Germany’s Adidas is a world leader when it comes to footwear and sportswear manufacturing. It’s also a global leader when it comes to corporate social and environmental responsibility.
In 2013, Adidas garnered RobecoSAM Sustainability Gold Class and Sector Leader awards. It has been included in the Dow Jones Sustainability Indexes for 14 consecutive years and was named both industry leader and included among the “Global 100 Most Sustainable Corporations in the World” for the tenth time.
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.
In its “Sustainability Progress Report 2013,” Adidas takes a new approach to its sustainability reporting, something it’s done since 2000. Aptly adopting the short title “Fair Play,” in it Adidas frames its sustainability goals and reviews both its successes and challenges from within the overarching context of a new approach centered on four pillars, or 4Ps: People, Product, Planet and Partnership.
What makes a good corporate citizen?
In the foreword to its “Sustainability Progress Report 2013,” Adidas Group CEO Herbert Hainer clearly states the ethics underlying the multinational business’s sustainability activities, and its effort to instill a mindset of achieving ongoing progress:
“While we had many successes to celebrate in 2013, we are aware that there is always more that we can do. For us, succeeding in business is about more than making money. It is about treating our employees, our suppliers and their workers fairly, being straight with our partners and supporting our local communities.
“It is about respecting the environment and making the best products we can for our customers. We are not perfect and we do not always get it right. But as we go about our work, we aim to honor the spirit of ‘fair play’ in everything we do. Therefore, let me assure you that we continue to take serious responsibility for our actions. And we continue to integrate sustainability into our business strategy.”
Adidas’s four pillars, or 4Ps: People, Product, Planet and Partnership, provide a conceptual framework that enables Adidas stakeholders — from its 50,000 employees on through to suppliers, customers and communities — to better and more easily understand, assess and realize the multinational footwear and sportswear company’s sustainability goals.
Four pillars of sustainability: People, Product, Planet and Partnerships
A massive undertaking, Adidas’s “Fair Play Framework” for sustainability is now established across the company’s 3,500 locations and among its more than 50,000 employees worldwide.
Surveying progress across Adidas’s four pillars, sustainability initiatives range from working to support all suppliers, direct and strategic, in their efforts to achieve sustainability self-governance; sourcing and being able to trace more sustainable materials from the original source through the supply chain; extending environmental assessments to selected suppliers; reducing energy, water consumption, waste and carbon emissions and other pollutants; and establishing sustainability partnerships with individuals, NGOs and other social and environmental interest groups.
A veteran in Adidas’s sustainability drive, Nicole Sievering summarizes some of the highlights included in the 2013 sustainability progress report:
“For 2013, again, we collected numerous sustainability stories from all over the business. The Report talks, for example, about diversity initiatives at the Adidas Group, an improved system to address human rights complaints, our employer branding project, the successful DryDye technology and virtualization projects, our ambition to reduce the environmental footprint with our Green Company initiatives and our community project in Brazil.”
Highlighs of progress across Adidas’s “Four Pillars of Sustainability” include:
- The “SMS for workers” project, launched at the end of 2012, was introduced to a total of five facilities in Indonesia and one in Vietnam — covering almost 35,000 factory workers.
- 1,346 factory social and environmental audits took place at suppliers; these involved management and worker interviews, reviews of factory policies, practices and documents, as well as facility inspections. The company’s sustainability team also conducted 148 training sessions and workshops for suppliers, licensees, workers and Adidas Group employees.
- More than 1,000 local community projects were supported financially or through employee volunteering globally.
- Water is a key area of focus for the company. The brand’s product offerings integrating DryDye fabric have steadily increased, reaching 2 million yards of DryDye fabric produced by the end of 2013, and saving 50 million liters of water. This game-changing technology will be further rolled out across product ranges. Also, the company recently announced a partnership with Pharrell Williams and his textile company Bionic Yarn, through which plastic debris from the oceans turned into yarn and fabric will be used in some of Pharrell’s upcoming Adidas Originals products.
- The target of using 15 percent Better Cotton by 2013 was overachieved as in 2013 the Adidas Group sourced more than 23 percent of all cotton as Better Cotton. The Adidas Group has committed to source 100 percent of cotton across all product categories in all its brands as ‘sustainable cotton’ by 2018.
- The increasing use of virtual samples allowed the Group to save close to 1.5 million samples between 2010 and 2013.
- As part of the Adidas’s Green Company program, four additional locations received ISO 14001 certification.
- Energy consumption was reduced at supplier level, also thanks to Energy Management trainings.
- New heel counters made out of recycled material will be inserted into 110 million pairs of shoes every year. This will allow 1,500 tons of polystyrene waste to be diverted from landfills.
- Adidas is the official Sponsor, Licensee and Outfitter of the 2014 FIFA World Cup Brazil. In a spirit of transparency, as has been done since the 2006 FIFA World Cup Germany, the list of factories manufacturing products for the event has been published.
- The Adidas Group has continued to be an active participant in the task forces of the Sustainable Apparel Coalition (SAC), supporting the development, refinement and completion of the Higg 2.0 Index.
- The Adidas Group is collaborating with other brands to establish a more efficient industry-wide monitoring tool, both for brands and suppliers.
Sustainability, fair wages and human rights
Whether it’s sourcing and developing more environmentally friendly materials, enforcing basic employee and human rights, or reducing water use and pollution, instituting open and trustworthy feedback loops — both internal and external — is a key facet of Adidas’s “Fair Play” framework and sustainability efforts.
An example: When it comes to Adidas’s “People” pillar, a global network of local compliance officers “act as independent contacts for any questions employees may have about compliance,” Adidas explains in its 2013 sustainability report. “Any employee who knows of, or suspects, wrongdoing is expected to promptly report it so that an investigation can be conducted and appropriate action taken.”
Social and environmental awareness, sensitivity and values vary across cultures and within organizations. Moreover, actions taken by business managers in accordance with a company’s social, environmental or economic standards and policies can be seen in a very different light by those affected, such as employees. A case study brief in Adidas’s 2013 sustainability report clearly illustrates this issue.
The owners of the PT Kizone apparel factory in Indonesia unethically closed and abandoned the factory some six months after being unable to resolve differences with Adidas regarding its operations. That left “hundreds of workers” without jobs, income and nothing in the way of severance pay.
Adidas in April, 2013 reached a settlement with the apparel factory’s displaced workers that gave them additional aid. This “came on top of $525,000 from the Adidas Group in humanitarian aid as well as job placement services, and direct advocacy with the Indonesian government of the issue of workers’ rights.”
A representative of the Indonesian district labor union applauded Adidas’s efforts.
“The union and the workers are very pleased that Adidas has made this settlement, which will have a real impact on the workers’ lives.”
Adidas conducts “Fair Wage Assessments”
Gaps in income and wealth have been widening in developed and developing countries around the world, even as multinational companies rake in record profits. That’s brought the issue of fair wages to the forefront not only in developing world nations, but in the U.S. and European Union countries as well. Addressing the issue, Adidas in 2012 began conducting a series of “Fair Wage Assessments,” qualitative case studies, management self-assessments and workers’ surveys among its suppliers’ factories.
As part of the “Fair Wage Assessments,” Adidas interviewed 1,817 workers spanning 12 factories in five countries to gather information on how workers believe they are being treated, and what they believe is a fair wage.
On a positive note, Adidas found that its suppliers “paid wages on time, complied with legal minimum wage rates,” and compensation packages included “many non-monetary benefits.” In addition, it found “no practices that allowed wage discrimination or wage disparity,” and that “wage costs continued to rise as employers tried to meet increased costs of living.”
Less encouragingly, “Fair Wage Assessment” staff found instances of “under-payment of overtime, workers not being well informed of the current legal minimum wage, the piece-rate system being the overly dominant method of calculating wages, and the lack of a direct link between the wages paid and the factory’s economic performance.”
In response, Adidas management has made eliminating the root causes of these issues a primary focus of its 2014 sustainability efforts. It also plans to extend “Fair Wage Assessments” to suppliers in other countries, such as Cambodia.
“Furthermore, we plan to develop a roadmap to drive effective wage-setting mechanisms at out suppliers’ sites.”
Management also intends to integrate “Fair Wage” elements into its own monitoring toolkit and suppliers’ Key Performance Indicators (KPIs), the company states.
In reading through Adidas’s 2013 sustainability report, it becomes abundantly clear that management isn’t just paying lip-service when it says that caring for the well-being of people, both within and outside the company, is a core value and pillar of its “Fair Play” sustainability framework. The same can be said for the values that compose the other three pillars: Product, Planet and Partnership.
For more on Adidas and its sustainability drive, delve into “Fair Play,” Adidas’s “Sustainability Progress Report 2013” for yourself.
Images courtesy of Adidas Group