A Win for International Labor Rights? Nike Discloses Overseas Factories

Last week, Nike disclosed a list of all 700 of its overseas production facilities — including factories in China, Thailand, Mexico and Turkey. It has also admitted that abusive working conditions have been uncovered in several Nike facilities. All of this comes as part of Nike’s settlement of the 1998 Kasky case alleging that Nike’s earlier defenses of its labor practices amounted to misrepresentation.

This is an important first in the struggle for transparency in international labor practices. Multinational corporations have generally been reluctant to disclose specific contracts with producers in the developing world under the guise of protecting trade secrets. What corporations really want to avoid is the harsh light of publicity about working conditions in their factories (health and safety problems, child labor, physical abuse, long working hours, less than subsistence wages) from trade unions and human rights NGOs. Nike, itself the subject of negative publicity campaigns and product boycotts in the 1990s because of conditions in its Asian factories (see, e.g., here and here), worked alongside union representatives and human rights activists in reaching the decision to disclose their supply chain.

Labor rights is an area corporations have typically preferred to keep “self-regulated” or subject only to guidelines, as opposed to binding treaties (see, e.g., the OECD Guidelines for MNEs here), on the ground that less regulation promotes competition and helps grow the economies of the labor-providing countries. The move by Nike, which alone employs over 650,000 contract workers around the world, may demonstrate that self-regulation, when combined with the pressure of litigation and far-reaching publicity campaigns, can work. Nike is clearly staking out the high ground among socially conscious consumers and interest groups in the US and Europe with this move; other corporations should follow. Transparency is good for everyone. Let’s see if conditions improve as a result.