Nike, the renowned sportswear giant, is currently facing increasing scrutiny from its investors regarding human rights risks in its supply chain. A coalition of smaller investors has proposed a resolution for the upcoming Annual General Meeting (AGM) in September, urging the company to reassess its management of human rights and labor standards. This is particularly relevant given the backdrop of alleged labor violations, including wage theft at factories in Cambodia and Thailand.

In a letter sent last year, signed by 70 investors managing over $4 trillion in assets, inquiries about Nike’s supply chain oversight went unanswered, leading to heightened shareholder activism. Martin Buttle from CCLA Investment Management expressed concern over Nike’s lack of engagement on these pressing issues, emphasizing the need for transparency and accountability.

Nike’s management, however, has recommended voting against the resolution, claiming existing policies sufficiently address human rights in sourcing. Historically recognized as an industry leader in responsible sourcing following past controversies, Nike now appears to be under significant pressure. Critics from various advocacy groups claim that their current practices are not enough, calling into question the efficacy of factory audits in high-risk regions.

With an impending downturn in share prices and a $2 billion restructuring initiative, Nike’s leadership faces a critical juncture. Investors argue that the company’s reputation hinges on addressing these human rights risks, which could have lasting financial implications. As the regulatory environment tightens globally, the pressure mounts for Nike to adapt—or risk further shareholder backlash and reputational damage.