PRACTICES OF

GOOD
GOVERNANCE OF
NIKE

SUBMITTED BY : ROSEMARIE ANNE F. RODOLFO

Nike aims to be a brand with purpose that moves the world forward.
To achieve that, we need all parts of our value chain to understand
and deliver on our goals – from our leaders to product designers, to the
employees in our stores, and workers in contracted factories who
make our products. A strong governance structure, coupled with a
sustainability mindset, provides the foundation for driving collective
decision making and accountability across the company.

CORPORATE RESPONSIBILITY,
SUSTAINABILITY & GOVERNANCE
COMMITTEE
Our ability to succeed starts with leadership commitment at the highest level. The
Corporate Responsibility, Sustainability and Governance (CRS&G) Committee of our
Board of Directors is responsible for reviewing Nike’s significant strategies, activities
and policies regarding sustainability, contract manufacturer labor practices, community
impact and charitable activities, among other duties, and make recommendations to the
Board. The committee sets the tone and pace for sustainability within Nike’s business
strategy. Learn more.

Responsibilities include:
 Review and provide guidance to management on sustainability issues and impacts,
and the integration of sustainability into Nike’s business, including innovation, product
design, manufacturing and sourcing, and operations.
 Review, provide guidance to management, and report to the Board on sustainability
(including labor practices) within Nike’s supply chain, and review reports of Nike’s
sustainability audits.
 Review and provide guidance to management regarding Nike’s work with industry
organizations and non-governmental organizations concerning corporate
responsibility.
 Annually review the activities of the Nike Foundation and Nike community impact
initiatives.
 Review and make recommendations to management on reporting to shareholders
and other communities regarding corporate responsibility activities.
 Review, provide guidance to management, and report to the Board regarding the
involvement of significant corporate responsibility issues in major business decisions,
to protect Nike’s valuable goodwill, and human and intellectual capital.
 Review and make recommendations to the Board with respect to any shareholder
proposal that relates to the matters overseen by the Committee.
 Annually evaluate the performance of the Committee and report the results of the
evaluation to the Board.
 Review and assess annually the adequacy of the Committee’s charter.
 Perform such other duties and functions as may, from time to time, be assigned to
the Committee by the Board.

PERFORMANCE AND DISCLOSURE

COMMITTEE
We established a Performance and Disclosure Committee – composed of Nike’s Chief
Administrative Officer and General Counsel, Executive VP of Global Communications,
Chief Financial Officer, Chief Operating Officer and Chief Sustainability Officer – in 2012
to provide oversight and direction on Nike public sustainability targets, reporting and
disclosures.

This body provides executive oversight of strategy, approach and release of company
reports, and the filters we use to participate in ratings, rankings, indices and key public-
facing agreements. The committee also provides executive oversight of development
and performance of relevant sustainability targets and corporate sustainability
policies. This oversight includes providing enterprise leadership for integrating
sustainability into corporate and functional strategy to ensure that the efforts are
resourced and supported to be successful.

NIKE TEAMS FOCUSED ON

SUSTAINABILITY
Nike’s core Sustainable Business & Innovation team is part of Nike’s Advanced
Innovation function. The SB&I team links sustainability and leadership across our value
chain including innovation and product creation, sourcing and manufacturing, facilities,
logistics and retail.

We have also connected teams across Nike with a common sustainability vision.
Specifically, we have sustainability-focused teams within Product Creation, Nike Direct,
Global Sourcing & Manufacturing, Supply Chain and Brand. These teams report to the
leaders of those areas and coordinate directly with SB&I through our Business
Integration team.

2020 SUSTAINABILITY TARGETS

Company-wide, we have long used corporate sustainability targets to drive
accountability and measure progress. We leveraged the development of our FY20
targets to further integrate sustainability into business operations. The embedded
sustainability teams drove the target-setting process for their functions with support and
guidance from SB&I. We expect targets to continue driving shared progress across our
value chain into the future.

Our targets cover progress against environmental, social and community topics. Nike
publicly reports progress to these targets in our regular Sustainable Business Report.
We also provide quarterly updates to our key business partners, the executive
Performance & Disclosure Committee, and the Nike Board of Directors. Learn more
about our progress to 2020 Targets.

SUSTAINABLE MANUFACTURING AND

SOURCING INDEX (SMSI)
In 2012, we launched our Sustainable Manufacturing and Sourcing Index (SMSI), a
system for combining factory ratings for lean manufacturing and human resource
management, with those for health, safety and the environment (HSE). This system
gives environmental and human resource management performance equal weight with
business metrics in our sourcing, increases transparency to reduce noncompliant
practices, and creates targets and incentives to improve performance and go well
beyond compliance.

Our SMSI has become an important input into factory selection, encouraging
performance improvement, eliminating underperformance in factories, and driving
business to those that perform best. Reaching a bronze rating on our SMSI
demonstrates full factory compliance with our Code of Conduct and Code Leadership
Standards, which are designed to protect the rights of workers and create a safe
working environment. Those that reach silver and gold reflect an additional commitment
to progressively embedding lean manufacturing and performance management
systems.

MATERIALS SUSTAINABILITY INDEX (MSI)

The Nike Materials Sustainability Index (MSI) helps our teams to choose better
materials from better vendors by allowing them to compare the environmental footprints
of more than 50,000 different materials, supplied by more than 700 vendors.
The MSI provides scores based on a variety of relevant environmental criteria, forming
the basis for how we measure product sustainability. The index takes into account the
energy, water and chemicals used to make materials, as well as waste generation. It
also rewards material suppliers for participating in sustainability programs. By
leveraging the MSI, our teams can choose materials with verifiably lighter environmental
footprints.

The materials score feeds our product indices – the Footwear Sustainability Index and
the Apparel Sustainability Index. These indices provide a way for our product creation
teams to measure the complete environmental profile of each product and make better
choices in planning, designing and developing products. The materials score from the
MSI accounts for more than 50 percent of the score for both footwear and apparel,
which helps teams understand the impact of their choices.

Teams also understand how they can improve the sustainability scores of products by
using better materials, such as cotton that is recycled, organic or certified by the Better
Cotton Initiative. Teams can also claim incentives to improve scoring, such as using
materials that require fewer chemicals or use less energy during manufacturing.

STAKEHOLDER ENGAGEMENT
Throughout our journey from corporate responsibility to sustainable innovation, we have
benefitted from constructive counsel from and engagement with a variety of external
stakeholders – civil society organizations, industry, government, consumers and others.

Engaging stakeholders helps us understand and manage emerging issues and risks,
and also helps us identify opportunities for innovation. Nike engages stakeholders
informally, for example in our work with coalitions and industry associations such as the
Sustainable Apparel Coalition and We Mean Business. We also engage in more formal
ways as part of our approach to issues or challenges, for example our work with the
World Resources Institute on our approach to assessing our greenhouse gas footprint.

Since our first Corporate Responsibility Report in 2001, Nike has formally involved
external stakeholders as part of the reporting process. This engagement has been a
critical tool in helping us improve the quality of our reporting and approach to corporate
responsibility and sustainability overall.

For the FY16/17 Sustainable Business report, we worked with Ceres to engage with a
set of stakeholders three times over a period of a year to provide guidance on our
transition to more targeted reporting and increased storytelling on our website.

EMPLOYEE ACCOUNTABILITY
We’re driving deeper accountability across the business by including sustainability
aspects in the performance evaluations of employees in our product engines. The
performance reviews for footwear and apparel employees include sustainability
deliverables and objectives, such as providing category teams and leadership with
progress updates against Nike’s product sustainability indices.

An organization created under the regulations of a state to act as a legal person to carry
on business, which can sue or be sued, can issue shares to raise funds with which to
start or to increase its capital is a corporation. There are also non-profit corporations
organized for religious, educational, charitable or public service purposes. One of the
corporations are the “Nike, Inc” which in other words can be said a company. And what
here will be discussed the process how a corporate body that is Nike governs, ethic of it
and the corporate responsibility of it upon the business world and balance of interest of
the stakeholders such as Government, Employees, Customers, Suppliers, Creditors,
Community.

It contracted with more than 700 shops in 45 countries all around the world. Although it is
an USA based company, its most of the factories are located in Asia, including China,
India, Indonesia, Malaysia, Pakistan, Philippines, Taiwan, Thailand and Vietnam. Its
mission’s statement is “to bring inspriation and inovation to every athlete in the world".

Ethics and Objectives:

Success in this era, now a days, means maintaining brand value and all that, Nike does
not seem to be exceptional. It is reasonable for every company to have some codes or
objectives or ethics written down somewhere, but what is important how it is
communicating and enforcing throughout the ongoing business and production manner.
Here can be quoted Kansas City Journal, by Arthur Chaykin "even Enron...had a perfectly
good code of ethics. However, no one was responsible for enforcing it, advocating it or
serving as a clearing house for issues arising under it". Nevertheless it is a fact, at least
whenever training is not directly increases profit, the facilities are merely just a “nice-to-
have” rather than necessity. For the remedy example of Oracle Learning Management is
a highly suitable solution to this problem.

Barrier to the objective:

One of the important points in the notion of Corporate Governance is the