Environmental Impacts

Managing the environmental impacts at our own sites and along the value chain is a key focus of our work. We have developed an approach to address water efficiency and quality and are committed to steadily increasing the use of more sustainable materials in our production, products and stores while driving toward circular business solutions. We are committed to reducing our absolute energy consumption and CO₂ emissions, transitioning to clean energy and looking into energy-harvesting opportunities.

Based on results from a pilot assessment of our environmental impacts along our value chain, we recently focused our attention on creating an internal tool to calculate our organizational footprint along the entire value chain and simulate reduction options on a more regular basis, using as much primary data as possible and breaking down results. We 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.

Measuring and optimally managing our environmental footprint in our own operations and across our supply chain is only one way to respond to climate change. In addition, we are proactively addressing the impacts of climate change by supporting global initiatives that aim to drive change for our industry. adidas reiterated its commitment to mitigating climate change by signing the Fashion Pact presented at the G7 Summit in 2019. In the prior year, the company 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.Back in 2015, adidas joined the UN Climate Neutral Now initiative and committed to the continued estimation and reduction of its emissions.

Reduction of CO₂ emissions by 2030

30%

Own operations

Back in 2008, adidas introduced a program called ‘Green Company’ to drive continuous improvement and savings in water, waste and energy at its own sites globally. The program covers administrative offices, production facilities and distribution centers, equaling more than 90% of our global employee base (excluding own retail) in 2019. In 2015, we presented targets to be achieved by 2020, including targets for carbon emissions reduction that were calculated considering a science-based methodology and context-based targets for water reduction.

One essential driver to achieve these targets is the implementation of environmental standards at our highest-consuming locations. adidas has successfully applied an Integrated Management System (IMS) which helps us to gain certification for key locations for their environmental management (ISO 14001), energy management (ISO 50001), as well as health and safety management (ISO 45001). Building on a group-wide IMS policy, adidas aims to further expand these certifications to key sites every year, through both external and internal audits. By the end of 2019, 37 sites globally held ISO 14001 certification, and 30 locations were recognized with ISO 45001 certification. After implementing IMS across key corporate locations in Europe, North America, Asia-Pacific and Latin America, we will focus on Russia/CIS and the Emerging Markets in 2020.

In 2019, we achieved an accumulated reduction of more than half of all emissions (52%) compared to 2015 in combined carbon net emissions. Alongside energy efficiency initiatives, carbon offsetting for key locations and the implementation of a company-wide energy monitoring system, we equipped facilities with photovoltaic panels, including our biggest distribution center in Rieste and the new corporate office building at our German headquarters. This resulted in the production of green electricity that accounts for around 5% of the electricity usage of the distribution center, and for around 13% of the electricity usage of our German headquarters. Overall, we will continue to drive renewable energy projects at key sites over the next years. It is our ambition to continuously add more of our own retail stores to the scope of Green Company. We closely collaborated with our facilities to continue to drive water efficiency initiatives and raise employee awareness for the importance of their contribution. As a result, we achieved accumulated water savings of 37% per employee between 2008 and 2019.

The progress toward all Green Company targets is tracked through an environmental data reporting system and is disclosed in detail in our annual Green Company Report that will be available on our corporate website as of April 2020.

Supply chain

As almost all of our production is outsourced, a significant part of our environmental impact occurs, at different intensities, throughout the supply chain. Therefore, for adidas, sourcing is not only about ensuring high product quality and timely delivery, it also means working with our suppliers to ensure they are able to continuously reduce their environmental footprint. We do so by providing them with policies and best-practice guidance for environmental management, by offering training sessions tailored to their needs, and by measuring their progress toward clear reduction targets for energy, water and waste that we expect them to achieve by 2020.

In 2019, adidas strengthened its environmental supply chain program through ongoing efforts to advance suppliers’ capacity for managing resource efficiency. After the release of the Environmental Good Practice Guideline and Toolkit in 2018, we updated and issued our Environmental Guidelines in 2019 for all strategic suppliers, along with an efficiency calculator so they can better understand their environmental impacts. We continued to support the Energy and Water Investment Plan and, by the end of 2019, we had mobilized more than 40 strategic suppliers located in five of our main sourcing locations (Cambodia, China, Indonesia, Vietnam and Taiwan) who successfully identified more than 400 saving opportunities that will be implemented with projected annual savings estimated at 350 million MJ of energy and four million m³ of water.

We also support our suppliers to gradually increase the generation and use of renewable energy in our supply chain and help connect our suppliers with experienced solar companies so they can jointly work toward the development and implementation of projects. As of 2019, more than 20% of our strategic suppliers are already also adopting renewable energy, including rooftop solar photovoltaic and biomass. As an example, two of our major suppliers in Vietnam initiated rooftop solar projects with the potential for huge estimated savings of almost one million kg CO₂e annually.

We co-hosted a supplier training event with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and VITAS (Vietnam Textile and Apparel Association) for more than 180 participants, among them suppliers, in Vietnam. The aim was to upskill suppliers on the commitment to reduce our carbon footprint by 30% by 2030 in accordance with the United Nations Framework Convention on Climate Change (UN FCCC), how it relates to supplier production facilities, clean energy opportunities in Vietnam, incentives and financing options. As a result of our collective efforts, suppliers have already met most of the efficiency targets across all categories (footwear, apparel, and accessories and gear) ahead of time. A tool called ‘E-KPI’ helps us to measure suppliers’ environmental compliance overall and assess their performance and progress toward the 2020 targets. We will continue to support suppliers to identify resource efficiency measures and roll-out in our supply chain.

An additional way we try to minimize our suppliers’ environmental impacts at their manufacturing plants is by helping them establish sound environmental management systems. The majority of our footwear sourcing volume, 98% (2018: 98%), is produced in factories which are certified in accordance with the International Environmental Standards ISO 14001 and/or the Workplace Health and Safety Management Standards OHSAS 18001.

Volatile Organic Compounds (VOCs), which are typically found in solvents used in our manufacturing process, can – in high concentration – cause breathing difficulties and other health problems for production workers. By applying innovative as well as environmentally sound bonding and priming technologies while following the adidas guidelines on the use of chemicals, our athletic footwear suppliers have been able to significantly reduce the use of VOCs, from above 100 grams per pair in 1999 to around 11 grams in 2019. The share of VOC emissions has now remained stable at a very low level for the past three years.

Chemical management

The management of chemicals in multi-tiered supply chains is a complex challenge and requires many actors contributing to the achievement of effective and sustainable solutions. For years, adidas has been running leadership programs in chemical management within its area of direct influence. In consultation with external stakeholders including chemical experts, environmental organizations and industry federations, adidas has defined an end-to-end-approach spanning the management of chemical input, monitoring supplier progress and reporting supplier data publicly to controlling the finished end product.

We further improved our chemical input management, recording 81% of auxiliaries and 91% of dyestuffs from our strategic apparel suppliers as bluesign-approved in 2019. We also continued to be 99% free of poly- and perfluorinated substances (PFCs) in our products for the fall/winter 2020 season. We contributed to the latest update of the ZDHC Manufacturing Restricted Substances List (MRSL) and made it part of the welcome kits with guidelines for our suppliers. As we believe that strengthening the monitoring approach in our supply chain will further contribute to the elimination of hazardous chemicals from the production process, we also contributed to the latest update of the ZDHC Wastewater Guidelines, an international wastewater standard for our industry. Using these guidelines, our strategic suppliers accounting for more than 80% of the wet processes have tested and publicly reported their wastewater test results twice a year since 2018. According to the latest results, the majority of our facilities meet the local legislation or the requirements of the wastewater treatment plant.

Transportation

We regularly track the environmental impact related to the transport of our goods. Compared to the previous year, performance remained relatively stable. The vast majority takes place via sea freight. In 2019, we recorded a slight increase in air freight due to the mitigation of the supply chain shortages.

Freight types used to ship adidas and Reebok products¹ in % of products shipped