Annual Report 2023


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Supply Chain

Working conditions


Our commitment to ensuring fair labor practices and safe working conditions in our manufacturing facilities throughout our global supply chain is fundamental to our human rights approach. Our active efforts are guided by the adidas Workplace Standards, which is our supply chain code of conduct that is aligned with the Fair Labor Association (‘FLA’) ‘Workplace Code of Conduct’ and ‘Principles of Fair Labor and Responsible Sourcing.’ These standards are embedded as a contractual obligation in the manufacturing agreements to ensure workers are employed in fair, safe, and healthy workplaces that are environmentally sound. In addition, they follow ILO and UN conventions relating to human rights and to fundamental principles and rights at work, as well as the model code of conduct of the World Federation of the Sporting Goods Industry (‘WFSGI’).

We seek to extend our reach by cascading responsibilities to our contractual partners to capture and address potential and actual risks related to possible labor rights violations upstream and downstream of our supply chain. Specific reference to the code provisions of the ILO core labor conventions is provided in the adidas Guidelines on Employment Standards. The Social and Environmental Affairs (‘SEA’) senior management team reviews and approves all policies and implementation processes of the labor rights program.

In addition to regular compliance monitoring, in 2023 we continued to focus on our own purchasing practices in accordance with our ‘Responsible Sourcing and Purchasing Policy’ to ensure that our sourcing activities do not negatively impact our manufacturing partners’ ability to comply with our social and environmental standards. To best understand potential impacts, we have sought feedback from our manufacturing partners, both anonymously and openly, through our subscription to the Better Buying Institute, an independent organization that assesses and reports on the sourcing practices of participating brands, and through our own engagement with our suppliers. Based on this feedback, we have continued our efforts to improve our purchasing practices. In addition, in partnership with Better Buying, we expanded the use of our e-learning training on responsible purchasing practices to more than 4,000 employees in Global Operations. In 2023, the training was also shared with the majority of adidas licensee partners to further improve their understanding of effective responsible purchasing policies.

Targets for 2025

Our social compliance program continues to evolve and is built around three core concepts with targets for 2025 in place.

Targets for 2025: Social impacts

Impact area



Supply Chain



Social impact (‘S-KPI’)


90% of strategic Tier 1 suppliers achieve at minimum ‘4S;’
100% of strategic Tier 1 suppliers achieve ‘3S’ or better1

Fair wages


Progressive improvement in compensation, measured by fair wage benchmarks across our strategic Tier 1 suppliers2



Achieve gender wage parity for workers and their supervisors in our strategic Tier 1 suppliers3

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 our value chain4


The S-KPI measures a set of social indicators, such as accident rates, worker satisfaction, and worker empowerment. Due to positive progress in our suppliers’ overall performance in 2022, we have upgraded our 2025 target for the number of suppliers expected to achieve a ‘4S’ rating. The overall target seeks to achieve 100% adherence to or 90% overachievement against these foundational social impact measures, with ‘3S’ being the minimum expected supplier performance.


The fair wage benchmarks include industry wages, minimum wages, and living wages. These benchmarks are set and tracked through the ‘FLA Fair Compensation Tool,’ a factory self-reporting tool that has been widely adopted by the industry and is being rolled out progressively to strategic Tier 1 suppliers.


The measurement of wage parity for production line workers and their immediate supervisors (i.e., line leaders) forms part of a broader gender strategy rollout to applicable strategic Tier 1 suppliers who complete self-assessments to identify and then close gender gaps in operating practices and procedures.


In conducting due diligence we seek to identify, prevent, or mitigate potential adverse human rights or environmental impacts, with priority given to addressing the most severe impacts.

Measuring supplier social impact performance

In 2022, we launched our social impact KPI (‘S-KPI’) tool to measure suppliers’ social impact performance through a set of social indicators, such as accident rates, worker satisfaction, and worker empowerment. By 2025, we aim to have 90% of strategic Tier 1 suppliers achieve a minimum of ‘4S,’ (on a scale of 1-5, with 5 being the best) and 100% of strategic Tier 1 suppliers achieve ‘3S’ or better.

Improving fair wages and gender equality at our suppliers’ factories

We are committed to upholding responsible sourcing practices, increasing gender equality, and creating pay equity, with the goal of providing fair compensation to workers in our supply chain, regardless of their gender. By 2025, we aim to see a progressive improvement in compensation, measured by fair wage benchmarks, and achieve gender wage parity for workers and their supervisors at our strategic Tier 1 suppliers.

  • Fair compensation: We are currently conducting a multi-year wage benchmarking exercise with our strategic suppliers.1 Data is being gathered from three different time periods: our 2020 benchmark year, our 2023 mid-term year, and our 2025 final year. The data reported for the 2020 benchmark year data was collected from 2021-2023, the 2023 mid-term year data will be collected in 2024, and the 2025 data will be collected in 2026. In 2023, we completed the 2020 benchmarking by collecting wage data in China, Thailand, and Pakistan.2 In line with the benchmarking completed in Cambodia, Indonesia, and Vietnam in the previous year, we compared factory wage data to external benchmarks, such as the applicable legal minimum wage, the FLA Country Average, which is an industry average based on suppliers working with FLA member companies, and the Global Living Wage Coalition (‘GLWC’) benchmark, where available.

Results of our entire benchmarking period 2020 show that the wages paid by the suppliers in scope for this exercise (representing around 80% of all strategic suppliers) exceed all of the aforementioned benchmarks. In line with the FLA Fair Compensation formula, all wages reported below include regular wages, paid leave, applicable and eligible incentives, benefits in kind and cash benefits, and exclude all legally required taxes and social insurance contributions.

  • Cambodia (ten factories): In our major sourcing country for apparel, wages paid by adidas suppliers surpassed the legal gross minimum wage by 56% and the applicable net FLA Country Average by 33%. In the case of Cambodia, 90% of the factories assessed are unionized, while 10% have a collective bargaining agreement (CBA) in place.
  • China (14 factories): The factories assessed in China are located within ten different gross minimum wage groups. Across all minimum wage groups, factories’ net wages surpassed their applicable minimum wage requirement by between 13% and 159%. Currently, two of our data collection in-scope factories with an available and applicable GLWC benchmark surpassed their GLWC benchmark by 2% and 34%, respectively. In China, 79% of these factories have a state-backed trade union, and 43% a CBA in place.
  • Indonesia (13 factories): The factories assessed in Indonesia are located within ten different legal gross minimum wage groups, which vary widely in terms of minimum wage requirements. Across all minimum wage groups, wages paid surpassed the legal minimum wage by between 9% and 66%; 92% of factories are unionized and have a CBA in place.
  • Pakistan (two factories): The data shows that wages paid by adidas suppliers surpassed the legal gross minimum wage by 42% and the applicable net FLA Country Average by 16%. Currently, none of the factories in scope in Pakistan are unionized.
  • Thailand (four factories): The factories assessed in Thailand are located within three different gross minimum wage groups. Across all minimum wage groups, wages paid surpassed the legal gross minimum wage by between 36% and 44%. Currently, none of the factories are unionized.
  • Vietnam (17 factories): Our factories are located within three legal gross minimum wage groups. The wages paid by factories in these zones surpass the minimum wage by between 72% and 78% and the GLWC benchmark by 18%, where applicable (zone 1 only). 100% of the factories have a state-backed trade union and a CBA in place.

We remain on track to complete our benchmarking process and, by the end of 2024, will be able to compare our 2020 wage data against the 2023 results. This will allow us to assess wage progress over time. We will continue our efforts to support the levers we have identified as being most influential in driving the wage-setting process. These are: legal obligations, responsible purchasing practices, productivity, industrial relations, and government engagement. We will also deploy a Gender Pay Parity Capacity Building Program across our supply chain in collaboration with other companies. This program will focus on raising our suppliers’ awareness and understanding of the gender pay gap, in particular equal pay for equal work.

  • Gender equality: We continue to implement measures that advance gender equality in our supply chain and meet our objectives to bring a gender lens to our strategic suppliers’ operations to ensure that all workers will have equal opportunities and rights. In 2023, such measures included the launch of the ‘Gender Equality Worker’ survey, data verification of supplier self-assessment responses, and conducting the second annual supplier self-assessment. More than 44,000 workers participated in the worker survey, designed to evaluate worker experience and perception on gender equality in the workplace, obtain worker feedback on gender equality practices in factories, and provide strategic suppliers with a reference point for continuous improvement. All strategic suppliers have also submitted initial improvement plans to address gaps identified in the gender equality self-assessment tool and will continue to update their roadmaps for improvement.

Monitoring and assessing performance

We regularly assess our manufacturing partners on their ability to provide fair, healthy, and environmentally sound workplace conditions by conducting announced and unannounced audits by our own team and by accredited external auditors. Any cases of non-compliance identified during audits are given a clear time frame for remediation. Potential new manufacturing facilities are assessed in a similar way, and orders can only be placed if approved by the SEA team. Based on the audit results, the Sourcing and SEA teams jointly decide on the course of action, ranging from training to enforcement actions, such as sending warning letters or hiring external consultants to help improve workplace systems or practices. We also operate several grievance channels allowing workers or third parties to submit complaints about violations of the adidas Workplace Standards and human rights generally. All third-party complaints received through our grievance channels are reviewed and investigated, and the outcome is reported on our corporate website. ADIDAS-GROUP.COM/SUSTAINBILITY

In 2023, adidas began a partnership with Better Work, which is a collaboration between the ILO and the International Finance Corporation (‘IFC’) that provides a range of due diligence and capacity building programs to suppliers in the 13 countries where Better Work operates. In addition to supply chain engagement, Better Work actively works to promote a constructive dialogue between the invested multi-stakeholders in those countries concerning buyer practices and workers’ rights e.g., civil society organizations, governments, worker representatives, and union groups.

Manufacturing facilities’ conditions are also inspected by independent auditors through our participation in the FLA, demonstrating our commitment to independent manufacturing facility inspections and external verification of our programs. Our program has been accredited three times by the FLA and, in 2023, remains accredited based on FLA’s annual evaluations, in which adidas was rated as a top performer.

At the end of 2023, adidas worked with 357 independent supplier facilities3(2022: 424) that manufacture products for our company in 40 countries (2022: 44). The reduction in the number of facilities reflects the consolidation of sourcing operations in line with our strategy to form long-term relationships with our core manufacturing partners. 63% of our manufacturing partners’ facilities (2022: 63%) are located in the Asia-Pacific region. In 2023, we worked with 37 licensees (2022: 39) manufacturing products in 251 factories (2022: 287) across 33 countries (2022: 34).

Onboarding of new suppliers

In 2023, our primary focus was on maintaining partnerships with our existing manufacturing partners rather than onboarding new ones. Consequently, the number of initial assessments – the first approval stage for a new entry into our supply chain – in prospective supplier factories remained with 66 at a similar level to the previous year (2022: 58). Of these, 19 factories (2022: 20) were either rejected directly after the initial assessment identified zero-tolerance issues or were ‘rejected with a second visit’ due to identification of one or more threshold issues, which means they were rejected but given the chance to remediate the non-compliance issues within a specific timeframe. The vast majority (64%) of all initial assessments were undertaken in Asia (2022: 71%), with China accounting for 20% (2022: 26%).

Overall, at the end of 2023, the first-time rejection rate of new factories visited was 29% and thus lower than in the previous year (2022: 34%). Manufacturing partners with threshold issues are typically given three months to remediate them before being re-audited for final acceptance. Through active support and capacity building, all initially rejected factories successfully closed their non-compliance issues and were onboarded. As a result, in 2023, there were no factories subject to ‘final rejection.’

Supply chain performance data











Onboarding of new suppliers





Total number of first-time rejections1





First-time rejection rate





Total number of final rejections





Final rejection rate2










Worker empowerment





Implementation of ‘Workers Voice’ grievance platform at strategic manufacturing partners





Satisfaction rate from workers who raised a grievance through ‘Workers Voice’















Number of training sessions (fundamental, performance, advanced)















Total number of audits (initial assessment, performance audits, environmental assessments)3















Number of warning letters (first warning)





Number of warning letters (second warning)





Number of warning letters (third and final warning)





Number of business relationship terminations for compliance reasons






Factories that were directly rejected after the first visit, i.e., with no chance of being visited a second time, and factories that were rejected after initial assessments but which were given a chance for a second visit.


Factories that were directly rejected after the first visit, i.e., with no chance of being visited a second time, and factories that were rejected after being visited a second time.


Total number of audits includes audits done in licensee factories. Performance audits conducted in approved factories that have passed the initial assessment (this includes on-site and desktop assessments). As of 2023 this includes audits under the SLCP and Better Work programs. Environmental assessments include ZDHC wastewater test assessments according to the ‘ZDHC Wastewater Guidelines.’


Includes warning letters issued by licensees excluding warnings to facilities for the non-disclosure of subcontractors, which are issued either directly through business entities or by the adidas Legal department where there is a breach of contract obligations under a manufacturing agreement. A third and final warning results in a recommended termination.

Worker empowerment

Over the past few years, we have developed efficient feedback channels, tools to measure worker satisfaction, and training tailored to empower workers.

  • Feedback options: A robust grievance mechanism is the fulcrum on which workers can raise their concerns and secure remedies. Since 2017, we have reduced our reliance on local worker hotlines as a complaint mechanism by building an application-based ‘Workers Voice’ platform: a bespoke, manufacturing-facility-based digital grievance channel for workers. We have progressively improved and expanded the use of this grievance mechanism, and in 2023, more than 359,000 workers employed in 108 manufacturing facilities across 16 countries had access, reflecting 100% coverage of our strategic manufacturing partners. Access to a digital complaint mechanism has proven invaluable during covid-19. Close to 42,000 human and labor rights complaints (2022: around 48,000) were filed through the Workers Voice platform in 2023, with 99% of these complaints being closed by the end of 2023. The top complaints received in 2023 were related to concerns over benefits (more than 11,000), general facilities (more than 7,200), and internal communication (more than 7,100).

    Input received through the Workers Voice platform is tracked by adidas using KPIs and dashboard reviews, case satisfaction ratings, and on-site worker interviews. This allows us to evaluate the efficacy of the grievance channels, see major cases in real time, and undertake timely interventions, where necessary. It also helps us understand the main challenges and labor rights issues in a manufacturing facility and track how the facility’s management and their HR teams resolve cases and communicate their findings. Our evaluation contributes to the facility’s overall social impact rating (S-KPI). adidas provides ongoing capacity building to enhance the facility teams’ capability to improve the effectiveness of the grievance mechanism. The case satisfaction rate, which allows workers to input their level of satisfaction with the resolution of complaints, has almost doubled from 39% in 2019 to 77% in 2023. The increase in satisfaction is partly related to a significant improvement in the response time of factory management to address workers’ grievances, which decreased from 49 hours in 2020 to less than twelve hours in 2023 due to improvements in communication and transparency in the workplace. The management teams in the manufacturing facilities have continuously engaged with the facility’s workers through newsletters and broadcast messages, which has improved the workers’ engagement and encouraged feedback.
  • Worker satisfaction: Complementing the various grievance channels, we expanded the ‘Worker Pulse’ project, a digitalized short survey to capture workers’ perception and awareness of their labor rights on focused areas such as communication, harassment, and abuse, as well as grievance systems. It builds on what we learned from a previous survey process we initiated in 2016. In 2023, we undertook these digital surveys in 109 manufacturing facilities (2022: 133) across 16 countries (2022: 17), with more than 71,000 workers participating (2022: 85,000) through a mobile-phone-based application. At its core, the survey presented six statements against which the level of agreement or disagreement was assessed. Topics included the willingness to speak up, to recommend the factory to work at to friends, or the comfort level when raising a suggestion or complaint or when talking to supervisors. The results show a steady increase in the number of favorable respondents across all questions since 2020, from roughly 78% to an average of 90% in 2023. The percentages indicate the average response on a five-point Likert-type scale where 100% represents ‘strong agreement’ and 0% ‘strong disagreement.’ This increase in overall worker satisfaction resulted in an increase in the average S‑KPI score for our manufacturing partners’ facilities in 2023. This shows that when workers’ voices are being heard and acted upon by the facility’s management, it can have an impact in improving the overall working conditions within a manufacturing facility. Manufacturing partners are required to develop and track workplace improvement plans based on feedback from the Worker Pulse.
  • Women leadership: Alongside facility-led training, we also offered tailored training under our ‘Women Leadership Program.’ Building on our team’s learnings, we modified the training approach in 2022, adopting a hybrid model of in-person and online training. We continued with this model in 2023 with more than 1,500 supervisors participating in factories in Cambodia, China, India, Indonesia, Myanmar, and Vietnam. We closely track the progress of workers graduating from this training initiative, and since 2016, approximately 170 female supervisors have been promoted to higher positions as a result of their participation in the program.
  • Labor rights: In 2023, we also saw a continuation of our mobile-phone-based ‘Digital Training’ project, which had been successfully rolled out at 133 manufacturing facilities in 17 countries in 2022. The digital tool assesses workers’ awareness of their labor rights and remedies, e.g., fire safety, harassment and abuse, and use of grievance channels. More than 50,000, workers took part in 2023 (2022: 82,000) and averaged a score higher than 92 out of 100 in the post-test questions, thereby demonstrating very high levels of awareness of their core rights and available remedies.

Manufacturing facility engagements and training sessions

Throughout 2023, we combined on-site and remote (i.e., virtual) interactions to maximize the impact of our facility engagements and training sessions. In total, we completed 644 individual facility engagements in 2023 (2022: 657) and 179 training sessions for manufacturing partners, licensees, workers and adidas employees (2022: 187), reaching a total of around 4,222 people. The training sessions continued to cover a broad range of topics, from our Workplace Standards, guidelines, and supporting policies, through to targeted training on specific labor, health and safety, and environmental topics.

We continued to work with our licensee partners in 2023 to ensure they are implementing adidas Workplace Standards into their manufacturing partners’ operations in a consistent manner. Our licensees continue to have access to the FLA e-learning materials, which include training courses covering topics such as human rights, forced labor, responsible manufacturing, and worker engagement. In 2023, we expanded this training by facilitating access to the Better Buying Institute’s e-learning course on responsible purchasing practices. In addition to the training, Better Buying worked with a selected group of licensees’ suppliers to complete the Better Buying Partnership Index survey, which helped evaluate the impact of the licensees’ purchasing practices on suppliers and their workers and identify any improvement areas.


We regularly audit our manufacturing partners against the adidas Workplace Standards, utilizing a range of audit tools. In 2023, in addition to our own audits, we began to incorporate assessments conducted by the ILO’s Better Work program, a collaboration between the United Nations’ ILO and the International Finance Corporation to improve working conditions within the apparel and footwear industry. adidas also continued to use ‘Social and Labor Convergence Program’ (SLCP) assessments (2023: 79, 2022: 133) in its monitoring activities to avoid repetitive social audits in shared facilities.

A total of 499 social compliance audits (initial assessments and performance audits) were conducted in 2023 (2022: 709), six of which were conducted remotely (2022: 15). Of the 329 on-site performance audits conducted, 82% were carried out on an unannounced basis, whereby the manufacturing facility is not informed in advance of the exact date of assessment. The number of audits in factories manufacturing goods for licensees was reduced from 295 in 2022 to 267 in 2023, reflecting a reduction in the number of licensee suppliers.

Number of audits by region and type



Initial assessment1


Performance audit2


Environmental assessment3

























































































Every new manufacturing facility has to pass an initial assessment to prove compliance with the ‘adidas Workplace Standards’ before an order is placed. The data shown includes both initial assessments and initial assessment follow-ups, and includes on-site and desktop assessments.


Audits conducted in approved factories that have passed the initial assessment (including on-site and desktop assessments). As of 2023, audits under the SLCP and Better Work programs are included.


Includes environmental assessments and wastewater test assessments according to the ‘ZDHC Wastewater Guidelines.’


Includes audits done in licensee factories.

To complement our broader sustainability efforts, we monitor our suppliers to ensure compliance with our environmental standards and guidelines and to validate their performance against annual environmental targets. In 2023, 325 facilities in 24 countries were assessed and evaluated for their environmental performance, which represented 317 of our key Tier 1 and Tier 2 manufacturing partners, and selected Tier 3 suppliers enrolled in our sourcing sustainability program. In addition, a total of 400 wastewater test assessments were conducted according to the ZDHC Wastewater Guidelines.

As we continue to increase our focus on added-value advisory services and empowerment projects, which go beyond our regular audit routine, the number of internally managed audits decreased to 85 in 2023 (2022: 109), with 90% (739 assessments) of all assessments performed by third-party monitors (2022: 860).4

A total of 72% (2022: 65%) of all direct and licensee facilities were audited in 2023. ‘High-risk’ locations in Asia, which is the most significant sourcing region for adidas, were the subject of extensive monitoring in 2023, with an audit coverage of 89% (2022: 84%). As a general principle, manufacturing facilities located in high-risk countries are 100% covered in our auditing scope, which means they receive audits annually, while low-risk countries with strong government enforcement and inspectorate systems, such as Germany, are considered out of scope for our audit coverage.

We also continue our efforts to cascade HREDD processes within our supply chain by holding our key Tier 1 manufacturing partners accountable for implementing their own due diligence processes. This includes measuring our suppliers’ ability and performance in conducting their own internal compliance monitoring, as well as their commissioning of social compliance audits in their subcontractor facilities, with implementation tracked via our S-KPI tool. This is complemented by ongoing steps to extend audit coverage to our nominated Tier 2 material suppliers and targeted Tier 3 spinning mills in China.

Audit results and S-KPI performance

2023 marks the second year of measuring our supplier performance using the S-KPI tool. The S-KPI assesses a factory’s performance in delivering a safe and fair workplace by measuring effective due diligence processes, as well as the ability to deliver positive social impact. In total, the S-KPI has 15 units of measures (‘UOM’). These include compliance with threshold and zero-tolerance issues, completion of remediation plans, accident and absenteeism rates, as well as a range of worker empowerment measures such as resolution and satisfaction rate of workers’ grievances, participation rate in worker satisfaction surveys, and the ratio of females in mid-managerial positions. The S-KPI assesses a factory’s performance in each of the UOMs based on the information gathered and, where applicable, validated during social compliance audits which are uploaded to a dashboard for each supplier. The result is a final score (in %) which is converted to S-rating levels from 1-5, with 5S being the best. The thresholds are set as follows: 1S: 0-29%, 2S: 30-59%, 3S: 60-79%, 4S: 80-89%, 5S: 90-100%. For suppliers that have achieved a S-KPI of 5S, we reserve the possibility to exclude them from selected S-KPI compliance measurements for one year due to their low risk profile. 

In 2023, almost 84% of our 108 key manufacturing facilities achieved a rating of 4S or better, which is a significant improvement compared to 2022 (75%). We see a positive trend, with almost all of the higher-performing manufacturing facilities (4S or 5S in 2022) maintaining or improving their S-KPI rating in 2023. With this performance, we are confident that we will meet the 2025 target for the upper performance band for our suppliers and now expect 90% of our strategic Tier 1 suppliers to achieve a minimum of 4S or better by 2025.

Social impact performance rating of strategic supplier factories by S-KPI in %

Social compliance performance rating of strategic supplier factories by C-KPI rating (Barchart)

All of our key licensees (i.e., our long-term partners and/or those with the largest business volumes) achieved a Licensee Compliance Rating (‘LCR’) of at least 4S in 2023, and of these, 75% received a rating of 5S. This rating reflects that these licensees have successfully demonstrated that they have embedded strong governance systems, supply chain management, and purchasing practices compliance requirements into their business practices. Licensees are also assessed on the existence of policies and systems to address stakeholder engagement, as well as levels of public reporting and communication.

Non-compliances identified in active factories

Our manufacturing partners’ facilities are evaluated against a number of critical compliance issues. While threshold issues are considered serious but correctable non-compliances that can be addressed through remedial action within a specified timeframe, zero-tolerance issues – such as forced labor; child labor practices; or critical life-threatening health, safety, and environment conditions – immediately trigger a warning and potential disqualification of a supplier. During the course of each year, we continuously track non-compliances identified through manufacturing partners’ performance audits, collaboration audits, self-governance assessments, and, since 2020, SLCP assessments. We follow up on all non-compliance and require our manufacturing partners to remediate these findings within a specified timeframe. The identified issues in 2023 remained largely the same as those reported in 2022.

  • Labor: Besides identifying non-compliance with the Workplace Standards, our Social Compliance team focuses on the use and effectiveness of the facilities’ HR management systems, including any gaps in policies and procedures related to specific risk areas, such as forced labor, child labor, freedom of association, or discrimination. As a result, the percentages shown indicate the systemic shortcomings of active facilities, where corrective action is required to reduce potential risks, rather than the confirmed presence of a specific case of non-compliance or breach, which requires remediation.

Shortcomings in the area of labor identified during audits in 2023

Top 10 shortcomings in the area of labor identified during audits in 2022 (Piechart)
1 ‘Other’ includes, for example, overtime/holiday rate and other benefits/allowances.
2 ‘No standardized filing’ indicates a factory does not keep relevant information/documents and records that demonstrate compliance with laws and regulations.
  • Health and safety: Fire, electrical, as well as machine and ladder safety are critical areas for existing manufacturing facilities, and together they accounted for almost 40% of the non-compliance identified in 2023. The way chemicals were stored and used, including the handling of hazardous chemicals, accounted for 5% of non-compliance findings reported. A further 9% of the findings related to management systems, policies, and procedures, and specifically a lack of compliance with our Workplace Standards and expectation for effective occupational health and safety systems, including the recruitment and retention of qualified safety staff.

Shortcomings in the area of health and safety identified during audits in 2023

Top 10 shortcomings in the area of health and safety identified during audits in 2022 (Piechart)
1 ‘Other’ includes, for example, material storage, housekeeping, or waste management.

Remediation of shortcomings

We follow up on all cases of non-compliance and require our manufacturing partners to remediate open issues within a specified timeframe. While in many cases the actual issues will have been resolved, our approach is to only ‘close’ these in our systems when we have verified evidence of completion and established that corrective actions taken are sustainable and sufficient to avoid reoccurrence. To support remediation and ensure effective management systems are in place, we undertake capacity building especially for any identified high-risk issues. For instance, in 2023, we launched an occupational health and safety program to improve electrical safety for workers and factory maintenance staff, including written guidelines and supplier training.

Independent FLA audits

Each year, the FLA independently assesses the supply chain of its member brands. It does this using a variety of monitoring models (e.g., in-person, virtual, or a hybrid approach of both in-person/virtual) that result in tailored ‘Sustainable Compliance Initiative’ (‘SCI’) assessments. adidas received three such FLA assessments in 2023. In addition to manufacturing facility monitoring, the FLA focused its efforts on more areas, including enhancing virtual monitoring methodology, issuing specific country-related and topical guidance, supply chain mapping, grievance mechanisms, revising its third-party complaint mechanism, developing responsible termination guidelines, and continuing its work to measure and mitigate impacts of covid-19 on the industry’s supply chain.


Warning letters are an essential part of our enforcement efforts and are triggered when we find ongoing serious non-compliance issues that need to be addressed by our manufacturing partners’ facilities. We work closely with our manufacturing partners to help them improve their performance. However, where we face situations of severe or repeated non-compliance that cannot be resolved, we terminate business relationships with facilities. When making such a decision, we always seek to balance the adverse impacts arising from the unresolved non-compliance against the wider effects that a business termination can have on the rights and interests of the workers, especially if this triggers layoffs. In such circumstances, we may extend timelines to ensure a responsible exit is achieved.

  • Warning letters: In 2023, our close engagement with our manufacturing partners’ facilities helped limit the need to issue warning letters, with a total of nine (2022: six) across seven countries. Compared to the previous year, the overall number of active first warning letters remained at a similar level, from six in 2022 to eight in 2023; the total number of second warnings was one in 2023 (2022: 0). Manufacturing facilities that receive a second warning letter are only one step away from being notified of possible termination of the manufacturing agreement and are subject to focused monitoring by our team. No third warning letters (which result in termination of the contract) were issued to our manufacturing partners in 2023 (2022: 0).
  • Advisory letter: For suppliers to whom we do not have a direct contractual relationship, we rely on advisory letters as an enforcement measure: In 2023, two advisory letters were issued to Tier 2 facilities after their management failed to commit to complying with our environmental requirements.
  • Terminations: In 2023, there were no instances in which a supplier agreement was terminated for social compliance reasons (2022: 0).

1 Strategic suppliers as of January 2020.

2 Data as reported in the 2022 Annual Report included 2020 benchmarking results from wage data collected in 2021 in Cambodia, Indonesia, and Vietnam (approximately 65% of our selected factories are located in these three countries). The reporting in this 2023 Annual Report reflects the full 2020 benchmarking results from all wage data collected between 2021–2023 from all of our factories in scope for this exercise located in our three initial countries (Cambodia, Indonesia, Vietnam), in addition to in-scope factories in China, Pakistan, and Thailand. A small number of factories in four different countries were initially considered for data collection and reporting. Due to the minor production volume they represent in their country and to protect their confidentiality, they have been subsequently removed from the scope.

3 Independent supplier facilities refer to individual Tier 1 facilities (factories) of our manufacturing partners that adidas has a manufacturing agreement with, and their Tier 1 subcontractor facilities, excluding own factories and licensee facilities. Facilities that work with our licensees are reported separately. Some of these facilities may produce both for adidas directly and for licensees.

4 Including social and environmental assessments, excluding ZDHC wastewater assessments (400).

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