ESRS 2 General Disclosures
SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model
The results concerning material impacts, risks and opportunities for matters related to consumers and end-users from our double materiality analysis are as follows:
Sub-topic |
|
Material IRO |
|
Classification |
|
Time Horizon |
|
Value Chain |
|
Description |
|---|---|---|---|---|---|---|---|---|---|---|
Privacy |
|
Risk |
|
n.a. |
|
Short-term |
|
Down-stream |
|
Failure to implement and maintain effective privacy management, especially in times of strong digital growth, could result in the inability to effectively convert privacy principles into operational business processes and thereby the non-compliance with or violation of legal requirements (such as the EU’s General Data Protection Regulation – GDPR). This could result in administrative fines, individual legal claims, or other administrative action, such as business operations restrictions upon complaints, audits, or lawsuits. |
Health and safety |
|
Risk |
|
n.a. |
|
Short-term |
|
Down-stream |
|
We expect an increase in regulatory requirements, e.g., in the EU regarding usage of chemicals. These (regional) requirements can lead to an increasing risk of non-compliance. Claims of non-compliance with legal requirements, applicable voluntary or mandatory standards for product quality or product safety could lead to voluntary or mandatory product recalls, returned stock and lead to penalties, fines, personal injury claims or reputational damage. |
Responsible marketing practices |
|
Negative Impact |
|
Actual |
|
n.a. |
|
Down-stream |
|
At adidas, we are committed to fostering an inclusive and positive environment for all our consumers. As part of our dedication to responsible marketing practices, we recognize the profound impact that these practices can have on the mental and psychological well-being of our consumers – either through us or our marketing partners. This includes, e.g., any form of communication that unfairly targets or excludes certain groups based on race, gender, age, or other characteristics and that can have detrimental effects on the mental health and overall well-being of consumers. |
Responsible marketing practices |
|
Negative Impact |
|
Potential |
|
Short-term |
|
Down-stream |
|
Environmental claims in advertising should be accurate and not misleading. Consumers should have all relevant information about the product before making a purchase decision. If not, consumers could purchase a product that does not meet their expectations, which could negatively impact their trust in our brand and leave them financially dissatisfied. |
We do not expect any presented risks related to consumers and end-users to result in any additional major risks for the forecast for the 2025 fiscal year compared to the explanations given in the Risk and Opportunity Report.
Connection between the negative impacts and adidas’ strategy and business model
Responsible marketing practices: discriminative marketing
At adidas, our business model is centered around our consumers. We focus on understanding and addressing what matters most to them by creating the products they desire, offering the service they expect, and providing the experience they need. Our goal is to reach sports and fashion enthusiasts worldwide, ensuring inclusivity regardless of race, gender, age, or other characteristics. Our values, standards and business model inherently oppose discrimination, as we aim to deliver our products and services to all potential consumers, embracing diversity in all its forms. We are committed to spreading this message through our marketing practices, which are essential for building brand desirability and attracting consumers. Our marketing practices focus on inspirational and innovative concepts that drive consumer advocacy, build brand equity, and increase demand. By aligning our marketing efforts with our business model, we prioritize consumer engagement and loyalty while actively working to prevent any form of discriminative marketing.
Responsible marketing practices: environmental claims
Regarding environmental claims, we prioritize accuracy and transparency in our marketing messages to maintain consumer trust and align our business practices with our long-standing commitment to sustainability – which spans over two decades. Our commitment is rooted in our purpose, ‘Through sport, we have the power to change lives.’ In 2021, we further sharpened our focus on sustainability and defined a decarbonization roadmap for 2030 and beyond, aimed at creating and driving positive impact. We will continue to empower our employees to become sustainability ambassadors and invite our global consumers to engage and connect with us on sustainability initiatives.
Relationship between material risks and adidas’ strategy and business model
Privacy
The effective implementation and maintenance of privacy management are paramount. Failure to convert privacy principles into operational business processes can lead to data breaches and violations of legal requirements. Such incidents could result in administrative fines, individual legal claims, or other administrative actions, such as business operation restrictions following complaints, audits, or lawsuits.
Scope of consumers and/or end-users
Given the nature of our products and services, all of our consumers and end-users can be subject to the material impacts or risks outlined in this chapter. Consequently, we do not generally categorize or specify consumer types.
Regarding privacy, we require users to be of the age of consent (16 and older in the European Union (EU)/the European Economic Area (EEA)) to use our platforms and provide information. This approach is designed to minimize privacy risks for children. Generally, we address the following consumers regarding privacy issues:
- consumers aged 16 and older who use any of the adidas platforms (website, apps),
- consumers aged 16 and older who create a membership account/profile via any of the adidas platforms (website, apps),
- consumers who interact with our customer service agents via adidas platforms (website, apps), and
- consumers who provide information to our employees at retail stores.
At adidas, we recognize the importance of providing accurate and accessible product-related information to our consumers and end-users. Through labels, manuals, digital platforms, and customer support, we aim to ensure that our products can be used safely, preventing any potential damage or misuse.
Our product range, including apparel, footwear, and accessories and gear, is designed to be safe, not inherently harmful, and does not increase the risk of chronic disease. We conduct rigorous product testing to comply with safety standards, provide clear usage instructions, as well as maintain full transparency on the material mix of our products. This commitment is designed to ensure the safety and well-being of our consumers and end-users.
Additionally, we require all our business relationships and supply chain partners to adhere to high health and safety standards. As a result, no specific consumers or end-users with particular characteristics, or those using particular products or services, are at greater risk of harm.
As described above, there are no specific consumer or end-user groups that are more or less vulnerable in terms of health and safety or privacy concerns. For example, a potential data breach can affect any consumer. However, regarding brand partnership marketing, we recognize the importance of understanding how our brand partnership marketing activities may impact our diverse consumers and end-users, particularly those with specific characteristics or those using particular products or services. While it is challenging to foresee and manage every potential occurrence, we have implemented several measures to develop a comprehensive understanding. Our consumers and end-users include a diverse group of individuals. We acknowledge that brand partnership marketing can influence all these groups in various ways. Particularly vulnerable consumers and end-users are those who may be discriminated against for one or more of the following actual or perceived characteristics:
- race, color, ethnic or national origin,
- age,
- religion or belief,
- disability,
- sex, sexual orientation, pregnancy, or related medical conditions,
- gender identity, status, or expression,
- nationality, immigration status, citizenship, or ancestry,
- physical or mental ability, condition or characteristics, or
- any other basis prohibited under local law.
The list is not exhaustive and may be supplemented by local law.
The identified material negative impacts related to responsible marketing practices are isolated incidents rather than widespread or systemic issues. By ensuring that our marketing efforts are tailored and specific, we minimize the risk of broad negative impacts on our consumers.
Material topics |
|
Material negative impacts – systemic or widespread |
|---|---|---|
Responsible Marketing Practices: |
|
Individual – When it comes to our marketing through partnerships, e.g. with other brands, sports teams, athletes, creative partners, innovation partners, or events, any occurrence of our negative impact on consumers is neither systemic nor widespread due to the unique and specific nature of our partnerships. |
Responsible Marketing Practices: |
|
Individual – Similarly to the above, any negative impact on consumers resulting from misinformation on environmental claims is also individual, and neither systemic nor widespread due to the unique and specific advertisement of individual products. |
The material risks we identified and assessed are related to the topics of privacy as well as health and safety.