A report on the Legal and ethical issues of Nike company


1- Write a report on Legal and ethical issues in with reference to Havard within 2000 words.



The report discusses the internationally renowned brand of sports from US, the NIKE. The selected companyis critical analysed for its business practices that includes both the legal and ethical aspects. The Nike Brand dominantly operates in one industry across all geographical region namely in the development, design, marketing and selling of the athletic apparel, equipment and most importantly foot wear(Vault, 2019). The company in Australia had 414 employees in Australia that includes all the subsidiaries under the company’s control ("Nike Australia Pty Ltd", 2019). In 2018 there was 73000 staffs globally employed by Nike.The brand of Nike is globally renowned and is present in most of the developed economies. The brand was reported to have 330,000 women workers in that nation for very low wages like 27 cents for an hour with very poor working conditions. In 2017 the brand had a rating of 36th among a 100 companies in 2017Fashion Transparency Index which suggest that the brand is not doing enough to keep upto its environmental and social practices(Nike News, 2019). The head quarter of the business is located in One BowermanDr, Beaverton, OR 97005, USA. The issues with the business and its counters that the business may perform to compete with other businesses globally. 

Legislative and Regulatory Frameworks

The past of Nike shows that it’s a brand working for the most reputed sports fashion brand and is the top selling active wear brand of the globe. However, various reports on the grounds of ethical, social and legal frameworks for the businesses has been questioned like the International Labor Forum Report to which the brand has turned its back in performing the commitments to the Worker’s Rights Consortium (WRC). The brand is a member of the international Sustainable Apparel Coalition which has made few positive changes to its previous ways and practices. The brand has made up the mind to cut its carbon emission by 50% within 2025. The Greenpeace has issued statements against Nike for the use of Hazardous chemical and disposing them to the workers without proper protection endangering their lives along with the pollution, it creates in the environment (Good On You, 2019). 

The Ethical Fashion report has branded the brand with a C for its Ethics and concerns in the Labor practices which is a low and is far from improved. The workers empowerments is minimal for the brand which makes the business score low in implementing living wages or its efforts to improve wages across the supply chain. The findings showed that the brand paid more in marketing and promotion of players from the profits which has reduced the wages of people down in the supply chain for the huge expenses that they undertake for promotions. There are other brands as well which have the same problem but Nike is a Global brand and such reports decrease their market share. The people or the outsourced labor for the business comes from Vietnam, Thailand, Vietnam, Sri Lanka like poor nations (Good On You, 2019). So the wages structure there or the legal obligations in such economies can be played around as the people are willing to work for any price without being concerned about the minimum wages. The gap in the environmental protection too due to its operations in such third world nations which bypass the laws for some money and the primary employer, in this case Nike has kept their silence on such issues. 

The denial of the fundamental rights like working conditions, wages, freedom in work selection etc has been reported for the brand. The selection of the poor nations is due to the laws there or the implementation of them in such nations. The government turns a blind eye towards the plight of the people and environment in such economies due to the fear that the investment made by Nike may go out of the nation thus giving the stakeholders of Nike to exploit the people and environment of such nations as per their will (Prezi.com, 2019). 

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The Australian laws on its Operations

The laws of Australia is very much in effect for Nike for its Australian business which makes it responsible for all its actions by them or its stakeholders. The 2013 event of Nike’s Bangladesh factory collapse was a big one which resulted in the death of 200 employees. The people in the market came to know that Nike was spending a lot on image building and least on the safety and welfare of its workers. The 8storied building collapsed taking in ground the brand name of Nike. The building collapse brought forth the laps that the brand had in terms of its third party selection. Nike transferred its businesses to other companies or suppliers rather completing them in-house. In April of 2017, the brand was caught selling its shoes in the black markets where one of its employee was making profits and this made the government take notice. The brand was trying a special tax deal which would allow it to have the best of product supervision across all its markets. So the allocation of resources were well done and allocation of resource in a meaningful time was completed. An efficient law is important for the Global operators like Nike like tax breaks for marketing costs etc to facilitate its business. The violations done by the regulators were to be taken up by the principal employer as per the commonwealth laws which is put in effect for the Nike’s business at Australia. 

The report from the Vietnam factories in 1999 showed the gross violation of its laws and general welfare where the brand was caught with toxic materials been exposed to unprotected employees and environment (Prezi.com, 2019). The mandatory laws of the people’s welfare, ethical treatment of people and environment was to be on the producer Nike to have a market opening in Australian economy. Further, by using recyclable materials which ensured that 50,000 less trees are cut each year was undertaken making the brand less carbon emitting and thus making the globe a better place (Ethical Consumer, 2019). However, the emission of Greenhouse gas was a big problem since it was bad for both people handling them and the environment. Investing a lots of money and time on the problem the brand made the needful solution now but it was after a long gap and after a massive effort. The use of PVC in its products and such steps to see that they produce significantly lesser landfills. The Nike Grid was established to reuse old shoes and use the material to produce shoes later as well which would reduce its emission and enhance its cost efficiency. Since 2013, 13 million pairs of shoes has been recycled via this program. The use of 3% organic cotton in its products were also undertaken which was to improve the conditions of cotton farmers (Business.gov.au, 2019). 

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Treaties, conventions and agreement that have affected the business in Australia

The MNC companies like Nike obtains supplies from the sweat shops established in Asian countries. This sweatshop provides exploitative wages and condition to their labors. The manner and extent of exploitation violates the treaties of basic human rights.  To operate in a foreign market like Australia, the business of Nike needs to follow certain laws and ethical principles. The laws guides the business of what to do and how to do them. The contacts of Australia is very competent to make a business operate the way it wants them to globally. The Australian laws guides the businesses to behave in a certain manner which is ethical and legally permitted by the business (Mortensen, 2014). The issues like Independent contractor as in the case of Nike has to have the laws followed by them if they wish to produce in the Australian soil and market. The Australian Taxation Office or ATO guides the employers and contractors to keep the processes like taxation, superannuation, and worker’s compensation like guidelines as a decision making took for the business to ensure that the contractors they have with them are following the laws of the land. The principle employer or Nike can only select a contractor who follows the environmental and ethical practices for its operations (Business.gov.au, 2019). 

The laws protects the employees from the bully of the employer who may repress them with various tact. Hence antidiscrimination laws, laws of payment of wages, proper working condition, 40hours a week job etc are part of it. Harassing people or intimidating them is unethical which is protected by the laws of the land and gives the employees all the due diligence to complain against the worker so that they minimize the risk of consequence and damage (Business.gov.au, 2019). The environmental legislations like The Protection of Environment and Biodiversity Act works in the business and affects the business type with environmental and natural elements like sea, soil, air etc are well explained herein (Business-humanrights.org, 2019).  

The production of the business has to go through a long phase of work like procurement to processing, packaging and sales. The sea, air, heritage cites, fuel quality, toxic wastes are all guided by this legislation of 1997 (Business.gov.au, 2019). The ways to monitor the gases, using the water, disposal of waste etc are well mentioned there so that the people may know and act accordingly to protect the environment that the business is working in. The commonwealth takes a note irrespective of the states about the natural degradation in the nation so that no big harm is made to the environment due to mal business practices. The code of conduct for operations morals and ethical practices for the brand has to be in place and be known by all in the business so that they are aware of their rights and responsibilities.

The business has targeted to have a Carbon Di oxide emission free process by 2020 and a target to reduce its emission by half by 2025. Hence, the business is following each and every steps in accordance to the laws of the land (Rosen, 2016). The previous hazardous and the complaints of the businesses unethical functioning has taken away many investor’s interest for the brand which has made the brand to reevaluate its working and ethical standards that it follows in its operations. The previous mistake of employing contractors from cost efficient markets has costed the brand a lots of money and fame in the recent past. The corporate reports of fashion and ethical index shows a low for the brand which it needs to improve upon its engagement with the civil society and hear from them. As being the principal employer, the responsibility for the labor forces and the chemicals used by the business is upon the Brand to see and respond upon when there is a lapse. The mutual collaboration and respect among the stakeholders and the use of materials and supervision of the processes needs special care to ensure that the legal frame work of the land are in place. An internal inspection helps the business to ensure that the laws of the market they are working in is well managed.  

The commitments that the business has to its people working both in house and in the contractors firm needs to have the best working and wages condition. The ethical treatment needs to be strong where they are aware mistakes to see that the brands name and image gets a better scope and score in the long run. The use of ethical, recyclable goods along with ethical behavior with the people in its supply chain has to be ensure by the business for its long term benefits. Previously Nike had a great deal of bad name for the unethical tax practices which made it invest in tax havens. This practice of hording money secretly to avoid taxes needs to go so that the stakeholders can rely on the business and its governance more. 


The environment is the subject of ethical behavior for the business where it should not only rely on the local laws but establish the best of practices. This would enable the ethical behavior not only in the business but also in among its stakeholders who are a major part of its operations. The balanced of the best practices would cost the business some money would give a great return I the long run. Since the brand image is of prime concern for the brand so the impact of such environmental as well as labor conditions complains can make is huge. The competence and the image depends on the brands methods to maintain the best practices. The check and supervision that the laws are kept and best practices are implemented along with the preset targets is a huge part for the business to gain in the days ahead. 


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