Update on response to Playfair allegations about the closure of the factory PT Kizone in Indonesia (engl.)

02. Februar 2012

Herzogenaurach, 2. Februar 2012 – The adidas Group is committed to ensuring fair labour practices, fair wages and safe working conditions in factories throughout our global supply chain. These active efforts are guided by our core values as a company. Importantly, the adidas Group is confident that we are adhering to and, in fact, exceeding standards our stakeholders expect from us on these matters.

Today, as we have since the early 1990s, the company takes an active role to promote and enforce workplace standards, based on International Labour Organization’s core labour rights conventions, which protect and improve worker experiences. Through hundreds of annual factory audits in 69 countries where we do business, our company and independent organisations consistently review and evaluate supplier conduct, work with them to address issues and make improvements where necessary, and we discontinue relationships with those suppliers – and with contractors they employ – who fail to adhere to our standards and requirements. Moreover, we share information, both in terms of best practices and in flagging wrongdoing, and we have earned recognition from governments and NGOs for our commitment to practices that protect workers and raise the bar for the entire sports apparel industry.

We use a collaborative, transparent and industry-leading approach to enforce our workplace standards, providing guidance and training materials to our suppliers. We employ a team of 65 specialists around the world, who work daily toward more sustainable business practices. In 2010, we held 193 training sessions and workshops for suppliers, licensees, workers and adidas Group employees and conducted 1,350 factory audits worldwide, 506 of which were carried out by various external monitoring groups including 16 by the Fair Labor Association.

In line with our overall transparency in these matters, we continue to provide clarifying information to address allegations that we have refused to pay severance money to workers at a closed apparel factory in Indonesia. The central fact remains that the PT Kizone factory was illegally closed and abandoned by its owner, not by the adidas Group, and this occurred more than six months after we placed our last order with them. We honored all terms of our contract, paying the factory owners every penny owed. In turn, we cannot assume, or accept, the liability for the severance owed by the former owner of PT Kizone who violated Indonesian law and fled.

Enforcing the rule of law is core to sustainable business and we cannot be held responsible for someone else breaking the law. We do participate in advocacy where there is a need to improve local and international law and enforcement. For example, although the adidas Group had no business relationship with the factory at the time of its closure, we are sympathetic to the plight of the workers and their families and asked the Indonesian Trade Minister to convene other involved government representatives to discuss the case and the situation of illegal factory closures in general. This week, we met with the union representing former PT Kizone workers and we are currently scheduling meetings in Jakarta with the Ministry of Trade, the Ministry of Manpower, the Korean Embassy and the U.S. Embassy to follow up on discussions and outcomes we facilitated in October.

In support of the workers, we have also contacted adidas suppliers located near the PT Kizone site and actively encouraged them to hire former PT Kizone workers to fill suitable, open job positions at their factories. We also commissioned and funded an independent job placement agency to work with former workers and help them with retraining and obtaining new jobs. We are pleased to report that nearly 950 former PT Kizone workers have found new employment, nearly 300 of which are at other local adidas Group suppliers.

We continue to pursue engagements with governments and regulatory agencies that invigorate discussion and change to address illegal factory closures, the flight of owners and extradition. In the coming weeks, we are reaching out to officials from the U.S. Trade Representative’s office, the U.S. State Department and the Korean Embassy in Washington DC to raise awareness around these matters. These types of efforts and engagements always benefit from additional credible and committed collaborators and we welcome our partners to join those conversations.

Protecting the interests of global workers involved in producing our footwear and apparel is an ongoing priority for the adidas Group because it is critical to our business. It is also the right thing to do. It is consistent with our values and the trust of our stakeholders that we work hard to earn every day.