Is Nike an Ethical Company? Dylan Mulvaney Campaign Leaves People Wondering

Nike is the world’s largest supplier of sporting shoes, apparel, and equipment. The company makes about $50 billion in annual sales. Nike has found itself at the center of several controversies from signing Colin Kaepernick to promote its brand to its fine in Europe over antitrust violations.

Also, Nike's reliance on cheap labor in Asia and registering subsidiaries in tax havens make some people wonder whether it's an ethical company.

Because a large percentage of consumers own a pair of Nike's or at least purchased something from the brand in the past, it's good to know whether the company people are supporting is considered ethical. Here's what we know about Nike's practices.

Nike manufactures most of its products in factories overseas. For its array of products from shoes to soccer balls, Nike works with nearly 800 independent factories. Together, the factories employ more than a million workers around the world. Nike’s contract factories are mainly in China, Vietnam, Indonesia, and Thailand.

So, does Nike manufacture anything in the U.S.? The answer is yes, some of Nike's manufacturing work takes place in the U.S., including shoe manufacturing.

Nike has faced criticism for contracting overseas sweatshop factories to manufacture its products. The factories have been found to violate minimum wage and overtime laws. The so-called Nike sweatshop factories are mainly located in China, Vietnam, and Indonesia. However, Nike denies supporting sweatshop labor.

Nike has also been accused of contracting factories that use child labor to manufacture its products. There have been claims of child labor in Nike’s supply chain in Pakistan and Cambodia. Nike says that it doesn’t support child labor. The company has taken steps to ensure that its contract factories don’t use child labor.

In addition to sweatshop and child labor claims, Nike waded into another controversy when it signed former NFL quarterback Colin Kaepernick to advertise its products in 2018. Kaepernick became a controversial figure after he knelt for the National Anthem. Nike’s deal with Kaepernick seemed like an insult to those that are against kneeling for the National Anthem.

Nike also got into trouble with some people and groups in 2019 when it decided to stop selling shoes with a design featuring an early American flag called the Betsy Ross flag. Nike halted the sale of the shoe after receiving advice from brand ambassador Kaepernick. Kaepernick said that the flag may be a symbol of hate since it came from the era of slavery.

Some conservatives didn't support Nike’s move. They accused the company of disrespecting America’s history. In response to Nike’s decision to halt the sale of shoes with the Betsy Ross flag, Arizona Governor Doug Ducey said that he would deny a $1 million grant that had been offered to Nike for investing in the state.

Nike has also faced tax evasion controversies. Confidential documents known as Paradise Papers revealed how Nike and other companies used offshore subsidiaries located in tax havens to reduce their tax bill.

In 2022 and again at the beginning of 2023, Nike came under fire over allegations of forced labor. While the company did not directly address the issue, it noted in its FY22 Impact Report, “We work to elevate human potential through our products, partnerships and operations, something that cannot be accomplished without a fundamental respect for human rights throughout Nike's operations.”

Then, in April 2023, several people, including Olympian Sharron Davies, called for a boycott over Nike's Dylan Mulvaney campaign. Mulvaney is a trans activist who has partnered with several others brands including Bud Light.

Despite the controversies Nike has found itself engulfed in, it appears to be pushing toward making its team and culture more diverse and inclusive.

Although Nike protrudes itself as a company that has banded together with people from all walks of life, past contracts with female athletes still has some questioning its ethics. In 2018, after Olympian Allyson Felix got pregnant, Nike dropped her pay by 70 percent in her new contract. The result? Felix ditched the brand and joined athleisure wear company Athleta instead.

Then, in 2021, seven-time Olympic medalist Simone Biles left Nike to pursue other opportunities which also included a partnership with Athleta. Insider reported that Biles felt that Nike "did not support her adequately as an individual."

In addition to Biles and Felix, there have been other female athletes who have opted not to renew their contracts with Nike including Chiney and Nneka Ogwumike as well as Breanna Stewart.

Nike's recent partnership with Mulvaney has not only brought its past controversies to light, but has some questioning Nike's decisions involving female sponsors.

Nike was fined $14 million in 2019 in Europe over antitrust violations. The antitrust fine was related to a matter involving Nike restricting how its licensees sell soccer team merchandise across Europe.

European authorities have been tough on American companies over antitrust issues. Alphabet’s Google has faced nearly $10 billion in antitrust fines in Europe in recent years. Apple also became the subject of a European antitrust probe after Spotify complained about its practices.

In addition to regulatory fines, Nike has lost money through its operations. The company suffered a $790 million loss in the fiscal fourth quarter, which ended in May 2020. Nike's loss happened at a time when sporting events were canceled around the world in response to the COVID-19 outbreak. The company has since watched its sales increase.

Nike’s controversial signing of Kaepernick for its advertising campaign wiped nearly $4 billion from the company's stock market value, although the deal boosted the company's sales. Nike stock trades on the NYSE under the ticker symbol "NKE."