ESRS 2 General Disclosures

SBM-3 – Material impacts, risks, and opportunities and their interaction with strategy and business model

Our people are the key to our company’s success. Their performance, well-being, and personal development have a significant impact on our brand reputation, consumer satisfaction, and, ultimately, our results. In our roadmap to success, we emphasize the focus on our own workforce as a foundational pillar that will guide us in the years to come.

Our goal is to develop a culture that values our employees’ experience, well-being, and performance. To support this aim, we rely on our six values – Courage, Ownership, Innovation, Teamplay, Integrity, and Respect – across our people policies and processes, including how we hire, promote, and evaluate performance. These values are closely tied to our culture and are the essence of our identity. They underscore the behaviors and mindsets we value in our colleagues, represent the attitude we want to see in each other, and help us achieve top performance. These values build also the foundation of our leadership framework ‘Leadership³’ which is built around nine core competencies divided into three key areas: Excel, Empower, and Elevate, which guide leaders in driving performance, building inclusive teams, and fostering innovation.

Our business model is fundamentally driven by human capital, encompassing skilled and creative individuals. As a result, fostering excellent working conditions and supporting freedom of association and the right to collective bargaining are material for us. This includes ensuring secure employment, promoting a healthy work-life balance with flexible and fair working time, enhancing employee engagement and development, creating an inclusive workplace, for all employees in a way that is non-exclusionary and is non-discriminatory, leveraging everyone’s talents, and providing competitive and adequate compensation and benefits. These factors are crucial for attracting and retaining top talent, which in turn guarantees high product quality and the ability to meet customer demands.

Our continued focus on our people can be further explained by our priorities around creating an equal playing field for all, leadership and performance.

These pillars seek to focus our efforts on people and culture by:

embedding DEI even further into talent processes and our culture in a legally compliant manner.
attracting, developing, and retaining key talent.
developing role-model leaders who empower people.
creating a premier employee experience.
instilling a mindset of continuous learning.
recognizing and rewarding both individual and team performance.

The interests, views, and rights of our employees are highly important to us. We engage with them through multiple channels and events to continually adapt our people focus and roadmap to success.

SBM-3 – Own workforce and material impacts, risks and opportunities (IROs)
Sub-topic	Material IRO	Classification	Time horizon	Value chain	Description
Secure employment	Positive Impact	Actual	n.a.	Own Operations	Providing a safe working environment for employees contributes to better productivity, well-being (incl. mental and physical health), and financial stability. Corporate, DC (distribution center), and Retail employees.
Working time	Positive Impact	Actual	n.a.	Own Operations	Providing flexible and fair working time and rules for employees actively supports employee well-being (incl. mental and physical health) and work-life balance. Corporate employees.
Adequate wages	Positive Impact	Actual	n.a.	Own Operations	Adequate wages positively impact employees’ financial security and stability, contributing to overall well-being and motivation.
Freedom of association	Positive Impact	Actual	n.a.	Own Operations	Basic human and labor rights positively impact employees’ abilities to protect and enforce their rights and represent their views and interests around working conditions on an institutional level.
Collective bargaining	Positive Impact	Actual	n.a.	Own Operations	Supporting employee representative organizations (e.g., trade unions) increases employees’ ability to negotiate more favorable remuneration and working time packages with employer organizations.
Work-life-balance	Positive Impact	Actual	n.a.	Own Operations	Providing flexible working hours and hybrid working, where job responsibilities allow, helps employees achieve a better balance between their private and professional lives.
Health and safety	Negative Impact	Actual	n.a.	Own Operations	Negative impacts occur around mental and physical health, impacting an individual’s ability to perform well at work.
Health and safety	Risk	n.a.	Short-term	Own Operations	Non-compliance with health and safety regulations, such as those related to the coronavirus or security measures across our operations, risks legal penalties, fatalities, and reputational damage for adidas, particularly when responsibilities are unclear, or awareness is lacking.
Gender equality and equal pay	Negative Impact	Actual	n.a.	Own Operations	Unfair and unequal treatment of employees leads to financial disadvantages for individuals and negatively impacts career progression and employee engagement.
Training and skills development	Positive Impact	Actual	n.a.	Own Operations	Providing training positively impacts our employees’ engagement, qualifications, professional development, and career progression.
Training and skills development	Negative Impact	Potential	Long-term	Own Operations	Lack of training and skills development can result in lower employee engagement and qualifications and hinder career progression.
Training and skills development	Risk	n.a.	Short-term	Own Operations	As we rely on a talented and skilled workforce, inadequate training and development may lead to higher staff turnover rates and the loss of key personnel and capabilities, resulting in productivity inefficiencies, disruption of key business activities, suboptimal business performance, and higher costs.
Training and skills development	Opportunity	n.a.	Mid-term	Own Operations	adidas relies on the skills and capabilities of its people and leaders to realize its strategic ambitions. If adidas successfully develops a diverse, inclusive, and talented workforce that maintains a culture of trust, creativity, and innovation, employee engagement will increase.
Employment and inclusion of persons with disabilities	Negative Impact	Actual	n.a.	Own Operations	Insufficient employment opportunities and career progress for people with disabilities negatively impact overall employee engagement levels, as employees expect a more inclusive working environment.
Measures against violence and harassment	Negative Impact	Actual	n.a.	Own Operations	Harassment and violence negatively impact the mental and physical health of all employees, particularly Retail employees can be exposed to external incidents like criminal activities for example store robberies.
Diversity	Positive Impact	Actual	n.a.	Own Operations	Providing an inclusive working environment and fair opportunities for individuals helps employees feel a sense of belonging and engagement.
Diversity	Negative Impact	Potential	Long-term	Own Operations	Unconscious and conscious biases in our systems and practices can negatively impact employees’ career development and personal health.
Diversity	Opportunity	n.a.	Mid-term	Own Operations	adidas strives to develop people and leaders of all backgrounds with the capability to maintain an inclusive workplace for all employees that is non-exclusionary and is non-discriminatory as well as a culture of trust, diversity of thought, creativity, and innovation. This development can lead to greater employee satisfaction and engagement, as well as innovation, which may enhance adidas’ capacity to execute its strategy and potentially overachieve its financial objectives.
Diversity	Risk	n.a.	Short-term	Own Operations	adidas relies on the skills and capabilities of its employees and leaders to achieve its strategic ambitions. If adidas fails to further develop an inclusive workplace for all employees that is non-exclusionary and is non-discriminatory as well as a culture of trust, diversity of thought, creativity, and innovation, this might lead to decreased employee satisfaction and engagement. As a result, adidas would jeopardize its capacity to execute its strategy and achieve its financial objectives.

We do not expect any presented own workforce related risks to result in any additional major risks and opportunities for the forecast for the 2025 fiscal year compared to the explanations given in the Risk and Opportunity Report.

All employees in adidas’ own workforce that can be materially impacted are included in the scope of our disclosures under ESRS 2.

Types of employees affected by workforce-related material impacts

Employees – all employed by the company:

Corporate: Employees working in departments such as Design, Marketing, Finance, Research and Development, Procurement, Human Resources (HR), etc., in all global corporate locations.
Retail: Employees working in the back office (administration and management work) as well as roles in retail stores who have direct consumer contact (shop floor, staff, cashiers, etc.)
Distribution Centers (DCs): Employees working in the back office (administration and management work) as well as workers performing DC operations.

External workforce types – non-employees:

The external workforce can be divided into two categories: Contingent Labor and Services Procurement. Each of these two sub-branches has unique characteristics, which are detailed below:

Contingent labor: Individuals who are sourced on a role or project basis. There are two different types of contingent labor:
- Temporary labor: Individuals employed by temp staffing agencies for the purpose of being assigned to other companies temporarily. Temporary labor workers perform internal adidas roles and are directly supervised and managed by adidas employees.
- Individual suppliers/employed professionals/employed consultants: As experts in their fields, these individuals advise companies within their area of expertise; however, unlike temporary labor workers, they typically work independently while offering guidance and advice on strategic, legal, financial, or other matters.
Services Procurement: In the area of Services Procurement, external service providers are companies that deliver people-based services to a company in an autonomous, liable, and self-reliant way. These include technical consulting companies, specialty services, marketing agencies, and maintenance companies. They are typically retained to perform project-based work under a contractual arrangement often called a Statement of Work (SOW).

Our employees are affected by both positive and negative material impacts to varying degrees due to the nature of their work:

SBM-3 – Material negative impacts – systemic or individual
Sub-topic		Material negative impact – systemic or individual
Health and safety		Individual – due to incidents in the workplace that could be related to physical violence, accidents in the workplace, or interaction with hazardous materials.
Gender equality and equal pay		Systemic – countries with more restrictive laws relating to women’s employment are more at risk of having unequal pay and lower workforce diversity.
Training and skills development		Systemic – due to the availability of training and skill development offerings across countries and functions.
Employment and inclusion of persons with disabilities		Systemic – due to inclusion in terms of hiring and accessibility for disabled persons in the workplace.
Measures against violence and harassment		Individual – due to incidents in the workplace that may be related to physical violence between employees or between non-employees and customers.
Diversity		Systemic – countries with more restrictive laws relating to the LGBTQIA+ community, women’s employment, or restrictive immigration laws are more at risk of having lower diversity.

The business model of adidas is expected to be impacted by climate change only in the long term, as described in the chapter E1-1 Climate Change. Most of our environmental impacts occur in our upstream value chain. Therefore, our primary efforts to reduce environmental impacts focus on increasing the use of green energy in our upstream value chain, developing new materials, and changing the existing mix toward lower-impact materials. We do not anticipate any restructuring or employment loss as part of our response to climate change. Instead, we see the transition to greener operations as a potential opportunity to create new jobs and upskill our own workforce on environmental topics.

adidas has identified and recognizes the following people with particular characteristics, working in specific contexts, or undertaking certain activities, who may be at greater risk of harm:

Underrepresented groups across all areas, particularly in high-ranking roles (Director level and above). They include women, diverse ethnicity groups, the LGBTQIA+ community, disabled (apparent and non-apparent disabilities) employees, and carers of children and elderly.
Employees with non-guaranteed hours, who have a higher risk of being negatively impacted with regard to the topics of secure employment and adequate wages. It is especially relevant for those employed in DC or Retail due to the seasonality of the business. To a lesser degree, the same applies to temporary workers in the same environments.
Retail employees working in busy urban areas, who have a higher exposure to violence as their workplaces provide open access to customers and the public.
Retail and DC employees, who have a higher exposure to physical harm such as occupational accidents, due to the more physical nature of their work compared to corporate employees.
Employees in countries with legal restrictions or barriers on work participation for women or underrepresented groups (e.g., visa restrictions), which can negatively impact gender equality or diversity.

We have also identified risks and opportunities that relate to specific groups of people rather than the entire workforce:

SBM-3 – Material impacts on employee groups
Sub-topic	Corporate/Retail/DC	Non-employees
Secure employment	Job security has a greater positive material impact on corporate employees but is less significant for DC and Retail workers due to the seasonality of workforce demand.	Demand volatility contributes to circumstances where non-employees may face more unpredictable employment conditions or are subject to short- or fixed-term contracting compared to employees.
Working time	Working time has a more positive impact on corporate employees, who have more flexible working options, whereas Retail and DC employees work on-site. Time tracking is simpler in Retail and DCs as these utilize system check-ins and check-outs, while corporate time tracking is trust-based and conducted online.	The positive impact is lower for non-employees as they are subject to working time tracking and benefits from their direct employer.
Work-life-balance	The actual positive impact on employees, particularly corporate workers who do not work in shifts, stems from the availability of flexible working hours and hybrid work options.	The positive impact is lower for non-employees as they are subject to working time tracking and benefits from their direct employer.
Adequate wages	This topic is less relevant for corporate employees but has a positive impact. Where the positive impact is not yet that strong is for retail and DC staff, whose salaries are comparatively lower than those offered in corporate roles.	Potentially different impact as non-employees are subject to conditions offered from their direct employer.
Freedom of association	No differentiation due to common framework.	Less material impact as non-employees are subject to rights from their direct employer.
Collective bargaining	No differentiation due to common framework.	Less material impact as non-employees are subject to rights from their direct employer.
Health and safety	Health and safety is a greater risk for DC and Retail employees due to the physical nature of their jobs, which exposes them to potential accidents or hazardous materials.	Non-employees benefit from the same on-site health and safety measures as employees.
Gender equality and equal pay	No differentiation within types of employees due to common salary frameworks applicable to these types of employees.	Potentially different impact as non-employees are subject to conditions offered from their direct employer.
Training and skills development	This opportunity is more pronounced for corporate employees, as they have better access to digital infrastructure, online training programs, and in-person training sessions conducted within the office environment.	Potentially different impact as non-employees are subject to offers for training and skills development from their direct employer.
Employment and inclusion of persons with disabilities	Greater risk for DC and Retail employees due to the physical nature of their jobs and the physical limitations of retail stores and DC warehouses, which make the inclusion of disabled persons more complex.	Greater risk for non-employees in DC and Retail environments due to the physical nature of their jobs and the limitations of the environment.
Measures against violence and harassment	Retail employees face a greater risk due to direct consumer contact, which can impact workplace security. In contrast, corporate and DC employees experience no increased risk, as access to their workplaces is restricted or closed.	Non-employees benefit from the same on-site health and safety measures as employees.
Diversity	Diversity in DC and Retail workers is represented by local ethnicities and diversity demographics, as hiring practices primarily focus on the local and seasonal workforce, and international mobility packages are less common. All DC, Retail and corporate employees benefit from a more positive impact regarding diversity.	Similar to employees.

SBM-3 – Material risks and opportunities arising from impacts relating to specific groups of people
Risks and opportunities of material subtopic	Corporate/Retail/DC	Underrepresented groups	Employees in crisis/conflict areas
Health and safety	Health and safety is a greater concern for DC and Retail employees due to the physical nature of their jobs and higher exposure to potentially hazardous situations and materials.	n.a.	Potential health and life threats (not work-related) in active military conflict areas and in crisis areas due to natural or environmental disasters.
Training and skills development	More opportunities for corporate employees due to the nature of their work, better access to digital infrastructure and online training programs, and in-person training conducted within the office environment.	Opportunities: Global training for creating a diverse and inclusive environment as well as having Employee Resource Groups (ERGs) that provide insights creates more attractive working conditions for underrepresented groups. Risks: n.a.	Fewer opportunities to conduct on-site training.
Diversity	Higher risk for DC and Retail employees due to hiring practices that rely more on local workforces.	Risk: Lack of non-exclusionary and non-discriminatory practices can negatively impact the careers and personal health of employees. Opportunity: DEI measures provide an inclusive environment and fair opportunities for all individuals, helping employees feel a sense of belonging and engagement.	n.a.

Annual Report 2024

Topics Filter

Results

ESRS 2 General Disclosures

SBM-3 – Material impacts, risks, and opportunities and their interaction with strategy and business model

Types of employees affected by workforce-related material impacts