Beyond the Profit: Nike and the Quadruple Bottom Line

Proposed Title: Beyond the Profit: Nike and the Quadruple Bottom Line Description of Project: The movement towards sustainable business is growing as the threat from civil wars, poverty and climate change becomes ever more real. No organization can sit back and do business as usual as doing so would be counterproductive. How can any business ignore the fact that its market is contracting as more and more people are losing their jobs? How can any organization ensure its long-term sustainability if the entire planet is on the verge of implosion? Faced with all these social problems, the boundaries between businesses and non-profits are blurring as “several streams of societal interests including financial investment, responsible business ethics and of course, environmental preservation” (Wibbeke & McArthur, 2013, p. 63). The stress is no longer on the profitability of a business but rather on its capacity to “meet today’s global economic, environmental, and social needs without compromising the same opportunity for future generations” (Wibbeke & McArthur, 2013, p. 63). The move towards sustainability is not only driven by changing morals in business, but also, by the increasing capacity of consumers to hurt the company’s bottom line through consumer boycotts. In a research on the impact of the opposition of the French in the war in Iraq in 2003 to the sales French wines in the United States (Chavis & Leslie, 2006), it was discovered that “the boycott resulted in 26% lower weekly sales at its peak and 13% lower sales over the six month period…the boycott lasted for” (Chavis & Leslie, 2006). Meanwhile, Marco Haan (2005) created models for consumer boycotts so as to guide firms on how much should they give in to consumer’s wishes. Towards the end of the study, he said, “Firms lose out when they do face a boycott, but they gain even more when their competitor does, since this gives them more market power. I also showed that the stronger a boycott will be, the more a firm will cater to the consumer’s wishes….an increase in competition may also induce firms to behave in a more responsible manner” (Haan, 2005, p. 19). Thanks to the internet, consumer boycotts not have lower transaction costs so that it has become even more powerful in pressuring businesses to adhere to strict operating standards that are beneficial to the society as a whole. In sum, societal sustainability is not just a moral business strategy, but a profitable one as well. The role of business to societal sustainability was explored in the John Elkington’s Cannibals with Forks: Triple Bottom Line of 21^st Century Business, the concept of profit, people and planet gained momentum, prompting the world’s top companies to publish reports express their new ways of value creation. But even the triple bottom line is no longer enough to represent the bigger role businesses have to play in their communities. As such a new label was born: the quadruple bottom line which “provides the means to measure, value and assess the addition of culture, spirituality and faith in reporting” (Sood & Tulchin, 2015). This is an important development as the world’s wars and civil unrests are motivated by differences in religions. Moreover, the emergence of secular spirituality among millennial generations prompts businesses to change their own corporate values in order to become attractive to their new clientele. If there is one company that can attest to the importance of utilizing the Triple Bottom Line and prioritizing societal sustainability as a business strategy, then it is Nike. As early as 1991, Nike received widespread criticism for the low wages and poor working conditions of its subcontractors in Indonesia. Many of the workers in these factories received less than the minimum wage, while others were physically and verbally abused. Nike’s bottom line suffered forcing the company to lay off workers. The turning point came in 1998, amidst weak demand for the company’s products and unrelenting criticism – Nike had to change. Nike decided to face the issue head-on and to take concrete actions. It initiated the Fair Labor Association and performed factory audits in order to discover the extent of the problem  (Nisen, 2013). It demanded its subcontractors to meet its corporate sustainability efforts, and published a list of factories it contracts with, complete with the working conditions and wage rates in these factories. Considered as a parent of Corporate Social Responsibility, Nike’s CSR efforts is still a world leader. No other company has been able to utilize its critics in monitoring the performance of all its subcontractors. Moreover, Nike’s success in turning its PR woes of the past to a new brand value that is relevant to the society is unprecedented. Nike is the proof of the concept of business as an agent of sustainability, and its plans for the future will pave the way for better societal engagement among business endeavors. Yet, despite Nike’s efforts to improve its CSR, it still has its failures. For example, a report by the International Institute for Sustainable Development (2015) says  that it is still unable to monitor the labor conditions in the factories of its overseas suppliers. In some factories, employees are working overtime in hazardous working conditions, while in others, children are utilized as laborers. Nike says that the problem is systemic (Banjo, 2014). It has to struggle to change mind sets and values of its own subcontractors, if it hopes to move forward with its CSR goals, and it is in this sense that the quadruple bottom line will be of use, where organizations are required to perform well in these four areas: “financially, environmentally, socially, and in how they treat their employees… How they treat their employees often gets included in the triple bottom line definition of the social category, but it warrants a separate and distinct set of measures and a high level of accountability.  It is an area where the impact of organizations is measurable, significant, and may be quite different than the impact on the communities in which they operate” (Lawler III, 2014). While the time for the quadruple bottom line has come as more and more organizations hope to transition to the QBL reporting (Lawler III, 2014), there is little to no agreement on what the fourth bottom line will be. Through this research, the author hopes to define what the quadruple bottom line is, why it is important in relation to societal sustainability, as well as provide a possible scorecard for reporting the fourth bottom line. Research Questions:

1. Why does Nike have to consider societal sustainability as a strategy?
2. What type of sustainability or CSR challenges does Nike face? How have they impacted the company's business?
3. How can the quadruple bottom line ...