Nike shareholders overwhelmingly rejected a proposal that called for greater transparency regarding the company's charitable partnerships and diversity, equity, and inclusion (DEI) initiatives. The proposal, championed by Inspire Investing, a faith-based investment firm, and filed on behalf of client William C. Cunningham, sought a report analyzing the risks and benefits associated with Nike's charitable support.
The resolution specifically highlighted Nike's perfect score of 100 on the Human Rights Campaign's Corporate Equality Index. Inspire Investing raised concerns that this score might indicate the company's employee health plan covers gender-transition procedures for minors, including surgeries, hormone therapy, and puberty blockers, a detail Nike has not publicly addressed.
Tim Schwarzenberger, portfolio manager at Inspire Investing, stated that while his firm is a long-term investor focused on competitive performance, he personally has not purchased Nike shoes in about a decade due to the company's perceived activism. He expressed a desire to return to being a customer if the company changes course.
Nike's board recommended shareholders reject the proposal, arguing in its proxy statement that the company already conducts risk evaluations for its charitable giving and that an additional report would not provide further value. The results, disclosed in a September 10 SEC filing, showed the proposal received less than 1% of the votes cast.
Schwarzenberger acknowledged that most shareholder proposals do not achieve majority support but believes the effort successfully raised important issues for many shareholders. He questioned Nike's definition of a "robust due diligence review" for its charitable partnerships and suggested that the company's continued participation in the Human Rights Campaign's index, which requires transgender-inclusive health benefits for a perfect score, raises questions about risk assessment. He urged Nike to provide transparency into how it has analyzed the risks associated with its partnerships.
Nike is also set to be removed from the S&P 100 index before trading opens on September 21, after nearly 18 years. S&P Dow Jones Indices cited a rebalance to make its indexes more representative of their market-cap ranges. Nike's market capitalization has fallen significantly from its peak in November 2021, with factors including increased competition, product challenges, and a 13% drop in Greater China revenue on a currency-neutral basis in fiscal 2026 contributing to the decline.
While Schwarzenberger conceded that Nike's political stances are not solely responsible for its stock performance decline, he believes alienating a portion of the customer base exacerbates recovery challenges. He pointed to past controversies involving Colin Kaepernick, a canceled sneaker design, Dylan Mulvaney, and proposed studies on transgender youth athletes as examples of the company wading into sensitive issues.
Schwarzenberger suggested that Nike does not need to adopt a conservative political stance but should instead cease making politics a central part of its product strategy. He urged the company to focus on its core business of manufacturing athletic apparel and acknowledge any mistakes made. He found the CEO's recent comments about refocusing on athletes encouraging but considered them insufficiently strong, advocating for a clear commitment to manufacturing and avoiding divisive political issues.
He also called for product innovation, comparing Nike's situation to Disney's perceived reliance on older brands. Inspire Investing has a track record of filing shareholder resolutions, with approximately two-thirds of targeted companies making requested changes. Schwarzenberger encouraged conservative investors to use their voice and leverage, noting that many Americans own shares indirectly through 401(k) accounts and can influence fund manager voting practices.