer- operates in a manner that considers both people and the environment at each step of the way. We work with a number of bodies to advocate for these policies. These include national governments, industry associations and NGOs.

 

Climate

For almost 20 years, Nike Inc. has recognized that climate change is an important challenge requiring urgent, meaningful action. We have developed and pursued a number of initiatives to reduce our impact on the climate. We helped create our own business coalition to advocate for climate change legislation, Business for Innovative Climate and Energy Policy (BICEP)

Made up of like-minded companies and working in close consultation with the Coalition of Environmentally Responsible Companies (CERES), BICEP started by developing a series of key principles that we believed were required in any legislation that passed U.S. Congress. Once BICEP’s initial principles were drafted, we recruited other companies to join, started reaching out to members of Congress and built a public relations campaign. What makes BICEP’s voice unique is our ability to make the business case for the passage of climate change legislation. BICEP members believe it is directly related to the ongoing successes of our businesses. This business perspective is important in the political debate, as most businesses and trade associations are opposed to climate legislation because they fear it would be too costly to implement. While we don’t minimize these concerns to businesses that are major carbon emitters, we believe delaying the legislation and undercutting the U.S.’s ability to move toward an international agreement on climate change would become more costly in the long run.

 

Sustainability/Creating Sustainable Models for Consumption and Growth

Nike’s commitment is to create extraordinary performance products for athletes while managing our business within nature’s limits. We anticipate a future that seeks out and rewards new models of consumption and growth, separated from material consumption. It’s a transition from build, buy and bury-the common business model today- to a future of sustainable business for consumption and growth.

As we embark on this journey, it’s clear to us that government will play an important role. Not only in setting the policy framework and legislative environment for emerging business models and sustainable products but also as a key partner to help drive innovation, collaboration and partnership with other stakeholders in the clothing and footwear sectors.

Our engagement with government on sustainable consumption and growth is still evolving as we, and others in our industry, face up to these new challenges. However, we already have an agreed set of policy objectives:

  • Partner with governments on defining and shaping public policies that encourage, incentivize and reward innovation for sustainable materials, product and business models in the footwear and clothing sectors.
  • Create partnerships with government, industry, academia and NGOs to share these common challenges and to agree on how best to leverage and deliver agreed policy goals through sharing best practice and identifying incentives for innovation to achieve our common shared policy outcomes.
  • Engage with government and other stakeholders in specific policy forums and where legislative change is being discussed  to ensure our voice and experience is part of the debate on the challenges to move forward toward a common goal of sustainable production and consumption.
  • Focus on key policy issues of climate change, sustainable materials and product and post-consumer waste.

 

Summary

The public policy work we do becomes increasingly important in the light of the fast moving changes and trends. Three key trends that cause us to pause and think about how we elevate public policy work to be a key strategic asset for Nike Inc.:

  • With the global economic crisis has come a substantial increase in trade protectionism across the world.
  • In many of our emerging markets government plays a very important role in enabling business.
  • We see the world of public policy evolving rapidly with new approaches to coalitions, new advocacy strategies, new public/private partnerships developing. We think this is exciting and ripe with opportunity.

Traditionally, the government affairs function can be heavily focused on reactive, risk abatement strategies. Increasingly, we have sought to develop our public policy and advocacy work as a strategic asset for the company. We are still in the early days of this work, but we see that policymakers have a key role in enabling the right conditions for scaling better business practices, value creation and new business models.