EU Taxonomy

Reporting scope for fiscal year 2024

In 2020, the EU introduced the EU Taxonomy Framework (‘Taxonomy’), a classification system to determine the environmental sustainability of economic activities, which has been amended and partially revised in subsequent years. In accordance with the Taxonomy, we are obligated to disclose the share of our Taxonomy-eligible and Taxonomy-aligned turnover (net sales), capital expenditure (‘CapEx’) and operating expenses (‘OpEx’) for the following six environmental objectives:

1. Climate change mitigation
2. Climate change adaptation
3. Sustainable use and protection of water and marine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protection and restoration of biodiversity and ecosystems.

Determination of Taxonomy-eligible activities

Due to the adidas core business activities, i.e., the manufacturing of textiles and footwear as well as the wholesale and retail sale thereof, remaining out of the scope of the Taxonomy, we have no turnover-generating Taxonomy-eligible activities to report on for 2024. Unchanged to prior years, Taxonomy-eligible activities at adidas were identified only in connection with the environmental objective of climate change mitigation (‘CCM’). These activities are related to our climate strategy actions and form part of our own operations decarbonization lever SEE ESRS E1:

• CCM 6.5 Transport by motorbikes, passenger cars, and light commercial vehicles (including company car leases)
• CCM 7.3 Installation, maintenance, and repair of energy-efficient equipment (e.g., LED lighting in retail stores)
• CCM 7.7 Acquisition and ownership of buildings (including building leases)

In addition, we are required to provide specific information on economic activities related to fossil gas and nuclear energy. In 2024, as in previous years, we did not carry out any significant activities in this area.

Assessment of Taxonomy alignment of Taxonomy-eligible activities

Since the identified Taxonomy-eligible activities all relate to the purchase of output from potentially Taxonomy-aligned activities, the Taxonomy alignment assessment needs to be performed at the output, i.e., production level and is dependent on acquiring the relevant information from the respective third-party suppliers. Due to the expected time and resource investment necessary for assessing all individual projects and items contributing to the eligible activities, we prioritized the assessment of those individual activities that were most material in terms of value and/or were more likely to be Taxonomy-aligned due to the availability of the necessary information.

CCM 6.5: Eligible activities relate to the leasing of the adidas company car fleet. As per the applicable technical screening criteria, a vehicle that emits a maximum of 50g of CO₂e/km is considered to make a substantial contribution to climate change mitigation. For adidas, this applies to all leased electric vehicles and most plug-in hybrid vehicles.

Compliance with the ‘Do-no-significant-harm’ (‘DNSH’) criteria requires the performance of a robust climate risk and vulnerability assessment at the level of the car manufacturers, adherence of the vehicles to certain recyclability and reusability criteria, and adherence to various product-related EU regulations and directives concerning the limits for certain gaseous emissions and the external rolling noise and resistance characteristics of the vehicle tires. Based on the information collected from our suppliers to perform a complete and conclusive DNSH assessment, some of the leased electric cars can be categorized as Taxonomy-aligned.

CCM 7.3: Eligible activities in 2024 predominantly relate to the installation of energy efficiency equipment, such as LED lighting and heating, ventilation and air conditioning (HVAC) units, across our retail store properties and corporate office locations. The assessment of Taxonomy alignment of the multiple individual projects against the respective criteria was conducted in a structured manner, to the extent possible with reasonable effort. While the eligible activities fulfill the substantial contribution criterion, none of them are Taxonomy-aligned because of the non-compliance with the DNSH assessment.

CCM 7.7: Eligible activities include the leasing of warehouses/distribution centers, own retail stores, and corporate offices. The applicable substantial contribution and DNSH criteria are in connection with the primary energy demand of the analyzed building and the performance of a robust climate risk and vulnerability assessment for the building location, respectively. The substantial contribution criterion evidence that is most relevant for adidas in this regard is the existence of an Energy Performance Certificate (EPC) class A. Many of the eligible building leases are located outside of the EU, where this EU-centric certification is not common practice and other standards and frameworks, which are not mentioned in the Regulation, are typically used (e.g., LEED certification). In line with the generally low share of available non-residential buildings meeting these energy performance standards across our markets, only a few eligible leases in 2024 fulfill this criterion. This is particularly the case for our eligible retail leases as many retail stores are mall-based, where adidas has only very limited influence on the building design and/or (re)development. In addition, certain eligible retail lease locations are heritage sites for which it is not possible to obtain EPC class A certification. The climate risk analysis was performed on a case-by-case basis using different information sources, such as input from landlords and/or our insurance provider. In addition, the insights related to our climate resilience analysis SEE ESRS E1 were taken into account to perform the DNSH assessment for several eligible buildings. For the majority of the assessed building leases not all information was available for a complete and conclusive assessment exactly as per the methodology and scope prescribed by the regulation. In summary, one high value lease contract in connection with the opening of a major warehouse in Northern Italy is Taxonomy-aligned and thus contributes to the mitigation of climate change. For the climate risks identified at this location, we have implemented risk mitigation measures where economically viable. The remaining residual risk is adequately covered financially by our insurance. In addition, we have a few eligible lease contracts in connection with retail and corporate sites that fulfill the substantial contribution criterion.

Minimum safeguards

The minimum safeguards form part of the Taxonomy alignment criteria. Their purpose is to clarify that eligible economic activities can only be environmentally sustainable when performed in circumstances that are compliant with social norms and certain minimum governance standards. In this context, companies must implement appropriate processes and procedures to avoid negative influences on or violations of the following four specific topics: human rights (including labor rights), taxation, corruption/bribery, and fair competition.

adidas has taken a company-wide approach to meeting the minimum safeguards covering human rights, taxation, corruption/bribery and fair competition. Our subject matter experts in the areas of social and environmental affairs, tax, and legal determined the extent to which the mentioned governance standards and policy frameworks are already embedded in existing adidas policies (e.g., adidas Human Rights Policy) and standard operating procedures (e.g., adidas Fair Play Code of Conduct), as well as in its compliance management system.

As in 2023, our assessment for the fiscal year 2024 confirmed that Taxonomy-eligible activities were performed in a manner that is fully compliant with minimum safeguards. We maintain rigorous internal policies and oversight mechanisms to ensure ongoing compliance with these standards.

More information on our compliance with the respective criteria is included in this Annual Report:

Human rights and labor rights SEE SOCIAL IMPACTS (ESRS S1-S4)

Taxation SEE RISK AND OPPORTUNITY REPORT

Corruption/bribery SEE RISK AND OPPORTUNITY REPORT

Fair competition SEE RISK AND OPPORTUNITY REPORT

Determination and reporting of Taxonomy KPIs

Turnover KPI: Turnover as per the Taxonomy (denominator of the turnover KPI) is equivalent to our net sales disclosed in the consolidated financial statements in this report. In 2024, the turnover amounts to € 23,683 million (2023: € 21,427 million). The identified eligible activities at adidas were not turnover generating, resulting in a numerator value of ’0’ and, accordingly, a turnover KPI of 0% eligible and 100% non-eligible turnover.  SEE INCOME STATEMENT

CapEx KPI: In comparison to the disclosed CapEx value of € 540 million in this report, the Taxonomy definition of CapEx results in a total value of € 1,767 million (denominator of the CapEx KPI) at adidas (2023: € 838 million). The denominator contains, in accordance with the definition of the Taxonomy and as disclosed in this report, additions to buildings, technical equipment and machinery, other equipment, furniture and fixtures, right-of-use assets, and other intangible assets, before depreciation, amortization, and remeasurements. To calculate the numerator of the CapEx KPI, we analyzed the additions in relation to the identified eligible activities as described above. In this process, we conducted several control measures, such as plausibility checks and reconciliations, to avoid double-counting of additions. In total, the corresponding numerator of the eligible CapEx KPI amounts to € 1,243 million (2023: € 344 million), resulting in a CapEx KPI of 70% eligible and 30% non-eligible CapEx. Most of the eligible CapEx in 2024 (96%) relate to building leases (section 7.7), which amount to € 1,192 million, € 26 million eligible CapEx relate to the installation of energy efficiency equipment (section 7.3), and the remaining € 25 million eligible CapEx relate to car leases (section 6.5). While a total of € 618 million of eligible CapEx complies with the substantial contribution criteria, € 579 million of eligible CapEx are Taxonomy-aligned. In summary, the corresponding numerator of the aligned CapEx KPI amounts to € 579 million, resulting in a CapEx KPI of 33% aligned and 37% non-aligned CapEx (2023: 1% aligned and 40% non-aligned CapEx). SEE STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS

OpEx KPI: The Taxonomy definition of ‘OpEx’ refers to expenditure for research and development, short-term leases, maintenance and repair, as well as certain other expenditure. In 2024, this amounts to € 954 million (denominator of the OpEx KPI) at adidas (2023: € 969 million), which compares to € 23,683 million of net sales and € 10,945 million of OpEx as per the consolidated financial statements for adidas disclosed in this report. In the context of our business model, which is the design, development, production, and marketing of a broad range of performance and sports lifestyle products, we consider the Taxonomy OpEx KPI denominator value to be insignificant. Consequently, and in line with the provisions of the regulation, we report the numerator value of our Taxonomy-eligible OpEx KPI as € 0 (2023: € 0). No further information on the alignment of eligible OpEx can be provided in this Annual Report, accordingly.

Further information on the Taxonomy KPIs according to Annex II of the Delegated Regulation can be found in this Annual Report. SEE EU TAXONOMY TABLES

We consider the EU Taxonomy to be a potentially valuable instrument that might help us validate and adjust our sustainability ambitions over time, assuming our core business activities become eligible to contribute to the Taxonomy’s environmental objectives and a common interpretation of all aspects relevant to adidas is established. At the time of the publication of this report, it remains unclear if this will happen in the foreseeable future.