Annual Report 2022

de

Topics Filter

Results

Environmental Impacts

 

Managing the environmental impacts along the entire value chain including our own sites is a key focus of our work. We are committed to decarbonization by reducing our absolute energy consumption as well as transitioning to clean energy. We are also committed to steadily increasing the use of more sustainable materials and manufacturing technologies in our products and expanding our circular services. We continue to address water efficiency and quality, with an advanced chemical management program in place. The following table provides an overview of the targets we have set ourselves that will help us reduce our environmental impacts.

Targets for 2025 and beyond: Environmental impacts

Target year

 

Area

 

Target

 

Baseline

2025

 

Own operations

 

 

 

 

 

Emissions

 

Achievement of climate neutrality (CO2e)

 

 

 

Water

 

15% water consumption intensity reduction (m3/m2)

 

2019

 

Waste

 

95% waste 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% water consumption intensity reduction at Tier 2 supplier facilities

 

2017

 

Chemicals (Input)

 

80% of supplier facilities to use 80% of the chemicals for production achieving the highest level of conformance (level 3) with ZDHC MRSL

 

 

 

Wastewater (Output)

 

80% of suppliers that operate on-site effluents plants to achieve ZDHC ‘Wastewater Foundational Level’

 

 

 

Product

 

 

 

 

 

Sustainable article offering 1

 

9 out of 10 articles will be sustainable, meaning that they are – to a significant degree – made with environmentally preferred materials

 

 

 

Decarbonization

 

15% reduction of GHG emissions per product

 

2017

2030

 

Entire value chain (from raw material production to own operations)

 

30% reduction of GHG emissions

 

2017

2050

 

 

Achievement of climate neutrality (CO2e)

 

 

1

Subject to reasonable assurance engagement of KPMG AG Wirtschaftsprüfungsgesellschaft.

Decarbonization

The climate crisis presents the most pressing long-term challenge facing civilization. For that reason, adidas has set targets that will help us limit emissions aligned with the 1.5°C benchmark and contribute to a net-zero future. adidas has committed to:

  • achieving climate neutrality (CO2e) across its own operations (Scope 1 and 2) by 2025,
  • reducing absolute greenhouse gas (GHG) emissions across the entire value chain (Scope 1, 2, 3)1 by 30% by 2030, measured against a baseline of 2017,
  • achieving climate neutrality (CO2e) across the entire value chain by 2050.

Our emission reduction targets by 2030 have been approved by the ‘Science Based Targets initiative’ (‘SBTi’). Within the 2025 target, we commit to reducing absolute Scope 1 and 2 GHG emissions by 90% from a baseline of 2017. This target is consistent with the reduction pathways needed to prevent a rise in average temperatures of more than 1.5°C – the most ambitious goal of the Paris Agreement. Our GHG reduction target for value chain emissions (Scope 3) meets the SBTi’s criteria for ambitious value chain goals, meaning they are in line with current best practices.

2030 Goal

-30%

GHG emissions reduction across entire value chain

adidas pathway to climate neutrality

Our pathway to Climate Neutrality (kgCO2e)  (Diagram)

Our ’Environmental Footprint Tool’ enables us to quantify, monitor, and be transparent about our carbon footprint not only across our own operations, but along our entire value chain. This covers all stages from extraction, production and processing of materials, product assembly, own operations, and logistics to the use phase and the disposal of our products at the end of their lifetime. Results for 2022 clearly show again that our environmental impacts are distributed unequally across the value chain, with the most significant impacts generated in the supply chain, particularly raw materials production and processing. We are moving ahead with our ambition to fully integrate the tool into our existing data-tracking systems to enable real-time simulations.

The following table shows the total annual GHG emissions across our value chain. The average Scope 1, 2, and 3 annual GHG emissions per product for 2022 decreased compared to the previous year. This reduction was majorly driven by our focus on innovation that enabled us to, for example, reduce emissions through low-carbon manufacturing and materials. In 2022, 96% of all polyester we used was recycled polyester, ensuring we are on the right path to achieving our target to only use recycled polyester. By continuing to focus on our decarbonization strategy which includes further material innovation, switching to cleaner energy sources at our supplier facilities, enabling low-carbon design for our products, and achieving climate neutrality (CO2e) across our own operations, we will ensure we stay on track to achieve our target of 15% emission reduction per product by 2025 (baseline 2017).

Breakdown of annual GHG emissions1,2

 

 

2022

 

2021

 

 

 

 

 

Scope 1 emissions (in tons CO2e)

 

21,856

 

12,908

Administrative offices

 

10,752

 

2,520

Distribution centers

 

5,128

 

4,807

Own retail stores

 

5,439

 

5,068

Showrooms

 

537

 

513

 

 

 

 

 

Scope 2 emissions, market-based (in tons CO2e)

 

142,293

 

125,502

Administrative offices

 

13,354

 

8,087

Distribution centers

 

21,647

 

10,316

Own retail stores

 

104,480

 

105,482

Showrooms

 

2,812

 

1,617

 

 

 

 

 

Scope 3 emissions (in tons CO2e)

 

7,523,545

 

7,055,633

Purchased goods and services

 

6,019,108

 

5,405,832

Upstream transportation and distribution

 

332,390

 

288,425

Business travel

 

36,158

 

7,723

Use of sold products

 

989,052

 

1,201,214

End-of-life treatment of sold products

 

146,838

 

152,439

Total emissions (in tons CO2e)

 

7,687,695

 

7,194,043

GHG emissions per product, total emissions/production volume (kg CO2e per product)

 

6.4

 

6.5

1

Values reported cover production seasons SS22 and FW22. Within Scope 3, ‘Purchased goods and services’ considers the production and processing of raw materials for which impacts are estimated based on quantities of materials and life-cycle analysis data. All key production processes are considered. Primary, secondary, and tertiary packaging material quantities are included. The quantities are estimated based on sales volumes, using composition and weight assumptions from the ‘Product Environmental Footprint Category Rules’ (‘PEFCR’). Furthermore, ‘Purchased goods and services’ also considers the assembly phase, for which impacts are estimated by applying emission factors to reported energy consumption from Tier 1 strategic suppliers. Sourcing volume data is used to estimate the impact of non-strategic suppliers (<20%). ‘Upstream transportation and distribution’: Quantities of goods for specified distribution routes are combined with transport emissions factors. ‘Business travel’: Calculations are based on the business travel data system. ‘Use of sold products’: Emissions caused by washing, drying, and ironing of sold products throughout their lifetime based on data on average care cycles from PEFCR and life-cycle analysis datasets. ‘End-of-life treatment of old products’: Emissions caused by disposal of sold products are estimated based on sales volumes and typical waste disposal routes (e.g., landfill and incineration). Scope 1 and 2: Impacts are estimated calculated based on reported environmental quantities in the Health and Safety, Environment, and Energy (HSEE) own operations workplace governance data collection systems.

2

Intensity factor does not include emissions from ‘Use of sold products’ to ensure alignment with our GHG reduction target for 2030 as approved by the ‘Science Based Targets initiative.’

Despite reducing our GHG emission intensity, as shown in the table, due to an increase in the number of products we created and shipped, and due to the return of employees to the offices after the pandemic, we see a slight increase in the total absolute GHG emission compared to the previous year.

Measuring our product footprint

In order to create new and elevated consumer experiences, we are developing and implementing tools that bring more transparency to our product creation process, enabling our development and innovation teams to identify materials as well as create products and concepts with lower carbon footprints. At the same time, this helps us provide consumers with greater transparency for more informed purchase decisions. Following the launch of our most climate-friendly shoe in collaboration with Allbirds, we continued to scale our capabilities to calculate and communicate our product footprints visible to consumers. During 2022, we introduced the Adizero Lightstrike with a carbon footprint of 3.5 kg CO2e per pair, achieving a 42% reduction compared to the previous version, and the Supernova 2 with a footprint of 8.9 kg CO2e per pair, an 11% reduction.

Identifying ways we can make lower-impact products requires a detailed and thorough approach that includes not only optimizing our own operations but also the manufacturing of each of our products. And since most of our carbon emissions occur outside our direct control, we collaborate with our suppliers located across the globe, helping them improve their carbon footprint during production processes.

Supply chain

We continued to work with our suppliers to ensure they are continuously optimizing their environmental footprint in energy use and carbon emissions. Strategic suppliers producing most of our products and materials are enrolled in our environmental program, which means we partner closely with them and provide suitable training to achieve their targets and progressively improve their footprint.

adidas aims to have the supply network with the lowest carbon footprint in the industry. At the start of 2022, we reached a major milestone on our path to meeting that goal, when we shared a set of clear expectations, the adidas Decarbonization Manifesto, with our strategic Tier 1 and Tier 22 suppliers. This Manifesto clearly presents how we expect our suppliers to support our decarbonization efforts. Our expectations include:

  • Environmental stewardship: Suppliers should set targets that get approved by the SBTi by 2024.
  • Materials: 100% of new material offered to adidas must be of sustainable content and produced using low-carbon-intensive processes.
  • Product: Suppliers should aim for an aggressive adoption of more sustainable and low-carbon materials spanning from creation to manufacturing.
  • Transparency: Suppliers should build in-house capacity to provide full transparency and traceability, from raw material to finished product, and connect to the adidas sustainable material tracing tool that is used to trace the source of origin.
  • Energy sources: Suppliers should adopt clean energy, including rooftop solar energy, energy sourced through renewable energy purchase power agreements (PPAs), and other renewable alternatives, and also achieve a phase-out of coal by or before 2025.
  • Manufacturing processes: Suppliers should adopt low-carbon technologies from the adidas low-carbon technology portfolio.

Becoming the industry’s lowest-carbon-footprint supply network is a team sport. Meeting the conditions of our Manifesto will form the basis for continuing business operations with our suppliers beyond 2025. We have put measures in place to incentivize high-performing and committed supplier partners. These measures include:

  • Product allocation priority,
  • Opportunity for existing, high-performing supplier partners to gain market share,
  • Entry opportunity for new, disruptive supplier partners,
  • First-mover advantage and sustainability leadership position.

We encourage all our suppliers to enroll in the ‘UNFCCC Climate Action Training’ program. This, in addition to other upskilling initiatives conducted by our in-house team, helps suppliers develop their own decarbonization pathways, since they are best placed to understand their own circumstances and find the most appropriate measures for their future reduction in GHG emissions. Beyond that, we have driven various initiatives to help suppliers scale their use of renewable energy and increase their energy efficiency:

  • Phasing out coal-fired boilers: With only one exception for administrative reasons, we have been successful in ensuring our suppliers refrained from installing new coal-fired boilers, heaters, or power generation systems from 2022 onwards, and remain committed to phasing out coal-fired boilers at all Tier 1 and Tier 2 direct supplier facilities by 2025. We asked these suppliers to conduct coal phase-out feasibility studies and provide us with a clear roadmap for replacing coal. During 2022, all relevant suppliers have confirmed their commitment to replace or modify their coal-fired boilers by 2025, and 18 boilers have already been converted to non-coal fuel or decommissioned this year.
  • Increasing adoption of on-site renewable energy for electricity generation: Electricity is the other major source of emissions in our manufacturing process. We are therefore asking our suppliers to obtain their electricity from on-site and off-site renewable energy sources and have incorporated renewable energy (‘RE’) and decarbonization performance of our suppliers in our supplier assessment process. Rooftop solar projects are one of the major contributors to such on-site RE electricity. Total rooftop solar capacity across our key suppliers has doubled to 186 MWp in 2022, putting us ahead of our internal roadmap. We will continue to increase rooftop solar capacity over the next few years.
  • Preparing suppliers to purchase electricity from off-site renewable energy sources: We are also encouraging our suppliers to source renewable energy through off-site options such as PPAs, green tariffs and Energy Attribute Certificates (‘EACs’) or Renewable Energy Certificates (‘RECs’). We provided supplier training workshops in multiple countries to upskill suppliers on how to source off-site RE and to communicate our expectations on scaling up RE. In 2022, our suppliers in China secured a total of 25,000 MWh of renewable energy through recently launched green power contracts.
  • Advocating for policy to scale up renewable energy: Many of the key operating countries in our supply chain do not have the policies required to support PPAs or to maximize rooftop solar potential. We engaged with the governments of Vietnam, Indonesia, and Cambodia, as well as their respective electricity utilities, to communicate our concerns and recommendations with a view to facilitating PPAs and removing the barriers to rooftop solar. We also actively collaborated with other stakeholders such as Euro-Cham, Am-Cham, USAID, and fashion industry associations on their policy advocacy work across multiple countries during 2022.
  • Continuing to increase energy efficiency: We use a supplier self-governance model for energy efficiency. Our efforts in recent years to improve our suppliers’ ability to measure, monitor, and conserve their energy use have enabled us to transfer full responsibility to our suppliers for their own efforts and achievements, while adidas continues to track and monitor their energy efficiency performance. In 2022, strategic suppliers enrolled in our environmental program successfully achieved an annual improvement in energy efficiency of almost 4% compared to the baseline of 2019, leading to an accumulated improvement of almost 12% over the last three years.

Own operations

Own operations refer to administrative offices, distribution centers, and our own retail stores. In 2022, this equaled a coverage of 3,730,035 m2 of gross leased area. Our efforts are underpinned by the clear targets we have set. By 2025, we aim to achieve climate neutrality (CO2e) across own operations. To achieve this target, we will steadily increase our overall environmental performance data coverage and continue to implement eco-efficiency standards through a holistic integrated management system (IMS) at key sites. All of these efforts will support us on our way to achieving a 30% reduction in GHG emissions across our entire value chain by 2030, measured against the baseline of 2017.

2025 Goal for Own Operations

Climate Neutrality (CO2e)

We defined a clear roadmap to achieve our emission reduction targets for our own operations, including measures such as implementing on-site renewable energy production, improving energy use efficiency, and sourcing renewable energy through green tariffs in Europe. In 2022, we continued to invest in own operations and offered Green Funds to subsidize local energy efficiency and on-site renewable energy projects. These initiatives included the on-site solar renewable energy projects in Herzogenaurach, Bogota, Caspe, and Stockport. We also improved energy efficiency through LED retrofits, HVAC (heating, ventilation, and air conditioning) equipment upgrades, energy monitoring, sensors, and automatization. Additionally, in response to the natural gas crisis, we implemented significant energy-saving measures in Europe, e.g., reducing building temperatures to a minimum and planning shutdown sequences for district heat networks.

In 2021 we began collecting electricity consumption data for our own retail stores. During 2022, we managed to increase our primary data coverage for own retail by 15 percentage points to 36% globally compared to last year. Data coverage for administrative offices and distribution centers is at 100%, while data for showrooms and small offices was estimated. In 2022, our total energy consumption across own operations globally was 510,539 MWh (2021: 512,050 MWh), equivalent to a total of 164,149 tCO2e (2021: 138,411 tCO2e). While we continue our transition toward renewable electricity in Europe through green tariffs, in 2022 we decided to switch our focus from short-term initiatives, such as the purchasing of EACs for Europe and North America, to focus on more impactful measures, e.g., securing long-term contracts such as PPAs starting in 2023. We have also expanded our scope of GHG Scope 1 and 2 reporting through the first-time inclusion of company vehicles in 2022, and as a result see an absolute increase compared to the previous year.

  • Implementing sustainable processes: Our Integrated Management System (‘IMS’) helps us to reduce potential negative impacts and secure all relevant ISO management certifications for key locations, such as environmental management (ISO 14001), health and safety management (ISO 45001) and energy management (ISO 50001). We aim to further expand these certifications to more key sites through implementation of the standards as well as internal and external audits, as these support our efforts to achieve our energy, water, waste, and health and safety targets. As of 2022, 64 sites (2021: 64) were certified for ISO 14001, 112 sites (2021: 63) for ISO 45001, and 322 sites (2021: 327) for ISO 50001 (applies to locations with more than 50 employees or space exceeding 4,500 m2).
  • Continuing Green Building certification: We continue to use ‘Green Building’ certifications in the interior design and construction of own retail stores – including ‘LEED’ (‘Leadership in Energy and Environmental Design’) and ‘BREEAM’ (‘Building Research Establishment Environmental Assessment Method’) certifications. As Green Building certification is used for strategically relevant projects, a set of internal eco-efficiency standards has been continuously implemented for all projects that mirror the priorities of the LEED certification. The ultimate goal is to achieve energy reduction through investment in high-energy-efficient equipment and energy monitoring. In 2022, our distribution center Suzhou X in China, one of the biggest highly automated distribution centers, was awarded LEED Platinum certification for Building Design and Construction, the highest level of sustainability recognition. The key Green Building features at Suzhou X include, but are not limited to, rooftop solar, LED lighting and control, top-vent air conditioning, HVLS ventilation fans, a building management and energy management system, rainwater collection, and a recycling system.

Water efficiency

We continued to expand our water-reduction efforts by including additional, high-consuming Tier 2 suppliers in our environmental program. In 2022, Tier 1 suppliers achieved a 20% reduction in water intensity (liters/worker-hour of operation) and Tier 2 suppliers a 29% intensity reduction (m3/total product output value in US-$), compared to the 2017 baseline. By 2025, we aim to achieve an overall reduction in water intensity of 40% against the 2017 baseline. This will be accomplished with the aid of new technologies and through continued support for our suppliers in the form of environmental good practice guidelines with examples for water-saving initiatives.

At own operations globally, we also aim to continue to strengthen water efficiency and wastewater projects in the coming years. By the end of 2022, our water intensity at administrative offices and distribution centers totaled 0.145 m3/m2 (2021: 0.128 m3/m2). This year, we have again included new administrative offices into our reporting and, with that, continued to expand our data coverage. In combination with the gradual return of employees to the office after the pandemic, we see an increase of the absolute volume of water consumption compared to 2021. Overall, we achieved an accumulative reduction of 25% (2021: 34%) compared to the 2019 baseline (0.193 m3/m2), and with that exceeded the target we set ourselves for 2025. 

Chemical management

It is necessary to use a range of chemicals to facilitate innovation and deliver high-performance products. For years, adidas has been implementing a holistic chemical management program in its supply chain, spanning the use of positive input chemistry, monitoring the chemical output of manufacturing and reporting supplier performance data publicly.

As a founding member and participating company, we continue to work closely with the Zero Discharge of Hazardous Chemicals (‘ZDHC’) Foundation and to promote the application of their guidelines and Manufacturing Restricted Substances Lists (‘MRSL’) across our suppliers. We are proud to have reached ‘Progressive Level’3 in the ZDHC ‘Brands to Zero’ program in 2022, which measures the level of suppliers’ adoption and implementation of ZDHC guidelines and tools.

  • Ensuring robust input chemical management: We are continuously working to promote sustainable chemistry in our product creation by accelerating the adoption of chemicals that meet the highest level of ZDHC MRSL conformance (Level 3). In 2022 we partnered with ZDHC and TESTEX, a certification organization, to hold workshops for some 160 suppliers in our major sourcing countries (China, Vietnam, and Indonesia). These events increased supplier awareness of ZDHC MRSL conformance and improved their competence in Level 3 certification and registration of chemical products on the ZDHC Gateway platform. Proactively involving key chemical formulators to these conversations underlines our ambition to motivate the entire industry to use more sustainable chemicals. We also launched the ‘ZDHC Supplier to Zero’ program in 2022 to assist suppliers in adopting safer chemistries. At the end of 2022, at least 50% of chemicals used at 46% of supplier facilities were ZDHC MRSL Level 3. At the manufacturing level, we continue to ban the intentional use of priority chemical groups classified as particularly hazardous under ZDHC standards and the EU REACH Candidate List of Substances of Very High Concern (‘SVHC’). We are working to find suitable alternatives and phase out harmful chemicals from our supply chain. adidas has successfully achieved a 99% phase-out of polyfluorinated and per-fluorinated chemicals (PFCs) since 2017.
  • Monitoring output chemical management: With regard to eliminating the discharge of hazardous chemicals, we believe it is critical that our suppliers adopt the ‘ZDHC Wastewater Guidelines’ in order to monitor the quality of directly discharged wastewater. In 2022, we successfully maintained our high standard of compliance, with 89% of these suppliers achieving ZDHC Wastewater ‘Foundational Level’ through the implementation of our Effluent Treatment Plant evaluation tool. In 2023, this tool will be integrated into the ZDHC supplier platform to support a wider group of facilities and will be adopted by other ZDHC brands as well.

Waste management

We make continuous efforts toward optimizing waste diversion across our supply chain with the aim of increasing the value of waste within the life cycle, e.g., through recycling or reuse. We have developed waste management guidelines to help our suppliers improve waste segregation in manufacturing, prioritizing, recycling and reuse for non-hazardous waste. These guidelines specify that the non-recyclable waste materials should also not be directly landfilled. In 2019, in collaboration with co-processing partners in our major sourcing countries, we developed a waste diversion program to use non-recyclable manufacturing waste in energy production. Co-processing is a proven and sustainable solution that can reduce pollution, reduce consumption of natural resources, reduce landfill space, and ultimately contribute to a smaller carbon footprint. To further optimize the waste diversion, we have scaled up this solution across the globe, especially in sourcing countries with immature co-processing infrastructure. Globally, the suppliers enrolled in our environmental program collectively achieved a 96% landfill diversion in 2022, exceeding our target of 95% for this year. With the promising result in 2022, we are currently working on setting a more ambitious target for future waste diversion.

At own operations, during 2022, we also focused on improving the quality of waste-related data from our administrative offices and distribution centers by upskilling team members on the data collection process of waste streams. This resulted in a higher data quality but also a lower diversion rate. As of 2022, 89% (2021: 74%) of our own operations by square meters are monitoring and tracking waste. By the end of 2022, a total of 32,246 tons (2021: 32,951 tons) of waste was generated, and we achieved an accumulated diversion rate of 88% (2021: 92%) for administrative offices and distribution centers.

Transportation 

We regularly track the environmental impact related to the transport of our goods. Compared to the previous year, performance remained relatively stable. While the use of air freight increased in 2022 as part of our efforts to counterbalance covid-related supply chain challenges to 2.0%, the vast majority of our transportation continued to take place via sea freight and truck, with 81.4% via sea freight and 16.6% via truck, almost unchanged compared to the previous year.

 

Materials

 

We are moving to a comprehensive sustainable article offering at scale. Our ambition is that 90% of our articles will be sustainable by 2025. We define articles as sustainable when they show environmental benefits versus conventional articles due to the materials used, meaning that they are – to a significant degree – made with environmentally preferred materials. The majority of the environmentally preferred materials currently used are recycled materials or more sustainable cotton. Additionally, innovative materials such as biobased synthetics and more sustainably grown natural materials are used on a small scale already and will become increasingly relevant in the future.

Share of more sustainable articles by 2025

90%

To qualify as a sustainable article, environmentally preferred materials have to exceed a certain predefined percentage of the article weight. The applied criteria for environmentally preferred materials and the percentage of the article weight are defined based on standards reflecting the latest industry developments, competitor benchmarks, and expert opinions: For apparel, the environmentally preferred material content is required to be at least 70% of the article weight, for accessories and gear at least 50%, and for footwear at least 20%.4 This standard has been applied for the year 2022 onward. By the end of 2022, we managed to have seven out of ten of our articles sustainable.

 
 

The table below shows materials that are among the most used ones for our products.

Selected material types used for adidas products 20221

Material

 

Share of total materials used in %

 

Share of material group in %

Polyester

 

35

 

 

Recycled polyester

 

 

 

96.0

Rubber

 

17

 

 

Recycled rubber

 

 

 

1.1

Natural rubber

 

 

 

10.8

Cotton

 

15

 

 

Third party certified cotton

 

 

 

96.2

Organic cotton

 

 

 

3.7

Recycled cotton

 

 

 

0.1

Ethylene-vinyl acetate (EVA)

 

12

 

 

Biobased EVA

 

 

 

0.5

Recycled EVA

 

 

 

0.7

Leather

 

2

 

 

Third party certified leather

 

 

 

99.9

1

The share of total materials used and share of material groups for rubber, EVA, and leather are based on the Fall/Winter 2022 and Spring/Summer 2022 seasons. The share of material groups for polyester and cotton are based on the Fall/Winter 2022 and Spring/Summer 2023 seasons.

  • Recycled polyester: Polyester is the most widely used material in adidas products. In 2017, we set ourselves the ambitious target of replacing all virgin polyester with recycled polyester in all products where a solution exists by the end of 2024. We set clear internal milestones for our product creation teams and have seen progress throughout the last several seasons. In 2022, 96% (2021: 91%) of all the polyester we used was recycled. With that, we are on track to use only recycled polyester by the end of 2023 – one year ahead of schedule. While recycled polyester has been in use for a long time, it is still not the standard in the textile industry, with only 15% of polyester produced worldwide being recycled polyester.
  • Parley Ocean Plastic: Since 2015, adidas has partnered with the environmental organization ‘Parley for the Oceans’ and uses ‘Parley Ocean Plastic’ as a replacement for virgin polyester. Parley Ocean Plastic is plastic waste collected from remote islands, beaches, coastal communities, and shorelines, preventing it from polluting the oceans. In 2021, we continued to roll out Parley Ocean Plastic in key categories, both in ‘Performance’ and ‘Lifestyle’ products across footwear, apparel, and accessories and gear. In 2022, we produced close to 27 million pairs of shoes containing Parley Ocean Plastic. (2021: close to 18 million).
  • More sustainable cotton: adidas has steadily increased the sourcing of more sustainable cotton throughout the last several years. Since the end of 2018, 100% of the cotton we use has come from more sustainable sources.
  • Responsibly sourced leather: adidas uses leather on account of its unique performance properties in products where it is the optimum material for the purpose. Currently, more than 99% of our leather volume is audited in accordance with the Leather Working Group (‘LWG’) protocol, and most of our hides are sourced from tanneries with the highest LWG rating (LWG Gold). We believe the existing LWG audit protocol and chain of custody provide a strong foundation on which to create a robust and scalable traceability solution for leather hides. For this reason, adidas is working with the LWG to broaden the scope of the audit to include traceability to the slaughterhouse by 2030. This will allow higher transparency on important environmental impacts such as deforestation from the origin of the material.
  • Natural materials: In 2022, adidas collaborated with innovative material startups such as Infinited Fiber Company, Spinnova, and Pond to develop materials from natural resources that we can use in our products. Together, we are striving to replace fossil-based plastics with plant-based raw materials, without compromising product performance. In the fall, we successfully launched a small apparel collection made with at least 60% fibers from recycled cotton waste and 40% organic cotton in partnership with Infinited Fiber Company and the EU-funded New Cotton project. This three-year project aims to collect, sort and regenerate textile waste into a new man-made cellulosic fiber that looks and feels like cotton, based on Infinited Fiber Company’s textile fiber regeneration technology. Also in the fall, we launched our ‘made with nature’ Ultraboost, which features a knitted upper made with lyocell, a material made from cellulose fibers derived from sustainably grown wood.

Synthetic fibers are widely used in our industry due to their unique performance properties, such as elasticity, light weight, and high durability. We are aware that products made from synthetic fibers can have a negative environmental impact during both material production and product use. We acknowledge that fiber fragmentation is a complex challenge for our industry, but it is one we are proactively addressing. adidas is a co-founder of ‘The Microfibre Consortium’ (‘TMC’), which has developed a test method for assessing fiber release and in future aims to advise the textile industry on mitigating the impact of fiber fragmentation. In 2022, TMC published position papers on microfiber degradability and wastewater management that are fully consistent with our internal guidelines and contribute to the industry’s knowledge on this topic.

Circular services

In addition to using recycled content or other more sustainable material in our products, we are rethinking entire processes to design products that have a circular end-of-life solution and are ‘made to be remade’ (MTBR), meaning they can be completely recycled after use and the material can be reused. We successfully scaled this concept from prototype back in 2019 to a fully commercial MTBR footwear offer across multiple categories in 2022 (including Ultraboost, Stan Smith, Terrex Free Hiker, and NMD Hype) and have meanwhile expanded the concept to apparel. In 2022, we introduced the adidas by Stella McCartney tracksuit made of viscose that can be returned and recycled into new fibers.

Besides various product launches we also continued with our circular services in 2022, which have the objective of prolonging the life of the product. In our Munich Terrex store, we launched a repair service, and in several flagship stores such as Berlin, London, Dubai, or Shenzen we are offering sneaker cleaning services.

Biodiversity

adidas is aware of the potential impacts and dependencies its business operations can have on ecosystem services and nature assets. As a consequence, biodiversity has been recognized as a material topic for external reporting in 2022. In our industry, preserving and restoring biodiversity is a complex challenge that requires strong collaboration between multiple actors, including direct and indirect suppliers, certifiers, and innovators. In 2022, we began working on a systematic approach to address biodiversity challenges in our value chain. Using scientifically validated frameworks we identified actions to be taken across our entire value chain activities related to the five drivers of nature change as identified by the Science Based Targets Network (‘SBTN’)5. As a first step, we aim to work with our suppliers to develop a deforestation-free roadmap for nature-derived materials. We will further assess our strategic facilities for potential impacts on protected areas, key biodiversity areas and the International Union for Conservation of Nature (‘IUCN’) Red List of Threatened Species. Finally, for downstream impacts in our value chain, adidas will evaluate future contributions to biodiversity-enhancing projects.

In line with our ambition to source our nature-derived materials more responsibly, we launched our standards for animal-derived materials in 2022. They demonstrate our commitment to sourcing animal-derived materials in an ethical and sustainable manner that respects animal welfare and species conservation. We do not source or process raw materials from endangered or threatened species as defined by the IUCN in its Red List. All down used in our products is either virgin down certified by the Textile Exchange’s Responsible Down Standard (‘RDS’) or recycled down. Regarding the sourcing of wool, we are committed to increase the share of wool that is certified by Textile Exchange’s Responsible Wool Standard (‘RWS’) to 100% by the end of 2024.

We have also started to explore how we can increase biodiversity in our own facilities. In an exploratory phase, the adidas headquarters has taken steps to map the current biodiversity status of the campus, the steps to reduce the impacts and to define measures to increase the number of species present on the campus.

Packaging

We are committed to using more sustainable packaging materials and reducing the impact of packaging by optimizing box sizes and number of shipments.

Most of our paper-based packaging, such as shoe boxes and shipping boxes, is made with recycled content. Practically all plastic packaging (polybags) used to protect finished products during shipping is made from 100% recycled LDPE (low-density polyethylene). The only current exception are the DCs where e-commerce returns are repackaged, and no local vendor of recycled LDPE polybags is available yet (less than 1% of polybags). For many years already, all the carrier bags handed out in adidas retail stores have been made with recycled paper.

Product safety

Product safety is an imperative. As a company we have to manage the risk of selling defective products that may result in injury to consumers. To mitigate this risk, we have company-wide product safety policies in place that ensure we consistently apply physical and chemical product safety and conformity standards.

The creation of respective adidas standards and policies is a collaborative, cross-functional approach involving experts from the Corporate Legal and Global Operations departments to ensure all aspects of a specific product are covered. This includes subsequent updates and training activities. Application and monitoring are ensured through our Global Operations function. One of these policies is the Restricted Substances Policy (‘A-01’ Policy) that we pioneered in 1998. It covers the strictest applicable local requirements and includes best-practice standards as recommended by consumer organizations. The policy is updated and published internally and externally at least once a year based on findings in our ongoing dialogue with scientific organizations, and it is mandatory for all business partners. Both our own quality laboratories and external institutes are used to constantly monitor material samples for compliance with our requirements. Materials that do not meet our standards and specifications are rejected. As a result of our ongoing efforts, we did not record any product recalls in 2022.

Over the last several years, we have substantially contributed to the AFIRM ‘Restricted Substances List,’ which constitutes a harmonized restricted substances list across the industry. While the uptake of the list as an industry best practice matured further, and AFIRM membership continues to grow, various tools have been developed further in 2022, such as a harmonized Test Request Form, the third-party Lab Evaluation Questionnaire, or the Supplier Online Training Videos. All these will be issued to the public and available to other companies from the textile and sporting goods industry and their suppliers. We also continued our 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.

 

1 The target boundary includes biogenic emissions and removals from bioenergy feedstocks.

2 Tier 1 suppliers are responsible for product assembly, Tier 2 suppliers are our material manufacturers.

3 ‘Progressive Level’ is the second best of the three levels awarded in the ZDHC ‘Brands to Zero’ program.

4 This standard was applied from 2022 onward. Percentage of sustainable articles (by count) offered at the points-of-sale (average of Fall/Winter season of the current financial year and Spring/Summer season of the following financial year). When calculating the article weight, trims are excluded for apparel, footwear, and accessories and gear. Only articles with verified environmentally preferred material contents are included. Licensed articles are excluded. Without Reebok.

5 Land/water/sea use change, Resource exploitation, Climate change, Pollution, and Invasive Species & Other are identified as drivers of nature change by Science Based Targets Network.

Would you like to learn more about labor and social standards in our supply chain?

More on Social Impacts
Accessories and gear
A product category which comprises equipment that is used rather than worn by the consumer, such as bags, balls, sun glasses or fitness equipment
Climate neutrality
Climate neutrality refers to a concept of a state in which human activities result in no net effect on the climate system. Achieving such a state requires balancing residual emissions with emission removals as well as accounting for regional or local bio-geophysical effects of human activities that, for example, affect surface albedo (i.e., solar radiation reflected by a surface) or local climate (definition according to ‘Intergovernmental Panel on Climate Change (IPCC) Glossary‘).
Lifestyle
Under the ‘Lifestyle’ category, we subsume all footwear, apparel, and ‘accessories and gear’ products that are born from sport and worn for style. ‘adidas Originals,’ which is inspired by sport and worn on the street, is at the heart of the ‘Lifestyle’ category.
More Sustainable cotton
For adidas, ‘more sustainable cotton’ means certified organic cotton or any other form of sustainably produced cotton that is currently available or may be available in the future, as well as ‘Better Cotton.’
Parley Ocean Plastic
‘Parley Ocean Plastic’ is a material created from upcycled plastic waste that was intercepted from beaches and coastal communities before reaching the ocean. The organization ‘Parley for the Oceans’ works with its partners to collect, sort and transport the recovered raw material (mainly PET bottles) to our supplier who produces the yarn, which is legally trademarked. It is used as a replacement for virgin plastic in the making of adidas x Parley products.
Parley for the Oceans
‘Parley for the Oceans’ is an environmental organization and global collaboration network. Founded in 2012, the initiative aims to raise awareness for the beauty and fragility of the oceans, and to inspire and empower diverse groups such as pacesetting companies, brands, organizations, governments, artists, designers, scientists, innovators and environmentalists in the exploration of new ways of creating, thinking and living on our finite, blue planet.
polybags (LDPE)
A type of product transport packaging made of recycled low-density polyethylene (‘LDPE’) that offers a more sustainable option to virgin plastic polybags, as they have a lower environmental footprint than conventional bags and most alternatives. Recycled LDPE polybags meet our quality and performance standards to effectively protect our products during shipping and handling, are available globally and can be recycled via existing waste streams.
Reference
This Group Management Report is a combined management report. It contains the Group Management Report of the adidas Group and the Management Report of adidas AG.
The Declaration on Corporate Governance is part of the Annual Report.
Declaration on Corporate Governance