Social Impacts Information

adidas recognizes its responsibility to respect human rights and the importance of managing the appropriate due diligence to fulfill this obligation as a business. We do this by striving to operate responsibly along the entire value chain, from raw material production to our own operations, by safeguarding the rights of our own employees and those of workers who manufacture our products through our Workplace Standards, and by using our influence to bring about positive change wherever adverse human rights impacts are linked to our business activities.

Human rights

In 2023, we took further steps to advance our Human Rights and Environmental Due Diligence (‘HREDD’) efforts in support of our ambition to have a system in place to identify and manage high-risk human rights issues across the entirety of our value chain by 2025. This included expanding the scope of our human rights and environmental risk management system to encompass other business areas such as Global Brands, Procurement, and Human Resources, in addition to our product sourcing activities. As part of this expanded risk management system, we have further developed our governance framework to assign accountability for human rights and environmental risk management at a functional level and established internal risk assessment and reporting procedures. Our cross-functional internal ESG Regulation Board oversees compliance with current and emerging regulations, and we have conducted upskilling training sessions on a range of topics, including the company-wide application of the German Act on Corporate Due Diligence Obligations in Supply Chains.

The Act, which went into effect on January 1, 2023, regulates the responsibility of German companies to respect human rights in their global supply chains and calls on companies to identify, assess, and prioritize risks and address them by taking steps to minimize or eliminate adverse impacts. To the best of our knowledge and belief, we have aligned our internal due diligence processes and reporting systems to comply with the requirements of the Act, which seeks to strengthen human rights and environmental protection in the following areas: child labor, forced labor and discrimination, land grabbing, occupational health and safety, the right to fair wages, the right to form unions, and environmental violations. In the first half of 2024, adidas will submit a Human Rights and Environmental Due Diligence Report to the German authorities and publish it on its corporate website to fulfill its annual public reporting obligation.

We are committed to providing for or cooperating in the remediation of adverse human rights and environmental impacts that we have caused or contributed to, and we seek to promote or cooperate in the mitigation and remediation of adverse impacts to which we are linked through our business relationships. In 2023, to strengthen this approach and complement our due diligence processes, we updated our ‘Third Party Complaint Procedure for Human Rights and Environmental Impacts’ to address both actual and potential adverse human rights and environmental impacts in our direct and indirect supply chain.

In 2023, we introduced additional tools and systems to enhance our assessment of high-risk issues such as forced labor and child labor in upstream supply chains and other human rights risks arising from business activities undertaken in conflict-affected countries. This included the introduction of a US regulatory compliance database, which allows individual business entities and production locations to be screened against trade sanctions and forced labor risk data. We automated this process by linking our in-house sustainable material traceability system to this platform, enabling us to track the risk of forced labor in our supply chain. We also continued to roll out an internal reporting tool to identify and evaluate the potential presence of ILO forced labor indicators. We started in China, where all our Tier 1 manufacturing partners, our nominated Tier 2 material suppliers, and targeted Tier 3 spinning mills were assessed against these ILO indicators. None of the suppliers assessed showed evidence of forced labor. This tool is now being applied globally to ensure ongoing regulatory compliance across the entire supply chain.

In response to the ongoing war in Ukraine and continued political instability in post-coup Myanmar, we continue to carry out a heightened version of human rights due diligence. In Ukraine, while physical access to conduct on-site audits remains restricted, we have actively engaged with our supplier to conduct remote worker interviews and monitor the human rights situation. In Myanmar, we continuously engage with international and local stakeholders to monitor the evolving human rights situation. To enhance these efforts, we joined the Multi-Stakeholder Alliance for Decent Employment in the Myanmar Apparel Industry (‘MADE’), a project that is co-funded by the European Union and aims to uphold and monitor human rights and social and environmental standards in Myanmar supplier factories and promote responsible business practices.

An enhanced human rights due diligence was also conducted in the context of adidas’ business wind-down in Russia, a country that has faced a wide range of international sanctions. The assessment considered the impact on employees and retail staff affected by the winding down of business operations and store closures.

Throughout 2023, we maintained close contact with FIFA’s Human Rights and Anti-Discrimination team and, together with other sponsors, held monthly calls to discuss the advancement of proposals for a legacy fund linked to the 2022 FIFA Men’s World Cup and to FIFA’s post-event evaluation of the effectiveness of its complaint mechanism in Qatar. This engagement also included reaching out to FIFA regarding their tracking of human rights impacts in the lead-up to the 2023 FIFA Women’s World Cup and the development of a human rights framework for cities hosting the 2026 FIFA Men’s World Cup in the Americas.

We continue to implement responsible recruitment practices in the supply chain. In 2023, we updated our Responsible Recruitment Policy to reflect the renewed industry commitment to the ‘Employer Pays’ principle to ensure that workers receive a timely refund in the event they have paid fees and incurred costs to obtain and maintain their job. As part of our ongoing engagement with Tier 2 manufacturers in our supply chain in Asia on the responsible recruitment and employment of foreign migrant workers, we piloted a digital worker voice tool with ten material suppliers in Taiwan. The pilot sought to amplify worker feedback and monitor and remedy grievances and complaints.

Transparency and recognition

We continue to transparently report on the actions we have taken to identify and mitigate risks of forced labor and adverse human rights impacts in our global supply chain through our annual Modern Slavery Statements to regulators in jurisdictions such as the UK and Australia, our annual modern slavery progress updates, and other public disclosures on our corporate website and relevant third-party channels. We are also committed to maintaining our achieved 100% response rate in the Business and Human Rights Resource Centre (‘BHRRC’) company response mechanism, which encourages companies to publicly address human rights issues raised by civil society. We continue to receive external recognition for our transparent approach to managing human rights. For example, we are ranked among the top ten apparel and footwear companies in the Corporate Human Rights benchmark of the World Benchmarking Alliance (‘WBA’) and maintain a leadership position in third place in the KnowTheChain benchmark on forced labor. ADIDAS-GROUP.COM/SUSTAINABILITY