Adidas Progress Report - Great Pass but No Slam Dunk

Adidas’s 2011 progress report left me with mixed feelings. There’s no doubt Adidas is an industry leader when it comes to sustainability. The list of examples proving it is almost endless, from being no. 38 on the list of Corporate Knight’s list of the Global 100 Most Sustainable Corporations (you won’t find there Nike or PUMA) to being rated as industry leader in sustainability issues and corporate responsibility for the eighth time by the Dow Jones Sustainability Indexes (DJSI).

The problem is that such recognition also generates expectations. So while its 2011 progress report shows a number of achievements, it also gives you an impression that some elements are still missing in Adidas’s effort to “to meet society's evolving expectations of business practices.”

One problem was more technical – Adidas doesn’t report on its progress to meet its goal to reduce its environmental footprint 15 percent by 2015. The reason is that the company started using a new data environmental reporting and management tool, but due to a range of deviations in data sets from previous years, this information is not included in the report. Another problem is more fundamental – while Adidas makes a lot of effort when it comes to makes its supply chain more sustainable, it seems to make far less effort when it comes to another important stakeholder group – customers.

Let’s start first with the good news.  Here are some of the main achievements Adidas reports about in its report:

• Preparing for London 2012: According to Adidas, all London 2012 Adidas products and services must be sourced and manufactured to environmental, social, and ethical guidelines and standards set by the London Organizing Committee of the Olympic and Paralympic Games. The company reported that suppliers and factories have been briefed on these standards and regular audits are conducted to ensure that all products are sourced and transported in an ethical manner. Around 90 percent of all Adidas Olympic articles have some sustainable content.

Couple of days after Adidas’s report was released, the Playfair 2012 campaign, which campaigns for a sweat-free Olympics released a report (Fair Games?) with findings from an investigation in 10 sportswear factories in China, Sri Lanka and the Philippines. According to the report, “workers making Olympic sportswear for London 2012 for top brands and High street names, including Adidas and Next, are being paid poverty wages, forced to work excessive overtime and threatened with instant dismissal if they complain about working conditions, according to a new report.”

Adidas responded quickly saying that it is strongly disputes many of the claims made in the report in a 10-page detailed response and promised to launch an immediate investigation. It certainly looks like Adidas is taking these allegations seriously and generally the company’s effort to be transparent about its supply chain (it is the only London Olympic licensee to fully disclose its production locations) looks very impressive.

• Improved performance of direct suppliers: At the end of 2010, Adidas adopted an aggressive policy to improve the lowest performing suppliers in its direct supply chain. Focused capacity building by its local compliance team led to a marked turnaround in 2011, with over 80 percent of its local suppliers now meeting the company’s 2C minimum (Adidas has a C-rating, on a scale of 1C-5C, where 5C is the highest rating). Those that have failed to meet Adidas’s expectations will be phased out in 2012.

• Piloting the Apparel Coalition Index across many product categories: As a founding member of the Sustainable Apparel Coalition, 2011 saw Adidas participating in both the development and testing of a cross-industry apparel sustainability measurement tool. Nearly 20 products were piloted from brand adidas, Reebok and Rockport, and these covered all business units and global creation centers.

• Publishing a roadmap to zero discharge: In November 2011, following Greenpeace’s Detox campaign, Adidas, Nike, PUMA and other companies released a joint roadmap towards zero discharge of hazardous chemicals (ZDHC) in the supply chain by 2020 for public consultation.

These achievements, as well as others, show that Adidas is making a real progress. Yet, as I mentioned two main issues seem to cloud its efforts.

First, there is the missing carbon emissions data that wasn’t included because of problems with the new data environmental reporting and management tool. Now, it’s not the end of the world and it can happen to any company, but the problem is that while Adidas is very proud of being very transparent you won’t find the explanation about the missing carbon data on its press release, update on the report on the Adidas employees’ blog, CEO letter, or even the 2011 highlights. To find it you really need to dig in the report. You might think it’s really a non-issue, but I believe that a transparent company shouldn’t have a problem to giving this issue more prominence.

The second issue is the fact that although Adidas is working hard to become more sustainable, it doesn’t seem to share these efforts with its customers. For example, the company has a sustainability website, but if you go to its regular website and it's not easy to find. This problem is not unique to Adidas, but it is still not clear why the company doesn’t do more to share its achievements with customers. As leading sports footwear, apparel and accessories company, Adidas has the ability to engage in a conversation on sustainability with many young people and I truly hope it will take advantage of this opportunity. We’ll wait for the 2012 report to see if it happens.

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.