Weaving responsible competitiveness

into Nike’s supply chain operations

Lesley Kavanagh
March 2009
Nike in numbers

• 30,000 employees
• Almost 800,000 workers in factories
• 80% women 18 – 24
• In excess of 800 factories
• 2008 revenues $18.6 billion
• Corporate Responsibility Team 135
• Compliance team 74 people

2
Evolution in Nike Compliance
Gen I Gen II Crossroads Gen III
“Codes” “Root cause analysis”

“Monitoring” “Business performance”

“Fighting fires” “HRM/Lean”

“Living wage” “Collaboration”

“Policing” “Business Integration”

“Capacity Building”

1992 1994 1998 2001 2004 2007 2008

CR in the business
Monitoring PWC Transparency 101 FY 04CR report
First Code begins- monitoring Considered integration
Wage studies Re Organized
Water based SHAPE Business Scorecards
Kukding workers Root causes
Department is Living Wage strike Consumer decides
3
formed FLA Industry Collaboration
 Nike CR Compliance Strategy
Mission
Drive positive, systemic change
in workers’ conditions in the footwear,
apparel and equipment industries.

Priorities
•Focus on key countries, key factories, critical compliance issues
•Drive shared accountability and workplace ownership of CR compliance
•Build efficiency through simplified processes that eliminate non value-add compliance activities

Drive Business Integration Foster Industry Change

Drive a lean, effective compliance Integrate with CR and business Build strategic stakeholder relationships to
process through strategic units to build capacities that drive elevate industry conditions through a
knowledge management, business and factory ownership of common standard and shared monitoring
remediation and verification. compliance . and remediation activities.

Foundation

WORKERS FACTORIES EMPLOYEES

PARTNERS
Keep Transition to •Develop and
Drive industry-
our focus factory CR expand skills,
wide
on the stewardship competencies and
improvements
worker systems to support
through multi-
operational
stakeholder
excellence
collaboration

4
Nike Compliance Targets FY11

Human Resource Management Implementation

• Implement in 100% Focus Factories
Factory Coverage – Multi Brand Collaboration
• 30% Above-the-Line supply chain
Excessive Overtime (EOT)
• Eliminate all EOT through proper tracking
Worker Empowerment/Satisfaction Survey
• Survey 100% Focus Factories Supply Chain
Compliance
FOA Education Program
• Implement FOA training in 100% Focus Countries Drive positive,
systemic change in
workers’ conditions in
the footwear, apparel
and equipment
industries.

5
  PASS NEW SOURCE APPROVAL

NSAP A-C D
RATIN RATIN
G G
RD
Revie
w


 D-Rating
 Labor / ESH Audit dialogue
with factory and
 FLA Audit
BU

 Compliance Visit
 Timeline agreed
Brand Audits
MAP sent to
Monthly
(labor) factory
distribution
to Business Units

 FACTORY DIVESTITURE
YES



EXIT NO

Factory
Committed
Response Plan to
Remediate?

6
 NIKE Code Leadership Standards

MANAGEMENT ENVIRONMENT SAFETY HEALTH

Hours of Work Management System Exposure Limits

Contractor Employee Training
Forced Labor
Freedom of Association/
Collective Bargaining
Harassment & Abuse
Contractor Leave Policies
Licensees/Agents
Migrant Employees
Non-Discrimination
Security
Wages
Women’s Rights
Age Verification
Bloodborne Pathogens Sanitation
Aboveground Storage Tanks Occ. Health Management
Hazardous Materials Electrical Safety
Emergency Action Drinking Water
Hazardous Waste Canteen
Underground Storage Tanks Fire Protection
Injury/Illness Dormitory
Wastewater* Childcare Management
Air Emissions Personal Protective Equip.
Polychlorinated Biphenyls Asbestos
Solid Waste Confined Spaces
Contractor Safety
Ergonomics
ESH Committee
Fall Protection
General Work Environment
Heat Stress
Control of Hazardous Energy
Maintenance Safety
Machine Guarding
Medical Services & First Aid
Occupational Noise
Non-Ionizing/RF
Powered Motor Vehicles
Accident Prevention/
Signs & Tags

7
 Monitoring results

Management ESH

810 audits 80 audits

Hours of work Chemicals

Wages and benefits Worker protection
Grievance systems Fire safety
Freedom of Maintenance Safety
Association

8
 What’s next?

• Global CR annual report June 09

• Revised Code of Conduct and
Standards
• Thriving communities (Indonesia)
• Continued brand collaboration
• Further Capacity building (HRM,
FOA, ESH)

9
Thank you
Questions?