Accounting: Ernst & Young Audit of Nike
Corporate Plant in Vietnam Prompts Positive Steps from Green Wash to
Green Initiatives David M. Boje
23 October, 1999, Last Revision Dec. 8, 1999
Green Wash Accounting is defined as
making it appear to the public that green accounting is going on, when
it is just a story told to keep customers, investors, and regulators
We begin with a well-documented
analysis of the Nike Corporation whose Green Wash came to
light when their contracted Ernst & Young Environmental Audit of a
Vietnam sneaker plant was released to the public. Nike is a
transorganization, a network of 450 subcontracting factories, NikeTown
outlets, subcontracts to FootLocker and numerous other outlets,
contracts with sports teams to wear Nike logos and apparel, including
contracts with university athletic programs. Nike employs
450,000 workers of which 85% are women.
World of Greenwash By Kenny Bruno (press
here) Greenpeace and
Corporate Watch team
up to give a monthly award to the ultimate in corporate
Greenwash.. "Welcome to the world of GREENWASH, where
transnational corporations (TNCs) are preserving and expanding
their markets by posing as friends of the environment
and enemies ofpoverty."
Day list of Awards (press
WASH AWARD - Sweatwash The Apparel Industry's Efforts to
Co-opt Labor Rights By Julie Light December 1998 (press
12, 1999 MONTREDON JOURNAL French See a Hero in War on
Corporation - Check out the Roundup ads (press
you are an old fashioned "cowboy" who does an
annual "round up" of your prize cattle.
Monsanto's cutely named poison now can be combined with
their seeds genetically engineered to tolerate
increased doses of roundup. " Boycott ROUNDUP and all
Monsanto products, especially Monsanto Roundup Ready
Soybeans. The same company that brought us Agent Orange
advertises itself with the GreenWash advertising of
"Food, Health, and Hope."
Award of the Month: Monsantoby Kenny Bruno (press
dairy hormone may be carcinogenic (press
here) From: Thu, Mar 18, 1999, LONDON (Dow Jones)
and Fox TV Unite to Suppress Journalists' Free Speech
on Hazards of Genetically Engineered Bovine Growth
Hormone (rBGH or rBST) Ronnie Cummins (press
STATES ENVIRONMENTAL PROTECTION AGENCY WASHINGTON D.C.
20460 OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE....
MEMORANDUM SUBJECT: Criminal Investigation of
Monsanto Corporation - Cover-up of Dioxin
Contamination in Products - Falsification of Dioxin
Health Studies (press
Investing How To Avoid Monsanto Investments (Mutual
Funds, Stocks) (press
of Monsanto Watch items (press
Spin : The Corporate Assault on Environmentalism by
Sharon Beder (April 1998) Chelsea Green Pub Co;
ISBN: 1890132128. (press
chapters describe the methods used, including
employing specialized PR firms, artificially created
grassroots support for corporate causes,
deterring public involvement, industry-funded
research, and getting corporate-based
"educational" materials into schools.
Tactics include, so-called "wise use
movement" (which exploits the fear of rural
peoples and scapegoats environmentalists rather than
bad economic policies and greedy corporations); the
creation of expensive, phony, anti-green
"grassroots campaigns"; the terrifying use
of free-speech threatening SLAPPS ("strategic
lawsuits against public participation"); the
undeserved power of "conservative,"
pro-business, pseudo think-tanks";
ecology-bashing P.R. firms; slick "green
marketing"; youth-targeted propaganda; and the
tragic failure of ourmajor media to inform us about
what's actually going on."
for Sale : Reclaiming Ecology in the Age of Corporate
Greenwash by Brian Tokar (press
here) South End Pr; ISBN: 0896085570 The War
Against the Greens : The 'Wise-Use' Movement, the New
Right,and Anti-Environmental Violence by David
here) 1997 Sierra Club Books; ISBN: 0871569078 For
more on Wise Use anti-Green Campaign (press
here) or see EcoWorld (press
here). Is there a war against the Greens?
We also look at Intel in New Mexico,
McDonalds and other cases involving Green Wash. In each case, as
public exposure brought the Green Wash practices to public attention,
the corporation did attempt to move from Green Wash to Green, with
varying degrees of success.
Each case appears to follow the
following steps toward Green Enlightenment, from denial, Green Gloss
(the second stage of Green Wash) to awareness, acquisition, to actual
implementation of Green Accounting. In short, a transition from
functionalist environmental (denial, risk limitation, and green wash)
accounting to green accounting practices.
Response 1--Denial-Head in Sand "Not our problem"
FIRST CASE: NIKE
- This is a case study of Nike
Corporporations' awakening to the need to use Green Environmental
Accounting (EA). The Nike Corporation now reports on its web
site that it has implemented Green EA practices to deal with key
Response 2 --Green Gloss (Green Wash) - Public relations Campaigns
"We Just Do it"
Response 3 --Strategic awareness - Minimal Compliance Internal
managerial recognition of need for environmental change
Response 4 --Strategic Acquisition - Proactive --Voluntary
environmental audit -- such as hiring environmental audit firms.
Response 5 --Flagship Implementation-Understands
Sustainability--Change core mission to include green goals and set
up a green program
RESPONSE 1 - From 1960 to 1992.
Nike engaged in Response 1: Denial. Nike blamed any an all
environmental and labor problems on 450 subcontractor firms. Nike
claimed it had a Code of Conduct (press
here) and subcontractors were not in compliance.
- In 1999 the Environmental Area of
the Code was revised to read as follows: ITEM "6.
Management of Environment, Safety and Health (MESH): The
manufacturer has written health and safety guidelines,
including those applying to employee residential facilities,
where applicable; has a factory safety committee; complies
with Nike's environmental, safety and health standards; limits
organic vapor concentrations at or below the Permissible
Exposure Limits mandated by the U.S. Occupational Safety and
Health Administration (OSHA); provides Personal Protective
Equipment (PPE) free of charge, and mandates its use; and
complies with all applicable local environmental, safety and
RESPONSE 2 - From 1992 to 1996
Nike engaged in Response 2: Threshold awareness. Nike hired 800 public
relations experts which they dispatched to produce counter-stories.
They hired Ambassador Andrew Young to write studies to counter charges
and studies of activies.
RESPONSE 3 - From 1996 to 1998
Nike is engaged in a Limited Response 3: Strategic Awareness.
Environmental and social audits (limited) have been conducted by major
accounting houses, but no changes were implemented in any
environmental agenda until the release of the Andrew Young audit by a
"disgruntled" Nike employee to the press was a major source
of embarrassment to Nike. It has resulted in front page articles, ESPN
reports on television, and is the subject of movies, such as Michael
Moore’s "The Big One." This is the first time that an
accounting firm's labor and environmental audit of any apparel company
has ever been made public.
RESPONSE 4 - Strategic
Acquisitiong of environmental aduting. Nike had audits for several
years before the realse of the 1997 report, but the major activities
in enaivonrmental action began in 1997 and continue to the present
moment. At least, I assume this is when Nike took
proactive control over its supply chain and 450 sub-contractor plants
to change labor and enviornmental conditions at the factory level.
RESPONSE 5 - Flagship
Implementation towards Sustainability seems to have happened at an
accelerated rate in 1998 and 1999. The scale of activities has
intensified and Nike is now making its bid to do all the documentation
required to become ISO 14000 certified.Environmental
Auditing Case Study I
am including excerpts from the "Ernst & Young Environmental
and Labor Practice Audit of the Tae Kwang Vina Industrial Ltd. Co.,
Vietnam," 6 January 1997 below. To read the entire report
including copies of letters from Ernst & Young to Nike and Nike to
here. I would also like to begin by listing academic univeristy
scholars who have looked at enivironmental and labor practices of Nike
in its Asian factories. Much of their work is on the web.
- In 1999, Nike implemented an
Environmental Section on its Web Site (press
Figure One: Nike
Product Life Cycle (Source press
The Nike Life Cycle
reads "The path a Nike shoe runs from design to manufacturing to
marketing to post consumer use can be compared to any type of athletic
endeavor. Each step, from selecting the right gear to teaming
together, is as important as the next in meeting the sporting
challenge." As a transorganization, "Nike has also teamed up
with manufacturing partners and materials suppliers to develop
lists of materials and chemicals that eliminate commonly used
substances known or suspected to be harmful to human and/or ecological
systems." This is step #1 on the illustrated model. One result of
this team-work at step #2 is "replacing conventional cotton with
organically grown cotton in various apparel items." Another
tangible result is "Nike's own patented REGRIND® technology
reuses the excess rubber from our outsole molds, a program that keeps
millions of pounds of solid-rubber waste out of landfills each
year." Nike also reports "Moreover, we're freshening
up footwear production methods by replacing volatile organic
petrochemical-based solvents with cleaner water-based
alternatives." 1.3 million gallons of solvents have been reduced
from their process. To box its shoes at #3 in the chart, Nike
"created a 100 percent post-consumer recycled corrugated
cardboard design." At Step #4, Nike helps consumers
recycle, "Reuse-A-Shoe has already kept more than 7.5 million
post-consumer and defective shoes out of landfills." Finally, in
step #5, downcycling, Nike uses the collected sneakers and save rubber
scraps in various projects: "We grind up the shoes you bring back
through the Reuse-A-Shoe program and make carpet padding,
equestrian trails, basketball and tennis courts, running tracks and
In sum, in all
these ways, Nike uses its transorganizational relationships with
research firms, suppliers, subcontract factories, retailers, and
consumers to effect positive changes in its environmental
practices. Nike's new 1999 environmental policy is "We at
Nike are implementing the idea of sustainability into our business
here for source).
eandeavor to -
In short, between
1997 at the time of the release of the Ernst and Young environmental
audit and 1999 with the revised environmental policies on Nike's web
sites, it would appear that Nike has moved from Response 4 - doing
enviornmental audits to Response 5 - flagship implementation of those
principles of sustainability into all major business decisions
our environmental impacts in our day to day operations
and throughout every stage of the product life cycle.
- Design and
develop product, materials and technologies according to the
fundamental principles of sustainability.
- Promote our
practices throughout the supply chain and seek business
partnerships with suppliers who operate in a manner consistent
with our values.
- Educate our
employees, customers, and business partners to support our
goal of achieving sustainability.
awareness into action by integrating environmental
responsibility into job responsibility.
with experts and organizations that contribute to our
knowledge about sustainability and stewardship of our outdoor
to quality of life in the communities in which we operate.
measure and report progress.
- Strive for
continuous improvement in everything we do.
- Comply with
all applicable and relevant regulations wherever in the
world we do business." (press
here for original Nike document).
I would like to
suggest that the realease of the Ernst and Young audit to the media
and into consumer and investor awareness was a stimulus to this
transorganizational change and development. It represents a
major change by 450 factories, hundreds of firms in the supply chain,
NikeTown, Footlocker and other outlets who together recycle two
million pairs of shoes a year, and reduce the use of millions of
gallons of solvents. Nike tells its saga of environmental
enlightenment as dating back to 1993. Nike, for example, "
has over 85 Reuse-A-Shoe collection partners in 13 major metro areas
across the US" (press
here for source document). Nike indicates it began its MESH
program in 1998, which just follows the release of the Ernst &
Young environmental audit.
Nike dates many of
its initial enviornmental efforts to 1993:
Environment Safety Health - "MESH unifies all the
environment, health and safety efforts made with our
various manufacturing sub-contractors into a common
understanding of goals and a common means of measuring our
actions. We kicked off implementation of this new management
system in June 1998.Yet, the Ernst and Young audit release did
prompt the introduction of wage increases, OSHA standards, and
a revision of Nike's environmental policies in 1999. Nike
organized a series of nine two-day workshops in four countries
last year with tools, templates, and written documents -
all translated into five languages." (Press
here for Nike source document).
The current 1999
efforts include the Airt To Earth (ATE) program of Nike training of
grade school students in the U.S. in the manufacture of its athletic
Nike Environmental Action Team (N.E.A.T.) was founded in
February, 1993, to coordinate and direct Nike's worldwide
environmental programs. In particular, N.E.A.T. works toward
reducing Nike's impact on the planet in the context of our
policies, operations and products." This includes
"Nike REGRIND, Reuse-A-Shoe and eco-friendly packaging
strategies all stem from the ingenuity of our own
here for Nike source document).
It is in the area
of improved reputation that Nike has the most to gain from moveing
from Response 1 - Deinal, to Response 2 - Green Wash onto Response 5 -
Flagship Implementation of ISO14000 and ISO14001 environmental
practices throughout its transorganizational network of suppliers,
manufacturers, distributors, and sports team relationships.
While I contend that the public release of the Nike Ernst & Young
environmental audit in 1997 accelerated Nike's interest in improving
its environmetnal reputation, Nike says otherwise. For example instead
of saying it is using less toxic or non-toxic solvents, Nike's story
is it is doing it for the consumers' allergies to chemicals:
Air to Earth program provides a foundation for grade school
students to understand their part in the big picture and
what they can to do to play a starring role. This
creative, inspiring program details the life cycle of an
athletic shoe and features well-known athletes as interpretive
guides throughout the curriculum. ATE is already being used by
416 teachers and making a difference in 622 classes around the
here for Nike source document).
effort in 1999 - "Worn athletic shoes contributed
during the Falcon's 1999 season will be transformed into a
turf football field. The field will go to the winning
organization of the "Dear Nike, We Need a Field"
contest to run throughout the season" (press
here for Nike source document).
14000/14001 Certification efforts by Nike Corporation
DOING IT How Nike Greens Its Asian Suppliers to Reduce Its
Environmental Footprint Reprinted by Nike with
permission from The Green Business Letter: The Hands-On
Journal for Environmentally
Conscious Companies (http://www.greenbiz.com), September
1998. Copyright ©1998 by Tilden Press Inc. All rights
here for Original Article on Nike Web Site). Excerpts
recently began rolling out a series of nine,
two-day workshops to help its contract facilities
develop environmental, health, and safety management
systems. At the end of the yearlong process,
participating factories not only will have
dramatically improved their EH&S performance but
also will have the necessary information and systems
in place to pursue ISO 14001 certification, if they
choose to do so. Nike's goal is that every footwear
factory have a functioning EH&S management system
in place by June 2001, regardless of whether they
pursue ISO certification."
has joined in another transorganizational partnering
with U.S.-Asia Environmental Partnership (US-AEP).
benefits from increased efficiency. By reducing
wastes, companies can decrease handling expenses,
fines, and even costly inputs.
savings may be passed along to buyer companies.
advantage through innovation.
production can be enhanced through the use of
cleaner technologies, process innovation, and
partnerships help maintain relationships between
buyers and suppliers leading to increased control
over product quality.
corporate environmental goals. In an era of
multifaceted, nonvertical manufacturing,
companies should include supplier outreach to
address corporate environmental goals.
reputation. Consumers, investors, and employees
respond often positively.
Nike works with two
consulting firms to implement its ISO14000/14001 certification:
interest in the environmental performance of its Asian
suppliers was spurred in part by questions from customers
about what chemicals were used in its shoes; many consumers
were trying to avoid chemical sensitivities and
here for Nike Source document).
In sum, Nike is
moving rapidly to change its public image of its labor and
enviornmental practices by implementing environmental auditing
recommendations of Ernst & Young, NGO recommendations by Dara
O'Rourke and others, and seeking ISO certifications.
consulting firms, The Gauntlett Group and Environmental
Resources Management, developed materials. Business for Social
Responsibility's Apparel Industry Working Group helped develop
tools and facilitate sessions. Nike has begun to use The
Natural Step principles in its training, part of its growing
relationship with that organization. US-AEP, Nike, and BSR are
collaborating on criteria for a model Asian "green
factory" that aggregates the most innovative
here for Nike Source document).
Studies of the Nike Environmental and Labor Practices Initiatives - There
is a growing list of Academic researchers who are studying Nike's
environmental and labor practices. They are comparing Nike documents
with statements collected in interviews and media reports on Nike
behavior. Here is a list with links to many of their studies.
OTHER ITEMS TO
CONSULT FOR BACKGROUND BEFORE CONTINUING
David (1999) "Reading
For A Change: Some Thoughts About Change-based Expressive
Inquiry" presentation to the Discourse and Language
Conference at Ohio State University. Barry did an analysis of
Boje,s 1998 "Nike, Greek goddess of victory
or cruelty?: Women’s stories of Asian factory life"
article and has his own unique perspective on Nike (se below).
- Boje, D. M.
Nike Roadrunner or Wile E. Coyote? A Postmodern Organization
Analysis of Double Logic, published in Journal of
Business & Entrepreneurship. Special Issue (March, Vol II)
77-109.. This is an analysis of the relationship between
Nike activists and Nike. This is a pre-publication draft. For
1999b through e by Boje (press
- Boje, D. M.
Greek Goddess of Victory or Cruelty? Women's Stories of Asian
Factory Life Journal of Organizational Change
Management. Vol 11(6): 461-480; a special issue
"Strategic Dimensions of Organizational Change and
Restructuring in the Asia Pacific: Part II, Concerns of Local
- Boje, D. M.
Swoosh Goddess is a Vampire: Nike's Environmental Accounting
StorytellingPp. 23-32. In International Business and
Ecology Research Yearbook. IABD Publication.
- Chan, Anita
1996 "Boot Camp At The Shoe Factory, Where Taiwanese
Bosses Drill Chinese Workers to Make Sneakers for American
Joggers", Washington Post, Outlook, November 3. p. C01,
Dongguan City, China. (press
here) . or (press
here) Dr. Anita Chan, Contemporary China Centre,
Australian National University (expert on working conditions
in shoe factories in China), 02-62414285 (home), 02-6249 4260
Cheryl L. (1996) "American Jordan: P.L.A.Y., consensus
and Punishment." Sociology of Sport Journal, 13(4):
Cheryl L. (1997) "P.L.A.Y., Nike, and Michael Jordan:
National Fantasy and the Racialization of Crime and
Punishment." Center for Cultural Values and Ethics.
department of Kinesiology, Women's Studies Program, Unit for
Criticism and Interpretive Theory, Unviersity of Illinois at
Urbana-Champaign, Louise Freer hall, 906 South Goodwin Avenue,
Urbana, IL 61801 (press
here) for web paper.
Cheryl L. and Amy Hribar (1995) "Celebrity Feminism: Nike
Sytle (Post-Fordism, Transcendence, and Consumer Power)."
Sociology of Sport Journal, 12 (4).
- Macintosh, Norman, Teri Shearer,
Daniel Thornton & Michael Welker 1997 "A
Baudrillardian Perspective on Accounting." Queen's
University School of Business Research Program Wroking
Paper 97-06Kingston, Ontario, K7L3N6. Paper presented to the
September 1997 conference, "Accounting, time and
Space" sponsored by the Accounting, Organizationas and
Society and the Copenhagen Business School. Article uses
Nike as an example of selling stories of Michael Jordan star
power to consumers while masking the "sub-human,
slave-like factory conditions, [workers] piad a pittance,
while Jordan earns more from Nike in a year than all of Nike's
factory workers" (p. 6).
Leslie S., Barbara Townley, Michele Chwastiak - 1997
"Theorizing Accounting at the Margin: Bourdieu, Ledger
Art, Nike and Elder Care."Paper presented at the
Interdisciplinary Perspectives on Accounting Conference,
UK. e.g. "Ernst & Young and other
accountants who have been called upon to document or attest to
fair labor standards at Nike and other overseas factories. In
this vignette, we note how the accounts of Indonesian and
other third-world women are partially silenced by the
attestations of "professional" accounting
Where the Major Shift Happened In
Nike's New Environmental Strategic Posturing
- Nike Inc.'s new List of News
Articles and Press Releases in support of its changed
environmental and labor practices (press
- For a List of Key Reports by
Academics and NGO's on Nike practices (press
- For links to media and activist
reports on Nike (press
- For an In The News Chronology of
Nike storytelling in reaction to media and NGO storytelling (press
In what follows, I also intersperse
photo from Dara O'Rourke, TRAC Research Associate and United Nations
consultant, who was able to independently document conditions at
the site of the Ernst & Young audit, the Tae Kwang Vina
factory in Vietnam. Mr. O'Rourke conducted walk-through audits of
environmental and working conditions, interviewed management
personnel, met with Tae Kwang Vina's managing director and interviewed
workers confidentially outside the factory.
The critical PR issue for Nike is that
its "Code of Conduct," was apparently not being followed.
The release of the Ernst & Young environmental audit to the public
called into serious question the relationship between what Nike's
officials said it was doing and what auditors found in
this factory, dangerous working conditions that persisted even with
audit reports from several prior years.
- See - SMOKE FROM A HIRED GUN:
A Critique of Nike's Labor and Environmental Auditing in
Vietnam as performed by Ernst & Young by Dara
O'Rourke November 10, 1997 (press
Above "Photo" by-Paul Kitagaki
Jr. of Oregonian is first day at work at Nike-Vietnam Factory.
Background. In November, 1997,
Corporate Watch's parent organization, the Transnational Resource
& Action Center (TRAC) released a secret, internal Nike document
which had been leaked to Corporate Watch. According to Corporate
here) "The hard hitting critique of Nike's Vietnamese
sweatshops also generated a series of scathing articles and columns on
the business pages and sports pages of newspapers across the U.S. and
around the world." There were 33,000 letters from concerned
customers sent to CEO Phil Knight after the news reports.
Before beginning the case study, I need
to reiterate what Dara O'Rourke (1997) reported:
- See for example --- Nike Shoe
Plant in Vietnam Is Called Unsafe for Workers Steven
Greenhouse New York Times, Front Page November 8, 1997 (press
here). For additional articles on this issue (press
- For an In The News Chronology of
Nike storytelling in reaction to media and NGO storytelling (press
here). For Boje's analysis of media coverage and
Nike storytelling behaviors (press
- Boje, D. M. 1998g. The Swoosh
Goddess is a Vampire: Nike's Environmental Accounting
Storytelling Pp. 23-32. In International Business and Ecology
Research Yearbook. IABD Publication (press
Shortcomings of the Ernst & Young
here) -- for full text.
- The audit is missing information
regarding occupational health and safety, environment, and
general working conditions.
- The methodology employed by Ernst
& Young ignores most accepted standards of labor and
environmental auditing. For example, the audit involved no
monitoring or sampling of air quality in the factory.
- Most of the data came directly
from management sources.
- The audit overlooks many of the
key issues of concern in Nike plants around Asia, including:
physical and verbal abuse of workers, sexual harassment,
repercussions for attempts to organize, and contract
Ernst & Young Audit Report
here for original). Note: Despite methodological flaws, the report
does come to a number of striking conclusions about the working
conditions inside Tae Kwang Vina. The following are direct quotes from
the origial Ernst & Young Audit Report::
The total Vietnamese workers as of
December 1996 was approximately 10,000. (200 office staff; 335
supervisory levels and 9,465 worker). The average age of the workers
ranges from 18 to 24. Majority of them are recruited from Bien Hoa
City and adjacent cities within 10 km distance from the factory.
II. Production facility compliance and waste tracking system
Improvements can be done on the following
points noted to comply more with the Vietnamese Environmental
Regulations and to improve the environmental and working condition of
1.In Stitching shop, the number of
workers is enormous (approximately 2,000 persons) but there are only 4
main doors which are not sufficient. The electrical ventilators and
natural air booths can not reduce too much heat and dust inside.
2.In Mixing chemical warehouse,
ventilation system (cyclones) does not work efficiently and requires
repair to reduce dust of harmful chemical powders that can affect
3.In P.U. Shop, harmful fume (caused by
Toluene used for out-sole cleaning) needs more of VT's attention.
Protective equipment (PE)
Personal protective equipment (gloves,
masks) are not daily provided. In many places, workers do not wear
protective equipment for reasons cited by the workers as follows:
1.Protective equipment are inconvenient
in performance of their work.
2.Ventilation in shops are not adequate
causing more discomfort for wearing PE.
3.Absence of strict implementation of
4.The workers' inadequate understanding
of the harmful effect of chemicals.
Black smoke fumed from the stack
Firing non-reusable garbage in combustors
caused exhaustion of black smoke into the air. The company should
consider that matter and accelerate measures and application to reduce
Photo by Dara O'Rourke with caption that
"Burning Scrap Rubber in a Boiler -
Which Emits Pollution, Violating Environmental
Dust concentrators are available but they
are inadequate to meet the dust requirements of the factory.
|Dust in Mixing Shop exceeded
the standard 10 times (based on inspection done by VT
under the contract between VT and the Ho Chi Minh City
University of Technology- called Environment Impact
Assessment Report) [Emphasis, mine].
Harmful use of chemicals
Dara O'Rourke Photo - "Working on
Nike Uppers with Glue and Solvents and No Protective Gear"
Measures should be taken in using Toluene
for sole cleaning both VT authority and workers.
Measures taken by V.T regarding Toluene:
|From a "sample of 165
employees from Mixing, P.U., Roller sections, there are
128 employees (77.57%) getting respiratory
disease..." (E&Y Page 9. References in this
section are to the Ernst & Young Report which is
included as an Appendix.)
"exceeded the standard from 6 to 177 times" in
several sections of the factory. (E&Y Page 8) Toluene
is a chemical solvent that is known to cause central
nervous system depression, damage to the liver and
kidneys, and skin and eye irritations. Source:
According to Nike's Chemical Procedures,
V.T needs more consideration while storing, handling and using Toluene
because it is flammable and it is harmful to one's health. Protective
equipment are as follows: safety glasses, lab coat, vent hood, proper
gloves, and class b extinguishers.
O'Rourke Photo -- "Workers
Without Respiratory Protection Using Gloves"
In storing chemical, VT strictly followed
Keep away from heat (isolated warehouse,
Toluene containers being used are kept far from production line)
Avoid contact with eyes, skin, clothing.
Avoid breathing vapor. V.T stipulates users to read and follow
procedures posted on containers.
Storing area is cool, dry, well
ventilated, flammable liquid stage area. (Except in TPR Shop)
Despite the above, usage of Toluene still
poses some problems:
Absence of safety glasses totally in the
Absence of proper gloves (TPR Shop, PU
Shop use only cotton-fiber gloves)
Vent hood is used but rarely in
production process. The reasons are already cited above.
III. Compliance with permits and requirements by Nike, Inc.
VT has complied with Code of Conduct and Memorandum of Understanding
as required by NIKE.
IV. Employees health and safety measures
Place Before 5/96
Place in 10/96
|1. Le Ngoc
|2. Nguyen Van
|3. Tran Thi
|4. Hoang Cong
|5. Do Van Toan
|6. Bui Van Khai
|Not Reported --
Source: The information on the working place of employees with
from the payroll register. The information on the worker's
obtained from the Summary of Regular Check-up of
21 May 1996.
|Chemical releases have led to an "increasing number
of employees who have disease [sic] involving skin, heart,
allergic, [and] throat working in chemical involved
sections." (E&Y Page 8, as cited in O'Rourke,
1.More then half of employees in Mixing, Roller, P.U., Stockfit,
lamination, TPR (sections using chemical) do not wear protective
equipment (mask and gloves) even in highly-hazardous places where the
concentration of chemical dust, fumes exceeded the standard
2.In Stockfit section where the employees can smell Toluene fumes,
only thin cotton mask and gloves are available while according to
requirements of NIKE, mask, protective suite, polyvinyl gloves are
3.Chemical information sheets and standardized chemical information
sheets are not found in Mixing, Roller and TPR sections.
4.The employees just know such chemicals are harmful for their health
but they do not know what these chemicals are and how to deal with
them because the employee have no training on chemicals.
5.Generally, chemicals are properly situated in the factory, spaced
adequately except one warehouse whose location is close two tanks of
F.O, D.O about 25m.
6.There are no training on proper handling of chemicals for related
employees in daily exposed to chemicals.
Production machines in the factory are new (year of production 1995)
and in good condition. They have stable covers and the contents are
separated from the users.
On 12/06/96, the Health Care Center of Dong Nai checked the labor
environment condition of the Company. Following are the results:
1.Heat: The permitted standard is 28oC while the heat level at
Pressing, Boiler and Assembly room is from 32-33oC.
2.Noise: The permitted standard is 85-90dB(A). The noise in the
Cutting, Pressing, Rotary P.U, and Assembly exceeds the standard
(85-101 dB(A)). If the noise is 90 dB(A), the working time can not
exceed 8 hours/day. At present, working time at the above sections is
3.Dust and Toxic fumes:
Toluene: the level at Assembly I-sole fit, Assembly Ultra Violet, Sole
sinking, Attaching room of Stockfit section; Sole fit Ultra Violet,
Attaching room of Assembly line and Mixing section exceeded the
standard from 6 to 177 times (emphasis, mine).
Aceton: the level at Assembly I-sole fit, Assembly Ultra Violet,
Attaching room of Stockfit section; Sole fit of Ultra Violet of
Assembly line exceeded the standard from 6 to 18 times (emphasis,
4.Dust in mixing room exceeded the standard 11 times (emphasis, mine).
5.Ventilation in most of sections is below the standard
6.According to report on Environmental Impact Assessment, employees'
petition and our investigation, the ventilation in 2 old buildings is
not sufficient because of high density of employees and heat from
machines (P.U, Stitching).
- Above photo by by-Paul Kitagaki Jr. of Oregonian News
(Depicts lunch room line up -- venteliation is kept at a
minimum in the lunch room to keep the lunch line moving and to
keep workers from hanging too long there).
7.The employees working in sections with noise > 85dB (A) have had
no earplugs yet for noise >90dB(A) still worked >8 hours/day.
8.The protective devices are still cotton mask, gloves. Minimal number
of employees wears available protective devices.
9.Toluene and Aceton are still at high levels.
10.Increasing number of employees who have disease involving skin,
heart, allergic, throat working in chemicals involved sections.
Recommendations are as follows:
1.Equip the employees working in areas with noise > 85dB(A) with
2.Employees working in Mixing, Roller, P.U section need adequate
equipment such as protective glasses, mask (professional), long
sleeved shirt, polyvinyl gloves.
3.Toluene and Aceton in Stockfit section exceed many times to
standard. The Company must equip ventilation system and fumes
4.The Company must prepare the list of chemicals used in details and
the solution to deal with them then submit the list to Hygiene &
Anti-epidemic Center in order to be notarized and approved.
1.Medical room of the factory has 3 staff (1 doctor, 2 nurses).
According to chief of medical room, the number of staff is not
sufficient to serve such a large number of employees.
2.There is regular medical check-up in the factory -2 times/year, 3 or
4 times for employees in special section as Mixing, Roller. This
regular check-up bases on random basic (200-300 employees/time).
3.Per result of checking health by Hygiene - Anti Epidemic Center of
Dong Nai dated 21 May 1996 on the sample of 165 employees from Mixing,
P.U, Roller sections, there are 128 employees (77.57%) getting
respiratory disease and 7 employees (4.24%) getting heart disease (not
resulting from working condition). The report said that employees
getting diseases of heart, allergy, respiratory should not work in
chemical-involved labor environment.
4.We have checked the change of working place of some employees
getting the above diseases and working in chemical environment and
found that they are still working in the same section (based on
From 1st April 1996 to 30 October 1996, there are 73 cases of labor
accidents is the carelessness of employees. There are 2 accidents in
which 32 cases happened at pressing section. The major reason of most
accidents caused by "the employees inadequate understanding to
operate the machine".
END OF ERNST & YOUNG EXCERPTS
Dara O'Rourke did an analysis of the
Ernst & Young Environmental Audit Report in 1997.
The following are excerpts from Dara O'Rourke (1997) (press
here for entire text).
WHAT ERNST & YOUNG MISSED
In my interviews with employees, I was given information about
numerous violations of Nike's Code of Conduct that were not discovered
by the Ernst & Young audit. I was informed that managers of Tae
Violated Vietnamese labor laws on maximum overtime hours.
Night-shift workers in the stitching section told me that their
"standard" work week is 10.5 hours per day, six days per
basic work week can lead to 700 or more overtime hours per year,
well over the legal maximum of 200 overtime hours per year.;
Forced overtime. Workers complained that they have no choice in
whether or not they work overtime. Workers are told one day in
advance that they must work overtime. If they "choose" not
overtime more than twice, they are likely to be fired .;
Violated Vietnamese labor laws on pay. Tae Kwang Vina is required
to pay increasing wages based on workers' skills. Workers at skill
level 1 should be paid the minimum wage ($40/month) times a
multiplier, skill level 2 should be paid $40 times a hi gher
etc. One staff member told me the company ignores this legal
requirement, giving annual salary increases much lower than
Broken strikes. Tae Kwang Vina management have repeatedly
threatened to fire all workers who wouldn't return to work during
strikes over the last two years. An office staff member explained that
"managers investigate who incited the action, and don 't fire
but make them change jobs, and treat them very badly until they
Physically and verbally abused workers. I was told numerous stories
about managers hitting workers. Reportedly, in one case the director
of security hit a Vietnamese guard. In another case, a manager hit
several women workers with a broom while tr ying to force them to
leave the factory in a single file line.
Sexual harassment. Several workers told me that a Korean manager
allegedly attempted to rape two women workers last year, and then
fled the country. This was widely reported in the Vietnamese press.9
Independent monitors on the ground in Vietnam wou ld have been
aware of this case and would have followed up on these issues.
Tae Kwang Vina is the most technically advanced of Nike's
in Vietnam, and according to Nike is no worse on labor or
issues than the other four Nike factories in Vietnam.10 In fact, Tae
Vina received the highest score of Nike's five factories in Vietnam in
The serious omissions and biases in the Ernst & Young findings
the weaknesses of using accounting firms to audit labor and
practices. These auditors are not trusted by workers, and their
never submitted to public scru tiny.
WHAT ERNST & YOUNG SHOULD HAVE ANALYZED
In following Nike's instructions for the audit, Ernst & Young
comprehensively analyze labor and environmental conditions inside the
Tae Kwang Vina factory. The audit is missing important information
regarding occupational health and safety, env ironment, and general
working conditions. An audit should be designed to determine normal
operating practices within a factory, to evaluate recognized hazards
how they are controlled, and to analyze how new hazards are identified
and controlled.12 I n order to do all this, auditors need to be
hazard recognition, and must be able to independently assess
actions. Ernst & Young failed to adequately analyze both existing
and procedures for resolving new hazards.
An Industrial Hygienist who performs worker health and safety
inspections for the State of California13 noted that if Tae Kwang Vina
been operating in the U.S., it would have been cited and fined on
numerous counts, including:
lack of personal protective equipment;
absence of a hazard communication program;
lack of job-specific training for operating machinery; and,
lack of drinking water in high heat stress environments.
The Ernst & Young audit failed to examine any of these issues in
and ignored exposures to other hazardous chemicals such as Methyl
Ketone and glues in the plant. The audit also failed to examine why
employees with respiratory illnesses were still working in areas of
exposure without controls, and why no safety committee exists in a
with 9,200 workers.
The audit should have also examined issues that are common points of
concern in Nike plants around Asia, and that have been specifically
at the Tae Kwang Vina plant. Workers should have been interviewed
off-site with guaranteed anonymity regarding physical and verbal abuse
managers, sexual harassment, general working conditions, and pay
Lora Jo Foo, Managing Attorney for the Asian Law Caucus and President
of Sweatshop Watch, asserts that "it is impossible to do an
minimum w age or overtime compensation without having information on
the actual hours worked, and the take-home pay of the workers, both of
which were missing from the Ernst & Young audit. A proper analysis
would involve unannounced monitoring of working hours, an d interviews
with workers away from the factory."14
The environmental section of the Ernst & Young audit similarly
most of the key environmental issues in this factory. At a minimum the
audit should have listed all chemicals used in the plant, noted that
scrap rubber in the factory's boiler s is violating Vietnamese
laws, and proposed alternatives to burning rubber.
A truly independent audit of labor and environmental practices would
involve a more complete analysis of the system within the factory
affects working conditions, health and safety, and the environment.
includes: management policies and action s, company organization,
training, hazard prevention programs, and existing and potential
and mental hazards. A long-term auditing program would also include
comprehensive health studies of workers in hazardous sections of the
plant. This type of audit obviously requires well trained auditors
committed to independent analysis of the conditions inside the
END OF O'ROUKE SUPPLEMENT
Implications of the Nike Case
FOLLOW UP WORK
- We have gotten a rare
glimpse of environmental auditing in a major transnational
- The release of the environmental
audit violates the confidentialy agreement between auditor and
- Nike's behavior since the release
of the audit has been to implement OSHA safety and health
standards, raise wages, and invite additional monitoring.
- Nike continues to draw
subcontractor behavior into tighter compliance to Nike's
espoused code of conduct.
- I conclude that Nike began
monitoring to appease consumer and investors, but with the
public relations storm following public release of the Ernst
and Young environmental and social audit, Nike began making
actual changes in its labor and environmental practices.
In 1999, Dara O'Rourke revisited
the same plant that was studied in the Ernst & Young audit.
He forund that numberous areas of the plant were significantly
upgraded, but that there was more to be done.
In sum, I have reviewed how Nike is
restorying itself since the whistle was blown by a disgruntled Nike
employee. I reviewed how desperate and oppressive work and
environmental conditions were in a frequently audited Vietnam
plant. I contend it was the release of this audit to the public
arena of awareness that led to a shift in Nike's environmental
strategic posturing. The good news is that with the strategic
shift, Nike may be able to attain ISO14000/140001 standards
certification. And Nike may move from the stages of denial, throught
its GreenWash to becoming a Flagship implementer of positibe labor
practices and eco-sustainable strategies. I would caution that a good
deal of NGO and certified environmental auditing needs to take place
to verify Nike's strategic shift and claims.
- O'Rourke, Dara and Garrett Brown
1999 "Beginning to Just Do It: Current Workplace and
Environmental Conditions at the Tae Kwang Vina Nike Shoe
Factory in Vietnam." This is a report sponsored by Nike,
to return to Vietnam to verify the changes at the plant since
the release of the Ernst and Young report and Phil Knights
announcements of changes in labor practices. (press
- "However, while
important improvements have been made at VT, significant
health and safety issues still remain. Workers in some
sections of the plant still face overexposures to
hazardous chemicals, and to heat and noise levels in
violation of Vietnamese and comparable US laws. There is
thus a need to fully evaluate and control exposures to
chemicals, noise, and heat, and to establish an effective
on-going health and safety management program. Respiratory
illnes rates also remain a concern. Further steps are
needed to bring this factory into compliance with US
Occupational Health and Safety Administration (OSHA)
standards, as pledged by Nike."
SECOND CASE - INTEL
Still under construction
McDonalds - under constructionPress for TD Consulting Gameboard,
Green Accounting Gameboard
or Storytelling Organization Gameboard.