Adidas Group

Additional comments

During 2011 we improved how we monitor supply chain compliance by customising programme activities with three redefined clusters of the supply chain. These clusters stressed more value-added practices by the fair, good and best compliance performers. The highest performing suppliers implemented “self-governance” activities, including more sophisticated reporting. Fair, good and best performers participated in the “Partnership” cluster, focusing on collaboration with multiple buyers in shared factories (such as the Sustainable Compliance Initiative and the Brown Shoe Collaboration), and participating in multi-stakeholder initiatives (such as the Fair Labor Association and Better Work). The poorest performing suppliers are in the “Risk Management” cluster.

• The Risk Management cluster includes those factories scoring at 1C or 2C – about 61% of our supply chain
• The Partnership cluster includes 3C factories – about 28% of our supply chain
• The Self-governance cluster is composed of 4C and 5C factories – about 11% of our supply chain.

The clusters show that we moved closer to our target that by 2015 80% of strategic Tier 1 suppliers will meet compliance expectations and a minimum performance rating of 3C.

Suppliers who are rated 1C (with social compliance KPI scores of 29% or below) are viewed as having systemic problems. Typically they are factories which have inadequate or underdeveloped management systems and are unable to support long-term sustainable compliance with the adidas Group’s Workplace Standard. By the end of 2011, 8% of all suppliers were rated as 1C. This is a substantial decrease from 19% in 2010 and has been achieved through a focused effort on capacity-building.

We designed a comprehensive capacity-building programme that required suppliers to develop and improve HR and Health, Safety and Environment management systems, as well as strengthen the capabilities of their personnel and organisation. The programme includes classroom training, project assignments and periodic progress reviews. Members of the Social & Environmental Affairs (SEA) team were actively involved in providing consultation to suppliers where needed. In countries like India and Indonesia, the team also engaged and commissioned external experts to deliver tailored training. Progress was then measured and improvements noted for each of the Unit of Measures of our social compliance key performance indicators.