Challenges and responses
As a global business we face a variety of challenges, as we strive to balance shareholder interests with the needs and concerns of employees, workers and the environment. The following overview summarises how we are responding to these challenges.
• Being a global business
• Being competitive
• Managing an external supply chain
• Building credibility and trust
• Managing change
• Being environmentally responsible
• Being an employer of choice
• Being a good corporate citizen
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Being a global business
Our brands are visible all over the world, through our presence at major sports events like the Football World Cup or the Olympic Games. This draws attention to the way we do business and the conditions under which our products are made.
Response: Being accountable and open
Increased scrutiny of our business practices is in part a result of our own efforts to raise the profile and reach of our brands across the world.
To manage our business on a global scale we set clear standards, rules and procedures that apply to our operations and our supplier partners. We seek to be open about our operations, for example, by disclosing our global factory list to the public or submitting our global supplier compliance programme to evaluation and accreditation by the Fair Labor Association.
We are committed to striking the balance between shareholder interests and the needs and concerns of employees and workers and the environment, or in short to becoming a sustainable company.
For more, see the Vision and governance section.
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Being competitive
We are required to respond to changing customer demands for a broad range of products. This means that we need a wide variety of suppliers. Ensuring consistent compliance with our social and environmental standards across a broad and complex supply chain is a challenge.
Response: ...But not at any price
As we have outsourced most of our production and source from a multi-tiered supply chain, the way we manage our suppliers is under scrutiny. The adidas Group Workplace Standards are fundamental to our relationships with our suppliers and are contractual obligations. They are based on the International Labour Organization (ILO) and UN conventions relating to human rights and employment practices.
While we have our own team that assesses how well our suppliers are complying with our supply chain code, we also work with external monitors to complement our measures. We strive to work with business partners who are fully committed to fair, safe and environmentally sound working conditions because we are convinced that it strengthens our - and their - position in the global marketplace.
For more, see our Workplace Standards section
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Managing an external supply chain
Most of our products are manufactured by suppliers under contract to the adidas Group. Outsourced production is not without its risks. We have less control over how our suppliers operate and the conditions at their factories than we do at company-owned sites.
Response
Within our core supply chain we act as both inspectors and advisors, assessing management commitment to our Workplace Standards but also training our suppliers on the key issues.
Our strategy is based on a long-term vision of self-governance for our suppliers and focuses on:
- Encouraging our business partners to establish a management systems approach to human resources and health, safety and the environment
- Training and advising our suppliers’ workers and managers
- Raising environmental awareness and promoting best environmental practice
- Expanding our engagement with local worker organisations and NGOs to better understand working conditions in places where our products are made.
For more, see the Supply chain section.
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Building credibility and trust
The adidas Group has its own internal team for assessing how well our suppliers are complying with our supply chain code of conduct, the Workplace Standards. Some people question how impartial an internal team can be, and they call for us to publish the results of our assessments and to involve independent third parties in investigating and verifying supplier performance.
Response
We value transparency and stakeholder feedback. We report regularly on our compliance work, including the location of our suppliers globally. We also submit our programme to evaluation and public reporting by the Fair Labor Association, a non-profit organisation which assesses and verifies the compliance programmes of brands and publishes the results. Moreover, we continue to practise full disclosure to researchers, trade unions and other concerned NGOs, based on their specific requests. A practice we have followed for more than a decade.
We also work collaboratively with our suppliers, labour activists, academics and others because we believe that working closely together demonstrates our commitment to meeting stakeholders’ concerns and creating lasting change in factory and environmental conditions.
For more, see the Stakeholders section.
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Managing change
As a company we do not act in isolation: we have to react to economic and social developments in the countries where our products are made. For example, we have had to adapt our programme in the face of worker strikes in Vietnam, factory closures in Indonesia and new legislation in China.
Response
Integrating our standards into our day-to-day operations lies at the heart of our ability to respond to these developments. The ‘Social and Environmental Affairs’ (SEA) team was created in 1997 to ensure supply chain compliance with the Workplace Standards. To make this a part of normal business practice, SEA team members are located near our suppliers and work closely with the Global Operations group, which is responsible for developing and sourcing products from suppliers.
To drive change in supplier behaviour and practices, the results of supply chain compliance performance must inform the Global Operations group and other supply chain decision-makers. So the Workplace Standards are an integral part of the manufacturing agreements the Group holds with its business partners. And the Global Operations group refer to our suppliers’ performance against our Standards when deciding which suppliers to select and retain. In this way, we are driving change in the way our suppliers do business.
For more, see the Supply chain section
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Being environmentally responsible
Our products must be competitive in function and price but also safe. Climate change is on the top of the agenda of governments around the world. Manufacturing products must be done with the least environmental impact without compromising function and quality. And we have to be efficient in our use of resources but also fully support our global business. Therefore, environmental sustainability poses a number of challenges for our product management, innovation and development teams, facility managers, manufacturing partners and sales organisations.
Response: Reducing our footprint
Building on our existing environmental programmes, in 2010 we have developed a Group-wide Environmental Strategy that determines targets and areas of actions within every part of our value chain to significantly reduce our environmental footprint by the year 2015.
We strive to design out environmental problems by:
- Complying with all legal local laws and regulations
- Applying best practices at our own sites and operations
- Ensuring product materials and components are non-toxic and safe
- Promoting environmental management systems and best practices in the supply chain, where major environmental impacts occur
- Integrating environmental aspects in the product design and development process.
For more, see the Environment section.
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Being an employer of choice
We operate all over the world and have to mirror the global marketplace with a multinational workforce. We know that our people are critical to our success. Our challenge is to recruit, retain and develop this diverse group of employees so that they achieve their full potential.
Response: Managing our people
To address these challenges we have a Human Resources (HR) strategy in place that has the following pillars:
- Create a working environment that stimulates team spirit, passion and engagement
- Instil a performance culture based upon strong leadership
- Be an employer of choice.
For more see the Employees section
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Being a good corporate citizen
Our business has an impact on communities around the world. We need to understand their local needs to design programmes that make a difference to people's lives.
Response: Supporting local communities
The adidas Group has adopted a largely decentralised and brand-oriented model for community involvement practices, recognising that people in our regional subsidiaries and Group entities best understand the needs and cultural sensitivities of their local communities.
Initiatives derive from the brands’ individual identities and values and are managed through the Adi Dassler Fund, the Reebok Corporate Responsibility Programme and the TaylorMade-adidas Golf Charity Programme. They may vary in form, but they are all aimed at supporting children and young adults, with sports as a common theme.
At Group level we support our suppliers’ communities, as well as make contributions to aid organisations that promote sustainable development practices within the industry.
For more, see the Community involvement section
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