Impact, Risk and Opportunity Management

E4-2 – Policies related to biodiversity and ecosystems

Our biodiversity strategy outlines our overall approach, which aims to ensure our company’s readiness to achieve deforestation- and conversion-free (DCF) supply chains by 2030 or earlier, with human rights considerations included. It is also aligned with adidas’ decarbonization goals. The strategy focuses on our upstream supply chain, especially on sourcing activities related to materials associated with man-made deforestation risks (in our case leather, natural rubber, and timber), and also addresses the opportunities of compliance and indirect carbon reduction related to land use. Finally, we are convinced that the biodiversity strategy will help influence the identified dependencies and pressures related to climate change, land-use change, impacts on ecosystems and the respective ecosystem services. Currently, a Biodiversity and Ecosystems Policy is under development, which will act as an umbrella for functional policies that drive implementation of biodiversity-related measures throughout the organization.

Our adidas Policy for the control and monitoring of hazardous substances prohibits the use of chemicals considered as harmful or toxic in the production of our products and includes restrictions on the use of animal-derived materials, among others, emphasizing that adidas does not source or process any raw materials from endangered or threatened species. With these considerations, the policy directly addresses impacts related to the extent and condition of ecosystems, as well as impacts and dependencies on ecosystem services.

adidas aims to source materials of animal origin in a humane, ethical, and sustainable manner that respects animal welfare and species conservation. Our Standards on Animal-Derived Materials prohibit the use of specific materials (e.g., hides or skins of exotic animals and angora wool) and set minimum standards to be followed when sourcing leather, down, and animal wool. By using certified materials, we aim to promote the adoption of sustainable land and agriculture practices, as well as the protection of pasture landscapes to reduce the negative impact of land-use change and the impact on biosystems. With these considerations, this standard directly addresses impacts related to land-use change, the extent and condition of ecosystems, as well as impacts and dependencies on ecosystem services.

adidas has the ambition to reduce its reliance on fossil-fuel-based resources, phasing out virgin fossil-based materials. By replacing these with recycled materials or materials derived from renewable sources such as bio-based feedstocks, we can help avoid the depletion of finite resources and reduce our carbon footprint and pressure on nature. In the production of plastics and synthetics, bio-feedstock can be an alternative to some chemical building blocks that conventionally come from fossil sources. Before including bio-based feedstocks into the adidas material portfolio, an impact assessment with a multi-factor analysis is required. High-risk feedstocks for deforestation are either excluded from any sourcing options or require certification. Additionally, any feedstock must be assessed based on its sourcing origin against key factors that drive environmental impact, and risks related to social impacts and human rights must be considered.

Moreover, traceability is covered by our Sustainable Product Tracing Methods SOP, which is an overarching document for any traceability related topic. Furthermore, other policies mentioned in ESRS E1 CLIMATE CHANGE, ESRS E2 POLLUTION, ESRS E3 WATER AND MARINE RESOURCES, and ESRS E5 RESOURCE USE AND CIRCULAR ECONOMY indirectly deal with the topic of biodiversity. For instance, our climate strategy provides the overall framework for our climate change mitigation actions, including alternative materials and processes addressing land-use change. Our Environmental Guidelines aim at preventing negative impacts on ecosystems by rethinking the use of resources and avoiding pollution.

adidas is committed to respecting and upholding internationally recognized human rights, both in its own operations and throughout its business relationships. With our biodiversity strategy, we want to avoid potential negative social consequences of biodiversity- and ecosystem-related impacts by including human rights and livelihood into the scope. Moreover, policies mentioned in ESRS S2 WORKERS IN THE VALUE CHAIN and ESRS S3 AFFECTED COMMUNITIES further layout our approach towards addressing human rights topics in the value chain.

E4-3 – Actions and resources related to biodiversity and ecosystems

Due to the complex supply chain structures in our industry, a key focus of our actions is to understand the origin and the respective biodiversity impact of the raw materials we use. Therefore, in 2024, we focused on enhancing transparency and traceability of materials by mapping upstream value chains of key materials. The highest priority was given to materials associated with a deforestation risk (which for us are leather, natural rubber, and timber-derived materials), followed by cotton as the largest nature-derived material used in our portfolio. We also initiated the creation of policies and standard operating procedures (SOPs) to support the implementation of the biodiversity strategy and actively contributed to evolving industry solutions for the traceability of materials in several working groups we participate in.

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

• Leather: Our activities related to leather in 2024 were designed around three main objectives – getting more transparency over our upstream supply chain (visibility all the way to the slaughterhouse and in some cases all the way to farm level); collaboration with other stakeholders to drive industry standards and targeted actions; and building awareness among our suppliers. For transparency in the supply chain, we completed a supply chain mapping, including all leather suppliers we had worked with in 2023, with the goal of identifying the origin of the raw materials up to the slaughterhouse, and in some cases even to farm level. The mapping is an integral part of our work toward meeting our target of deforestation- and conversion-free (DCF) bovine leather supply chains by 2030 or earlier. Currently, the intended endpoint of a deforestation-free chain of custody is the slaughterhouse, the origin of leather as a product. During 2024, we engaged with indirect suppliers in our leather supply chain and also with companies from the meat industry to understand how deforestation-free due diligence can be enabled from farm to slaughterhouse through certification and other methods. This builds on our work from 2023, when we sponsored the first phase of COTI (Certification of Origin and Traceability Implementation Initiative), which aims to enable traceability for social and environmental compliance from farming to slaughterhouse, including indirect farming systems in the state of Pará, Brazil, based on a system of individual animal tagging. For driving industry standards and targeted measures, we actively contributed to several working groups such as Textile Exchange’s DCF call to action working group and the LWG chain of custody/traceability task team, aiming at enhancing the LWG audit protocol to include deforestation-free due diligence and extending it to the slaughterhouse through a chain of custody. We also consulted with the WWF and the Brazilian consultancy Rever to advance the development of a DCF toolkit to guide adidas activities towards a deforestation-free bovine leather supply. Finally, to create awareness of deforestation topics, we communicated our DCF target to direct and indirect suppliers in specific meetings and workshops. In 2024, adidas decided to stop purchasing kangaroo leather, which will be gradually replaced with other types of leather.
• Natural rubber: In 2024, we also completed the mapping of our natural rubber supply chain, partially covering our Tier 3 rubber suppliers, mainly in Southeast Asia. Due to data gaps, another mapping exercise – to be carried out in 2025 – will be needed to derive actionable results. This mapping contributes directly to the implementation of our biodiversity strategy.
• Timber-derived materials – specifically man-made cellulosic fibers (MMCFs) and paper packaging: To steer our journey toward deforestation-free MMCFs and paper packaging (covering our total volume globally), adidas has joined CanopyStyle and Pack4Good, two initiatives from Canopy Planet setting the framework for good sourcing practices to protect ancient and endangered forests. Several consultations were already held in 2024. In collaboration with Canopy Planet, adidas has embarked on a supply chain mapping exercise for MMCFs as part of our deforestation-free supply chain targets, linked to our biodiversity strategy. We have identified the Tier 4 suppliers (fiber producers) our suppliers source from, and we will continue to monitor risks and set targets for a certified supply chain. For paper packaging, many internal teams were consulted to better understand the volumes sourced, certifications used, and country of origin of the material. Throughout 2025, a more detailed assessment will be carried out to create a baseline from which we will derive an action plan. Additionally, our distribution centers constantly optimize the packaging size in order to minimize the consumption of packaging material and to improve transportation efficiency.
• Cotton: Since 2018, adidas has stopped sourcing conventional cotton and started using solely third-party certified cotton (organic, recycled, and other cotton standards). Most of the cotton in our portfolio is Better Cotton certified, a standard which uses a mass balance approach and therefore is not traceable to the country of origin. Our measures in 2024 revolved around gaining more transparency on the country of origin and diversifying our cotton portfolio in order to ultimately have a verified country of origin for all cotton we source. To gain more insights, we requested supplier self-declarations on the cotton sourcing countries. Additionally, we signed up for Traceable Better Cotton, aiming to start sourcing product-segregated Better Cotton, with traceability up to the country of origin. In parallel, we have joined the US Cotton Trust Protocol, which provides a chain of custody to the country of origin for cotton. Finally, we advanced the development of our Responsibly Sourced Cotton SOP (to be finalized and adopted in 2025), which will formalize adidas’ guidance on cotton sourcing and traceability.
• Innovation: We continuously explore innovative solutions that can replace current materials and may reduce pressures on land and ecosystems. Scouting and piloting is done by our own innovation team as well as through Fashion for Good, a multi-stakeholder platform for sustainable innovation in the fashion industry. More details on our activities during 2024 are listed in ESRS E5 RESOURCE USE AND CIRCULAR ECONOMY.
• Collaboration: During 2024, we continued to contribute to several working groups from Textile Exchange, Better Cotton, and Leather Working Group, with the goal of generating knowledge and ultimately creating industry standards to reduce the impact of raw materials and processes on biodiversity, for example through improved agricultural practices. As a member of Textile Exchange’s Regenerative Agriculture Outcome Framework working group, we contributed to the creation of a cross-industry basket of indicators for regenerative agriculture and their piloting. We are also an active member of the Fashion Pact Unlock Project, which tests the carbon accounting and other environmental benefits of regenerative cotton, and Textile Exchange’s Leather, Cotton, Synthetics, and Manmade Cellulosic Round Tables. These groups focus on advancing important topics in the sector, such as improving traceability and developing environmental impact analyses and guidance for the industry. These activities support the implementation of our biodiversity strategy.
• In November 2024, adidas held a stakeholder consultation with civil society organizations, suppliers, customers, and partner organizations. One of three topics discussed during the full-day event was adidas’ approach to biodiversity, including a draft version of our Biodiversity and Ecosystems Policy. We received valuable feedback, which will be included in the final version of the policy, which is supposed to be launched in early 2025.
• In 2024, adidas joined the Corporate Engagement Program of SBTN’s science-based targets for nature. Throughout the year, we have collected information, consulted with peers, and onboarded a specialized external organization to support the process of target setting. In 2025, we will keep involving external stakeholders to continuously get feedback on our progress.

Unless explicitly stated otherwise, all actions are ongoing.

While we rely on internal resources (mainly from the Sustainability team), no significant additional Operating expenses or capital expenditure are needed for now or the foreseeable future for the implementation of the presented measures.

Further measures to reduce negative impacts on biodiversity and ecosystems related to climate change, pollution or resource use are described in detail in the relevant chapters ESRS E1 CLIMATE CHANGE, ESRS E2 POLLUTION and ESRS E5 RESOURCE USE AND CIRCULAR ECONOMY, respectively.

Biodiversity offsets are part of neither our measures nor of our short- or mid-term action plans.