Team talk
Sustainability review 2009

We check these rules through factory visits. We have a team of experts that control new factories proposed by our Sourcing managers, to ensure that they meet our Standards and that there are no high risk issues, which we call threshold issues. These experts work in our Social and Environmental Affairs team. If factories do not meet our Standards then we reject them, but if the issues are ones that can be fixed we give them three months and go back and check again to see if they have improved. If they have improved, they are approved.

An approved factory has to place a poster on the wall that tells workers that it is now making products for the adidas Group. The poster also informs workers that we will help them find solutions to factory issues. And it gives them local numbers to call and addresses to write to. In some cases the telephone hotlines that we use are run by non-profit organisations and in other cases our own field staff take the calls and respond to the workers' concerns. A lot of our time is spent checking factories because we have received calls or requests from workers for hard-to-fix issues, such as the wrong salary payment, working too many hours, or being unfairly let go.

Once a factory is approved we continue to check. For those suppliers who manufacture directly for the adidas Group, we regularly check how the factory is performing: is it continuing to make an effort to improve, to provide training and to meet our expectations about the fair treatment of the workers and safety in the workplace? At the end of each year the factory gets a score and that score is given to our Sourcing managers, who add it to their own scores for quality and delivery, etc. They then decide how many orders it should receive in the future. We want our factories to know that if they do well and are meeting our Standards they will remain our partner and continue to receive orders. This is a carrot. We also have a stick.

When we check and find that the factory is not treating their workers fairly or if they don't have a safe and healthy workplace, we take action. We issue warning letters asking that the problems we have found be fixed. If the problems are not fixed after the first letter, we send a second letter to stop orders and by the third we ask our Sourcing team to stop working with them. If we find very serious issues at a factory, such as life-threatening safety issues, we may immediately end our business relationship and write to the local government and ask for their help to fix the issues that we have found. This whole process is called enforcement.

The adidas Group continues to grow and one way it grows is by making agreements with other smaller businesses to make, sell or distribute our products. This is what we call licensing. Because of licensing and the use of agents, the adidas Group also has many indirect suppliers. These are factories working not directly for us, but for others. To manage this part of our supply chain we ask the agents and licensees to copy our approach and have people check the factories and help them stay true to our rules. In many cases the companies managing our indirect suppliers use consultancy firms to do the checking. We call these consultants external monitors, and the results of their audits can be seen here.