ESRS 2 General Disclosures

The apparel and footwear industry is heavily dependent on the use of resources, both renewable and non-renewable, which leads to adverse environmental impacts.

For adidas, the risk with regard to resource inflows could be related to:

• Potentially higher costs and/or unavailability of materials.
• Upcoming regulations like ESPR (Ecodesign for Sustainable Products Regulation), which may require the use of materials (i.e., high-recycled content) that could become scarce.

Currently, the lack of a circular economy ecosystem and infrastructure in the apparel and footwear industry means that most products have no circular end-of-life solution and end up as waste.

For adidas, the risks with regard to resource outflows could be related to:

• High uncertainty in the regulatory developments in different countries.
• Potentially inconsistent approaches to circular product definition and related infrastructure (e.g., sorting and recycling infrastructure), which could lead to operational challenges for a globally operating company such as adidas (e.g., when defining circular product design guidelines).
• Cost of establishing a circular infrastructure for apparel and footwear is to be partly paid for by brands (e.g., upcoming Extended Producer Responsibility (EPR) legislation in several countries).

For adidas, waste related risks could be related to:

• Potentially higher operational costs for our suppliers, as stricter waste management requirements are imposed on them (e.g., the need for improved processes for waste separation, handling, transportation, disposal, and/or treatment).