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Running head: SWEATSHOPS TO SWEATWASHING 1
SWEATSHOPS TO SWEATWASHING 4
From Sweatshops to Sweatwashing:
An Analysis of Nike’s Corporate Social Responsibility
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Introduction
Nike, Inc. was founded in 1964 by Philip H. Knight, who acted
as President and CEO (Arnold & Hartman, 2003, p. 11). Knight
named his successor, William Perez, in 2004 (Holmes, 2004,
para. 1); Perez only lasted 13 months in the CEO position. He
was then replaced by Mark Parker in 2006 (Holmes, 2006a,
para. 5). The brand is distributed in 52 countries and possesses

550,000 workers. Nike produces 175 million pairs of shoes per
year. It has 500 contract suppliers, half of which are located in
Asia (Arnold & Hartman, 2003, p. 11). This paper will examine
the sweatshop scandal of the 1990’s that Nike was involved
with. The effect of the sweatshops on people, planet, and profits
will also be addressed. The paper will explore the company’s
current CSR practices. The paper will also examine what
greenwashing is and the types of greenwashing. A culminating
theme of this paper is an analysis determining whether or not
Nike is indeed greenwashing. Lastly, the paper will provide
recommendations based on the analysis.
Overview of Nike’s Sweatshop Practices
In 1984 Nike closed its last United States factory. With no more
domestic factories, the majority of its facilities were located in
Asia, which is where sweatshop and labor issues are most
prominent. This decision cost 65,000 American workers their
jobs (Glenn, 2004, para. 3). Most workers in the foreign
factories are generally teenagers or unmarried mothers, whose
ages range from 17 to 30 years. On average, each worker makes
about 4.3 pairs of shoes per day (Glenn, 2004, para. 5-10).
Nike’s Asian factories are located primarily in China, Thailand,
Pakistan, Vietnam, Cambodia, and Indonesia. The company
moved its operation abroad in an effort to cut labor costs
(Levenson, 2008, p. 168-170). In some cases, Nike was able to
reduce its labor expenses by paying workers a mere 20 cents an
hour, to work in factories that had poor ventilation and similar
unsafe as well as abusive environments (Bernstein, 2004, p. 1;
Sage, 1999, pp. 216-217). The factory workers in Indonesia earn
a wage of $2.50. The reported livable wage in Indonesia is
about $4.00, making the $2.50 wage insufficient. It is a similar
situation for Chinese workers, who make about $1.60 per day;
some workers claim they do not receive the entire $1.60. Three
simple meals in China cost about $2.10. Clearly, it can be seen
that Nike factory workers are not paid enough to live a basic
life. It is reported many of these Asian factory laborers are
unpaid for any overtime they perform (Glenn, 2004, para. 5-10).

Because they cannot afford boarding costs on their own, 60-70%
of Nike workers in Asian countries are financially forced to rent
rooms from the company. Rooms are identical and one-story.
These rooms feature concrete walls and floors and are three-by-
three meters in size. Multiple people live in one room. All
workers share a bathroom and laundry room with everyone else
(Glenn, 2004, para. 5-10).
It is has been documented that workers have been sexually and
physically abused in the Nike factories. Some are said to be
beaten for poor workmanship, called derogatory names, or have
their mouths taped shut for talking. Some women claim they
have been sexually harassed in the form of unwanted touching
and groping. The more attractive women tend to be greater
targets for sexual harassment and therefore are more likely to be
promoted (Glenn, 2004, para. 15). An incident in Vietnam at
Nike’s Bien Hou plant involved numerous women being forced
to run laps around the perimeter of three warehouses. The
exercise was meant a punishment and caused some of the
women to faint. One female worker stated, "The manager wants
us to meet the regulated number…When we don't and there's a
gap, they force us to work extra to meet the quota” (Saporito,
1998, para. 4).
In 1988 a journalist shed light on Nike’s Asian suppliers. Public
accusations arose stating that the company was paying such low
ages that it was not sufficient for supporting everyday life.
TheNew York Times also reported that one of the factory
workers had been convicted of abusing the factory’s workers.
The release of this information in the media caused a feeling of
infuriation with consumers (Arnold & Hartman, 2003, p. 12).
According to Arnold and Hartman (2003), most consumers felt
that Nike was focusing more on its public image and marketing
rather than focusing on the welfare of its workers:
Rather than crack down on the abusive conditions in the
factories, Nike has resorted to an elaborate international public
relations campaign to give the appearance that it cares about the
workers. But no amount of public relations will change the fact

that a full-worker who makes $1.60 a day is likely to spend a
fair amount of time hungry if three very simple meals cost
$2.10. (p. 12)
The criticism of Nike, Inc. continued through the 1990’s. It was
not until 1998 that Philip Knight finally accepted responsibility
for the poor treatment and low concern for factory workers
(Arnold & Hartman, 2003, p. 13). Nike did not feel that the
working conditions its foreign workers dealt with were its
responsibility because of the fact that they were not directly
employed by Nike (Locke, Kochan, Romis, & Fei, 2007, p. 5).
The Workers Rights Consortium (WRC), an independent
organization that works to protect those individuals who sew
various forms of apparel, conducts investigations of major
companies and brands to ensure that those who work within its
factories have protected rights and are not undergoing abuse.
Support for the WRC comes mainly from the students of
colleges and universities. Each year, Knight donates millions of
dollars towards the University of Oregon, the school in which
he graduated from. However, in the year 2000 ceased its
donations to the university. This is because the University of
Oregon had become a supporter of the Workers Rights
Consortium. Had the donation been made, it would have
supported the cost of renovations for the school’s athletic
stadium, which had a total price tag of $80 million. Knight
cancelled the donation because the WRC tends to be harsh
towards apparel and footwear companies and did not approve of
the University of Oregon’s support for it. Nike is a part of the
Fair Labor Association, which is similar to the Workers Rights
Consortium except it allows for major companies to be on its
board. In Greenhouse’s (2000) article, Randy Newman, a senior
at the University of Oregon in 2000, stated the following:
It's kind of amusing, considering that he's upset that we joined
some labor-monitoring body. He keeps claiming that his
company is socially responsible and they don't use sweatshop
labor. If that's the case, why is he so upset that we joined this

monitoring group? It kind of implies that something isn't quite
up to par. (para. 7)
Nike Inc. has experienced controversy because of its sweatshop
practices. The company tried to amend its situation through
marketing efforts and a revision of its policies towards foreign
workers. However, it seems suspicious that Nike stopped
making its donations to the University of Oregon because of the
institution’s support of the Workers Rights Consortium. One
would think that it would benefit Nike to support the school and
its WRC efforts, considering the WRC makes an effort to
protect factory workers and their rights (Greenhouse, 2000).
The Effect of Nike’s Sweatshops on People, Planet, and Profits
Without any question, Nike’s sweatshop practices affected
people the most. Its profits were also hurt by its irresponsible
practices. Although to a much lesser extent than people and
profits, the environment was also impacted by Nike’s
sweatshops abroad. The company’s irresponsible labor practices
in the 1990’s were most notably criticized for poor and unsafe
working conditions, small wages, and not unionizing employees.
The organization often produced its products in nations such as
China because it the wages there are among the lowest in the
world, and also because the Chinese government does not
permit employees to form unions (Bernstein, 2004, p. 1).
But China was not the only nation where Nike established its
sweatshop factories. The child labor crisis in Pakistan was a
huge problem for Nike. In the mid 1990’s, the company had
sourced soccer balls from Sialkot, where children were being
put to work to manufacture the balls (Boje & Khan, 2009, pp.
12-13). The story of Nike’s child labor practices in Pakistan
aired on CBS, and the company frantically tried to cover up its
mistakes. The company claimed that it had taken steps to
prevent situations like that from occurring. In a contradictory
statement, Donna Gibbs, the spokesperson for the company
stated child labor was “…an ages old practice [and] the process
of change is going to take time” (Boje & Khan, 2009, pp. 13-
14). Clearly, the company knew that it made a mistake, and did

not want to confront the issue face-to-face. It evidently did not
take much regard for its employees, other than claiming that it
was doing a social good by keeping children and adults off the
streets and employed (Boje & Khan, 2009, p. 14; Sage, 1999, p.
219).
In response to the poor working conditions, small wages, and
child labor practices of Nike’s sweatshops, many labor and
human rights organizations took a stance on the company’s
irresponsible practices. The non-government organizations were
concerned with worker health and safety, wages, and fair
treatment (Sage, 1999, pp. 219, 227). The Nike Network created
a powerful agenda that exposed the working conditions in the
company’s sweatshops, and increased consumer awareness
about the labor and human rights issues. The campaign
increased awareness about mandatory unpaid overtime, abusive
treatment of workers, extremely small wages, child labor, and
health and safety hazards in the factories (Glenn, 2004, para. 5-
10; Sage, 1999, pp. 226-227). Consequently, consumers
responded by avoiding Nike’s products that were produced in
such poor working conditions where laborers were not given a
day off for more than two weeks, while being paid a non-livable
wage (Levenson, 2008, p. 169-170; Sage, 1999, p. 227). Was it
worthwhile for Nike to mistreat its international employees just
to improve profits for the short-term? Most would agree that it
was not.
Nike’s profits were certainly affected by its sweatshop scandal.
Until the later 1990’s, the company was quite profitable. In
1998, Nike reported a nearly 50% drop in its profits, relative to
the prior year. The organization ultimately reported a net loss of
nearly 70 million dollars in the last three months of 1998 (Sage,
1999, p. 226). The financial damage continued. During the first
quarter of the following year, the firm’s revenues decreased by
nearly ten percent, while its income dropped another 35%, on
top of the 50% in the prior operating period (Sage, 1999, p.
226). Although the Asian economy was weak during those
years, much of the firm’s financial losses were the result of the

Nike Network’s campaign against the company, raising
consumer awareness about the company’s irresponsible labor
practices (Sage, 1999, p. 226). Nike’s CEO at the time, Phil
Knight, felt that its products were recession proof (Sellers &
Schiff, 1998, p. 27). However, it is unlikely that any product is
safe from adverse consumer perceptions about an organization
and its irresponsible practices. The company’s stock price took
a hit, amid the falling revenues and net losses. Nike’s stock
price fell 30 dollars in 1997, from its peak of 76 dollars in 1996
(Sellers & Schiff, 1998, p. 26). Clearly, consumers lost faith in
the company, and the brand was tarnished. Nike ultimately had
to refurbish its brand to effectively regain loyalty from its
targeted consumer segment, 12-27 year olds (Sellers & Schiff,
1998, p. 27).
Nike also affected the environment by producing shoes in
sweatshops. One of the most significant environmental impacts
was in its footwear that integrates an air pocket in the design.
Along with air, there was sulfur hexafluoride (SF6) in the
pockets. SF6 is present in cooling devices such as air
conditioners and refrigerators, and creates an environmental
problem when the substance is released into the air. It breaks
down the atmosphere, contributing to global warming (Holmes,
2006b, p. 1). Amid the sweatshop scandal, the company peaked
its production of shoes that used the air pockets with SF6
present in its products. In 1997, the firm had an environmental
footprint of “…7 million metric tons of carbon dioxide,” which
is equivalent to the exhaust that is emitted from a million
automobiles (Holmes, 2006b, p. 1).
Nike’s Current Corporate Responsibility Practices
Nike has since resolved its greenhouse gas issue in regards
to the SF6 being present in its shoes (Holmes, 2006b, p. 2). The
company’s corporate responsibility report has extensive
information regarding multiple areas that it is taking
responsibility for, such as the environment, working conditions,
employees and labor issues, and community investments (“Nike,
Inc.”, 2010, p. 3). Nike’s CSR report states that the firm is

working towards innovation and sustainability, as well as
addressing labor and environmental issues (“Nike, Inc.”, 2010,
pp. 22-25).
The company has implemented a system to grade its factories on
a number of labor, and health and safety related metrics. Scores
range from an A, which indicates that factories are fully
compliant to the metrics, to a D which means that the company
may halt production if problems are not resolved (Bernstein,
2004, p. 1; “Nike, Inc.”, 2010, p. 44). According to its CR
report, in 2007, most of its factories scored between an A and a
C, with a concentration around a B. In 2009, the majority of
Nike’s factories scored in the B to C range (“Nike, Inc.”, 2010,
p. 45). A grade of C is an indicator that major issues are not
being resolved in a timely manner (Bernstein, 2004, p. 1). It
appears that Nike has room for improvement in the area of its
factories and labor relations, since the correlation of its scores
worsened from 2007 to 2009 (“Nike, Inc.”, 2010, p. 45). The
company does acknowledge that its efforts to mitigate labor
abuses have not eliminated the issue entirely (Levenson, 2008,
p. 166). However, Nike is being more transparent in the sense
that it publically releases information about its factories such as
names and plant locations. It began this initiative in 2005, and
was the first company in the industry to implement such a plan
(Levenson, 2008, p. 168).
Nike is taking steps to reduce its environmental footprint. It is
reducing the amount of adhesives in its products, along with
using recycled materials to manufacture its goods. The company
has also implemented a system called the Considered Index,
which measures the environmental impact of its decisions
regarding how products are made. Design proposals for new
shoes tend to receive higher scores on its Considered Index if
the pattern uses less material and environmentally friendly
components (Levenson, 2008, pp. 166-167). Nike has also set
goals for itself to reduce its carbon footprint by reducing
harmful carbon dioxide emissions into the atmosphere in an
effort to lessen climate change (“Nike, Inc.”, 2010, p. 29).

Although Nike has improved its corporate social responsibility
since the sweatshop crisis, many people ask if the company is
doing the right things and taking responsibility for the relevant
issues in the appropriate areas.
What is Greenwashing?
According to CorpWatch, greenwashing occurs when socially
and environmentally destructive corporations attempt to
preserve and expand their markets by posing as protectors of the
environment and leaders in the struggle to eliminate poverty.
Companies participate in greenwashing by misleading the public
and creating an insincere concern for the environment, just as a
food manufacturer might exaggerate the flavor of its newest
product to draw in customers. Some corporations purposely
spread misleading information in an attempt to create a
competitive advantage for the firm itself, while other
organizations unintentionally greenwash through the sloppy
collection of exaggerated information producing overblown
environmental claims (Lamb, 2008). Greenwashing is an action
that corporations have been participating in since the
environmentalist movement of the 1960’s (Greenwash Fact
Sheet, 2001). It was not until 1986 when the term was coined by
Jay Westerveld, a New York suburban environmentalist
(Bradshaw, 2009).
Greenwashing can be categorized into four different forms:
classic greenwashing, bluewashing, sweatwashing, and deep
greenwashing (Greenwash Fact Sheet, 2001). Classic
greenwashing is the action of corporations that partake in
practices that are environmentally destructive, spreading
misleading information to create an environmentally responsible
public brand image (Bruno, 2002). Bluewashing is the action of
corporations advertising their brand in unison with the United
Nations to reap the association with UN themes of human
rights, labor rights, and environmental protection although their
practices do not align with UN values (Bruno, 2002).
Sweatwashing is the action of corporations participating in
socially responsible activities in effort to divert attention away

from controversial and/or unethical factory practices
(Greenwash Fact Sheet, 2001). Deep greenwashing is the action
of corporations participating in political efforts to avoid
democratic control of corporate behavior through a combination
of PR and lobbying muscle (Greenwash Fact Sheet, 2001). Deep
Greenwashing, perhaps the most concerning form of
greenwashing, is a corporate strategy that strives to weaken
national and international environmental agreements while
promoting voluntary measures.
Is Nike Greenwashing?
Based on the analysis of Nike, one is lead to believe that Nike
is participating in three out of the four forms of greenwashing:
classic greenwashing, bluewashing, and sweatwashing. Nike is
classic greenwashing by emitting millions of metric tons of
carbon dioxide through business operations and producing shoes
that contribute to global warming all while publicly setting
goals to increase the amount of organic and recycled materials
in its goods, reduce the amount of adhesives in its products,
creating the considered index system, and setting goals to
reduce its carbon footprint. Nike is bluewashing by associating
with the Global Compact in order to reap the association with
UN themes of human rights, labor rights and environmental
protection although Nike clearly violates Principle 3, "freedom
of association and the effective recognition of the right to
collective bargaining" in Vietnam, China, Indonesia, Cambodia
and Mexico (Bruno, 2002, para.7). Nike is sweatwashing by
following a code of conducts for its contractors created as result
of their sweatshop controversy. This code was made in order to
make it appear that Nike has solved all concerns regarding its
working conditions in its international factories. The code of
conducts for Nike’s contractors obtains positive regulations
such as a minimum age of workers requirement of age 16 and a
ban on forced labor and minimum safety and environmental
standards however the code of conducts obtains unethical
loopholes (Beder, 2002). These loopholes allow Nike to pay
minimum wage (as set in host country) but not living wage and

not require overtime (61+ hours). However, volunteered
overtime is accepted (Beder, 2002). Nike is also sweatwashing
by participating in any sort of socially responsibly activities in
effort to divert attention away from its controversial and
unethical factory practices. As a result of the late 1990’s
sweatshop scandal, Nike has participated in many socially
responsible initiatives to cover up its unethical procedures and
decisions. Despite all of Nike’s efforts, it would be in the best
interest of the company and its shareholders to devote most of
its resources into problem areas of its operations, specifically
the unethical treatment of factory workers.
Recommendations
In the most fundamental form, Nike’s CSR strategy must align
with the company’s strategy and mission while taking a holistic
approach to balance each of the demands from people, planet,
and profit. After establishing an appropriate CSR strategy,
which aligns with the organization’s mission and company
strategy, the company must take immediate action to improve
conditions in the factories. Recently, the factory scores have
worsened relative to past years. Numerous factories scored a C
which indicates that issues are not being corrected efficiently
and effectively (“Nike, Inc.”, 2010, p. 45). Therefore, the
company must take action to address and solve the factory
issues. It would be advisable for Nike to spend more time
addressing the issues occurring within its factories rather than
trying to be the Band-Aid for the environment. Nike must be
sensitive and ensure that it is being socially responsible in the
right areas to improve its weaknesses. The company must be
careful not to engage in sweatwashing, for consumers may
perceive that Nike is trying to put a patina on the unethical
sweatshop practices. Nike has long been regarded as an industry
leader in the footwear industry and must take the initiative to
inspire and encourage participation from other firms and
manufacturers to enhance the ethical treatment of employees on
a global scale. The company should act to influence labor
regulations and policies abroad, thereby setting the standards

for the legal and ethical treatment of workers in all industries in
the international arena (Zadek, 2004, pp. 127-132).
Conclusion
After conducting the analysis, it appears that Nike is
greenwashing, specifically in the form of classic greenwashing,
bluewashing, and sweatwashing (Greenwash Fact Sheet, 2001).
Acknowledging the fact that Nike has taken steps to improve its
CSR practices, accountability, and transparency, the company
still has much room for improvement (“Nike, Inc.”, 2010, pp.
29-50; Levenson, 2008, pp. 166-168; Holmes, 2006b, p. 2). This
paper recommended that Nike first align its CSR strategy with
its company strategy, improve its factory conditions, avoid
sweatwashing, and inspire other firms in the footwear industry
to participate in genuine corporate social responsibility and
international legal reform (“Nike, Inc.”, 2010, p. 45; Zadek,
2004, pp. 127-132). If the company takes these
recommendations to heart, it has the potential to sustain its
strong position in the industry and brand awareness while being
sensitive to the moral and ethical issues that are present in the
21st century.
References
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Industry. Journal of Small Business and Entrepreneurship,
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Retrieved November 11, 2011, from
http://conservationbytes.com/2009/11/21/greenwash-blackwash-
two-faces-of-conservation-evil/
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