BY: MELIS TOKGOZ
ADIDAS GROUP The adidas Group is a multinational corporation that is a leader in the apparel industry by designing and manufacturing sport shoes, clothing, and accessories. adidas, Reebok, and TylorMade-adidas Golf are the brands that the adidas Group is made up of. The adidas Group’s sustainability strategy is currently based around 4 pillars: 1. 2. 3. 4.
People: Employees, and the communities where the business has a presence. Product: Better ways to create products through innovation, sustainable materials, and efficient practices. Planet: Reducing environmental footprint. Partnership: Engaging with critical stakeholders and collaborating with partners (19).
The adidas Group’s efforts in sustainability have received high external recognition by ethical investment agencies and socially responsible investment analysts over the past decades. The Dow Jones Sustainability Index, the Financial Times Index FTSE4Good, and ETHIBEL have rated the adidas Group as a leader in social and environmental responsibility. In addition, the adidas Group is rated in the list of the ‘Global 100 Most Sustainable Corporations in the World’ since 2005 (19), ranking fifth in the ‘2016 Global 100’ results. (23) Through research and a variety of case studies, I have analyzed adidas Group’s CSR through a new framework. This framework has three environmental factors: Raw Material Consumption, Environmental Resource Efficiency, Waste Usage and three social factors: Fair Employee Treatment, Community Awareness, and Product Durability and Sustainability.
Product Durability and Sustainability
Raw Material Consumption
The product or service a company delivers needs to be durable, sustain its relevance and have meaning to its audience. Companies need to be innovative and aware of recent trends, so that their business sustains itself in an ever-changing world.
It’s important to analyze how a company extracts and uses raw materials. Are they used efficiently and in a sustainable manner?
Community Awareness
Environmental Resource Efficiency
Corporations should be socially aware of the world and the communities its business has a presence in. Companies need to partake in philanthropy and actively give back to the communities it works in.
Global corporations use a major amount of three very important resources – water, carbon emissions, and energy. These limited resources must be used in an efficient and innovative manner in order for the company to sustain itself and the earth.
SOCIAL RESPONSIBILITY FRAMEWORK
Fair Employee Treatment
Waste Usage
Responsible corporations need to take active initiative to ensure all employees are treated with respect, dignity, and receive their basic human rights. This includes everyone in the business, from those working at the supply chain to those at the head of the leadership team.
How does a corporation deal with the waste they create, as well as the excess waste currently on earth? A sustainable company focuses not only on sustaining its business model, but sustaining the planet that provides for it.
IDEATION AND CONCEPTUALIZATION
World Federation of the Sporting Goods Industry
FIFA Olympics
UEFA Euro Soccer Championships
America SCORES
SUPPLIERS AND MANUFACTURING CONSUMERS AND COMMUNITIES
Cotton Use BOKS Programme Open Source Innovation
adidas Fund
Better Cotton Initiative
Company Sports
Ginga Social
Labour Rights Charter
ILO Better Work
Emissions
Sustainable Apparel Coalition Virtual Technology
COTY
“SMS for workers”
Sport Infinity
Parley for the Ocean
Fair Labor Association
Human Rights Concerns
Water and Energy Use
BASF
Code of Conduct
Fair Factories Clearinghouse
Recycled Nylon
European Outdoor Group
ADIDAS GROUP
Workplace Standards
Fair Wage Assessments Factory Strikes
BLC Leather Working Group
DryDye Technology
Transportation
Green Company Initiative
BOOST Cushioning
AFIRM Working Group Bluesign Technologies
Microbeads & Body Care Products
Pattern Efficiency
Recycled Plastics
Bionic Yarns
adidas & Parley Shoe
Zero Discharge of Hazardous Chemicals Low-Waste Products
HomeCourt Stores
RAW MATERIAL CONSUMPTION Better Cotton Initiative Cotton is an extremely damaging raw material in the apparel industry, due to its heavy negative implications on the environment. The adidas Group is a founding member of the Better Cotton Initiative, and is committed to increasing the volume of cotton sourced from the initiative. The Better Cotton Initiative aims to reduce the use of pesticides, promotes efficient water use, crop rotation and fair working conditions (22). adidas Group’s most recent sustainability report reveals that 43% of the company’s cotton usage was sourced as Better Cotton, surpassing the 40% goal for 2015. This marks the highest volume of sustainable cotton used in the company’s history (1). In the past, adidas Group has demonstrated taking steps towards the goal of a more sustainable cotton practice. In 2014, adidas Group sourced 30% of its cotton as Better Cotton, surpassing the original 25% they were aiming for (2). This means that adidas Group has surpassed its cotton target for a second year in a row (2). In the most recent sustainability report, adidas Group has announced that it has committed to sourcing 100% of its cotton across all products and in all brands as “sustainable cotton” by 2018 (1). Looking at the company’s current patterns and initiatives, adidas Group is well on its way to reaching that milestone.
Leather The adidas Group also uses processed leather in footwear products. The company does not source raw materials from any endangered or threatened species, as defined by the International Union for Conservation of Nature and Natural Resources red list. The company policy also prohibits using leathers from animals that have been inhumanely treated. In addition, various environmental impacts occur at the different stages in the leather supply chain. The adidas Group takes steps to address these impacts through active participation in the BLC Leather Working Group, which has developed standards and audit protocols, as well as checking compliance through independent monitoring of tannery sites (22). Recycled Nylon Standard nylon is made from petroleum, which requires raw materials such as crude oils. adidas Group’s recycled nylon is made from post-industrial and post-consumer waste. Recycled nylon reduces dependence on petroleum, creates less waste, and contributes to a reduction in toxic emissions from incinerators that would be needed for waste disposal. As of summer 2015, more than 30% of the company’s swimwear collection includes recycled nylon (22). The adidas Group is actively trying to use raw materials in the most sustainable way possible, which not only sustains their products but also sustains the planet.
ENVIRONMENTAL RESOURCE EFFICIENCY adidas Group has been working towards making CO2 emissions, water usage, and energy usage as efficient as possible, as well as developing an environmentally sustainable company. About 96% of footwear suppliers are ISO (international quality standard) certified (4). adidas Group has actively partnered with Sustainable Apparel Coalition in the development, refinement, and completion of Hogg 2.0, a sustainability benchmark (14). The company’s Green Company Initiative also saves water, paper, and energy (9). In addition, adidas used 12% less water in 2014 than it did in 2013 (10). In 2008, the company committed to reducing carbon emissions by 30% by the end of the year, and has also focused on supply chain energy efficiency (4). The total CO2 emissions from administrative offices, owned production sites, and distribution centres decreased 27% from 2013 to 2014 (10). DryDye Collection In 2012, the company introduced its DryDye collection, making it the first in the market to introduce a method of dyeing clothing without using water. Rather than consuming the typical 25 litres required to dye a shirt, the DryDye technology uses no water. Instead, the dye is injected using compressed carbon dioxide. The garment also uses 50% less chemicals and energy (16). By end of 2103, 50 million litres of water was saved after reaching 2 million yards of DryDye fabric used in production (15).
HomeCourt HomeCourt is the new global adidas store concept. The HomeCourt store in Nuremberg, Germany is the first adidas store worldwide to pilot their green retail approach (21). The store has an intelligent control unit, which runs all stores operating systems, optimizing heating, venting, lighting, shading, and door control settings. LED lighting and other energy efficient devices are used. In terms of water usage, there are sensor controlled taps, and low flush toilets. Also, waste is separated for maximum recycling. Overall, the energy savings went up to 50%. adidas will analyze the data from this pilot store in order to take further steps in retail sustainability (12). BOOST adidas has worked with BASF, a company working in sustainable chemistry and the green sport world, to create a revolutionary new cushioning material, BOOST. This material has the highest energy return in the industry (4).
WASTE USAGE adidas and Parley Partnership adidas’s partnership with Parley for the Ocean, which launched in April 2015, resulted in an innovative shoe concept. The shoe is made from yarns and filaments reclaimed and recycled from ocean waste, as well as illegal deep sea gillnets (4). The concept shoe also incorporates knitting, which produces less water than traditional shoe-making methods, which create a lot of waste in the process of cutting out a pattern. The method of knitting is also zero-waste, and is the same method used for adidas’s Primeknit shoes (7). adidas is showing support for Parley’s Ocean Plastic Program by showcasing their shoe concept and other initiatives to cut down on plastic. The adidas Group is avoiding plastic bag use in retail stores, and is planning to phase them out completely by the end of Q1 of 2016 (5). In terms of their body care products, adidas and license partner COTY have planned to end use of plastic microbeads by January 1st 2016 (6). Further Initiatives adidas Group has formed other initiatives and partnerships around reducing the earth’s waste. In March 2014, the company announced a partnership with Bionic Yarns to incorporate fabric from upcycled marine plastic into a new Originals line of shoes and apparel (18). The company has also created heel counters made from recycled food containers, which is estimated to divert 1,500 tons of polystyrene waste from landfills (15).
Pattern Efficiency The company has also focused on minimizing materials waste through pattern efficiency (15). The adidas by Stella McCartney line includes Low-Waste Tees and Shorts created with precise cutting techniques that ensure 95% of fabric is used, with the remaining 5% being recycled or repurposed. Similarly, the Running line changed its pattern efficiency to 96%, with the remaining 4% of materials (inlay soles, textiles, finishing and rubber) recycled for use in other products (18). Toxicity Concerns In addition, adidas Group is also concerned with the toxicity and health concerns involved with the waste from creating products. In 2000, adidas Group become one of the first companies to eliminate PVC, one of the most toxic plastics, and is currently moving towards printing with phthalate-free inks, phthalate being a suspected carcinogen (17). adidas Group has also partnered with Bluesign Technologies, a company dedicated to the sustainable movement within the textile industry, to screen and manage chemical input at the supplier level (17). The company has also phased out the use of long chained PFC’s, and is well on its way to a 99% PFC free company by the end of 2017. Currently, 90% of adidas products are 90% PFC-free (10). Sport Infinity adidas Group is a company that is thinking forward on the topic of reducing waste. Another project from the company is Sport Infinity, a three-year research program attempting to develop an inexhaustible 3D material. The project aims to create a soccer cleat that uses no chemical adhesives, creates no waste, and can be repeatedly recycled. Funded by the European Union, the program will employee individuals from various industries to research and develop the project (13). Virtual Technology adidas Group has also been using virtual technology to share ideas and communicate within the company. By using virtual technology, the number of samples made from 2011 to 2102 was reduced by 600,000 (16).
FAIR EMPLOYEE TREATMENT adidas Group has a governance framework that works towards maintaining the human rights of all its employees, which includes: • • •
Workplace Standards, the adidas Group’s supplier code of conduct Labour Rights Charter, outlining the adidas Group’s position on human and core labour rights for company employees adidas Group Code of Conduct, defining rules for all employees with respect to legally compliant and ethical behavior (20)
Global corporations have impacts in all of the countries in which their designing, supplying, manufacturing, distributing, and purchasing takes place. A corporation that is truly responsible actively partakes in finding a solution when employees in any branch of their production and in any part of the world experience hardship. adidas Group has many examples where they have not been passive to global employee issues. Yue Yuen Strike In Dongguan, China, a strike occurred at Taiwanese shoe manufacturer Yue Yuen, which supplies athletic shoes to various companies. The adidas Group handled the situation by getting in contact with the parent company, Pou Chen Group, which had direct discussions with local government and he trade union federation in order to address the workers concerns. When two workers representatives were imprisoned, Mr. Zhang and Mr. Lin, adidas Group engaged with several labour rights organization in Southern China, and wrote to he Dongguan mayoral office. Strikers demanded an increase in insurance and housing funds, which eventually resulted in Yue Yuen increasing payments (11). adidas Group understands that willingness to lobby governments and campaign on behalf of workers and their representatives is a tool for responsibility, and for sustaining their company.
PT Kizone Closing In Indonesia, the owners of PT Kizone apparel factory unethically closed and abandoned about six months after being unable to work out differences with adidas regarding its operations. That left “hundreds” of workers without jobs or severance pay. In April 2013, adidas Group reached a settlement with the factories displaced workers and gave them additional aid, such as job placement services and direct advocacy with the Indonesian government (14). Fair Wage Assessments adidas Group has addressed the topic of fair wages by conducting a series of “Fair Wage Assessments” in 2012. 1,817 workers spanning 12 factories in 5 countries were interviewed, giving adidas Group the ability to gather information on fair wages within their supply chain. In response, adidas Group has made eliminating the root causes of fair wage issues a primary focus in its 2014 sustainability efforts (14). SMS for Workers At the end of 2012, Adidas launched the “SMS for workers” project in 5 factors in Indonesia, and one in Vietnam. This includes almost 35,000 factory workers (14). The pilot program gave employees with grievances the ability to voice their concerns from their mobile phones. The system was not only cost effective to install, but allowed workers to express their concerns from anywhere and give factory managers better ideas on where to improve. The communication was also two-way: employees who opted into the program could also gain updates from factory management (16). Further Initiatives In 2013, 1,346 factory environmental and social audits took place in adidas Group’s suppliers. Also, the sustainability team conducted 148 training sessions and workshops for suppliers, licensees, workers, and employees (14). adidas Group has a global network of compliance officers who “act as independent contacts for any questions employees may have about compliance” (14).
COMMUNITY AWARENESS Ginga Social In the run up to the Brazil 2014 World Cup, adidas worked with local organizers on a number of grassroots programs (4), such as partnering with Gols de Letra (16) to run Ginga Social. Ginga Social is a sports-based initiative, where local coaches teach values and life skills to young people (ages 7-17) in low-income, high-crime neighbourhoods. This sort of program equips coaches with communication and leadership skills to make a positive impact in the lives of vulnerable people in their communities. Also, local sport facilities were refurbished and their lives were extended in the process. Overall, 2,200 children and teens benefited, and that number rises to 7,000 people when including all those involved. adidas Brazil has continued investing in the program well after the World Cup, as adidas sees not only environmental sustainability as a key business driver, but social and governmental sustainability as well (4). Parley for the Oceans adidas Group also runs a volunteer program in cooperation with Company Sports, which is usually sports-related. However, in 2015 employees were given the option to volunteer with Parley for the Oceans through this volunteer program (3). In April 2015, adidas formed a partnership with Parley for the Oceans, which they also co-founded (5). The adidas and Parley partnership is based on communication and education, research and innovation, as well as direct actions against ocean pollution (4).
In November 2015, 20 employees went to volunteer with Parley for the Ocean through adidas (5). The employees were able the learn the negative impacts of ocean pollution from educators, speak with local community members (students and divers) (3), retrieved debris from coastal areas, and acted as Paley for the Ocean ambassadors within adidas (5). One of the problems explored was the fact that plastic pollution ends up in the food chain, causing health and environmental issues. Plastic breaks down into micro-plastics that can’t fully be degraded, and the release of toxic chemicals complicates the recycling of plastic. The volunteer opportunity led to a greater understanding of environmental issues, and the through this partnership adidas is able to co-create new fabrics and innovations for their company (3).
PRODUCT DURABILITY AND SUSTAINABILITY Open Source Innovation A large part of what makes adidas Group’s products relevant and what sustains their presence in the world is their method of open source innovation. adidas Group defines open source innovation as design that is “compromised of crowd sourcing ideas from four pillars within and outside of Adidas”. The four pillars of this ideation process are the following: 1. 2. 3. 4.
Creators – athletes and artists. Communities – individuals and groups of people who want to work with adidas Group. Customers – open communication and feedback with product users. Partners – collaboration with other companies, non-profits, and NGO’s (4).
Sports World Relevance adidas Group’s relevant presence in the sporting world is what makes their product line durable and sustainable in an ever-changing world. adidas was the official sponsor, licensee, and outfitter of the 2014 FIFA World Cup in Brazil. With the rise of consumers demanding transparency in the products and services they buy, the list of factories manufacturers products for the event had been published (14). Currently, the 2016 Summer Olympics in Brazil and the UEFA Euro 2016 soccer championships are predicted to bring major sales and showcase opportunities to the company (8).
OPPORTUNITIES
KEEP US ACCOUNTABLE adidas Group has taken many active precautions and initiatives to try and reduce human rights and wage issues abroad. One of the company’s initiatives was “SMS for workers”, a pilot project where workers were able to voice their concerns from anywhere through mobile phones. The project was proactive in discovering that factories do have a large amount of workers with grievances, which adidas Group can take action on. adidas Group can take this initiative further, and implement a digital check-in with the ability to send messages in all of its factories and suppliers. From there, workers would be able to voice their concerns. In this revamped project, concerns would be sent to a third party independent monitoring team or system. This keeps adidas Group accountable of their actions. adidas Groups' head offices would have a virtual map where they could identify what areas of the world or factories have repeated or worrying concerns. Factories of concern would be dealt with accordingly, whether that meant having a monitoring system check in on the factory, speak with government officials, or terminate agreements in working with them.
VISUALIZE MY IMPACT adidas Group has explored new retail spaces that are focused on sustainability, such as the HomeCourt stores. A potential concept store for adidas Group could be one that focuses on visualizing the brand’s environmental impact. The stores itself would tell a story and be an experience for the user, in which they can better understand the brand’s actions towards the environment. The store incorporates two types of digital visualizations: one showing where in the world environmental damage takes place, and areas in the world adidas Group is impacting positively. Users would experience these visualisations in product displays, walls, change rooms, and throughout the store’s space.
TRASH TO TREASURE adidas Group has demonstrated action towards reducing the waste on earth, which has been seen through innovations such as the adidas and Parley ocean waste shoe concept. adidas Group could continue this initiative with other waste materials that aren’t commonly used in the apparel i ndustry just yet. For example, adidas could take existing technology and further develop it so that food waste, such as citric byproducts, can be processed into a raw material that can be spun into yarn or fabric. adidas Group could also create shoes in areas with waste unique to its geographical region, which also reduces environmental impact through transportation. This could expand into a line of shoes that are unique to different parts of the world.
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