Metrics and Targets

S2-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities

Targets

adidas has set specific targets to be achieved in 2025, which aim to reduce negative material impacts and risks as well as advance positive impacts and opportunities for workers in our value chain.

Social impact (S-KPI)

The social impact (S-KPI) rating helps us track material impacts on workers in the supply chain including health and safety, wages, gender equality, and working hours. Thus, we have set a S-KPI target for our strategic suppliers to foster the continuous improvement of their working conditions and to both reduce material negative impacts such as non-compliances related to health and safety and working hours, while also advancing positive impacts including achieving gender equality and fair compensation.

Our target for 2025 is to have 90% of our strategic Tier 1 suppliers reach a minimum rating of 4S and 100% of these suppliers reach a minimum rating of 3S (on a scale of 1S to 5S, with 5S being the highest rating). The thresholds are set as follows: 1S: 0-29%, 2S: 30-59%, 3S: 60-79%, 4S: 80-89%, 5S: 90-100%. The baseline year for comparison is 2022, when the S-KPI tool was launched. The social key performance indicator (S-KPI) rating tool measures the accident rates, retention levels, or worker satisfaction and empowerment. It is described in detail in S2-4.

Performance against its disclosed targets:

In 2024, almost 82% of our 99 key manufacturing facilities achieved a rating of 4S or better, which is a slight reduction compared to 2023 (84%).

Fair compensation

We are committed to progressive improvement in compensation across our strategic Tier 1 suppliers in 2025. This ambition is intended to advance positive impacts and opportunities for workers in our supply chain by providing a decent standard of living that is considered acceptable by society at its current level of economic development.

We are actively monitoring fair wage benchmarks and our suppliers’ performance against these. To do this, we are using 2020 as a baseline, which is the initial benchmark year based on factory self-reported wage data in Cambodia, China, Indonesia, Thailand, Pakistan, and Vietnam. This benchmark also allows us to track if workers are unionized and/or have collective bargaining agreements (CBA) in place.

In 2024, we continued our multi-year wage data collection across our strategic suppliers. Data is being collected from suppliers from three different time periods: our 2020 benchmark year, our 2023 mid-term year, and our 2025 final year. In line with the benchmarking completed for 2020, 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. In countries with multiple minimum wage groups, we did not use the FLA Country Average as it is only available at the country level, and not by minimum wage region/requirement group.
• The Global Living Wage Coalition/Anker Research Institute Living Wage Estimate or Reference Value¹ (GLWC-ARI Estimate), where available, as our living wage benchmark.

Overall, we verified that in all countries, the surveyed factories meet their required minimum wage, and in most instances, surpass their GLWC-ARI Living Wage Estimate or Reference Value, with the exception of Thailand and Region 3 in Vietnam.² All amounts below, except for the minimum wage benchmarks, are in their net format (excluding legal deductions).

Results of our 2023 wage data collection³ are as follows:

Cambodia (eight factories; 39,152 workers): 

• In our major sourcing country for apparel, wages paid by adidas suppliers surpassed the legal minimum wage by 51% (2020: 56%).
• Factory net wages surpassed the FLA Country Average by 32% (2020: 33%).
• Factory net wages surpassed the GLWC-Anker Living Wage Reference Value by 34%. We did not have a GLWC-Anker Living Wage Reference Value in 2020.
• Other factory characteristics:
  • 88% of the factories in the measured data set are unionized, and 13% have a collective bargaining agreement (CBA) in place.
  • 100% of eligible workers in the factories within our sample set are covered by social insurance.
  • 100% of workers are paid digitally.

China (13 factories; 31,755 workers):

• Factories within our data collection scope sit within nine different minimum wage groups. Due to one factory deactivation, this is one minimum wage group less than in 2020.
• 2023 minimum wage requirements in China ranged widely, between 1.550 CNY and 2.280 CNY.
• Across all minimum wage groups, our 2023 data collection shows that net wages surpassed their applicable minimum wage requirement by 16% to 178% (2020:13% and 159% respectively); which helped support higher basic wages.
• There was one applicable region with an available GLWC-Anker Living Wage Estimate (in 2020, there were two regions). In this region, factory net wages surpassed the GLWC-Anker benchmark by 57%.
• Other factory characteristics:
  • All factories are unionized with State-backed unions and have a CBA in place.
  • 100% of eligible workers in the factories within our sample are covered by social insurance.
  • 100% of workers are paid digitally.

Indonesia (nine factories; 96,698 workers):

• Factories within our data collection scope are located within nine different minimum wage groups in Indonesia, with vast differences in their requirements.
• For 2023, our factories’ minimum wage requirements ranged from 2,018,836.92 IDR to 4,584,519.08 IDR based on their location.
• Due to changes in our supply chain, we had two fewer minimum wage groups in 2023 than 2020. These two minimum wage groups represented high wage locations, which reduced our country average results.
• Across all minimum wage groups, our 2023 data collection shows that factory net wages surpassed their applicable minimum wage requirement by between 8% and 40% (2020: 9% and 66%, respectively).
• Other factory characteristics:
  • 89% of factories are unionized and have a CBA in place.
  • 100% of eligible workers in the factories within our sample are covered by social insurance.
  • 100% of workers within our sample are paid digitally.

 Pakistan (two factories; 7,590 workers):

• The 2023 data collection shows that wages paid by adidas suppliers surpassed the legal minimum wage by 33%⁴ (2020: 42%).
• Pakistan experienced double digit inflation that outpaced the government mandated minimum wage adjustments. We will prioritize our Fair Compensation work in Pakistan over the coming years to better understand the economic factors influencing wage outcomes, as part of our ongoing wage assessments.
• Other factory characteristics:
  • None of the factories within our sample are unionized.
  • 100% of eligible workers are covered by social insurance.
  • 100% of workers are paid digitally.

 Thailand (four factories; 5,740 workers):

• Factories within our data collection scope sit within three different minimum wage requirement groups in Thailand.
• Minimum wage requirements ranged from 332 THB/day –353 THB/day.
• Across all minimum wage groups, our 2023 data collection shows that factory net wages surpassed their applicable minimum wage requirement by 37% to 56% (2020: 36% to 44%).
• Factory net wages fell short of the GLWC-Anker Reference Value by 4%. We did not have this reference value in 2020. Due to the current GLWC-Anker Reference Value gap, we will also prioritize our data collection and analysis in Thailand, as part of our ongoing wage assessments.
• Other factory characteristics:
  • None of the factories within our sample are unionized.
  • 100% of eligible workers are covered by social insurance.
  • 100% of workers are paid digitally.

Vietnam (15 factories; 104,466 workers):

• Factories within our data collection scope sit within three different minimum wage regions with significant differences; minimum wage requirements varied between 3,640,000 VND and 4,680,000 VND.
• Across all minimum wage groups, our 2023 data collection shows that factories’ net wages surpassed their applicable minimum wage requirement by between 73% and 84% (2020: 72% and 78%).
• For 2023, two of three regions surpassed their individual GLWC-ARI Living Wage estimates:
  • Region 1 surpassed its GLWC-ARI estimate by 13% (2020:18%).
  • Region 2 surpassed its GLWC-ARI estimate by 8%. There was no GLWC-ARI estimate for this region in 2020.
  • Region 3 factory net wages fell below their Anker living wage estimate by 7%. There was no GLWC-ARI for this region in 2020.
• Other factory characteristics:
  • All factories within the sample have State-backed unions and have a CBA in place.
  • 100% of eligible workers are covered by social insurance.
  • 100% of workers are paid digitally.

Performance against its disclosed targets:

Based on data collected in 2024, at a country level, wages paid by all of the suppliers in scope for this exercise (representing around 73% of all strategic Tier 1 suppliers) continue to meet and exceed minimum wage requirements. Apart from Thailand and Region 3 in Vietnam, wages paid by suppliers meet and exceed the Anker Research Institute living wage benchmarks, in the 4 countries where these are available. However, factory wages did not grow at the same rate as some of the benchmarks, due to a range of external economic factors including the rate of inflation. In Pakistan, inflation outpaced the rate of wage growth, increasing the cost-of-living pressures on workers.

Gender equality and equal pay for equal work

Aligned with core labor standards, which call for equal pay for equal work, we adopted the target that every strategic supplier will have secured gender wage parity for workers in 2025 and advance positive impacts and opportunities for workers in our supply chain.

Since the setting of the target, due to technical challenges and data privacy restrictions in obtaining comprehensive sex-disaggregated wage data from our supplier factories, we have focused our actions in support of this target on capacity building and supporting suppliers’ understanding and ability to improve wage management systems that ensure equal pay for equal work.

This target will be achieved by implementing capacity building initiatives to build suppliers’ understanding of gender pay parity.

We based this target on the fundamental assumption that complete and comprehensive sex-disaggregated wage data would be available for data collection. However, as described above, due to the complexities of this data collection exercise and concerns over data privacy, this assumption was incorrect, and the target outcomes were adjusted to focus on capacity building rather than data collection.

Performance against its disclosed targets:

In 2024, we began a joint, collaborative initiative to develop a gender pay parity e-learning program to enhance sensitivity and knowledge on gender pay parity. The e-learning program is intended to be launched in Q2 2025. Our goal is to have 100% of our key suppliers complete this e-learning program by Q4 2025. This program is focused on raising our suppliers’ awareness and understanding of the gender pay gap, in particular equal pay for equal work.

Human Rights and Environmental Due Diligence (HREDD)

To ensure that human rights risks can be reduced and mitigated throughout our value chain and therefore reduce negative material impacts, we have set the following target regarding human rights due diligence, as part of our broader risk management processes:

By end of 2025, 100% of the upstream value chain and our operations have a system in place to identify and manage high-risk human rights issues.

In setting our HREDD target, which was developed prior to the introduction of the German Supply Chain Due Diligence Act, we have conducted a gap analysis and adopted a risk-based approach which targets high-risk locations, processes and activities requiring the closest attention and where we are able to apply influence and leverage to mitigate or remediate issues. This risk-based approach follows the principles outlined in the UNGPs (United Nations Guiding Principles) and OECD MNE (Multinational Enterprises) Guidelines and as an assessment process includes sources of information, such as the review of publicly available databases provided by governments, as well as regular engagement with civil society organizations, unions, employer federations, and with workers directly.

Performance against its disclosed targets:

In 2024 we continued to embed our HREDD system across the business to identify and manage high-risk human rights issues. This included the further maturing of internal risk management procedures in the procurement area as it relates to suppliers of non-trade goods and services to adidas. This has included expanding the use of the EcoVadis sustainability assessments tool to evaluate the sustainability management systems of non-trade suppliers – both upstream and downstream – and, where required, engage prioritized partners on performance improvement plans.

Engagement of value chain workers in setting targets

We aim to address the topics that are most salient to our business and our stakeholders. To identify these topics, set targets accordingly, and increase transparency and disclosure, we openly engage with our stakeholders and consider their views and opinions when making decisions that shape our day-to-day operations.

While we have not directly engaged with workers in our supply chain in setting the current 2025 publicly stated targets, we incorporate worker feedback in tracking our performance against our targets and in reviewing the effectiveness of our program and our efforts to reduce negative impacts on workers.

We track our performance against each of our publicly stated targets and transparently report on our progress annually. In evaluating the social impact performance (S-KPI) of our suppliers and progress toward this target, we engage supply chain workers by incorporating 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 into the S-KPI rating.

Upstream value chain workers are engaged in identifying lessons and improvements by evaluating their direct input received through the WOVO platform. 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 Human Resources teams resolve cases and communicate their findings. By reviewing this data, we can identify areas of improvement in our social compliance program, gaps in supplier programs or processes, and other parts of our human rights due diligence system.

1 For more on the ARI Living Wage estimates and reference values please see: Our Work — Anker Research Institute

2 For our wage assessments exercise we use the FLA Fair Compensation formula: (basic contracted wage + incentives + cash benefits + benefits in kind) – (taxes and legal deductions), it excludes overtime pay.

3 Wage data for 2023 was collected in 2024 and is self-reported by suppliers. For data collection, we took a representative sample of strategic factories within our Fair Compensation strategy scope. For 2023, the representative sample included approximately 73% of strategic supplier factories.

4 Pakistan had two applicable minimum wages in 2023 – for our comparison, we compared factory wages against an average of the two minimum wage requirements.