How Could Nike Not Know? And How Do We Find Out?

Two major stories have broken in the last few days that raise questions about how much global brands -- and in particular Nike -- know about conditions in their supply chains.

First, Greenpeace released a report accusing Nike (and Adidas, Puma and other international brands) of sourcing apparel from factories in China that pollute rivers with hazardous chemicals. Nike's response was, "To the best of our knowledge we are not contributing to pollution of the Yangtze Delta through our factory partners." Not a very reassuring statement.

Second, and more troubling, the AP reported abusive conditions for workers in a Pou Chen factory in Indonesia producing Converse shoes for Nike. (Did you know that since 2003 Nike has owned and made those hipster Converse shoes you're wearing?)

According to the AP:

The 10,000 mostly female workers at the Taiwanese-operated Pou Chen plant make around 50 cents an hour. That's enough, for food and bunkhouse-type lodging, but little else. Some workers interviewed by the AP in March and April described being hit or scratched in the arm -- one man until he bled. Others said they were fired after filing complaints.

"They throw shoes and other things at us" said a 23-year-old woman in the embroidery division. "They growl and slap us when they get angry.

"It's part of our daily bread."

Interestingly, after looking into these allegations, Nike found similar abuses.

The company's own inquiries also found workers at the two factories were subjected to "serious and egregious" physical and verbal abuse, including the punishment of forcing workers to stand in the sun, said Hannah Jones, a Nike executive who oversees the company's efforts to improve working conditions.

Nike's investigation found that nearly two-thirds of the 168 factories making Converse products fail to meet Nike's standards for contract manufacturers. Nike blames these problems on pre-existing licenses and subcontracting relationships that they claim prevent Nike from inspecting factories or enforcing their code of conduct.

This quite frankly is hard to believe. Shoe and apparel orders are refreshed every year, if not every season. Does Converse really have pre-existing licenses from before Nike bought them in 2003? Does Nike not have rules about subcontracting? And furthermore, does the world's number-one shoe brand really not have the leverage to motivate factories to meet their code of conduct today?

This is particularly surprising for Nike, as the company has been under a spotlight since the 1990s regarding labor and environmental practices, and was one of the first shoe brands to disclose their supplier factories.

Nike is actually a leader in a very non-transparent industry. But even after a decade of investments in corporate responsibility programs, codes of conduct, monitoring, reporting, training, etc., problems clearly still remain.

GoodGuide is able to capture some of this information in our ratings of Nike and other apparel brands.

Unfortunately, there is a lot that we -- and apparently Nike -- still don't know about apparel and footwear supply chains. And sadly we know even less about the less transparent brands you and I buy from everyday.