Nike Named by Activists Promoting Bill to Stop Share Buybacks – Sourcing Journal
A group of congressmen has reintroduced a bill that would prevent companies like Alphabet, Nike and Norfolk Southern from buying back their own stock.
At a press conference in Washington DC on Thursday, Illinois Congressman Jesús “Chuy” García said stock buybacks were only designed to artificially inflate stock prices and enrich executives “at the expense of workers, consumers and the US economy.” .
“Share buybacks are just to line the pockets of already wealthy corporate leaders and shareholders,” said Garcia, a member of the House Financial Services Committee and Congressional Labor Caucus. “Companies are buying back their stock with funds that could be used to increase workers’ wages or investing in resources needed to provide quality goods and services, leading to higher levels of inequality and business practices that can harm everyday people .”
Garcia, a co-sponsor of the Reward Work Act with fellow Democrats Peter DeFazio of Oregon and Ro Khanna of California, said Norfolk Southern, whose train derailment earlier this year in East Palestine, Ohio, led to a spill of toxic chemicals, plans to launch grenades Spent $7.5 billion buying back its own stock instead of spending the money on safety improvements and employee benefits. Alphabet, Google’s parent company, recently approved $70 billion in share buybacks despite laying off 12,000 employees in January. Similarly, last year the firm Just Do It authorized $18 billion worth of share buybacks “drastically cutting already low wages and factory workers in … Asia,” he said.
“These are just three examples of an explosive trend that began during the Reagan era [of] Deregulation,” Garcia said, while his supporters held up placards reading “Stop corporate greed,” “Reward labor” and “Invest in workers.”
Before Reagan, stock buybacks were “generally avoided” because they could be viewed as illegal market manipulation, he said. That changed in 1982 when the Securities and Exchange Commission “changed the rules” and “opened the floodgates” to the “rampant use” of stock buybacks as part of a broader trend of financialization and widespread speculation.
“How do we solve this?” Garcia asked. “Well, there is no easy solution. We need transformative change to refocus workers and consumers in these economies. And banning buybacks is a good start.”
Anannya Bhattacharjee, international coordinator for the Asia Floor Wage Alliance (AFWA), a non-profit organization working to ensure a living wage for textile workers, has traveled from India to address the press conference. She has previously criticized Nike’s use of share buybacks. Along with the Global Labor Justice-International Labor Rights Forum and 20 garment industry unions from Cambodia, India, Indonesia, Pakistan and Sri Lanka, the AFWA filed an international labor grievance with the Organization for Economic Co-operation and Development in the country’s capital in March and accused the sportswear giant of violating the guidelines of the intergovernmental organization on responsible business conduct for multinational companies.
The complaint states that Nike not only contributed to “serious human rights impacts” at the factories it uses, but also failed to address and remediate them in accordance with policies. Rather than reward workers or invest in safety and productivity initiatives, the company is conducting buybacks to “falsely boost” its share price, it said.
“In 2020, as the Covid-19 pandemic caused global shutdowns and chaos, major fashion companies, many based here in the United States, made business decisions that resulted in a devastating human rights crisis for millions of garment workers in their region. “Supply chains,” Bhattacharjee said. “These are workers who are earning poverty wages and whose income has been cut or eliminated altogether. This was in direct violation of national laws in many countries.”
Instead of ensuring that their suppliers pay workers the wages required by law,
“Big Fashion” invested that money in share buybacks, “further enriching their wealthiest investors,” she added.
Bhattacharjee said Nike, which did not respond to a request for comment, sourced from several factories where wage cuts were documented. She again referred to the $18 billion set aside for share buybacks.
“When a company like Nike emerges from a global pandemic with record sales and skyrocketing profits, we demand that it also pulls the garment workers in its supply chain out of the crisis,” she said. “Nike sells its products with advertising that places their Swoosh logo next to the word ‘equality.’ Nike even has an ad campaign called “Until We All Win.”
“But who wins when Nike turns its back on the economic destruction of the women who make its clothes and instead chooses to pass billions of dollars on to its wealthiest investors in the form of share buybacks?” asked Bhattacharjee.
Aside from Garcia, DeFazio, and Khanna, the Reward Worker Act will be made up of Democratic Representatives Cori Bush of Missouri, Steve Cohen of Tennessee, Eleanor Holmes Norton of Washington, DC, Pramila Jayapal of Washington, Alexandria Ocasio-Cortez of New York, and Ilhan Omar supports Minnesota, Wisconsin’s Mark Pocan, Illinois’ Jan Schakowsky, Michigan’s Rashida Tlaib and New Jersey’s Bonnie Watson Coleman. It is also supported by AFL-CIO, Americans for Financial Reform, Communications Workers of America, Public Citizen, Institute for Policy Studies Global Economy Project, Groundwork Collaborative, Indivisible, Service Employees International Union and Take On Wall Street.
https://sourcingjournal.com/topics/business-news/nike-stock-buybacks-norfolk-southern-derailment-washington-dc-press-conference-436935/ Nike Named by Activists Promoting Bill to Stop Share Buybacks – Sourcing Journal