Impact, Risk and Opportunity Management

E3-1 – Policies related to water and marine resources

adidas Environmental Guidelines

Our adidas Environmental Guidelines set specific and measurable targets for suppliers with water-intensive processes in their facilities (mostly Tier 2 suppliers), while Tier 1 suppliers adopt a self-governance approach and are encouraged to continuously improve their water efficiency and reduce their consumption. We communicate the objectives and related targets of the adidas Environmental Guidelines to all affected suppliers, including the specific requirements outlined in the ‘Water Conservation and Access to Water’ section. At a minimum, we expect suppliers to comply with the following:

• Any abstraction of water from surface or groundwater must comply with local regulations and be authorized by the relevant authorities.

• Illegal water intake is prohibited.

• Suppliers are expected to ensure responsible water extraction and consumption. They are strongly encouraged to implement water recycling and reuse practices to minimize overall water intake.

Water Management Policy

Our Water Management Policy, aligned with our adidas Environmental Guidelines, aims to address water withdrawal and discharges by promoting the continuous reduction of water consumption in our upstream value chain, where water use hotspots in manufacturing processes can be found. The policy applies to 80% of Tier 1 and Tier 2 suppliers, based on sourcing value.¹ This also includes suppliers that may be located in water-risk areas according to adidas’ water risk assessment. Based on scientific frameworks such as SBTN, this policy also supports various conservation measures, including water-saving and recycling practices as well as improvements to sanitary conditions in factory environments. In addition, our policy also emphasizes responsible wastewater management to mitigate water quality risks related to the activities conducted by the above-mentioned suppliers.

These suppliers are required to comply with our policies, which mandate responsible water use, including managing withdrawals and discharges. Suppliers are encouraged to continuously improve water efficiency and discharge quality to reduce their impact on ecosystems. Compliance and performance related to these policies and targets are verified annually through independent third-party audits.

Policies, actions, and targets related to water quality – specifically those addressing water pollution, wastewater management, and microfibers in our supply chain – are detailed in all the sections of chapter E2. For further information, please refer to: See ESRS E2 – POLLUTION

E3-2 – Actions and resources related to water and marine resources

Our actions regarding the material topics are related to our upstream supply chain. They adhere to our Water Management Policy and adidas Environmental Guidelines and are designed to holistically address the material water topics in our upstream supply chain. These actions are designed to help us monitor water consumption and withdrawal, improve water discharge, and drive water efficiency and sustainable water management in our upstream value chain. They collectively contribute to the implementation of the policies and the achievement of the water intensity reduction target at the supply chain level. Our actions tackle all the material impacts, risks and opportunities identified in section SBM-3 – Materials impacts, risks and opportunities and their interaction with strategy and business model.

These actions are mainly executed and monitored by our Sourcing Sustainability team, which operates within our key sourcing countries. The team provides capacity building training and technical advice to individual suppliers (Tier 1 and Tier 2) on areas for improvement, focusing on resource efficiency and responsible management practices. Stakeholder collaboration and engagement is driven by the Sustainability and ESG team in alignment with the Sourcing Sustainability team.

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

• Setting upstream supply chain targets: To reduce water withdrawal from natural sources, adidas recognizes the importance of responsible water management and clear reduction targets. Building on the progress achieved over the past five years, we are committed to further advancing water reuse and recycling within our production processes. In 2025, we established a new five-year target of achieving 40% water recycling among our Tier 1 and Tier 2 suppliers. We believe that setting such targets not only supports sustainable business growth but also contributes to the long-term mitigation of water stress in the regions where our suppliers operate.

• Continuous technical support, monitoring, and reporting: For over a decade, adidas has conducted monthly monitoring of water consumption and water flow at key production sites. Regional teams systematically track and report water usage and discharge through sub-metering. This enables the early detection of leaks, abnormal usage, and areas for improvement. Any anomalies trigger immediate corrective action, with suppliers responsible for resolution and regional teams providing follow-up and remediation support as needed. We also offer technical guidance to suppliers, promoting best practices, such as recycling cooling water and installing reverse osmosis systems for effluent treatment. To further enhance water efficiency and support our water and pollution targets, our adidas Environmental Guidelines outline key actions for water recycling and recovery at supplier facilities. These include storm and rainwater harvesting, zero discharge design, recycling of wastewater in production and cooling towers, use of local recirculation systems, reusing and recycling cooling tower blowdown, and minimizing condenser or cooling tower blowdown to prevent dissolved solids buildup. We also engage third-party experts to conduct on-site visits and provide technical support to suppliers in implementing these measures.

• Third-party verification: All of the above-listed actions and reported data from our Tier 1 and Tier 2 suppliers are verified by third-party experts, who also provide advice on further water-saving practices, ensuring compliance with our standards and guidelines on an annual basis. We conduct yearly review cycles to evaluate our water management program on Tier 2 level. The review of water management areas revealed no major concerns. Advancements in water intensity savings are highlighted in the E3-3 target section.

• Stakeholder engagement and collaboration: In 2025, adidas deepened its engagement within the sustainability community – both with industry peers and partners across its supply chain – to advance responsible water and pollution management. We organized awareness initiatives, such as webinars and supplier summits, to share best practices and industry expertise. Ongoing collaboration with organizations such as the Leather Working Group (LWG) and the Better Cotton Initiative (BCI) helped shape environmental standards for raw materials, with a focus on water management at tanneries and farms, soil health, and the responsible use of pesticides. To put these commitments into practice, adidas prioritized sourcing preferred materials during the product design phase, including LWG-certified leather and third-party-certified cotton. This approach ensures robust water resource planning and addresses our water IROs through recognized certification schemes.

• Internal learning and innovation for water management: In 2025, adidas organized learning sessions with different stakeholders in our supply chain, including one Tier 4 supplier, to address cross-industry challenges related to water withdrawal and consumption in textile and agriculture sectors. These sessions focused on exploring innovative solutions, such as advanced recycling systems and digital monitoring technologies, aimed at reducing water impact across the supply chain. By engaging both external stakeholders and employees, this initiative reinforced the importance of effective water management and fostered greater awareness and action across all levels of the organization.

• Water risk assessment across the supply chain: In 2025, we carried out a water risk mapping, which included areas of high-water stress, for our Tier 1 and Tier 2 suppliers as well as for our owned and managed facilities. The assessment was performed with the WRI Aqueduct 4.0 tool. The aim was to understand the water risks associated with the activities of our local suppliers in their operating areas. This helped us make informed decisions to safeguard our long-term business. Regarding our suppliers, we plan to incorporate these insights into our communication channels to develop mitigation and adaptation plans that address the identified water risks.

• Laying the foundation for science-based targets for nature: In 2025, we successfully completed steps one and two of the Science Based Targets Network (SBTN) framework, marking a significant milestone in our commitment to taking action. Step one involved conducting a robust materiality assessment to identify our most relevant impacts and dependencies on nature to confirm that our efforts are focused where they matter most in relation to our activities and materials in our supply chain. Step two enabled us to gain a deep understanding of our footprint across key environmental domains – freshwater, land, biodiversity, and climate – laying the foundation for setting science-based targets for nature. These steps not only enhanced our strategic alignment with adidas’ decarbonization and deforestation-free goals but also strengthened our data capabilities and cross-functional collaboration. Moreover, we are convinced that these steps will assist us in driving meaningful change in the next phases, especially in activities related to freshwater in our supply chain. The results related to freshwater will be used as the basis for the next phase of target-setting for our supply chain and for our own operations.

Our actions regarding water quality, including pollution related to wastewater, as well as information concerning wastewater recycling for our supply chain, are disclosed in E2-2 – Actions and resources related to pollution. Actions related to the reduction of plastic use in our products are disclosed in E5-2 – Actions and resources related to resource use and circular economy. See ESRS E2-2 – actions and resources related to POLLUTION See ESRS E5-2 – actions and resources related to RESOURCE USE AND CIRCULAR ECONOMY

1 Unless described otherwise, this scope always applies in E3-1, E3-2, and E3-3 when referring to Tier 1 and Tier 2 suppliers.