Impact, Risk and Opportunity Management

E3-1 – Policies related to water and marine resources

adidas understands the importance of reducing the environmental impacts caused by our upstream industrial and manufacturing activities. Our Environmental Guidelines lay out adidas’ expectations for our suppliers (Tier 1 and Tier 2 suppliers) toward establishing a sound environmental management system and cover, for example, the handling of water withdrawals, consumption, and discharges in the upstream value chain. It is designed to ensure compliance with applicable laws, regulations, and requirements for our suppliers and products. It also aims to support our suppliers to identify and mitigate their operational risks and, as a result, to foster continuous improvement.

We promote a continuous reduction of water consumption in our upstream value chain and support various conservation measures, including water saving and recycling practices, as well as improvement of sanitary conditions. Our Environmental Guidelines set specific and measurable targets for suppliers with water-intensive processes in their facilities (mostly Tier 2 suppliers), while Tier 1 suppliers adopt a self-governance approach and are encouraged to continuously improve their water efficiency and reduce their consumption. We directly communicate the Guidelines’ objectives as well as the related targets to every affected supplier.

Our Environmental Guidelines – Water Conservation and Access to Water section sets out a number of requirements for our suppliers. As a minimum, we expect them to comply with the following:

• Water abstraction from either surface or ground water must be in compliance with local regulatory requirements and approved by the respective authorities;
• illegal water intake is not allowed;
• water extraction and consumption have to be responsible; and
• water recycling and reuse in production sites are highly encouraged (as a way to minimize the overall water intake).
• Additionally, we have clearly listed some key actions that can be taken for water recycling and recovery in our suppliers’ facilities, on a voluntary basis to support their target achievement. These actions include, storm/rainwater harvesting and use; zero discharge design and recycling of wastewater to be included in production processes and cooling tower; use of local recirculation systems in facilities and shops (as opposed to centralized recirculation systems), reusing and recycling cooling tower blowdown; and limiting condenser or cooling tower blowdown to the minimum required, e.g., to prevent accumulation of dissolved solids. Our team performs on-site visits to support the facilities in conducting these tasks.

For our policies, actions and targets concerning wastewater management, please refer to ESRS E2 POLLUTION.

The product design phase covers water management considerations by using preferred materials, such as leather certified by the Leather Working Group and third-party certified cotton, including organic, recycled, and other third-party-certified cotton such as Better Cotton – which provides farmers with a comprehensive framework for using water in a way that improves yields while conserving resources for them and their community.

While emphasizing our commitment to the reduction of water consumption and prevention of water pollution, our Environmental Guidelines focus on empowering suppliers to enhance their water management system within their facilities as a key priority. Our suppliers must adhere to our Environmental Guidelines, ensuring responsible water consumption. They are also required to invest in improving their water efficiency and discharge quality to minimize the impact on aquatic systems. Their performance is evaluated on an annual basis by third-party auditors. The consideration of water risk areas, however, is not yet included in the assessment, due to the complexity of implementing a uniform risk-measurement approach across all facilities.

E3-2 – Actions and resources related to water and marine resources

Our actions follow our guidelines and are formulated to address water management holistically. Thus, they are designed to help us monitor water consumption and withdrawal, improve water discharge, and drive water efficiency and sustainable water management in our upstream value chain. They collectively contribute to the implementation of the Environmental Guidelines and to the achievement of the water intensity reduction target.

In the reporting year, adidas carried out the following actions related to water management:

• Since 2015, we have been closely monitoring water consumption and water flow processes at key production facilities on a monthly basis. Regional teams closely track the water usage and discharge via systematic submetering and through an adidas reporting platform, which helps to identify any water leakage or abnormal usage as well as areas for improvement on water management. Any anomaly triggers immediate action. We provide individual technical advice to our suppliers and offer guidance on improving their water management practices, as well as encourage recycling water practices in production, such as recycling cooling water and installing reverse osmosis systems for effluent treatment. In 2024, we continued to expand and focus our water reduction efforts by including additional Tier 2 suppliers with high water use in our environmental program. Suppliers take ownership of resolving issues, and our regional teams follow up with remediation plans when needed.
• All actions and reported data are verified by third-party experts who also provide advice on further water saving practices.
• We conduct yearly review cycles to evaluate our water management program on Tier 2 level.
• Third-party auditors review and verify the suppliers’ facilities’ water management practices annually, ensuring compliance with our standards and guidelines. Moreover, third-party inspections and data checks are conducted at our Tier 1 and Tier 2 suppliers on an annual basis.
• adidas fosters strong relationships within the sustainability community and among peers and engages openly with stakeholders to promote sustainable practices across the supply base. We conduct regular awareness-raising activities such as webinars or supplier summits to facilitate best practice sharing and knowledge exchange from peers and industry experts.
• We continuously work with Better Cotton, the Leather Working Group, and other organizations that shape the environmental requirements for our raw materials to prioritize responsible water management practices in their guidelines and standards.
• In 2024, we carried out a water risk mapping, which included areas of high-water stress, for suppliers in scope for adidas environmental program. The assessment was based on WRI Aqueduct 4.0 and aimed at exploring the best approach to be used moving forward. In the coming years we will refine such an approach, and the insights will be used to establish a mitigation and adaptation plan to address the identified water risks.

Our actions regarding wastewater are disclosed in ESRS E2 POLLUTION as well as information concerning wastewater recycling and reducing plastic use in products in ESRS E5 RESOURCE USE AND CIRCULAR ECONOMY.

All the measures described are designed to be ongoing, in line with achieving adidas’ targets.

All actions mentioned above are executed and monitored by our Sustainable Sourcing team, which operates within our key sourcing countries. The team provides capacity building training and technical advice to individual suppliers (Tier 1 and Tier 2) on areas for improvement, focusing on resource efficiency and responsible management practices. While we rely on internal resources (mainly from the Sustainable Sourcing team), no significant additional operating expenses or capital expenditure is needed for now and the foreseeable future for the implementation of the presented measures.