Nike Knocked by Unions for Tax Havens Exposed in Paradise PapersBy
AFL-CIO sent shareholder proposal asking for end to practice
Group may take same measure with Facebook, Allergan, Alphabet
Nike Inc. is facing a push by organized labor to stop using tax-avoidance schemes following revelations in the so-called Paradise Papers that the sports brand funneled billions of dollars into offshore havens.
The AFL-CIO, a federation of 56 unions that represent 12.5 million workers, said it sent a shareholder proposal to the company on Tuesday. The document asks the world’s largest sports brand to pay its fair share of taxes -- money that could help fund public services. Nike has avoided paying $4 billion in U.S. taxes, according to the AFL-CIO.
“The Paradise Papers described how Nike shifted billions in profits,” Heather Slavkin Corzo, director of AFL-CIO office of investment, said on Wednesday during a call with reporters. “This could fund infrastructure, schools and other public services.”
The move comes after Nike’s appearance earlier this month in the Paradise Papers, a trove of 6.8 million leaked internal files from an offshore law firm. The documents have been analyzed by more than 90 media outlets and the International Consortium of Investigative Journalists. A report from this group highlighted Nike’s use of a subsidiary that allowed it to shift billions in profits from Europe to a tax haven in Bermuda.
Nike, based in Beaverton, Oregon, declined to comment.
The AFL-CIO is also considering making shareholder proposals to other companies highlighted in the Paradise Papers, including Facebook Inc., Alphabet Inc. and Allergan Plc. The group also wants to shed light on Apple Inc.’s practices but the deadline for filing a proposal for the next shareholder meeting had passed.
The pension funds of the union’s membership own a combined 500,000 shares of Nike. Domini Impact Investments, which manages about $831 million in assets and co-filed the shareholder proposal with the AFL-CIO, owns about 375 shares.
The proposal urges Nike to consider the impact of its global tax strategies on local economies and governments, as well as the risk of a damaged reputation for not paying its fair share of taxes.
Getting investors to support backing away from a strategy that has made a company more profitable is not an easy task, said Adam Kanzer, managing director of Domini. One way they are trying to overcome the challenge is by presenting it to fellow shareholders as a way to reduce the risk of public-relations damage.
“This is not a proposal to get Nike to pay more taxes,” Kanzer said. “It’s directed at setting up a governance mechanism and greater oversight.”