Adidas: Rethinking Business For Society

Company Background

Adidas is a multinational corporation which manufactures different types of sportswear and sporting goods. It was created by Adolf Dassler in 1949 and its headquarters is in Herzogenaurach, Germany. According to Wikipedia, Adidas is the number one manufacturer of sportswear in Europe. However, it falls behind Nike and Under Armour in the United States. According with the Adidas´ report which is emitted yearly it has been identified seven SDG´s which Adidas sustainability progress report, working on develop:

1. Decent work and economic growth: Care for welfare and development of employees, and that can be demonstrated in the labor turnover rate which is decreasing every year for example: According to the Sustainability Progress Report 2015 mention that “labor turnover rate decreases more than 3% a double reduction compared to the same period in 2012”, it could be possible thanks that Adidas launch a project to measure not only production process but also the happiness of the staff. These programs were Rights First Time (RFT) and Happy Manufacturing to improve the welfare of employees.
2. Gender Equality: Adidas athletes and ESPN’s Maria Taylor work together this year to aware the equality of gender in media representation for women in sport. Even some campaigns related to the equality of gender was launched to push the visibility of women athletes, there was still difference in payment between male and female that is why in March 2019, Adidas decided sponsored FIFA Women's World Cup with the same bonus as male just before considering the complains.
3. Climate Action: Adidas created Green Company Program in 2008, in order to have a positive impact on the Footprint. With this program the statistics showed in Adidas´ report the progress, it shows with numbers that were possible to decrease the level of pollution and saving resources per employee and reduction of carbon emission per square meter. This program has a focus on reducing water consumption and it has expectations in a positive impact to develop until 2020.
4. Partnerships for the goals: Adidas has built relationships along the time, especially regarding the environmental impact, Adidas tries to be engagement in this topic and actually is member of SAC (The Sustainable Apparel Coalition), additional to be engaged with the human rights protection Adidas Group is member UN Global Compact. In complement to pursue the goals Adidas consider that its suppliers have to be the most important partners in order to ensure the production process and have sustainability in Adidas´ supply chain.

Industry Innovations and Infrastructure: Related to the last SDG, innovation is strongly linked with the supply chain and the production process. Some examples of that are how Adidas is trying to avoid environmental impact and save resources like water, chemical, and energy with the Dry-dyeing clothes. According to Adi Dassler, the products has to made off with innovation better for customers but less impact on the planet.

Life below water: Adidas is part of the Parley Ocean School Program and, regarding with the plastic pollution in this year according to Adidas news they raise the investment to create awareness and educate to the future generations about plastic pollution in the oceans, with campaigns and movements created by them such us: Run for the Oceans created in the last year, this movement counts with runners around the world and Adidas contribute $1 to launch the youth activist platform.

Responsible consumption and production: As it was mentioned in the other SDGs, Adidas tries to be sustainable in the production process and in their supply chain, for this reason Adidas is implicated in Better Cotton Initiative (BCI), which ensure the sustainable with lowest negative impact for the environment, at the same time this initiative measure the effectiveness of use in the areas where is produced. In this way Adidas is aware the consumption of row material and contribute to the development of sustainable initiatives.

Adidas Global Initiatives

Through the years, Adidas has branded itself as an innovative company. The company has pioneered Global initiatives which hugely incorporate social responsibility and sustainability. Among those global initiatives are:

1. Run for the Oceans. This global initiative aims to fight plastic waste pollution in the ocean by converting plastic waste into rubber shoes. For this initiative, Adidas has partnered with parley for oceans, a company that collects plastic waste. This initiative has adapted the circular economy. According to an article, Adidas plans to produce 11 million pairs of shoes made from plastic waste this year.
2. She Breaks Barriers Campaign is another global initiative by Adidas which promotes gender equality in sports. For this initiative, Adidas has collaborated with different women athletes, artists, and organizations for women to promote this campaign.
3. Zero Dye Range. In order to reduce water waste and save energy, Adidas created the Zero Dye Range initiative. The dying process is skipped in the manufacturing of this collection. The result of the products has an off-white color and a soft hand feel to them.

Sustainability Report

Adidas took important measures to decrease their impact on the environment. They began using sustainable materials, sustainable manufacturing and recycling. The firm has announced six objectives that it hopes will reach by 2020. Among these objectives are the reduction of water use, paper use and power use and the use of viable cotton. Adidas has also teamed up to save the ocean with Parley. The company finally started a range of products to create sports shoes and apparel using plastics collected from the ocean. As a subset of the Adidas group, Reebok has lately launched sustainable plant-based shoes made from sustainable products.

To tackle some of the significant social issues, Adidas invests in multiple programs. An excellent example of this is the initiative 'Sport needs a space' in which Adidas aims to empower individuals, enhance wellness and stimulate intervention. Adidas is also involved in supporting refugees, building partnerships with organizations that assist take natural disaster materials to the impacted region, empowering women, and supporting certain operations linked to fighting breast cancer, and utilizing children through free pre-school events. Adidas accepts that there is a market for the environmentally friendly products and proudly advertises their own products.

According to Rankabrand.org Adidas has achieved the D-label in their sustainability score report which means it’s their “First milestone, should be done better”. Adidas has started to take sustainability into account. Still, a lot more can be done. And other brands like Nike and Puma have scored C-label which means that they are doing good on their sustainability, but more improvement is required for them also.

Criticisms

Despite the proclamation of Adidas contribution to sustainability, the company has also been pushed into controversy over the years as a result of engaging with business connections or activities that do not show sustainability. Adidas has been attacked for developing sweatshops in Indonesia, and while Adidas strategy specifically describes employees ' liberty and reasonable therapy, it is not always the case. Adidas had bought plastic from Asia Pulp & Paper for their products for many years, which had a horrible record for damaging the wildlife of Indonesia. When Adidas canceled its agreement with Asia Pulp & Paper in 2011, Greenpeace Executive Director Phil Radford praised Adidas for 'taking rainforest conservation seriously' attempts to protect forests.

Recommendations

Adidas has successfully become one of the world's most representative sustainable companies because of its years of experience in sustainable development and its achievements. However, we all know that there are many places in Adidas that can do better. Therefore, we recommend that Adidas develop a stronger sustainable development strategy, organically combine Adidas' existing products with sustainable development strategies, to implement its own product strategy, and to make sustainable development work better and contribute to the realization of the United Nations SDGs. Since Adidas mainly produces sporting goods, it can convey a sustainable attitude and concept to the society through its products. Adidas also sees products as one of the strategic priorities of its sustainability strategy, so we made some recommendations for this part.

Short Term

In fact, Adidas' corporate development goals are consistent with the UN's sustainable development goals in many aspects, such as decent work and economic growth, gender equality, responsible consumption and production, climate action, and so on. Adidas has made some achievements in this area, such as the use of marine plastic waste to produce sports shoes. And we all know that it is unrealistic to want Adidas to contribute to all the UN's 17 sustainable development goals, because not all of them are related to Adidas. So Adidas' short-term goal can be set at the 12nd goal: responsible consumption and production. Herbert Hainer, CEO of Adidas Group, also said, 'Our sustainability strategy is also the foundation for improving efficiency and innovation. This strategy is critical to success.' This is simply inconsistent with the goals of the United Nations. So, Adidas can invest in materials, processes and innovative machinery to enable them to upgrade materials to products and reduce waste. Such as gradually increase the use of sustainable materials in production, products and stores instead of using raw plastics. Based on the history of Adidas' sustainability, we also recommend that they launch a global product recycling program for all major cities and markets to promote material reuse and promote their closed-loop solutions. And the above initiatives will also contribute to the goals of climate action.

Long Term

Also, Adidas try to increase sustainability in their supply chain, to achieve this goal, we recommend them to focus more and more on their products in the future, polyester and plastics are two main materials for their products, we recommend use completely recycled materials instead of raw materials, this improvement not only can help the environment but also can reduce the price. For those materials which can’t completely be recycled, we hope Adidas to make them at least sustainable, like the sustainable cotton they already used. In the process of production, it is also important to save energy and control the quality, for example, to save water, we recommend Adidas to build a long-term water treatment system. The foundation of quality it’s safety, so the chemical examination is essential, we recommend Adidas to build an automated system which can monitor and track supplier compliance with the MRSL(which is manufacturing restricted substances list. In the finishing stage, product packaging and waste are huge problems as well, since the plastic packaging is still the mainstream and sometimes unavoidable, we strongly recommend Adidas reduce single-use plastics and unnecessary over package, maybe try to create a durable and reusable material to replace plastics in the future. In addition to what they should do, Adidas should also focus more on interacting with their customers in the future, to get their feedback and arrange some special activities to help the development of their products, such as take-back program and second hand market.

References

1. 2015_sustainability_progress_report.pdf. (n.d.). Retrieved from https://www.adidas-group.com/media/filer_public/9c/f3/9cf3db44-b703-4cd0-98c5-28413f272aac/2015_sustainability_progress_report.pdf
2. 2016_adidas_sustainability_progress_report.pdf. (n.d.). Retrieved from https://www.adidas-group.com/media/filer_public/08/7b/087bf055-d8d1-43e3-8adc-7672f2760d9b/2016_adidas_sustainability_progress_report.pdf
3. Adidas announces next phase in fight for the oceans against marine plastic pollution with upscaled commitment to Parley Ocean School Program. (n.d.). Retrieved June 23, 2019, from https://news.adidas.com/running/adidas-announces-next-phase-in-fight-for-the-oceans-against-marine-plastic-pollution-with-upscaled-c/s/c19b8a9a-ebf0-4970-b27e-ca5121edf665
4. Adidas continues push for equality in sports, increasing visibility for female athletes. (n.d.). Retrieved June 22, 2019, from https://news.adidas.com/football/adidas-continues-push-for-equality-in-sports--increasing-visibility-for-female-athletes/s/2a1bbd18-8a81-4e19-811d-81905304f564
5. Innovation. (n.d.). Retrieved June 23, 2019, from /en/sustainability/products/sustainability-innovation/
6. Women’s World Cup 2019 commercial guide: Every country, every sponsor, every broadcaster. (n.d.). Retrieved June 22, 2019, from http://www.sportspromedia.com/analysis/womens-world-cup-france-2019-sponsors-broadcasters