Metrics and Targets

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

Targets and program ambitions

As part of a five-year program cycle, adidas has set program ambitions, achieved by 2025, that collectively address several material impacts, risks, and opportunities (IROs) for workers in our value chain. They aimed to mitigate and, where possible, eliminate risks such as unfair wages, excessive working hours, and health and safety gaps, while advancing positive outcomes like gender equality and equal pay for equal work. Our program ambitions combine social impact KPIs that cover multiple issues with focused goals on positive impact areas such as fair compensation and gender equality. Integrated into our due diligence and supplier programs, these targets have driven measurable progress in protecting and empowering workers, strengthening resilience, and ensuring continuous improvement across the supply chain.

Human Rights and Environmental Due Diligence (HREDD)

Our 2025 target was to achieve full coverage of human rights due diligence systems across our operations and upstream value chain, ensuring there are processes in place to manage high-risk human rights issues. Our HREDD process covers all identified material human rights issues, and the HREDD risk assessment and identification process helps us to prioritize action on those material topics.

We have met our stated 2025 ambition. We embedded a comprehensive HREDD framework and supporting internal risk‑management procedures across relevant business functions, in alignment with our stated target. Aligned with the German Supply Chain Due Diligence Act, the system covers our entire upstream value chain and adidas operations, and is supplemented by targeted coverage of prioritized high‑risk Non‑Trade Procurement (NTP) and selected downstream relationships (e.g., transportation and logistics). Identified high‑risk issues, and the measures to address them, are formally reported annually to the Chief Human Rights Officer (CHRO) and the Executive Board.

Social impact (S-KPI)

The S-KPI helps track material impacts on workers – including: health, safety, wages, gender equality, and working hours – and supports continuous improvement while ensuring compliance with the Workplace Standards. The S-KPI is adidas specific and has 15 units of measures (‘UOM’). These include compliance with threshold and zero-tolerance issues, completion of remediation plans, accident and absenteeism rates, as well as a range of 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. The S-KPI is based on supplier-provided data and, where applicable, validated during social compliance audits (conducted by internal monitors and in some cases by third-party verifiers).

Our 2025 target was to have 90% of our core 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%.

In 2025, 80% of our Tier 1 suppliers achieved a rating of 4S or better (2024: 82%), and 96% reached 3S or better (2024: 95%). While these results fell short of our goals, they reflect robust performance across most of our suppliers. Despite extensive support through advisory sessions and training, some suppliers did not meet expected milestones. Our analysis indicates this is caused by two main factors: (i) delays in completing remediation of threshold issues identified during audits and (ii) limited capability within the suppliers’ compliance teams, particularly among newly onboarded suppliers and those facing high staff turnover.

At the same time, the performance by leading suppliers demonstrates the positive impact of our S-KPI framework. Four out of five Tier 1 suppliers achieved higher levels of social compliance standards, delivering tangible improvements in worker safety and well-being. As we conclude the five-year S-KPI cycle, these achievements reinforce our commitment to driving continuous improvement across the supply chain.

Fair compensation

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

To support our ambition, we track wage progress using the Fair Labor Association’s (FLA) Fair Compensation Wage Data Collection Methodology and Tool. The data collection exercises allow us to compare wages of our in-scope suppliers against the available country wage benchmarks, such as the applicable minimum wage and living wage benchmarks. Wage benchmarks vary by country based on their availability; minimum wage benchmarks are available for all countries, whereas our selected living wage benchmark, the Global Living Wage Coalition (GLWC)/Anker Research Institute (ARI) living wage benchmarks are only available in some of the in-scope countries based on where ARI has completed living wage studies.

To execute our 2025 Fair Compensation strategy, we collected data in three key stages: in 2020 (baseline year); 2023 (mid-point year); and 2025 (final). To fully evaluate progressive improvement in compensation, we require full-year data on working hours and wages. As a result, full-year 2025 data will be analyzed in early 2026. This is in line with previous data collection exercises. More details and information on our 2020 and 2023 wage data collection exercises, including available country wage benchmarks and results, are available on our corporate website.

This final data collection will allow us to compare results across all three years of the program, evaluate how factory wages measure up against benchmarks across our strategic timeline, and evaluate progress and positive outcomes for workers. Our 2025 wage data collection results will be included in the Annual Report 2026 and on the Fair Compensation page on our corporate website.

Gender equality and equal pay for equal work

Our ambition, set in 2020, is that every core Tier 1 supplier will have secured gender wage parity for workers by 2025. Since the setting of the target, due to technical challenges and data privacy restrictions in obtaining comprehensive gender-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.

In 2025, we delivered the outcomes of a joint collaborative initiative to develop a gender pay parity e-learning program to enhance sensitivity and understanding of the gender pay gap, in particular equal pay for equal work. Our goal is to have 100% of our core Tier 1 suppliers subscribed to the FLA e-Learning Portal complete this e-learning program. In 2025, 70% of our core Tier 1 suppliers enrolled in the e-learning and 100% completed the course. A second phase of the e-learning will be completed in 2026 to ensure 100% of core Tier 1 suppliers complete the course.

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 workers were not directly involved in setting our 2025 program ambitions, their feedback – collected through grievance mechanisms and surveys – helps us track progress and evaluate program effectiveness.