Enforcing compliance

Enforcement guidelines

The Enforcement Guidelines cover the principles of enforcement of the Workplace Standards, and those sanctions or remedies we will apply where the Standards are breached. Such sanctions or remedies include:

  • Termination of the manufacturing agreement – in situations of severe or repeat non-compliance
  • Stop-work notices – in life-threatening situations or where the manufacturing process is likely to have significant negative consequences for the environment
  • Third-party investigations – where persistent or repeated violations of the Workplace Standards or local laws have become a matter of public interest
  • Warning letters – in cases of ongoing and serious non-compliance
  • Reviewing orders
  • Commissioning of special projects – to remedy particular compliance problems.

Two types of non-compliances

Breaches of the Workplace Standards are categorised into zero tolerance points and threshold issues. Zero tolerance includes prison labour, serious, life-threatening health and safety conditions and repetitive or systematic abuse. The Enforcement Guidelines for zero tolerance is the supplier’s disqualification from the adidas Group supply chain. Threshold compliance issues include serious employment issues, serious health, safety or environmental issues and any combination of the two. The Enforcement Guidelines for threshold issues can disqualify a new supplier from production or lead to enforcement actions with existing suppliers.

In 2007, we expanded the reach of the Enforcement Guidelines and engaged third-party representatives in the indirect sourcing models. Existing Group relationships were modelled to define clear and effective lines of responsibility with the third-party supply chain and the adidas Group.

Warning letter system

We strongly believe in a partnership approach, and where a supplier is performing poorly in terms of the Workplace Standards compliance, we will work closely with them to find solutions. However, where we find ongoing and serious non-compliances and a lack of commitment on the part of the management to address the issues, we will, when appropriate, issue a formal warning letter.

For threshold compliance issues, three warning letters will usually result in an immediate recommendation to terminate. In very serious cases or in cases of zero tolerance non-compliance, a single letter will be issued advising our suppliers that SEA has recommended the business relationship be terminated. Our Sourcing, Business Unit and Legal departments would then follow up with a formal notification of the end of the business relationship.

There are tables showing numbers of warning letters, terminations and rejections on the Enforcement data page in the Performance data section.

  • In 2007, we expanded the reach of the Enforcement Guidelines and engaged third-party representatives in the indirect sourcing models.