Today Nike breaks a three-year silence on social reporting as it publishes its 2004 corporate responsibility report. This is Nike's first report since a 2002 California supreme court ruling that the company could be sued by Mark Kasky, a labour rights activist, over statements it made about its labour practices. But that is not all: the sports equipment company has also broken new ground in transparency by publishing a complete list of suppliers on its website.

"That will garner great attention among companies that report on their supply chain practices, and it will put Nike ahead of the game," says Aron Cramer, president and chief executive of Business for Social Responsibility, a US non-profit advisory group whose membership includes many leading multinationals.

Nike's return to social reporting - particularly with the added level of disclosure in listing its suppliers - provides a forceful counter- argument to those who suggested the Kasky ruling would discourage corporate transparency. "We felt the risks of any future lawsuit were far outweighed by benefits of transparency," says Hannah Jones, Nike's vice-president of corporate responsibility. "Because if we've learned anything as a company, it's that closing down and not talking about the challenges and opportunities doesn't get you far."

Mr Kasky sued Nike in 1998 under California's unfair competition laws, charging that public statements defending the company's labour practices constituted false advertising. After moving through the courts, Nike eventually settled, agreeing to donate $1.5m (£793,000) to the Fair Labor Association (FLA), a Washington-based non-profit organisation.

While Nike issued a corporate responsibility report in 2001, it held off from any further public disclosure on its supply chain. "In 2001, as a Kasky filter, we tried to be careful," says Dusty Kidd, Nike's vice-president of compliance. "But then it moved forward in the courts, and that's why we stopped reporting."

Today Nike's silence has ended. As well as providing detail on its supply chain practices, the report covers areas such as workforce diversity, the environment, community programmes and socially responsible investment. An independent review committee of individuals from trade unions, non-governmental organisations, academia and the business community was brought together to strengthen the credibility of the information in the report.

Ms Jones says that the Kasky ruling, while disappointing, helped the company bring a greater degree of rigour to its reporting. "I worked hand in hand with the legal department [on the report] and that is a good thing," she says. "Because when you're being very robust and factual, you create something that moves corporate responsibility out of the reputation area and into business process, business innovation and the business case - and that's exactly the way forward."

As part of this effort to provide information, the report makes no bones about the difficulties it has encountered in managing its supply chain. In the section on workers in contract factories, for example, the authors describe the struggle to improve labour conditions. "Despite anecdotal instances of success," they state, "we remain profoundly challenged to understand how to systematically measure the impact of our own interventions".

And like the "warts and all" report published by Gap in May last year, Nike's report provides plenty of detail on areas such as the difficulties of ending contracts with suppliers, or factories' non-compliance with labour, environment and health and safety standards.

Auret van Heerden, executive director of the FLA, believes Nike has made an impressive attempt to capture these difficulties. "It's a new standard for social reporting in terms of the amount of information that they convey and the range of subjects that they touch on," he says.

Nike hopes that by publishing its list of suppliers it will encourage others to do the same. The report relies heavily on the guidelines developed by the Global Reporting Initiative, a UN-backed organisation.

Michael Posner, executive director of Human Rights First (formerly the Lawyers Committee for Human Rights), applauds Nike's effort to be more transparent. However, he says the report is only a start when it comes to addressing what he describes as "chronic" problems in the factories of apparel and footwear industry suppliers.

"They've done things that are moving in the right direction," he says. "But then the question is, 'what are you going to do about it?' because [Nike is] finding problems across the system."