The company that monitors Nike’s labour standards throughout the world has shut its US-based auditing unit that carries out much of the work.
PricewaterhouseCoopers says its social compliance monitoring unit will no longer operate in the US and has been switched to Europe. This means Nike will have to look elsewhere for much of the monitoring it has been carrying out on supplier factories.
PwC said: ‘We can’t talk about Nike as we don’t discuss our client work, but we have moved the social compliance monitoring unit to Europe and though we are still offering monitoring services in over 60 countries, that will not include the US.’
Dusty Kidd, vice president of corporate responsibility at Nike, told EP: ‘PwC has decided to get out of that business in the US. We will continue to use them for some of the work they do, but not work in every country. We’ve got a strong relationship with them that goes back many years, but given that they have chosen to get out of the monitoring business in the US we don’t have a lot of choice but to move elsewhere.’
Kidd said Nike had decided to hand some monitoring work to Global Social Compliance, a company set up in May by Randy Rankin, a former senior PwC employee in the US with expertise in the field. He added that Nike was keen to develop links with NGOs such as the Global Alliance for Workers and Communities, which recently produced a hard-hitting report – at Nike’s invitation – on supplier factory conditions in Indonesia.
David Wheeler, director of business and sustainability at the Schulich School of Business in Toronto, said: ‘What Nike and others are now looking for is a level of public approval which the big five auditing firms aren’t able to deliver on their own. Companies like Nike now want to get NGOs and other civil society actors involved in auditing and monitoring, which may be one of the reasons why this relationship has played its course.’
PwC did not comment on why it had closed down its US monitoring wing, but is believed to have taken into account some of the negative publicity it has received for its work with Nike.
A number of NGOs have questioned PwC’s methodology for monitoring Nike suppliers, and it came under fire over the Global Alliance report. This found serious concerns about the way workers were treated at nine factories that PwC had not mentioned following its audit.
However, Nike said that the two organizations had entirely different briefs.
Global Exchange, a US-based non-profit body, claimed Nike’s programme of factory monitoring by PwC ‘lacked independence’ because the retailer had selected PwC and had also designed the inspections programme.
The Fair Labor Association has appointed three more monitoring organizations to audit factories in the garment industry on its behalf. They are Intertek Testing Services, the Global Standards consultancy and Merchandise Testing Labs. The FLA now has six such monitors eligible to conduct external monitoring in factories.