What is Adidas?
Multinational manufacturers and distributors of athletic apparel have a logistically tall order enforcing standards from manufacturing to retail. Yet it makes good business sense for such companies to stay ahead of the curve when it comes to environmental and fair labor standards. Bad publicity about child laborers or environmental pollution could have severe consequences for stock prices and sales. This study focuses on Adidas AG, a storied name in athletic accessories, having been founded early last century as a German athletic shoe company. Today it is a publicly traded multinational company still headquartered in Germany and uses the trademark Adidas Group. The company has vigorously maintained and protected its three stripe trademark on sports apparel and athletic footwear. It has also has attempted to impose a company-wide policy of corporate governance that includes sustainability and touts its inclusion in the Dow Jones Sustainability Index.
Adidas is a national company that sells athletic products including apparel, sports accessories and shoes. One of the largest athletic companies in the world, Adidas performance with sustainability has greatly increased in the past 16 years. Due to the adoption of sustainability principles by its competitors throughout the textile industry (Nike and Puma for example), Adidas adapted The Adidas Group which is an organization formed to delegate the tasks of every aspect of sustainability within the multi-million-dollar company. “The Adidas Group prides themselves on four basic pillars of sustainability, Product, People, Planet, and Partnership. Adidas’s four pillars . . . provide a conceptual framework that enables Adidas stakeholders — from its 50,000 employees on through to suppliers, customers and communities — to better and more easily understand, assess and realize the multinational footwear and sportswear company’s sustainability goals.” The Adidas Group Website contains the following information regarding these “pillars”:
“We positively influence the lives of our employees, factory workers and people living in the communities where we have a business presence.”
In 1998 Adidas developed a document that explained to their suppliers a code of conduct to support their workers and promote efficiency and a positive working atmosphere. Their “Workplace Standards” document, available in many languages, lays down a policy about the views of the Adidas company on a variety of aspects work environment. The document addresses child labor, discrimination, working hours and wages, freedom of association and disciplinary practices. Within these topics the Adidas company sets the tone for how ethical work life should be while working at their company. It also states the rights of workers and the benefits they have as well as states the rights of the company and how Adidas applies right from wrong. The document further touches upon health and safety as well as environmental requirements. Within environmental requirements Adidas advises partners to be conscious of sustainability and wants partners to make constant improvement in areas or resources they feel could enhance in a sustainable way. Adidas is not perfect in working conditions and could use improvement on clarity even in their 2016 document.
In 2012, people were worried about the workers associated with the brand because of harsh labor hours and pay that were made public during the 2012 London Olympics. In response, the Adidas Group adapted an SMS texting hotline for all company members and workers to use. The hotline is for anyone to send a message to management, and the point is for workers to feel at ease when they are dealing with dissatisfaction at work. This can range from the conditions workers are working in, the moral and team effort of other workers around them, benefits and pay, and their overall safety. This is Adidas best effort so far to make sure they are on top of whatever is going on in the daily lives of their workers. Unfortunately, Adidas, like other brands, must also aggressively enforce the brand’s trademark against counterfeiters who could care less about sustainability principles. In Nike, Inc. v. Top Brand Co. Ltd., (2005 WL 1654859, July 13, 2005) Adidas and other companies brought suit against an Asian manufacturer for affixing counterfeit hang tags on hundreds of thousands of garments, none of which complied with company principles, but for which Adidas may responsible in the media is aggressive legal action is not taken.
In a Sustainable brands interview Frank Henke, the Adidas Global director of Social and Environmental Affairs explains his goals and concerns for the SMS Hotline program. “Becoming a sustainable company is a marathon, not a sprint,” Henke said from the company’s German headquarters.
“The company is testing out new ways to improve working conditions at factories. New approaches are necessary on the shop floor: Many workers will not drop a card in the suggestion box if they believe they are watched, and calling a hotline is not always a comfortable option for workers. In Indonesia, Adidas and one of its largest factories are testing out a new method — SMS texting.”
“We find better ways to create our products – mainly through innovation, increased use of more sustainable materials and efficiencies.”
Adidas leads their production with the goal of designing for the environment (DFE). While in production they take into account the raw materials they use, the design, and the resources that are needed. Sustainable textiles can be a challenge, a company like Adidas wants to achieve sustainable goals but also live up to the performance of the products themselves for their customers.
- Here is a list of questions Adidas creators base their products and design off of:
- What impacts are due to the origin of the material?
- How can we use fewer resources?
- Where can we use recycled and sustainable materials?
- What about minimizing carbon emissions?
- Will the final product be safe for consumers?
Recently Adidas has centered their production on zero-waste material. This movement focuses on eliminating materials and reducing waste at the beginning of the chain of production. This new generation of sporting goods, makes for a happy consumer and retailer because now no one has to feel guilty about tossing their shoes away. The shoes are made of inexhaustible 3D super-material that holds the ability to be recycled countless times over and over. That recycled material can then make a new pair of shoes or be mixed in with newer material and combined into a different product. This allows for customers to create their own shoe and then reuse the same model or add to it as many times as they want. The Zero-Waste campaign is funded by the European Commission which recognizes the tons of material needed to make European football cleats. “Lionel Messi’s old ones – would be broken down into small parts that weigh only a few grams and remolded again in a waste-free, adhesive-free process, Adidas said in a press release. This would give consumers more scope for personalization than ever before as they could develop new creations without feeling guilty for wasting their old shoes.” European football players also recognize the tremendous amount of cleats they use season after season and enjoy the fact that after a pair of cleats is not good for use anymore it can be recycled into making a new pair. “Even Messi was impressed: “I am proud that Adidas is working to make sure that all of their boots, including mine, are being made in a way that protects the environment. For me, this is the future of football”, said the world player of the year.”
Adidas also produces dry dye fabric which absorb water and cuts energy and is made with less chemicals. The brand’s product offerings integrating dry dye fabric have steadily increased, reaching 2 million yards of dry dye fabric produced by the end of 2013, and saving 50 million liters of water. This process and fabric is made for mainly clothing products, such as running shirts. This includes a waterless dyeing process and 25 liters of water saved per shirt.
“We reduce the environmental footprint of both our own operations and our suppliers’ factories.”
Adidas developed their Green Company program in 2008 in order to build environmental initiatives. The Green Company formulated a list of environmental initiatives for Adidas to follow in order to become a zero emissions company.
- Embedding environmental best practice in everything we do
- Maximizing environmental efficiency gains
- Supporting and harnessing our people’s passion for a greener planet
Within areas of production at Adidas the Green team focuses on meeting these targets to cut down on energy use, household waste, paper consumption and lower carbon emissions. These dedicated members are there for the company members to realize how to lead a sustainable lifestyle at work. The Green Team encourages companies to think “greener” about choices that range from low hanging fruit to big picture projects. An example is the Adidas California Golf location where they strictly focused on recycling, in 2012 they recycled 60 tons of waste that would have otherwise gone to the landfill prior to the Green Team taking action.
“We engage with critical stakeholders and collaborate with partners to improve our industry.”
Adidas considers everyone who is affected or affects their operations to be a stakeholder. This includes traditional aspects of the supply chain such as employees, business deciders, trade associations and shareholders. Adidas also invites journalist, workers in factories, customers, and other associations to be a part of the process at Adidas.
Is Adidas Ethical?
No company this size of Adidas can operate without trial and error in its management approaches, but Adidas is ethically sustainable because it makes bona fide efforts to care for the environment. Sustainable ethics deals with whether a company develops a moral relationship with the environment. Adidas is a good example of a major company in the textile and athletic wear industry that has become sustainable over time by making this moral relationship a priority. Being ethically sustainable takes into all account of what constitutes sustainability. In Sustainable Business: an Executive’s Primer, Nancy Landrum writes that across the triple bottom line a company’s efforts should be in the middle. Landrum also points out that even though the company’s performance and profitability are important, social issues should not be overlooked. In all areas of the textile business labor and working conditions are removed from where the leaders of the company actually operate, this makes it challenging to incorporate moral values and values of the company for the duration, and his is something that Adidas is working to achieve.
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