Team talk
Sustainability review 2009

When we are concerned about political developments in countries where we have suppliers, we will reach out to governments in an effort to ensure workers' rights are protected.

Writing to US Secretary of State Hillary Clinton about Honduras

In June 2009 the elected President of Honduras was deposed. As a company that buys products made in Honduras, we were concerned about the consequences of this action. We understood that there were serious disagreements between the elected President, Congress and the Supreme Court, but we believe these disagreements should be resolved through peaceful and democratic dialogue, rather than military action.

While we did not endorse the position of any party in this internal dispute, we did join Nike, Gap and Knights Apparel in signing a letter that called for the restoration of democracy in Honduras. This followed similar messages from the President of the United States, the governments of countries throughout the Americas, the Organization of American States, the UN General Assembly and the European Union. The letter, sent on July 27th to US Secretary of State Hillary Clinton, urged an immediate resolution to the crisis and the respect of all civil liberties including two - freedom of movement and freedom of association - that most directly impacted workers.

Writing to the US Government about Madagascar

In late 2009, the US Government conducted its annual review of Madagascar's eligibility for preferential trade status under the African Growth and Opportunity Act (AGOA). The US Administration was inclined to suspend Madagascar from AGOA due to the interim government's lack of progress in returning to a constitutional democracy. We went on a fact-finding mission to the capital of Madagascar for consultations with the American Chamber of Commerce, the local Manufacturer's Association and the US Embassy. We concluded that the withdrawal of Madagascar's duty-free status would lead to layoffs and factory closures, consequential impacts on materials and fabric suppliers in Mauritius, Lesotho and Swaziland, and further destabilise a fragile economy. Additionally, we concluded that the political landscape was shifting - albeit on a slower timeline than ideal - towards elections that would put democratic institutions back in full working order.

In October, we submitted a letter to the US State Department explaining the broader consequences of suspending Madagascar from AGOA and co-signed a similar letter from a coalition of US business and manufacturing companies. The US Government recognised that positive democratic progress was being made in Madagascar. However in December, the US Government did suspend Madagascar from AGOA after the interim president barred opposition leaders from the country.

Full text of the letter we sent to Secretary Clinton about Honduras
Full text of the letter we sent to the US State Department about Madagascar

While sometimes we are defending ourselves in the media against accusations from pressure groups, we also directly engage with them to see where we can agree to take action.

In 2002 several international trade union federations and labour rights organisations formed the Play Fair Alliance to ask the sporting goods industry to improve working conditions in factories. To highlight their concerns the Alliance ran public campaigns and produced reports, setting out ways brands could improve the lives of workers. In December 2007, Play Fair and the major sporting goods companies met in Hong Kong to discuss workers' wages and working conditions. It was agreed in that meeting that the discussion needed to move from a high level, to the practical 'what will work on the ground' in a particular country. Indonesia was chosen for a follow-up workshop, which was held in November 2009.

Trade unions set the agenda

The two-day workshop in Jakarta was facilitated by a rights activist, nominated by the local trade unions. The local trade unions also set out the main agenda points, which spoke to their three main concerns:

• The need for brands to secure freedom for unions to carry out their union activities
• To reduce the number of workers employed on short term contracts, in favour of more permanent employees, and for brands to push and pay factories more to ensure workers receive a fair wage, based on their marital status.

Meeting in the middle

The brands and suppliers present in the workshop did not agree to all of the unions' requests, but they did commit to delivering improvements in the exercise of freedom of association, including the development of a joint protocol between unions, brands and suppliers that would better define the activities of unions in the workplace. The brands also agreed to support the reduction in the use of contract labour by their suppliers and to investigate and develop approaches to improving pay.

At the end of the workshop an action plan was drawn up to carry forward the areas of agreement and to deliver change in the factories making products for the adidas Group and for the other sporting goods brands.

See our response to the Play Fair Alliance's report "Clearing the Hurdles" and their specific recommendations

Worker Cooperative Project in Indonesia

Worker cooperatives have long been identified as a way to improve workers' living standards in the factory. By joining together, workers can access cheaper goods and services and save money. This year we have helped establish a successful cooperative on the edge of Jakarta, which we hope will encourage other new cooperatives in Indonesia.

Having previously produced guidelines on establishing a worker cooperative in 2004, we decided, in late 2008, to push the initiative further. We commissioned a not-for-profit group, Dompet Dhuafa, to lead a pilot project establishing a worker cooperative in an apparel factory in Indonesia, Tung Mung. The factory is located in Tangerang on the outskirts of Jakarta and employs around 1,300 workers. It was chosen because we saw strong interest from workers, labour union and management, who were all keen but did not know how and where to start.

Hard work is worth it

With the professional guidance from the not-for-profit organisation and active participation from a group of highly motivated workers, this project has gone smoothly and has been successful. Workers and management had to grapple with issues such as electing administrators, legal compliance and registration and undergo lots of training, as well as develop systems and procedures. After a lot of hard work, Tung Mung factory workers have a cooperative that is working well, run by properly trained administrators.

The cooperative has gone from strength to strength. It started with 350 worker members and initial capital of IDR 48 million - about US$ 5,000 - which came from members' savings and a loan from management. Now it has 750 members, operates a grocery store and offers its members both loans and savings. And with the help of a commercial bank, assets have grown seven-fold, reaching IDR 350 million (about US$ 37,500) in less than a year.

Next steps

Not surprisingly there is overwhelming support and appreciation from workers. They can now buy goods at a cheaper rate with flexible payment options and have access to loans at a far lower rate, than the loan sharks used to charge them. The plans for 2010 include encouraging all workers to become members and to extend the range of services.

In December 2009, we held a workshop about this project to which we invited other suppliers in Indonesia. We hope that they will have learnt from the success of the Tung Mung cooperative and are encouraged to establish worker cooperatives at their own factories.

Download our Worker Cooperative Guidelines

Listening to workers' voices

Our SEA team is tasked with protecting the rights of the workers who make adidas Group products. It would not be possible for us to do this job unless we know, first hand, workers' concerns. Sometimes we directly engage with them when inspecting factories and we often speak to them in interviews, either at work or when they have time off. These interviews provide them with an opportunity to confidentially report their concerns and views on the workplace conditions and their pay and benefits.

To safeguard against any form of retaliation, SEA field staff leave workers with their business cards and contact telephone numbers and encourage workers to call if they have any issue. It is not uncommon for SEA field staff to receive calls and SMS messages from workers, as well as trade union officials who want to report factory issues.

Working with independent hotline partners

To complement the discussions that take place during factory visits, SEA has also established worker hotlines. These hotline numbers are advertised on posters in the factories. The worker hotlines allow workers to call with complaints and concerns regarding their working lives. We manage some of these hotlines in-house, but in some countries, such as China, we have given this responsibility to an independent third party.

There China Labour Support Network (CLSN), which had built a good reputation as a not-for-profit group that helps workers resolve labour and health and safety issues, screens the calls to the hotline. They provide immediate advice and guidance and refer the most serious cases to SEA for further investigation and follow-up.

Our partner's view of the China hotline

Juliana So from CLSN believes that the hotline service in China has succeeded because of the commitment of CLSN and their partnership with the SEA field staff in resolving hard-to-fix problems, including some that had remained unresolved despite lengthy legal procedures. According to Juliana, other reasons for the hotline's success include providing early interventions to reduce the need for legal action between workers and factories, as well as providing workers with basic information and advice on their rights.

But Juliana also sees areas for further improvement, including the need to promote the hotline services better, reduce response times and letting workers know about the scope of services and support available to them. Juliana also feels the company should be more critical of suppliers whose actions or practices consistently breach worker's rights.

As the global economic crisis unfolded and as consumer markets began to dip we knew that there would be challenges ahead for workers employed in the footwear and apparel factories. To help our business partners through the crisis we concentrated our orders on the best performing suppliers and those with the greatest dependence on us. This helped maintain their financial viability and created greater job security for the workers in those factories. But it also meant fewer orders flowed to other suppliers, which resulted in some closures.

Guidelines for suppliers on factory closures

We already had internal policies that spelt out our role in factory closures, but we felt that we needed something more. So in February 2009 we prepared and issued a set of Guidelines on Managing Layoffs and Downsizing. The guidelines explained what we expected suppliers to do and what information they should share to allow us to check that workers were fairly treated during layoffs.

Since issuing the guidelines we have been asking factories to share with us their plans for staff reductions and/or closures. This allows us to track the developing situations closely, engaging when we can with the workers and trade unions to ascertain if the factory has informed everyone in advance and has paid workers in full, as per the law.

Most closures handled properly

In the majority of cases closures and layoffs have been handled properly and responsibly by our suppliers. We have however had situations where workers were not properly informed or fully paid and this has led to strikes and protests. In these situations we have stepped in to help the workers, and where necessary we have reached out to governments asking them to help the workers claim back the monies owed to them.

Download our Guidelines on Managing Layoffs and Downsizing