00-06-04, Nike has "disclosed" very short PWC reports on its homepage

Some initial thoughts on Nike's disclosure of PWC reports (see www.nikebiz.com) from Tim Conner on the Nike international list. (others thoughts on this are very welcome).

A key demand of some groups involved in the international campaign has been for greater transparency in Nike's monitoring programs, so that an accurate assessment can be made of their effectiveness in discovering and rectifying problems in Nike factories. Any step toward greater openness and accountability, however small, is to be welcomed. Such steps also need to be kept in perspective and balanced against the importance of full disclosure.

TRANSPARENCY OF PWC's MONITORING:

1. Full disclosure would involve disclosure of PWC's reports, including information about the methodology used.

At this stage, Nike has only released "full reports" for three factories and there is no information on how many such reports will be released. Nike has not said why they have only released such a small number of reports, nor the basis on which these reports were chosen - was it, for example, a random selection, or one based on the content of the reports?

The "full reports" provide very limited information. They do not indicate what questions PWC asks workers, how workers are selected for interview, how workers' confidentiality is protected, nor how much time is spent interviewing each worker and building a relationship of trust. The students Nike sent to observe PWC's monitoring found significant problems in each of these areas. This program of disclosure will not tell us whether these problems are rectified.

These "full reports" also fail to indicate how workers answered specific questions, giving only very broad (and very brief) summaries of the monitors' impressions. Many of the sections of the Canadian report are left blank. All three reports indicate that "at Nike's request" the monitor didn't conduct a full health and safety investigation nor an environmental investigation at that time.

Nike has released a list of the number of "non-compliances" found by PriceWaterhouseCoopers and the resulting action plans for 53 factories in North America. Nike has not said on what basis these 53 factories were selected for release of information from amongst the 167 factories which supply Nike in North America. Again it is not clear whether reports from other factories in North America have been withheld at this stage because their content may be damaging to Nike. Nike has made a commitment that over the long term the list of non-compliances and action plans of more than 700 Nike contract factories will be released, with this information released a little at a time, quarter by quarter. Nike has not said why this information can only be released on a quarterly basis rather than all at once.

While interesting, the list of non-compliances for these 53 factories tells us what PWC's monitors found, not how effective their monitoring is in discovering the extent of labour abuses in Nike's contract factories. Of course, this summary list provides us even less information about PWC's methodology than the "full reports". In the three full reports, for example, the number of workers interviewed in each factory varies from 3 to 25. We have no way of knowing which number is more indicative of the number usually interviewed.

2. Full disclosure would involve release of factory addresses in association with these reports so that independent research could assess the effectiveness of Nike's monitoring program. We have questioned whether an accounting firm visiting factories one day each year will have the motivation or expertise to build a relationship of trust with workers so that they know they can report problems in their factory with out fear of retribution. Workers in a number of Nike factories have told us that they are warned before Nike's monitors arrive that if they say anything negative about the factory it could result in losing orders from Nike and as a result they or their fellow workmates might lose their jobs. While full release of PWC's reports (including information about methodology) would be a useful step towards accountability we will not know how effective PWC's monitoring is until Nike is willing to release the names and addresses of the factory to which each report relates, so that independent research can be conducted and PWC's monitoring can be assessed against it.

EFFECTIVENESS OF PWC's MONITORING

Given that the purpose of calling for transparency is to assess the effectiveness of Nike's monitoring programs, it is useful to consider what these reports tell us about the key concerns which have been raised by labour rights groups.

1. Protection of Workers' Right to Organise

Nike's code claims to protect workers' right to freedom of association, a human right protected in the Universal Declaration of Human Rights and in ILO conventions.

Nike has chosen to site much of its production in countries or industrial zones where it is illegal for workers to form their own unions and even in countries where it is legal to exercise this right independent research has found that in Nike contract factories workers are commonly harassed, discriminated against and dismissed for seeking to express it. If this right was properly protected in Nike factories it would provide an "on the ground" monitoring system far superior to annual one day visits by an accounting firm.

This disclosure indicates that PWC's reporting on protection of this right is extremely weak. The list of definitions tells us that this rights is grouped under "Respect for Workers and Rights" in each report, but it is not specifically mentioned in this section of any of the three "full reports" which Nike has disclosed and in the Canadian report this section itself is entirely blank.

Many of the students who Nike sent to observe PWC's monitoring reported that workers are asked about this right using language which workers cannot understand. Since this disclosure does not reveal which questions are asked there is no way of knowing whether this phrasing will be changed. It is not at all clear whether PWC asks workers whether anyone has tried to form a union at the factory and what happened as a result, nor whether PWC seeks to interview any union organisers to ensure that they are not being discriminated against.

In order for Nike's code to effectively protect workers' right to organise it is also necessary that Nike workers understand that the code is supposed to protect it. Although Nike has told us that considerable steps are taken to ensure that workers' know and understand the code, this new disclosure of PWC's monitoring suggests that workers are not even asked about their knowledge of the code. One of the three full reports mentions that workers have a very limited knowledge of Nike's code but this is mentioned as a casual observation, there is no indication that workers were asked directly about it and no action plan is put in place to rectify it. Neither of the other full reports make any mention of the issue and (unlike "Management Knowledge of Code") it is not listed in the "compliance grid" for the other 50 factories.

Finally, if there is dismissal, harassment or discrimination against workers who try to form unions in a factory then no worker will tell a monitor about this unless they have confidence that doing so will not lead to discrimination against them. There is no indication of whether PWC monitors take any steps to establish a relationship of trust with workers they interview nor if they behave in a manner which would warrant that trust (by, for example, ensuring that all workers they speak to are not subsequently discriminated against).

2. A wage that meets workers basic needs

In the letter on March 15 some of us called for Nike to ensure that workers are paid (at the very least) wages sufficient to meet their basic needs and those of a small number of dependents with some discretionary income and some money for saving. Nike has not agreed to this. The students did report, however, that PWC asks workers if their wage meets their basic needs but what workers say in response is not even reported to Nike. The three full reports do have sections about what percentage of a workers income they are able to save or spend on a dependent. In the Mexican report 76% of the 25 workers interviewed indicated that they were not able to save or spend anything on dependents, but two workers indicated that they were able to use more than 50% of their income in this way - a discrepancy possibly explainable if these two workers lived at home and were supported by their parents. In the US and Canadian reports this section is blank. Tim Connor