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Beneath the (Under) Armour: A Green and Ethical Company?

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Under Armour (UA) competes in an industry that faces ethical challenges in all operations.  The ethical standards of UA span to all sectors of the business to include the following: product production, manufacturing, operations, and global aspects of the corporation. Yet, UA is leading the way in concurring ethical challenges through successful tactics that make them stand out from competitors.  UA is a market leader, not only in innovation, but in ethical standards, eco-friendly operations, and business practices, throughout the active wear industry.

Athletic Apparel: A Tainted Industry?

True to the apparel industry, active wear has not been immune to labor issues as outsourcing to less developed countries has introduced questionable practices and possible human rights violations.  The lack of environmental and human labor regulations has given the industry a suspect reputation and often times a stigma that, “no news is good news” for the industry’s human labor practices.

The challenges of being a global company can be daunting as rival Nike discovered in the 1980s when it was faced with harsh criticism over its supplier’s treatment of workers in Cambodia, among other places. As recently as 2000, Nike headman Phil Knight was under fire from the Workers Rights Consortium, who staged various demonstrations opposing Nike’s involvement with unfair labor practices abroad. The bad publicity resulted in Nike dropping its sponsorship with Brown University’s hockey team and temporarily halted Knight’s multimillion-dollar gift to the University of Oregon’s Autzen Stadium, his alma mater.[i]As a result of Nike’s very public and very embarrassing display of unethical human labor practices; many companies began to crack down on their suppliers and vendors, demanding fair wages, decent working conditions, and eliminating child labor all together.

Other important issues many fashion houses and apparel developers are facing include those regarding the environment.  Many consumers are becoming aware of the carbon footprint their garments are leaving and are looking to minimize their “brown impact.” In 2006 the Counsel for Textile Recycling found roughly 2.5 billion pounds of clothing waste is recycled through consignment and thrift stores, but only accounts for 15% of the apparel waste actually disposed.  Synthetic fibers, such as polyester and rayon, use petroleum to create while natural fibers, including cotton, account for large amounts of pesticides and water for the cultivation and production of the textile.[ii]The consumers’ concerns have been made known and many design houses have joined organizations such as the Sustainable Apparel Coalition[iii]to show their support and willingness to practice environmentally friendly production in all aspects of their products.

A Code lies Beneath the Armour?

According to Under Armour’s “Code”:

“Under Armour was founded on the following core values: Innovation, Inspiration, Reliability, and Integrity. Consistent with these values, we seek to do business with suppliers and their subcontractors that adhere to these practices, follow established work place practices and comply with our Code of Conduct.”[iv]

By this standard, UA has committed to maintain a standard above and beyond the industry and consumer expectations and requires all employees and vendors/suppliers to adhere to the “Code” as well.  This includes sensitive issues such as child labor, fair wages, safe work environment, forced labor, and reasonable working hours.  For countries that do not meet those standards set forth by UA, business conducted with all vendors and third party agencies including a minimum wage and maximum work hours per week practices, UA requires these be adhered to while doing business.

In 2010, the “Code” was challenged by the Apparel Supply Chain Compliance Program survey developed by As You Sow Foundation which is dedicated to “promote corporate responsibility through shareholder advocacy, grant-making, and innovative legal strategies” and “A safe, just, and sustainable world in which environmental health and human rights are central to corporate decision making.”[v] This voluntary survey, created in part by Verite, a non-profit agency, indicated that UA received the overall score of C-. Their 1.9 rating (on a 4.0 scale) was nearly half of Levi Strauss & CO’s 3.4. Additionally, UA received low marks for management accountability and transparency.[vi] Further examination of the report shows that although UA understands what management decision could be undertaken to improve their scores, their grades on providing resources to improve their practices were lacking.  The only other active wear participants were Columbia Sportswear and Gildan Activewear Inc, both scoring higher than UA at 2.0 and 3.0 respectively.[vii] Therefore, it is reasonable to conclude that although Under Armour takes CSR seriously, they have yet to put forth a comprehensive resource package that would enable Under Armour to earn higher marks across the board in the future. As Robbin Jaffin, Director, Supplier Programs for Verite mentions, “Global firms must have visibility and accountability for all relationships both direct and indirect in implementing global standards of responsibility.”[viii]

Environmental Ethics and Challenges

Environmentally speaking, UA has joined 150+ companies dedicated to helping other countries, namely China, practice environmentally friendly manufacturing, dyeing, and production of apparel and footwear.[ix]In the Northwest Apparel and Footwear Show in March, 2011, Hisham Muhareb, founder, was quoted saying, “There is a lot of effort in how they are going green” and industry renowned fabric specialist, Douglas Hoschek, said, “The people in China need our help, we don't need an earthquake to have a catastrophe in China,” referring to the China’s lack of environmental laws and Japan’s devastating earthquake’s affect on the industry.[x]

UA has gone a step further by implement their UA Green product line, committed to enhance an athlete’s performance while having less of an impact on the environment. Their five commitments include:

Products: Under Armour will continue to increase the amount of products it makes from recycled materials.

Energy: Under Armour will continue to find ways to reduce the energy used to run its business.

Waste: Under Armour will continue to find ways to reduce and reuse the waste it creates.

Supply Chain: Under Armour will partner with its suppliers to understand and improve its upstream environmental impact.

Green Building: Under Armour will continue to incorporate green building practices into its retail stores and corporate facilities.

UA’s environmentally friendly product line creates synthetic textiles from used plastic bottles, reducing plastic waste by over 250,000 1 liter bottles in 2009 and estimated to exceed 1,000,000 bottles in 2010.  UA states, “Our vision is to build green technology into the best performance gear in the world. We'll get there with science, passion and innovation and we'll never sacrifice performance,”[xi] committing to help create a better environment while maintaining their high quality standards.

Can Under Armour Continue to Expand while Maintaining their Code?

As Under Armour expands beyond their core audience of athletes into the traditional mass market their management should at least consider three courses of action. First, UA should consider incorporating social compliance goals into their procurement management staff’s performance metric. Second, UA should consider increasing their transparency by publishing all supplier locations and/or introducing a program that publishes the conditions at these supplier locations. Last, UA should consider increased engagements with their suppliers’ indigenous governments to show a concerted effort towards increased social responsibility. Under Armour’s relationship with collegiate and high school teams puts them at greater risk of their brand image as college students have shown a propensity to organize, demonstrate and negatively affect UA’s brand image. However, with a concerted and dedicated effort toward corporate social responsibility, Under Armour will be able to continue their bravado while they continue their success and continue to protect their house.

Conclusion

When Cameroon Newton and the University of Auburn Tigers recently won the 2010-2011 Bowl Championship Series (BCS) with Under Armour as their uniform apparel sponsor and provider, it was statement that Under Armour had arrived on a much larger stage. However, how Under Armour manages its overall success will have to be tempered with how Under Armour manages its success in confronting environmental ethics, upholding global standards of human treatment, and overcoming industry stereotypes. Under Armour has seen how its rivals have fared with these tribulations leaving them uniquely informed to the vulnerability and the opportunity that an apparel company can ascend to when perched on their distinctive world stage.


Sources Cited:


[i] Greenhouse, Steven. (2000). Nike’s Chief Cancels a Gift Over Monitor of Sweatshops. New York Times. 25 April 2000.  Retrieved from <http://www.nytimes.com/2000/04/25/us/nike-s-chief-cancels-a-gift-over-monitor-of-sweatshops.html?pagewanted=print&src=pm>.

[ii] Claudio, L. (2007). Waste Couture: Environmental Impact of the Clothing Industry. Environmental Health Perspectives. Retrieved from <http://ehp03.niehs.nih.gov>.

[iii] Mowbray, John. "One Voice For Global Change." ECOTEXTILE NEWS. December/January 2011: 21. Print.

[iv] Corporate Responsibility. (2006). Code of Ethics and Business Conduct. Under Armour.  Retrieved from <http://www.uabiz.com/corpResponsibility.cfm>.

[v] As You Sow. (2010). Corporate Social Responsibility. Retrieved from <www.asyousow.org>.

[vi] Brettman, Allan. (19 March 2011). “Nike, Under Armour, others embrace green solutions at Northwest apparel show.” The American Intelligence Wire. General Reference Center Gold. Gale. Denver Public Library. 6 April 2011.

April 2011

[vii] Brettman, Allan. (19 March 2011). “Nike, Under Armour, others embrace green solutions at Northwest apparel show.” The American Intelligence Wire. General Reference Center Gold. Gale. Denver Public Library. 6 April 2011.

April 2011

[viii] Personal Interview. (12 April 2011). Mrs. Robbin Jaffin, Director of Supplier Programs of Verite. Conducted by Matthew Reese.

[ix] Brettman, Allan. (19 March 2011). “Nike, Under Armour, others embrace green solutions at Northwest apparel show.” The American Intelligence Wire. General Reference Center Gold. Gale. Denver Public Library. 6 April 2011.

April 2011

[x] Brettman, Allan. (19 March 2011). “Nike, Under Armour, others embrace green solutions at Northwest apparel show.” The American Intelligence Wire. General Reference Center Gold. Gale. Denver Public Library. 6 April 2011.

April 2011

[xi] About Us. (2010). Under Armour. Retrieved from <www.uabiz.com>.

This report was a group project for the Global Strategy class of Thunderbird School of Global Management Professor Nathan Washburn, Ph.D.