Nike Corporation1BackgroundlNike is the biggest manufacturer of sportswear in the world, and employs almost 1 million people.lNike outsourcing contracts 500 factories in 45 countries.2AccusationslIn 1996, Nike was accused of labor violations and human rights abuses in foreign countries.3Nikes ResponselNike responded withlLabor CodeslPersonal LetterslCampus VisitslNewspaper Releases4LitigationlMarc Kasky, a San Francisco resident, sued Nike for false advertising, saying the statements were a marketing charade.5Nikes ResponselNike said its speech was protected by the First Amendment.lThe company won the first trials, but lost in the California Supreme Court.lNike successfully appealed to the US Supreme Court.6ConsequenceslIf Nike were to lose on the grounds of false advertising, companies everywhere would be liable for almost any public statement, muzzling corporations.lIf Nike were to win on the grounds of First Amendment protection, companies would be legally empowered to mislead consumers.7Supreme Court DecisionlThe US Supreme Court decided 5-3 to postpone ruling on Nike vs. Kasky. lGroups on both sides complained about the decision, having hoped for a solution.8Charity SettlementlNike made a charity settlement, giving $1.5 million to the Fair Labor Association.lGroups on both sides of the issue complained about the settlement.9Ethical ConsiderationslProduct advertising ethics are more lenient than responsibility advertising ethics. Was Nike ethical in the way it promoted its responsibility campaign?l What methods of communication should companies use to promote social responsibility?10Corporate Social Responsibility Statements: A Possible SolutionlCSR Statements would require companies to report labor and environmental information like the financial information in balance sheets.11CSR ReportinglCSR Information is widely sought and used:lInvestors screen companies for violationslConsumers more loyal to responsible companieslCSR information improves corporate imagelCompanies are more likely to improve if information is disclosed 12CSR ReportingCSR reporting would remove legal ambiguity from companies seeking to improve transparency.13