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Shareholder proposal result of Nike ‘completely ignoring us,’ Tulipshare Founder say

Tulipshare Founder and CEO Antoine Argouges joins Yahoo Finance Live to discuss the decision in calling on Nike to implement contract clauses to protect workers in international supply chains, and the fight for human rights.

Video Transcript

[AUDIO LOGO]

- UK-based activist investment platform Tulipshare is calling for Nike to implement contract clauses developed by the American Bar Association to protect workers in international supply chains. The company, which owns 276 shares of Nike, has filed a shareholder proposal ahead of its annual general meeting. It asks the mega brand to oversee and issue a shareholder report to assess the effectiveness of its supply chain and ensure alignment with its human rights commitments. Yahoo Finance reached out to Nike for comment.

Joining us now to discuss is Tulipshare founder and CEO Antoine Argouges. Thank you so much for joining me this morning. So I want to first ask you about what prompted this. Obviously, I know that you've said in your note from Tulipshare that some of those initiatives that you've seen from the UN are being implemented. But what are the ones that you would like to see Nike do more on?

ANTOINE ARGOUGES: Well, realistically, for everyone to understand, in the supply chain of such a big company, like Nike, you have the tier one supplier, which are basically the last end of the funnel. Then you have the tier two, producing the manufacturing goods, and then the tier three, which are producing the raw material. What we're asking here is Nike to disclose and update its internal control policy, effectively, on the tier two and tier three of the supply chain, which is impacting its most vulnerable workers.

- And you do have five recommendations that you've put in that report. Walk us through them. I know one of them is assessing the existing policies, as you mentioned there, about also consistency with the OECD guidelines.

ANTOINE ARGOUGES: Absolutely. I mean, there is a lot of materials out there for Nike to pull from in order to update its internal policies. We think a company, such as Nike, which is very innovative and it its supply chain, is also innovative in the control of its supply chain and should definitely update according to the American Bar Association's, the OECD guidelines, some human rights principles, which we know for sure Nike is not respecting all of them, even according to their internal audit. So now we've assembled enough shares to be able to go to the AGM. We've reached out to Nike multiple times in order to get response and progress on this with absolutely no engagement from the company.

- And we did reach out to Nike as well at Yahoo Finance and weren't able to get a response at the moment. But so far, then, are there any other activist investors really pushing for these same initiatives?

ANTOINE ARGOUGES: There is a lot of people pushing to improve, obviously, social commitment and workers' rights, not only in the supply chain, but across the whole value chain. You have a lot of voice now that are saying that being an active investor is going to destroy shareholder value. And that is absolutely wrong. We believe that on the long term, rising and improving social commitments and workers' condition will drive shareholder value up.

Not doing so will pose a huge risk potentially on consumer demand. You never know what happens with tier two and tier three suppliers. If a scandal happens, then this can come back on to consumer demand and, therefore, impact shareholder value and share price.

- So, Antoine, if you don't receive any sort of response or an appropriate response from Nike, what will the next move be?

ANTOINE ARGOUGES: We haven't received any response so far. Nike has been completely ignoring us. This is why we filed this shareholder proposal, which we've already filed shareholder proposal at multiple large organizations, such as a very successful campaign at Apple, at Johnson & Johnson. Last year we received 44% voting support at Amazon to improve working conditions in the fulfillment center.

So really here, it's about asking for every other shareholder at Nike, their opinion, where do you want to stand on this issue? Do you want to be on the right side of history or on the wrong side of history? And if Nike doesn't want to engage with us, then it's going to be a decision that's going to be made by every shareholder.

- And what about consumers themselves? Is there any sort of outreach that you're doing for consumers to become aware of this so that they can also perhaps chime in here if the idea is to get more pressure on Nike to act?

ANTOINE ARGOUGES: Absolutely. Everyone should be involved into this. It's the rising tides that raise all the boats. We have a consumer platform that allows everyone who is a shareholder to show support to one of our campaign.

You can access our website and bring your support wherever you are owning your shares, whoever you are. It doesn't depend if you're a small shareholder or a massive institution. You can tag along and bring support. This is really, it's now a shareholder matter. And it's going to have to be discussed and decided in between shareholders.

- And when you think of, I believe in your notes, you said 27.6 million people estimated trapped into forced labor here, how much of an onus is there? When Nike is trying to balance bottom line with also shareholder responsibility and the issues that you're bringing to the table here, is there just a concern that it's not going to be worth Nike taking up your cause if it's not affecting their bottom line enough?

ANTOINE ARGOUGES: The share price is down already 9.7% in a year. So it did not waited for our shareholder proposal to actually have an impact. So we believe that it's the opposite. It's actually pushing for stronger environmental and social commitment that is going to drive up customer demand and provide a significant better return for shareholder value. Down the line, it's going to have an impact on the bottom line. It's the opposite, not doing anything, the inaction, and the business as usual that could have a greater negative effect.

- We do appreciate you taking the time to join us this morning. Tulipshare founder and CEO Antoine Argouges, thank you so much for joining us on Yahoo Finance.

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