Analysis & Results

Data Analysis

Adidas uses a CSR system, a corporate social responsibility report or known as a sustainability report. Companies periodically publish sustainability reports to share their corporate social responsibility actions and results. The information communicates the corporations’ commitments and actions in social and environmental areas. The goal is to improve transparency by communicating with stakeholders and allowing the outsiders, such as the investors and media, better understand the company's short term and long-term goals. There are also other goals of the sustainability reports to discuss the impacts of decisions made that align with the triple bottom line. According to the global reporting initiative website, “The Global Reporting Initiative contains over 10,000 reporters in over 100 countries. There’s the determination on proper reporting to deliver the highest level of transparency for impacts on the economy, environment and people.” The idea behind sustainability reports also focuses on how corporations can prioritise their internal data to engage their external parties—increasing stakeholders' value.

Adidas has come along with most major corporations to show their annual report on 2020 their environmental impact. Adidas has even gone as far as to create a system they call the Environmental Footprint Tool (EFT), which uses data from the IT systems and departmental sources and calculates a monetized environmental footprint that accounts for the complete value chain starting from raw materials and even going to the production assembly line and product waste usages. Adidas uses the EFT as a foundation for developing their new strategy, and the EFT directly reflects the pivot in future objectives into utilising the EFT with Adidas systems to enable real-time situations to support business decision-making. They are also making significant efforts towards the sustainability path outside of their operations. For example, Adidas has “signed the Fashion Pact in the 2019 G7 Summit and the UN Fashion Industry Charter for Climate Action. Adidas committed to the Science-based Targets Initiative in 2020. Adidas has been a member of the UN Climate Neutral Now Initiative since 2015 in the continued progress to lowering emissions across their value chain by 20% by 2030.”

On top of that, Adidas also has a program called the “Green Company”, whose sole purpose is to focus on savings in energy, water, and waste within its global locations. The Green Company program covers over 97% of Adidas’s global employee base and implements its environmental standards. Adidas has an Integrated Management System (IMS) that tracks health and safety management, energy management, and environmental management. The IMS system hands out certifications to departments that qualify. Their sustainability report shows that 42 sites received the ecological credentials, 39 received health & safety certifications, and 51 received the energy certifications. The Energy Attribute Certificates (EACs) received by suitable locations helped provide data that indicated Adidas reduced their combined net emissions by 55%, and by 2025 they aim to achieve carbon neutrality for their corporate and own retail sites. They also have a sub-report designed explicitly for their “Green Company” program; that way, anyone can track the public progressions sought after by the program.

Adidas manages a fully outsourced product, which pushes them to oversee the environmental impacts affected at each production stage. Adidas builds a foundation on ensuring high product quality and timely delivery when working with their suppliers. Adidas has a policy implemented within their guidelines named “Rooftop Solar Guideline” and “Waste Co-processing Due Diligence”. The “Rooftop Solar Guideline” is an Adidas funded study that provided solar rooftops for 80% of Adidas' key outsourcing countries, Vietnam and China. The Rooftop Solar Guideline already saw positive results in 2020. A hands-on training process carried out by Adidas named the “Environmental Good Practice Guide & Toolkit” covers 60 measures and practices for identifying environmental impacts within operations. Adidas is also co-developing a climate action training program with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) to change their greenhouse gas emissions through their fashion supply chain.

In 2020, according to the sustainability report, “98% of their footwear sourcing volume was produced in factories certified with the international Environmental Standards ISO 14001, and Workplace Health and Safety Management Standards 0HSAS 18001”. Adidas reveals in their report that they have an extensive set of goals and targets to be achieved by 2025. A couple of them are expanding their water reduction efforts to achieve a 40% water consumption reduction. Another goal is to accelerate their low-carbon manufacturing within their supply chain, focusing and limiting on topics such as renewable energy and coal replacement. They also set out plans to reduce transportation. Most of their vehicle takes place through sea freight instead of truck or air, and that remains consistent regarding the data whether the conversation is about the appeal, footwear, or accessories and gear.

Adidas, lastly still pushes sustainability in their products, and they are committed to increasing the use of more sustainable materials and sustainable innovation. Adidas even explained that the use of Synthetic Fibers was widely used, and they are aware that synthetic fibres harm the environment. They are actively working to correct this situation by becoming co-founders of the Microfiber Consortium (TMC), which helps develop tools to minimise shedding and releasing the microfibers into the environment.

Researchers have found more initiatives.  Adidas also pushes sustainable innovation through their materials by managing to become 100% sustainable in their sourcing of cotton by the end of 2018 through the Better Cotton Initiative. As of 2024, Adidas seeks to administer and replace all virgin polyester with recycled polyester. As of 2020, 71% of all polyester used for their apparel and footwear was used from already recycled polyester, making this a very attainable goal. For anyone interested, their “Primeblue” and “Primegreen” labelled products are made with recycled materials. Adidas has also performed as a partner with the organization “Parley for the oceans”, using ocean plastic as a replacement for virgin plastic. In 2020 they produced more than 15 million pairs of shoes containing Parley Ocean Plastic, and the target is 17 million shoes by 2021. Adidas also phased out plastic bags in their retail stores globally by 2016, and the company aims to reduce virgin plastics by 100% and transition into recycled LDPE Polybags by 2021.

Adidas is ahead of the curve when it comes to sustainability. Shown from their data, most of their departments are already over 70% of full efficacy and sustainability. There are no corporations in comparison with Adidas, and if so, the corporations aren’t on the path towards a fully closed loop sustainability system like Adidas. Adidas has a clear strategy for controlling the entire life cycle of its products. Whether fully recycled products or sub-divisions focused on recycling older model products and making them biodegradable or bio-fabricated products. The Ultraboost DNA Loop program allows inventors and innovators the platform to discuss ways to help further improve any existing or new ideas throughout the corporation. Researchers found this part of the company to be the most appealing because it allowed for open dialogue. Customers may like this idea because it allows them to be a part of the conversation. Things like this set Adidas apart from other large companies. When considering the size of this company, the scale of its sustainability efforts is impressive. Adidas is a multinational company that is the largest manufacturer of sporting goods in Europe. The strategies developed to convert its energy, waste, recyclables, materials and products, as well as to optimize its processes while

 

Chronologies of Adidas

 

Year	Adidas Sustainability Initiatives
1998	Adidas developed its own environmental and social standards that all of its supplies are required to uphold.
2012	At the London Olympic Games Adidas equipped all volunteers with uniforms made from recycled polyester.
2015	Adidas and Parley For The Oceans launched a single shoe in the united nations as part of the long-term eco-innovation partnership.
2021	More than 70% of all the polyester Adidas uses in products is recycled.
2024	Adidas will eliminate the use of virgin polyester wherever possible.
2025	9 out of 10 Adidas articles will feature a sustainable technology material, design or manufacturing method.
2050	Adidas will achieve carbon neutrality across its entire supply chain.

 

Results

 

Adidas' Sustainable Development Goals

Adidas has published its progress against established targets in its sustainability report every year since 2000. The company further publishes a separate environmental report detailing the progress made in our operations worldwide. The Green Company Report now covers approximately 90% of Adidas's internal environmental footprint. Our research found that Adidas has done an excellent job of meeting its sustainability goals over the past few years.

Adidas maintains their commitment to sustainability, and they’ve embedded these principals into their business practices for over two decades. This business strategy is rooted in their purpose, they believe that ‘through sport, they have the power to change lives.’ To underline this commitment, in 2021, sustainability was defined as one of the strategic focus areas of their strategy ‘Own the Game.’ 

Adidas has further sharpened their focus on sustainability and defined a roadmap for 2025 and beyond that allows them to create – and drive – their positive impact. Adidas explains as they continue to pioneer in sustainability, move to a comprehensive, consumer-facing sustainable article offering at scale, expand their circular services and work towards achieving climate neutrality (GHG) across our entire value chain. They will empower their employees to become sustainability ambassadors, just as they invite their consumers globally to engage and connect with them on the topic of sustainability. They also aim to uphold the highest standards of social compliance across our supply chain.

 

Goals	Met?	Explanation
Reduce carbon emissions	Yes	Adidas reduced their carbon emissions by 55%, exceeding their expectation of 15%.
Reduce employee water consumption	Yes	Adidas has reduced water use per employee by 48%. The target they set in 2008 was 35%.
Reduce employee Paper consumption	Yes	Paper use per employee was reduced by 80%, exceeding the original target by 5%.
Use of waste	Yes	Adidas achieved a waste diversion target of 50% savings in their own operations since 2008.

In addition to this, Adidas has a clear roadmap with clear goals for 2025 and beyond. These goals focus on the topics that are most important to its business and stakeholders. As Adidas continues to lead the way in sustainability, it will shift to a large scale offering of fully sustainable products for consumers, expand its recycling services and work towards climate neutrality (GHG) throughout its value chain (Our Target, n.d.).

Target Year 2025

Area	Target	Baseline
Own operations
Emissions	Achievement of climate neutrality (GHG)
Water	15% consumption reduction (m3/ m2)	2019
Abfall	95% diversion rate	2019
Supply chain
Energy	Adoption of renewable energy at strategic Tier 1 and Tier 2 supplier facilities to keep emissions flat	2017
Water	40% intensity reduction at Tier 2 supplier facilities	2017
Chemicals (input)	80% of supplier facilities to achieve the highest level of compliance (level 3) with the Zero Discharge of Hazardous Chemicals   ZDHC 'Manufacturing Restricted Substances List' for 80% of their input chemicals
Wastewater (output)	80% of suppliers that operate on-site effluents plants to achieve ZDHC 'Wastewater Foundational Level’
Product
Sustainable article offering	Nine out of ten articles will be sustainable, meaning that they are made – to a significant degree – with environmentally preferred materials	2020
Decarbonization	15% reduction of GHG emissions per product	2017

 

Target Years Beyond 2025

Target year	Area	Target	Baseline
2030	Entire value chain (from raw material production to own operations)	30% reduction of GHG emissions	2017
2050	Entire value chain (from raw material production to own operations)	Achievement of climate neutrality (GHG)

 

Target for 2025: Social impact

Impact area	Target
Own operations
Health & Safety	Lost-Time Incident Rate (LTIR) below industry average; Zero fatal accidents; Zero Occupational Illness Frequency Rate (OIFR)
Supply Chain
Social impact (,S-KPI')	70% of Tier 1 strategic suppliers achieve at minimum 4S; 100% of Tier 1 strategic suppliers achieve 3S or better
Fair wages	Progressive improvement in compensation, measured by fair wage benchmarks across our strategic Tier 1 suppliers
Gender	Achieve gender wage parity for workers and their supervisors in its strategic Tier 1 suppliers
Entire value chain (from raw material production to own operations)
Human Rights and Environmental  Due Diligence (HREDD)	System in place to identify and manage high-risk human rights issues in 100% of the value chain

 

The shared value

The 2020 Green Report surfaces that Adidas is already on track to meet its sustainability goals. Some of Adidas' products are made of PARLEY marine plastic. The company believes this material is not the solution to saving our oceans, but it is a start. These products are made from re-imagined plastic waste intercepted from remote islands, beaches, coastal communities and shorelines. In addition, Adidas focuses on how to control pollution and production costs. In its sustainability report, Adidas has brilliantly demonstrated how it requires its employees and production design to use less water and paper in the production process but to guarantee the performance of the production. Besides, Adidas Group’s partnership with micro-finance organization Grameen Bank to manufacture low-cost shoes for the poor in Bangladesh. If the deal goes through, it will be an important footprint for Nobel Laureate Muhammad Yunus' social endeavours (Rahman, 2010).

Adidas has partnered with Grameen Bank, a micro-finance organization, to manufacture low-cost shoes for the poor in Bangladesh. The creative partnership produces affordable footwear for the poor in Bangladesh, which prevent them from hookworm and other parasitic illnesses. In addition, these shoes are manufactured in developing countries, which also creates job opportunities for the poor. This partnership between Adidas and Grameen Bank is aiming to serve the poor rather than make profits. By doing so, Adidas and Grameen Bank create a social business model that holds a sustainable economic strategy. They make great contributions to society by providing essential access to health to the poor in developing countries. This innovative partnership is a perfect example that illustrates shared value and corporate social responsibility (CSR). The social business projects are catering for social needs, not just conventional economic needs. Firms create economic values by creating social values. Thus, by reconceiving products and markets, Adidas succeeded in building a socially responsible image towards the public. Moreover, it supports Bangladesh’s local economy indirectly by enabling local cluster development.

 

Redefine Products	Reconceive Productivity	Local Clusters
Using innovative materials to make products	Cost and pollution control in the production chain	micro-finance organization Grameen Bank

 

 

Crowdsourcing

Crowdsourcing is a very prevalent use of gaining information to and from the community that provides Adidas with vital information. This is an important part of Adidas' strategy for the future. For example, in April 2018, the company launched Speedfactory, a new concept that incorporates machine learning to make sneaker fans and amateur athletes an integral part of the production and development process. Adidas fans are given the freedom to design their own shoes. Based on these designs, with the help of big data, Adidas can significantly reduce the length of the production cycle. The prototyping, design and production process, which normally takes 18 months, can be reduced to 24 hours (Perry, 2018). “We will be the first sporting goods manufacturer which invites athletes, consumers and partners to be a part of the brand”, said Adidas (History of Adidas, n.d.).

Adidas utilises the open innovation and crowdsourcing process to provide several advantages over the traditional approaches allowed through this strategic process, all of which impact their bottom line. Adidas uses this strategy to improve discovery methods and develop new technologies. This process provides creative solutions and helps Adidas enhance themselves by creating a more considerable diversity of problem-solvers and a wider pool of intellect addressing the issues.

Accelerated time-to-market and opportunities for first-to-market advantages also mean competitive advantage and a more agile organization able to adapt to changing customer needs and business environments.

The higher hit rate of new product development (and new solution development) from a greater breadth of ideas considered, more knowledge and know-how brought to bear, and a high level of experimentation, testing and consumer/user feedback throughout the design process (this also reduces the risk of innovation and enables faster abandonment of and greater learning from failed ideas).

 

The Triple Bottom Line

 

People

Less risk from governmental and legislative changes – Adidas continues to enable their triple bottom line. this allows the focus to reduce the risks of government and legislative action’s focus on overseeing the cooperation of federal and state-level emission regulations.

Improving recruitment - This portion of Adidas can attract better talent by focusing on TBL factors such as environmental factors, workforce diversity, and climate change.

Retention of top talent – While Adidas is focusing on sustainability and their corporate social responsibility will help to retain their best talent.

Planet

Energy efficiencies - improves energy and efficiency through process redesign, product re-design, supply chain redesign, and sustainability efforts (Adidas rebranch).

Reducing sourcing and material costs - sustainability-focused sourcing not only reduces the cost of doing business but also helps the organization source better quality material. Material that can only help Adidas – (Adidas has a variety of shoes made of re-used fishing net sourced from the ocean).

Reusing and recycling - TBL can help Adidas to build processes that will encourage reusing and recycling not only in its internal processes but also at the customers’ end.

 

Profit

Reduced risk and easier financing - Environmental, social, and governance (ESG) metrics are often used to determine how ethical and sustainable an organization can become. Adidas is following a TBL led approach help organizations to reduce risks and attract investments.

Reducing expense and operational costs – Adidas has proved that sustainability efforts instead of increasing costs, reduce the overall operational expenses. Focus on sustainability helps organizations simplify the supply chain and find reliable partners.

Increased revenue and market share - Adidas can increase its revenue and market share by focusing on a product range that caters to environment and sustainability-conscious customers.

 

ESG Issues

Identifying ESG Materiality Issues are an important aspect of measuring an effective corporate sustainability practice. Adidas uses the Sustainability Accounting Standards Board as a template. The first step is for Adidas to determine which ESG issues directly affect its business. The second step is to find the relationship between investments in specific ESG initiatives and how this affects their financial performance. The next step was to get creative and use its innovation to create new products, processes and models. The final step is to keep stakeholders informed.

As a company in the field of sports product production, Adidas mainly faces ESG issues such as Management of Chemicals in Products, Environmental Impacts on the Supply Chain, Labor Conditions in the Supply Chain and Raw Materials Sourcing.

Adidas keeps pushing the boundaries of there sustainable offering, so that their consumers are able to choose from a uniquely comprehensive range. By 2025, nine out of ten Adidas articles will be sustainable. They define articles as sustainable when they show environmental benefits versus conventional articles due to the materials used, meaning they are – to a significant degree – made with environmentally preferred materials. Adidas further aims to reduce GHG emissions per product by 15% by 2025 (Our target, 2022).

Adidas are committed to achieving climate neutrality (CO2e) across its own operations by 2025, reducing absolute greenhouse gas (GHG) emissions across our entire value chain by 30% by 2030, measured against a baseline of 2017. With that, they will pave the way for climate neutrality (CO2e) across our entire value chain by 2050. They will achieve this through initiatives such as driving zero-carbon within their own operations and promoting environmental programs along their entire value chain in close cooperation with their suppliers (Our target, 2022).

 

ESG ISSUES	How does Adidas address them?
Management of Chemicals in Products	Adidas implements the Manufacturing Restricted Substances List (MRSL)from the ZDHC, which is banning and restricting certain substances from entering the manufacturing processes.
Environmental Impacts on the Supply Chain	Adidas supports its suppliers in expanding the adoption of renewable energy.
Labor Conditions in the Supply Chain	Adidas has developed a "Workplace Standard", a supply chain code of conduct that covers worker health and safety and ensures environmentally sound plant operations.
Raw Materials Sourcing	Adidas steadily increases its cotton purchases under the Good Cotton Initiative (BCI)

 

Life cycle

According to Our world Social and environmental report 2000 released by Adidas, they have conducted a life cycle assessment of their products.

Adidas aims to influence the environmental impact of its products throughout their life cycle, including, for example, from the choice of product materials to the disposal of the products. Most of the products designed, developed and marketed by Adidas are produced by its independent suppliers. For independent suppliers, Adidas' management believes that the company can only influence suppliers to follow certain sustainability standards during the production phase. However, Adidas believes that it can control all other stages of the product life cycle. For example, during the design development phase, Adidas specifies what materials the product is made from, which can influence later stages of the process.

 

 

 

Figure 1 Life cycle of Adidas’s Product, from Our world Social and environmental report 2000

Adidas’s main sustainable design principle is to make greater use of more sustainable materials (Ekblom, 2014).

Adidas designs and produces with Design for the Environment (DFE) in mind. The company considers the raw materials and other resources needed to produce its products. Adidas wants to achieve sustainability while maintaining the performance of its products. For example, Adidas produces dry-dyed fabrics. This material absorbs moisture and reduces weight, and more importantly, it is made from fewer chemicals.

The use of recyclable materials is also reflected in how waste is used wisely. Adidas succeeded in making products from marine plastic waste through research. It can reduce the pollution of the marine ecosystem.

 

Lean System

Adidas has improved overall factory performance such as delivery, quality and costs through its Lean Manufacturing Efficiency Program (About this document Sustainability, 2006).

Adidas has a project called SEA-Lean which can collect various data in the production process. Adidas has used the SEA-Lean joint monitoring to perform data analysis on established lean data conditions and measured working conditions to improve production transparency.

Adidas opened a fully automated production line based on lean manufacturing goals. The program is called SPEEDFACTORY, and its goal is not to replace workers immediately but to increase the efficiency and speed of production. Most of Adidas' products are manufactured and shipped far from the end consumer, and it can take a lot of time in the production-to-shelf process. Adidas wants to reduce costs by reducing the time it takes for items to get from the factory to the retailer (Andrei, 2016).

In addition, Adidas focuses on providing training for employees to better assist in lean manufacturing. For example, in Guangzhou (China), Adidas conducted seven training sessions for employees, including a cross-training session with Lean employees (About this document Sustainability, 2006).

 

Supply Chain

Adidas takes a direct and systematic approach to manage its relationships with its vast network of suppliers. To ensure compliance, consistency and quality while meeting key performance objectives, Adidas has developed a set of workplace standards, a set of internal social and environmental protocols that apply to all suppliers in the supply chain (Ross, 2020).

There are many participants in the process of Adidas products from production to shelves, which requires Adidas to carry out more effective management and supervision. Adidas' supply chain management strategy focuses on two aspects, one is technology and data, and the other is optimizing the customer experience.

Technology and Data: Adidas produces according to market demand. Adidas will provide what consumers want when they want the product. All Adidas suppliers ship components directly to Speedfactory. The automated production facility primarily uses 3D printing and robotics to assemble products. It can effectively increase the speed and quantity of production. The facility has been transferred from Germany to Asia in 2019. In addition to this, Adidas has implemented a multi-dimensional purchasing program. Consumers can choose any suitable way to purchase the product, regardless of where it is stored and how it is delivered. Adidas used technology and data to reduce excess and waste in production and inventory. The company has increased revenue while reducing storage and shipping costs.

Optimizing customer experience: Adidas uses fast delivery, location availability and collaboration & innovation to optimize the customer experience. Customers can buy the latest and best products from Adidas. In addition, Adidas focuses on urban markets. They promote a lot of values there about sports and life. Adidas welcomes the creative input and participation of all members of its global community, including athletes, consumers and partners.

 

Circular economy

Adidas strives to follow the principles of the circular economy. In 2020, Adidas announced its Three Loop strategy - our roadmap to help end plastic waste. At its core, the strategy is about recycling - Made To Be Remade (Adidas, 2021).

Made To Be Remade (MTBR) is the concept that when a piece of plastic has been used, it must be transformed to create a new use. Adidas believes that the end of one thing is also the beginning of the next. The company can extend the life of old products by transforming them into new ones. During the production process, Adidas requires products to be designed to meet the goal of remaking.

TPU is a material that can be recycled, and Adidas has used this material to produce products because of its versatility. The material can be melted, modified and used to create a variety of components from the same base material. Adidas uses the material to produce products because TPU offers flexibility, durability and performance benefits such as Boost.

In the future, Adidas will further promote the circular economy by exploring concepts such as disassembly and multi-material reuse.