Adidas AG

RATING

SECTOR

Apparel

WEBSITE

CONTACT

Adi-Dassler-Strasse 1 91074 Herzogenaurach Germany

STOCK EXCHANGE

LISTING

  • Dow Jones Sustainability Indices (DJSI)
  • FTSE4Good Index Series
  • MSCI Global Sustainability, ESG and SRI Indices
  • STOXX Global ESG Leaders Indices 
  • Ethibel Sustainability Indices (ESI)
  • ECPI Indices
  • Global 100 Index
  • CDP Climate Change and Water Management (B Score)
  • Green Supply Chain Corporate Information Transparency Index
  • Corporate Human Rights Benchmark
  • Leader in Children’s Rights Benchmark conducted by the Global Child Forum in collaboration with the Boston Consulting Group. 
  • Know the Chain Benchmark

EMPLOYEES

59,533

CHIEF SUSTAINABILITY OFFICER

Marina Schurr

AWARDS

  • Stop Slavery Award

CONTENT SOURCE

FURTHER READING

Report created by Cec Ehrhard

Adidas AG

SECTIONS :  Sustainability    Evaluation  •  Progress  •  Watch  •  Overview

Company Activity

Adidas is a German athletic apparel and accessory company. It operates through the following segments: Europe, North America, Asia-Pacific, Latin America, Emerging Markets, Russia/CIS, adidas Golf, Runtastic, and Other Businesses.

The company’s business plan is built around three strategic choices that will enable them to focus even more on consumers:

  • Speed: Putting their consumers at the heart of everything they do and serving them in the best possible way means that they need to ensure that they always find fresh and desirable products where and when they want them. They will become the first true fast sports company.
  • Cities where they deliver: Urbanization continues to be a global megatrend. Most of the global population lives in cities. Cities are shaping global trends and consumers’ perception, perspectives and buying decisions. They have identified six key cities in which they want to over-proportionally grow share of mind, the share of market and share of the trend: London, Los Angeles, New York, Paris, Shanghai and Tokyo.
  • Open Source – How they create: This is all about collaboration and innovation. About learning and sharing. they are opening the doors of their brands inviting athletes, consumers and partners to co-create the future of the sport and sports culture with us.

To foster Adidas’ brand momentum and accelerate sales and earnings growth, the company introduced a number of initiatives that they will focus on in addition to the three strategic choices and their corporate culture – Portfolio, North America, Digital and ONE Adidas.

  • Portfolio: They are constantly revisiting and sharpening the focus of their brand portfolio, fully concentrating on Adidas and Reebok and on their core competencies in footwear and apparel. This will allow them to reduce complexity and pursue their consumer in a more targeted and consequent way.
  • Adidas North America: North America represents the biggest market in the sporting goods industry with a total share of approximately 40%. It is the single biggest growth opportunity for the Adidas brand. That is why they have made North America a strategic priority and started to significantly increase their investments into their US business – people, infrastructure, marketing and point-of-sale – in order to be more relevant and always visible to the consumer.
  • Digital: The digital transformation is fundamentally changing the way consumers behave and the way they work. Technology has enabled them to build more direct relationships with their consumers. With their relatively young workforce, they are in the unique position to continuously improve their digital capabilities – not only to interact with the consumer but also to become faster, better and more efficient in every part of the organization.
  • ONE Adidas: They continuously strive for operational excellence. ONE Adidas encompasses a set of initiatives that will enable us to work smarter, more efficiently and in a more aligned way. Because they know that when they act as one global company instead of 20 smaller ones, they can only get better.

Company Sustainability Activity

Adidas’ approach to sustainability involves taking responsibility for the entire life cycle of sport, using a two-fold approach to focus on both its products and people.

Highlights

  • 68% of all cotton sourced globally was “Better Cotton
  • Reduced absolute CO2 emissions annually by 3% – transition to clean energy
  • Surpassed goals of 3% net emissions reduction by achieving an 11% absolute annual reduction in Scope 1 and Scope 2 CO2 emissions 

Targets

2020 product targets, according to the company: 

Water

  • 20% water savings at strategic suppliers (baseline 2014)
  • 35% water savings at apparel material suppliers (baseline 2014)
  • 35% water savings per employee at own sites (baseline 2008)
  • Further expand the use of waterless technologies for products

Materials & Processes

  • In 2020, Adidas will produce 15 to 20 million pairs of shoes using recycled plastic waste from beaches and coastal regions, compared to more than eleven million pairs in 2019, five million in 2018, and one million in 2017
  • Adidas is also working on the development of bio-fabricated materials for sports apparel and presented first prototypes for tennis wear in 2019
  • 20% waste reduction at strategic suppliers (baseline 2014)
  • 50% waste diversion for owned operations to minimize landfill (baseline 2015)
  • 75% paper reduction per employee at own sites (baseline 2008)
  • Replacing conventional cotton, with the aim of achieving 100% sustainable cotton by 2018
  • Rolling out a global product take-back program to all key cities and markets
  • Reduce glue use by using laser welding or a mechanical locking design, thereby reducing emissions. And where glue is used, the team has specified water-based glues as much as possible

Energy

  • 20% energy savings at strategic suppliers (baseline 2014)
  • 3% absolute annual reduction in Scope 1 & 2 CO2 emissions (3) at own sites (baseline 2015)
  • Further expansion of IMS to key sites globally at own operations
  • LEED certification for new corporate construction key projects, such as the new offices at the company’s headquarters in Germany and new flagship stores.
  • Reduce the environmental footprint of consumer events

Expanded Targets

  • The first fully recyclable running shoe “Futurecraft Loop” has been in the test phase since 2019. The market launch is planned for 2021.
  • From 2021 onwards, packaging used to transport products from the manufacturing countries to the store shelves will also be made from recycled materials. At the same time, Adidas is testing a recycling loop for transport packaging
  • By 2024, Adidas will only use recycled polyester in all Adidas products across the business, aided by the introduction of PRIMEBLUE  and PRIMEGREEN performance fabrics where 100% of the polyester used is recycled
  • By 2030, as a signatory to the UN Fashion Industry Charter for Climate Action, Adidas has committed to reducing both its own and its suppliers’ greenhouse gas emissions compared to 2017 by 30%
  • By 2050, Adidas aims to achieve climate neutrality

Progress

  • 99% of products are per-fluorinated chemical (PFC) free
  • Organized “run for the oceans: a global running event with over 2.2 million runners from all over the world in 2019”
  • Plastic bags have been removed from all Adidas stores worldwide
  • Avoided more than 40 tons of single-use plastic items per year
  • Parley for the oceans: over 15 million pairs of shoes will be produced with plastic waste collected from beaches and coastal regions 
  • Infinite play: pilot project in the U.K. to extend the useful life of a product
  • Products can be brought back  to be resold or recycled
  • Better cotton: 100% of all cotton sourced globally is sustainable cotton
  • The Adidas Futurecraft Biofabric prototype shoe features an upper made from 100% Biosteel® fiber, a nature-based and completely biodegradable high-performance fiber, developed by the German biotech company AMSilk.
  • Contributed to the AFIRM Restricted Substances List that hrmonizes Restricted Substances Lists across the industry
  • Continued participation in several major public stakeholder consultation processes initiated by the European Commission (e.g. European Chemicals Agency) and US state legislative initiatives to inform governmental entities on implications and opportunities of drafted legislation.

Certificates

  • ISO 14001
  • ISO 50001
  • ISO 45001
  • OHSAS 18001
  • LEED Gold – Brand Center Store Berlin,  Office Shanghai,  WoKi II Herzogenaurach, WoKi I Herzogenaurach
  • LEED Silver – Multibrand Factory Outlet Store Otopeni (Bucharest)
 

United Nations Sustainable Development Goals

United Nations SDGs Compliance

Based Off Adidas Website

SDG 3

  • Work-Life Integration initiatives and programs include the provision of flexible working times and place, people development and leadership competence related to work-life integration, as well as family-oriented services
  • Global Salary Management System is rewards program which is used as a basis for establishing and evaluating the value of employees’ positions and salaries in a market-driven and performance-oriented way
  • Support initiatives such as ‘Lean In’ and put a strong emphasis on continuously closing potential gaps

SDG 6

  • Continue to drive water efficiency initiatives and raise employee awareness for the importance of their contribution. As a result, Adidas achieved accumulated water savings of 37% per employee between 2008 and 2019.
  • Continue to support the Energy and Water Investment Plan and, by the end of 2019, Adidas had mobilized more than 40 strategic suppliers located in five of their main sourcing locations
  • Contributed to the latest update of the ZDHC Wastewater Guidelines, an international wastewater standard for their industry

SDG 8

  • Throughout 2019, engaged with a broad spectrum of human and labor rights advocacy groups, working collaboratively with the FLA and calling on the Cambodian government to address ongoing human rights topics, which ultimately triggered a review of the EU’s trade preferences for the country
  • A set of policies, including a Modern Slavery Policy, a Responsible Recruitment Policy and a Responsible Sourcing and Purchasing Policy, drive Adidas practices in this area

SDG 10

  • Continue to support and grow Employee Resource Groups (ERG) – specific networks that give employees from various walks of life a voice, including networks for women, LGBTQ+, experienced generations, and North American people of color
  • Already in 2011, Adidas proactively set itself the goal of increasing the number of women in management positions globally. By the end of 2019, the company had recorded a total of 34% of women globally in management positions (2018: 33%), exceeding the 2020 target of 32%
  • She Breaks Barriers“, which is aimed to get girls to join and stay in sports
  • One Starting Line“, which is aimed at increasing inclusivity for all in sport and sports culture

SDG 12

  • Focused attention on creating an internal tool to calculate the organizational footprint along the entire value chain and simulate reduction options on a more regular basis. Aim to use the results of this impact valuation tool for steering business decisions, tracking performance over the years and further driving integration of sustainability into the business
  • A tool called ‘E-KPI’ helps to measure suppliers’ environmental compliance overall and assess their performance and progress toward the 2020 targets

SDG 13

  • Reiterated the company’s commitment to mitigating climate change by signing the Fashion Pact presented at the G7 Summit in 2019
  • Signed the UN Fashion Industry Charter for Climate Action and committed to reducing emissions in its supply chain by 30% by 2030 (baseline 2017), thus paving the way for climate neutrality by 2050
  • Introduced a program called ‘Green Company’ to drive continuous improvement and savings in water, waste and energy at its own sites globally
  • Achieved an accumulated reduction of more than half of all emissions in 2019 (52%) compared to 2015 in combined carbon net emissions

SDG 14

  • Reduce the amount of virgin plastic added to the world and clean up the already existing plastic. As such, the Adidas brand more than doubled the number of products made with recycled ocean plastic from seven million in 2018 to more than 14 million in 2019
  • Together with Parley for the Oceans, Adidas is developing products partially created from upcycled plastic waste, intercepted before it reaches the ocean from beaches and coastal communities.”
  • “End Plastic Waste” – aimed at protecting the world’s oceans for future generations

SDG 17

  • Partners with The Better Cotton Initiative (BCI), The Zero Discharge of Hazardous Chemicals (ZDHC) working group, The Sustainable Apparel Coalition (SAC), The Leather Working Group (LWG) and The Apparel and Footwear International RSL Management (AFIRM) Working Group, The Parley for the Oceans

Evaluation

Adidas is a leader in sportswear manufacturing, an industry that is widely involved in a large amount of material and energy waste. However, Adidas is working to address its environmental impact by including sustainability in each area of the business, specifically in reducing emissions, waste and water. Adidas’ continued inclusion in multiple sustainability indices is evidence of its continued commitment to sustainability.

The company has clearly communication their goals towards sustainability, yet, Adidas does not provide clear KPIs. Adidas has numerous listings (Dow Jones Sustainability Index, FTSE4Good, MSCI Global sustainability, and more) and some certifications (LEED, ISO, OSHAS), but the company does not hold primary sustainability recognitions. For these reason, Adidas has been given a “B” rating. 

Analyst Outlook: Neutral

Adidas continues to achieve its environmental targets each year in water use, energy, plastic, paper, materials, and GHG emissions.

Key Points

  • Update sustainability report (latest report is from 2016)
  • Update and clearly state SDGs on website
  • Continue to make all workplaces and stores LEED certified, as only a few operations are currently LEED certified 
  • Follow through on targets to potentially become A rated
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