Over the past decade, Nike’s factory partners have made significant progress in Labor and Health, Safety and Environment (HSE) performance. This is a direct result of our collective focus on collaboration, transparency, implementation of new tools and systems and a commitment to putting workers at the center of our compliance and innovation efforts.
This journey has proven that continuous improvement and implementation of new business models helps raise the bar for the important work we all do to engage and support workers and increase our standards of social and environmental performance. Programs such as Lean and Human Resource Management are two important examples of building greater ownership and capabilities by our factory partners to drive systemic, long-lasting change.
With the work we’ve all done to date, we are on track to reach Nike’s goal of having 100 percent of contract factories achieve a rating of Bronze or above by 2020. In fact, in Q1 FY16, 86 percent of our contract factories rated Bronze or better, and a large percentage of those have been steady at a Bronze rating for three or more years. This demonstrates that factory leadership has embraced taking ownership of compliance performance with the aim of achieving more Silver ratings.
To drive further progress towards our North Star mission to deliver game changing innovation through a revolutionized and sustainable, world-class source-base, we will continue to evolve our strategic approach to sustainability and compliance management.
As such, Nike is implementing the Factory Compliance Ownership (FCO) program. The goal of the FCO is to achieve 100% Bronze or above factory performance ratings by embedding further ownership and payment for compliance and audits into factory operations, incentivizing factory performance, and aligning factory performance to Nike’s sustainability consulting resources. This program is a necessary evolution in our approach to compliance ownership that will allow us to deliver more support and innovative programs those in-line factories seeking to move into Silver and Gold rating. The cost of the factory audits will be directly linked to the level of risk and performance at each location. The details of these costs will be shared with you in further communications from the field teams supporting engagement in your region.
Nike will continue to take an active role in assessing that the requirements set within Nike’s Code of Conduct and Code Leadership Standards are met by all contract factories. Nike will continue to monitor contract factory compliance by conducting audits, along with other approved third party auditors, as we do today. In addition, Nike will still selectively monitor factories via un-announced audits.
In the coming weeks our Nike field teams will be meeting with factories across our sourcing base to provide more detailed information about the rollout and implementation of the program. Where in-person meetings aren’t possible we will make alternative arrangements. In the meantime attached is an information gathering form; it is important that this form is filled out and returned to ensure Nike has accurate factory contact data.
A sustainable future requires evolving our business model to use innovation to bring about positive change across the entire supply chain and continuing to listen to the voice of the worker. Thank you for your continued partnership and support in driving business value through higher performance.
Best Regards,
Nick Athanasakos, VP Nike Inc Global Sourcing & Manufacturing
Sharla Settlemier, VP Nike Inc Sustainable Manufacturing & Sourcing