DATA

ABOUT THE BRAND

Adidas AG is a German multinational corporation, that designs and manufactures shoes, clothing and accessories in the sporting and leisure arena. It is the largest sportswear manufacturer in Europe and the second biggest in the world. Adidas invests heavily in innovation and recently prototyped a completely compostable sneaker. The brand collaborates with several well known artists and designers including Kanye West and Stella McCartney, along with several high profile athletes.

HIGHLIGHTS

THE PROS:

💪🏼  Adidas Group has mechanisms in place for workers to report issues with worker hotlines in each country, manned either by internal staff or independent NGOs, who speak the workers’ local language. These hotline services have been adopted by 58 of its strategic suppliers in Vietnam, Indonesia and Cambodia with the total workforce of around 270,000 having adopted the system.

♻️  The brand has partnered with Parley Ocean Plastic and in 2017 has the goal of creating one million pairs of shoes with Parley Ocean Plastic.

📝 Adidas has a Sustainability Strategy with six strategic priorities which follow the entire lifecycle of its products. It has set science based targets to measure its progress towards achieving improvements. Its priorities are:

  • Water
  • Materials and processes
  • Energy
  • People
  • Health
  • Action
THE CONS:

♻️  Greenpeace’s Detox Catwalk 2016 report ranks Adidas in ‘Evolution Mode’.  It says, the brand is held back by its use of the ZDHC, and needs to develop its own MRSL to implement its ‘clean factory’ approach, as well as be more ambitious in phasing out of its use of PFC’s.  

💪🏼  In April 2014, the New York Times reported that 118 workers passed out at the Shen Zhou and Daqian Textile factories in Phnom Penh, Cambodia, factories used by Adidas to manufacture its products.

💰  In May 2015, the Business of Fashion reported that Adidas was eyeing the “fast fashion” model as a way of pepping up its three-striped ranges of tops, leggings and sneakers. The article states that as part of a strategy launched in March, Adidas wants half of its products to be produced using the fast fashion model by 2020, as it seeks to lift its operating margin above 10 percent.

/ Adidas was founded in 1949 by Adi Dassler in Bavaria, Germany.

/ In its 2016 Sustainability Progress Report, Adidas reports it has 60,000 employees.

/ At the end of 2016, the Adidas Group worked with 1,038 independent factories in 63 countries. The Adidas Group also worked with 61 licensees whose suppliers manufactured products in 377 factories across 48 countries.

/ In 2016, Adidas Group had annual sales of €19.3 billion (USD$22 billion) with an operating profit of €1.5 billion (USD$1.75 billion).

/ The brand reports that it produced more than 840 million products in 2016.

/ In May 2015, the Business of Fashion reported that Adidas was eyeing the “fast fashion” model as a way of pepping up its three-striped ranges of tops, leggings and sneakers. The article states that as part of a strategy launched in March, Adidas said it wants half of its ranges to be produced on the fast fashion model by 2020 as it seeks to lift its operating margin above 10 percent.

As of October 2017, Adidas Group publicly shares a list of its primary Tier 1 suppliers and their known subcontractors, as well as a list of licensee factories and its Tier 2 wet processing suppliers, responsible for the majority of its wet processes. Each list details the supplier by country, name, address and tier in the supply chain. It is not clear whether the lists extend to fabric mills or not.

In its 2016 Annual Sustainability Report the brand states that 64% of the Adidas Group’s supplier factories are located in the Asia Pacific region, 26% in the Americas and 10% in Europe, Middle East and Africa (EMEA).

/ Adidas Group has published an annual sustainability report since 2000.

/ The brand states that it is a member of the Fair Labour Association (FLA) and is subject to external assessments by independent monitors, participation in the third-party complaint system and public reporting. In 2016, the Fair Labor Association (FLA) conducted 4 factory assessments or remediation verification exercises using the methodology from the Sustainable Compliance Initiative (SCI)

The brand shares a breakdown of audit type, region and country  it was conducted in. For example, in Asia – the major sourcing region for Adidas,  there were 178 initial assessments, 524 performance audits and 839 environmental audits performed. The 2016 Annual Sustainability Report provides further detail on what each type of audit is, however it is unclear how frequently the audits are performed and whether advance notice is given.

Greenpeace’s Detox Catwalk 2016 report ranks Adidas in ‘Evolution Mode’.  It says, the brand is held back by its use of the ZDHC, and needs to develop its own MRSL to implement its ‘clean factory’ approach, as well as be more ambitious in phasing out of its use of PFC’s. It commends the brand for its transparency and ensuring that 50% of its global wet-processing suppliers have disclosed data on the IPE platform, growing to 80% in September 2016.

/  The brand has a set of rules called ‘The Workplace Standards’ which it says are applied at its own sites and suppliers’ factories to cover health and safety, labour rights and environmental protection. It states that the standards draw from both international law and the International Labour Organization (ILO) conventions in addition to following the World Federation of Sporting Goods Industry model code of conduct.

/ Adidas group has mechanisms in place for workers to report issues. For example, it states that it has worker hotlines in each country, manned either by internal staff or independent NGOs, who speak the workers’ local language. These hotline services have, been adopted by 58 of its strategic suppliers in Vietnam, Indonesia and Cambodia with the total workforce of around 270,000 having adopted the system.

The 2017 Ethical Fashion Report, which looks at criteria including payment of a living wage, transparency and worker empowerment initiatives, gave the brand an ‘A-’ grade, giving it the top score for its Supplier Code of Conduct. It reported that Adidas traces and audits most of its supply chain, and publicly lists most of its suppliers. However, despite these positive steps, the brand still has few worker empowerment initiatives and needs to take further action to pay a living wage across their entire supply chain.

In July 2016, Clean Clothes Campaign reported that Adidas, along with other sportswear giants, was paying poverty wages to workers stitching it’s clothes. A report prepared by Clean Clothes Campaign France exposes the adverse impact on workers of a business model based on low labour costs to allow brands invest massively in endorsement deals with players, national teams and clubs.

The brand has introduced a Modern Slavery Outreach Programme, in 2016, to identify risks of forced labour, child labour and human trafficking in its extended supply chain (i.e. those parts that fall outside our normal monitoring coverage for social compliance). The programme involves partnering with Tier 1 suppliers to support targeted training for Tier 2 suppliers and subcontractors; direct training on forced labour indicators for material Tier 2 suppliers and the development of collaborative models to address risks of forced labour and child labour in the Tier 3 raw materials supply chain with the targeted materials being conventional cotton, leather and natural rubber.

The brand reports that it has a number of Responsible Sourcing Practices that take into consideration the capacity of suppliers to meet fluctuating demands (and reduce the risk of undeclared subcontracting). The brand states it has:

  • A ‘buy ready’ policy that mitigates the need for last minute changes in development process
  • A costing policy that acknowledges the cost of labour and time to produce the item
  • A forecasting system that enables the supplier to do effective planning
  • Enters into dialogue with suppliers on their capacity that enables level loading during peak months
  • Has a strategic supplier programme developed for long term business relationships

We do not have any information on how the brand addresses audit fatigue, or how often it monitors its supply chain.

/ In its 2016 Annual Sustainability Report, the brand states that in Indonesia, it was involved in a pilot programme which surveyed almost 500 participants on topics such as trust, wage fairness, room temperature, noise level, canteen services etc. The brand also runs a programme in Pakistan to improve women’s knowledge and skills.

The brand has a variety of initiatives and collaborations that appear to be aimed at reducing the negative social impacts of its supply chain. For example, it works with industry groups like the Fair Labour Association, the ILO Better Work, the Fair Factories Clearinghouse (FFC) and the Global Social Compliance Programme.

Adidas is a signatory to the Bangladesh Accord on Fire and Building Safety.

/ Adidas reports it is working toward replacing conventional cotton, with the aim of using 100% sustainable cotton by 2018. The brand is committed to increasing the sourcing of Better Cotton Initiative (BCI) cotton over the next few years, and is a founding member of the BCI initiative. The brand states that in 2016, 68% of the cotton it used globally was Better Cotton, exceeding its original target of 60%. The Adidas BCI sourcing countries include Turkey, Brazil, US, Mali, Pakistan and India.

/ Adidas states that it is using recycled polyester (rPET) in some of its products, and that rPET was the main material used in the 70,000 volunteers’ uniforms in the 2012 London Olympics.

/ The brand has partnered with Parley Ocean Plastic and in 2017 has the goal of creating one million pairs of shoes with Parley Ocean Plastic.

/ The brand states that in Germany, its energy mix includes more than 60% energy renewables and to achieve further reductions in carbon emissions, its German sites are investing in carbon-offsetting certificates.

/ The brand says that GHG emissions account for 42% of its total environmental impacts with more than half of these being CO2 emissions (54%) caused beyond direct suppliers. The impacts occur during the processing of raw materials, e.g. leather production, which is mainly due to cattle farming, as well as high energy use for production of synthetic materials.

/ The brand does not use PVC in the majority of its products (some local production of athletic footwear products still uses PVC) and has eliminated the use of polyethylene chloride for having a similar environmental footprint as PVC. The brand appears to require testing for various polymers and lists these as restricted substances in its restricted substances policy.

The brand states that it is phasing out the use of virgin plastic, starting with:

  • eliminating plastic bags in its stores;
  • Increasing the use of recycled polyester;
  • Creating a new supply chain for Parley Ocean Plastic.

/ As of April 2016, the brand has eliminated plastic bags from its retail stores globally and has switched to paper bags. In total, Adidas aims to move approximately 70 million plastic shopping bags.

/ Adidas has a Sustainability Strategy with six strategic priorities which follow the entire lifecycle of its products. It has set science based targets to measure its progress towards achieving improvements. Its priorities are:

  • Water
  • Materials and processes
  • Energy
  • People
  • Health
  • Action

/ The brand says it is committed to minimising waste as it occurs during production along its supply chain and finding environmental-friendly disposal solutions that reduce their carbon footprint. In 2016, Adidas launched a pilot project in Vietnam to understand how to achieve its goal of zero landfill by finding rubber upcycling alternatives.  

/ Adidas says it plans to invest in materials, processes and innovative machinery which it says will allow it to upcycle materials into products and reduce waste material. However, we could not find detail on how these initiatives are to be achieved.

/ By 2020, the brand wants to achieve a 50% waste diversion for its owned operations and reduce paper consumption per employee by 75%.

/ In April 2016, Fortune reported that Adidas is looking to cut waste and water usage by setting a set of 6 priorities. Among them, apparel material suppliers will reduce water usage by 50%, completely switch to sustainable cotton by 2018, and by 2020, a vast majority of suppliers will have reduced their energy usage by 20%.

/ Adidas introduced supervisory skill training in Vietnam and in 2016, 25 supervisors from seven strategic suppliers received tailored training that enhanced their skills to effectively communicate with the workforce. The training will be rolled out to other strategic suppliers in Vietnam with the potential to include China and Indonesia in 2017.

/ Adidas group announced a 3 year partnership with China’s Ministry of Education (MoE) in September 2015 to promote grassroots football in China. According to the brand the partnership focuses on supporting China’s physical education classes, teacher trainings and student training camps. The goal is to reach 22 million students in China.

/ The brand targeted regions in severe need, such as refugees at the Turkish-Syrian border as well as in various refugee camps all over Europe with product donations.

/ The brand says it uses sports as a tool for integration initiatives in Germany. For example, the adidas Fund offered employees the opportunity to help refugees – the Fund organised local events such as running groups and sport events. In 2016, German employees invested 1,300 hours in the integration of refugees.

/ Adidas says that for the past two years it has engaged on the topic of refugees and the humanitarian crisis facing Syrian refugees. As well as engaging with NGOs, local trade unions and the Turkish Government – the brand has trained Turkish based suppliers on the impact of illegal workers on the labour market, how to ensure legal and fair recruitment, and employment for refugees.

CEO, Herbert Hainer’s tenure was terminated on September 30, 2016. It was agreed that the contractual commitments on the part of the company would continue to be granted until the expiry of his service in March 2017.

In January 2016, Fortune reported that Adidas had appointed a new CEO. Kasper Rorsted will take over direction of Adidas Group after Herbert Hainer.

Adidas is a publicly listed company.

In April 2017, The Boston Globe reported that Adidas sent an email to customers congratulating them for “surviving the Boston Marathon”. This created a huge scandal and Adidas had to apologize for sending a poorly worded marketing e-mail to its customers.

/ Adidas says it is using various recycled materials such as inlay soles, textiles, metals, plastics, packaging and rubber. The brand says that the companies it works with make injected plastic plates for football boots and are recycling 99% of the waste back into production and these companies have been able to increase the percentage of rubber and EVA that can be reground and reused in shoes.

/ The brand works with Parley Ocean Plastic and in 2016 introduced football and running products (i.e. the Bayern Munich and Real Madrid Jerseys and the Ultraboost ungaged products). In 2017, the goal is to create one million pairs of shoes with Parley Ocean Plastic.

/ The brand states it has been working on its first range of qualified materials to enable fully recyclable products. Thus far, the brand has made its first prototypes from the materials.

/ In November 2016, Adidas produced the first performance shoe from Biosteel fibres which is 100% biodegradable.

/ The Adidas brand has used innovative technology and techniques in its manufacturing processes to reduce its environmental impact. These technologies include DryDye technology, a process called “NoDye” and a low-waste initiative.

/ In May 2017, Business of Fashion reported that Adidas has launched a new automated “Speedfactory” in the Bavarian town of Ansbach, where the company is deploying new processes like robotic cutting, computerised knitting and 3D printing. Adidas is also building a second “Speedfactory” near Atlanta, Georgia, targeting the American market.

/ In October 2016, Industry Week reported that Reebok was planning to bring back some of its shoe production back to the US. A small manufacturing lab will be opened in 2017 using innovative liquid material and 3-D drawing.

VOICES

GreenpeaceGREENPEACE | DETOX CATWALK

“Adidas’ rapid progress on transparency is particularly encouraging and needs to be maintained to ensure that supply chain facilities beyond China begin full public disclosure of their data on hazardous chemical discharges. If it keeps up its winning streak, adidas will only further secure its place on the podium as a Detox leader.” – 06/2014


LaborBehindTheLabelLABOUR BEHIND THE LABEL | TAILORED WAGES

It is disappointing that a company as large as Adidas has yet to commit to a living-wage strategy, and continues to monitor across its suppliers only that factories pay a minimum wage. Although Adidas says it is “examining the question of fair wages” through membership of the Fair Wage Network, this does not commit it to real action to increase wages on the ground in supplier factories. Gathering data and learning more about the problem is not what is needed now.”

Unfortunately, Adidas’s management seem to be heading in the opposite direction: Adidas CEO Herbert Hainer said in a recent article that because the minimum wage had increased so significantly in China, the company plans to grow production elsewhere. This kind of international corporate bullying sends signals to Asian governments that if wages go up; buyers will flee, and drives the race to the bottom on wages in the industry. Adidas needs a change of tack if its commitment to ‘fair wage’ practice is going to become more than CSR rhetoric.” – 03/2014


TriplePundit

ANDREW BERGER | TRIPLE PUNDIT

Fundamentally, enhancing the overall sustainability of a business enterprise is about corporate culture — about instilling a set of social and environmental values and attitudes that fosters and encourages awareness, innovation and responsibility among employees, suppliers, customers, and in the communities where a company represents itself. Adidas recognizes this.” – 05/06/2014

GREG THOMSEN, MD ADIDAS OUTDOOR USA | TO THE NEW YORK TIMES

“We realized somebody had to start making their voice heard. In my 40 years in the industry I have never seen the industry galvanized in such a way before.” – 2017


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