Sustainability rooted in our Purpose Information

adidas’ purpose ‘Through sport, we have the power to change lives,’ guides the way we run our company, how we work with our partners, create our products, and engage with our consumers. We will always strive to expand the limits of human possibilities, to include and unite people through sport, and to create a more sustainable world. We believe that acting as a responsible company will contribute to lasting economic success. However, achieving a truly sustainable business model is a marathon, not a sprint.

Sustainability rooted in our purpose

Our commitment to sustainability is embedded into how we have done business for over two decades. It is rooted in our purpose ‘Through sport, we have the power to change lives.’ In 2021, we have doubled down on our commitment to sustainability and defined a roadmap for 2025 and beyond that allows us to create a positive impact across relevant areas, always focusing on the most material topics – for us and our stakeholders. We will continue to move to a comprehensive, consumer-facing sustainable article offering at scale, expand our circular services, and work toward achieving climate neutrality (CO₂e) across our entire value chain. We continue to empower our employees to become sustainability ambassadors, just as we invite consumers globally to engage and connect with us on the topic of sustainability. Lastly, we aim to uphold the highest social compliance standards in our supply chain.

We believe that moving toward achieving the targets we have defined for 2025 will set us up for future success. Yet we know that we cannot achieve these alone. We will leverage our long-term relationships with suppliers to ensure they can continue moving with us in alignment with our decarbonization efforts, and work closely with partners to scale innovative materials and recycling technologies. adidas-group.com/sustainability

Governance

A robust governance structure ensures timely and direct execution of programs that drive the achievement of our set of targets for 2025 and beyond. The head of Sustainability reports directly to the member of the Executive Board responsible for Global Operations, who is responsible for the development, coordination, and execution of our sustainability strategy and also leads the ‘Sustainability Sponsor Board,’ which is composed of senior representatives from Global Brands, Global Operations, Digital, Sales, and other relevant functions across the company. The ‘Sustainability Sponsor Board’ ensures cross-functional alignment, transparent end-to-end management, and execution of agreed-upon sustainability goals within their functions. This includes reviewing and signing-off on policies as required. We also maintain a separate compliance function which is operated as the Social and Environmental Affairs (‘SEA’) Team to evaluate supplier-facing social and environmental compliance performance and human rights impacts, reporting, through the General Counsel, to the CEO.

We have set up regular sustainability networking calls for all employees involved in sustainability projects and programs in the organization to ensure company-wide alignment on all levels. On top of this, adidas continued to offer the company-wide sustainability training program available to all employees, educating them on how to think and act sustainably, enabling them to become sustainability ambassadors, and encouraging everyone to make personal and professional commitments to contribute to a cleaner planet. We also initiated sustainability training for our retail colleagues, with the objective of informing, engaging, and inspiring our entire team and all consumers we interact with on a daily basis, around the globe.

Materiality

Throughout 2022, adidas conducted a full-scope materiality analysis to confirm non-financial topics relevant to the company’s external reporting. The process was based on existing and future regulatory disclosure requirements applicable to adidas.These requirements, in combination with existing material topics, were the starting point for creating a long list of potentially material ESG ('environmental, social, and governance’) topics. In a series of workshops with internal stakeholders, including responsible experts and senior management of relevant functions, we identified and validated related impacts, risks and opportunities for these topics. The analysis was carried out from an impact materiality perspective as well as from a financial materiality perspective, each of which was assessed both qualitatively and quantitatively. This has ultimately led us to form a two-dimensional materiality matrix and a list of material topics, which forms the basis of the non-financial statement presented in this report. Notably, all existing material topics were fully confirmed. The topic of biodiversity was identified as a new material topic. see Non-financial statement

Stakeholder engagement

Engaging openly with stakeholders and establishing ways to increase transparency and disclosure has long been central to our approach. Our stakeholders are those people or organizations who affect or are affected by our operations, including our employees, consumers, suppliers and their workers, customers, investors, media, governments, and NGOs. The adidas ‘Stakeholder Relations Guideline’ specifies key principles for the development of stakeholder relations and details the different forms of stakeholder engagement. adidas participates in a variety of industry associations, multi-stakeholder organizations, and non-profit initiatives.

Through these memberships, we work closely with leading companies from different sectors to develop sustainable business approaches and debate social and environmental topics on a global, regional, and local level. We use collaborations and partnerships to build leverage for systemic change in our industry, such as for efforts to mitigate the carbon footprint in our industry’s supply chain, to strengthen chemical management practices, and to raise social and environmental standards in the textile and leather supply chain. In addition, we build awareness, capacity, and knowledge of laws and rights among factory management and workers by partnering with leading providers such as the International Labour Organization’s (‘ILO’) ‘Better Work’ program, as well as with the United Nations International Organization for Migration (‘IOM’) with the objective of ensuring that the labor rights of foreign and migrant workers are upheld in the adidas supply chain.

Key memberships:

• Apparel and Footwear International RSL Management (‘AFIRM’) working group
• Better Cotton (‘BC’)
• Fair Factories Clearinghouse (‘FFC’)
• Fair Labor Association (‘FLA’)
• Fashion for Good
• Federation of European Sporting Goods Industry (‘FESI’)
• German government-led Partnership for Sustainable Textiles (‘Textilbündnis’)
• Leather Working Group (‘LWG’)
• Organic Cotton Accelerator (‘OCA’)
• Textile Exchange
• The Fashion Pact
• The Microfibre Consortium (‘TMC’)
• The International Accord for Health and Safety in the Textile and Garment Industry
• United Nations Fashion Industry Charter for Climate Action (‘UNFCCC’)
• World Federation of the Sporting Goods Industry (‘WFSGI’)
• Zero Discharge of Hazardous Chemicals (‘ZDHC’) Foundation

Transparency

We believe transparent communication with our stakeholders is critical. We use global reporting standards such as the guidelines of the Global Reporting Initiative (‘GRI’) and the Sustainability Accountability Standards Board (‘SASB’) to inform our external non-financial reporting. We regularly disclose additional information to public-facing social and environmental benchmarks and reporting platforms and publish important sustainability updates about our work throughout the year on our corporate channels, including our corporate website. A key element is the publication of our global supplier factory list which is updated twice a year. In addition, we disclose the names of the factories of suppliers that process materials for our primary suppliers and subcontractors, where the majority of wet processes are carried out.

We acknowledge the value of climate-related reporting and for many years have been reporting into well-established frameworks. Based on its international accreditation, we are aiming to stepwise include the ‘Task Force on Climate-related Financial Disclosures’ (‘TCFD’) recommendations that enable companies to improve reporting of climate-related financial information, especially climate-related risks and opportunities. The TCFD is structured around four thematic areas that represent core elements of how organizations operate: governance, strategy, risk management as well as metrics and targets. We believe that with our long-standing commitment to and strategic focus on sustainability we are already covering elements of the four thematic areas in various sections of our Annual Report. adidas has a comprehensive roadmap with clear targets in place. The Sustainability Sponsor Board ensures end-to-end management to achieve these targets. As part of our risk identification process, we monitor physical risks related to climate change as well as risks and opportunities resulting from the transition to a low-carbon economy. To further refine and develop the core reporting elements in line with the TCFD recommendations, a cross-functional project team was set up. This team met throughout 2022 to establish solid governance processes around the TCFD and created a prioritized list of climate-related risks and opportunities. Further, relevant stakeholders took part in upskilling sessions, and, together with several experts, the Risk Management team conducted a qualitative climate-related risk and opportunity assessment. Given the complex nature of the topic, further preparation will be needed to build more granularity and to ensure high quality for more extensive external reporting for scenario analyses.  SEE Risk and opportunity report

External recognition

adidas continuously receives positive recognition from international institutions, rating agencies, NGOs, and socially responsible investment analysts for its holistic approach to managing sustainability. In 2022, adidas was again subject to comprehensive corporate environmental, social, and governance (‘ESG’) assessments, and took part in focused thematic disclosure benchmarks for environmental or social performance. As a result, adidas was represented in a number of high-profile sustainability indices, ratings, and disclosure benchmark evaluations.

Following a thorough update of its ESG evaluation by rating agency S&P in 2022, adidas maintained its overall strong ESG Evaluation Score of 85, keeping us among the top ten in the entire S&P Global Rating Universe, despite it having doubled compared to last year. In its comprehensive assessment, S&P emphasized our industry-leading approach to innovation, supply chain management, and commitment to strong corporate governance values. For the first time in 2022, adidas responded to the CDP Forest assessment and managed to already score equal to the industry and European average, evidencing our ongoing developments to prevent deforestation and preserve biodiversity.