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Nordstrom has apparel contract supply operations at
hundreds of manufacturing facilities worldwide. While
the company maintains it has Standards and Business
Practice Guidelines to address such abuses, it is unclear
to what extent these guidelines are monitored and enforced.
Our resolution asks for a report to shareholders on
progress made by the company in implementing vendor
guidelines.
Companies such as Nike and Reebok who failed to
respond promptly and seriously to allegations of labor
abuses at contract supplier factories have paid a heavy
price in negative publicity and falling stock prices.
These corporations initially refused to take a measure
of responsibility for the contract employees who make
their products.
"Last year, Nike and Reebok saw their profits
fall 37 percent and 65 percent, respectively. Company
executives blame the drop mainly on the overall slump
in U.S. athletic footwear sales, which fell an estimated
9 percent, but also on negative publicity from the
sweatshop controversy."
--San Francisco Chronicle, April 17, 1999
Nordstrom has already received negative publicity
in this area. A lawsuit filed in 1999 alleged illegal
labor practices by Nordstrom suppliers in the U.S, territory
of Saipan, which is exempt from American labor, immigration
and customs laws.
Company Position
The company says in its statement in opposition
that it has made available information regarding vendor
standards compliance mechanisms and progress in achieving
compliance. This is not the case. The company is willing
to discuss the components of the program but not how
well it is performing. That’s like saying the company
is very profitable but not releasing earnings figures.
Reporting to Shareholders
For the second year in a row, the company has declined
to provide a public accountability mechanism such as
an annual report to shareholders on progress made and
challenges that remain. The report could provide information
about the numbers of facilities audited, the audit pass/fail
rate, reasons for failure, and a discussion of progress
made and problems that remain at facilities with the
worst code violations. Without some transparency to
shareholders and customers, we cannot be certain that
the guidelines are being properly enforced.
Threat to Shareholder Value
Nordstrom products are discretionary purchases. Consumers
may turn to other companies not associated with these
problems. Without reports validating progress towards
implementing Business Practice Guidelines, lasting damage
could occur to our company’s reputation, brand value
and its long-term profitability.
Your YES Vote on Proposal #4 Will: Encourage
management to continue working diligently to resolve
contract supplier problems before they damage the company’s
reputation and impact sales of Nordstrom products.
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