adidas Group Response to Greenpeace Report

Herzogenaurach, 14 July 2011 - On July 13th, 2011, Greenpeace International released their report ‘Dirty Laundry - Unravelling the corporate connections to toxic water pollution in China’. The report addresses the problem of toxic water pollution resulting from the release of hazardous chemicals by the textile industry in China. Greenpeace investigations focused on two textile suppliers that were found to be discharging a range of hazardous and persistent chemicals into nearby waterways. Together with the report, Greenpeace launched a social media campaign, ‘Detox’, calling upon international sporting goods brands to phase out chemicals from their global textile supply chains.

One of the suppliers targeted in the report and alleged by Greenpeace to discharge polluted waste water into a nearby river is the Youngor Group Co., Ltd. located in Ningbo, China. The Greenpeace report names the adidas Group as one of several brands buying from this supplier.

The Youngor Group operates multiple factories within a large industrial park, as well as in other locations in Ningbo. adidas Group brands only source from the cut and sew facilities Ningbo Youngor Fashion Knitting, Ltd., which is within the 55 hectare industrial park, and Ningbo Youngor Pants Co., Ltd., which is located several kilometres from that park. Our business relationship with the Youngor Group is restricted to the cutting and sewing of garments. The adidas Group does not source fabrics from Youngor Group, which would involve the use of dyestuffs, chemicals and their associated water treatment processes.

We have requested Youngor’s Management to investigate Greenpeace’s claims and, if they are accurate, to take immediate steps for remediation. Youngor has expressed their willingness to cooperate. We have also asked Greenpeace to share with Youngor the specifics of their research, e.g. to disclose all information related to waste water sampling and detection methods to support Youngor’s own investigation and remediation process. Currently, Youngor is having its waste water independently tested to confirm Greenpeace’s findings.

FOR RESULTS OF THE VERIFICATION OF THESE FINDINGS PLEASE SEE THE END OF THIS PAGE.

As a company that is committed to sustainable business practices in our own operations and our global supply base, we share Greenpeace concerns about widespread water pollution in China as a consequence of the rapid industrialisation and economic growth. However, we do not agree with Greenpeace’s conclusion that as a company we have not yet made a significant effort to tackle the problem of eliminating the release of hazardous chemicals during the production process.

The management of chemicals in multi-tiered supply chains is a complex challenge, requiring many actors to play a role in achieving effective and sustainable solutions. The adidas Group has been running leadership programmes for years that address this topic within its area of direct influence. Important steps have been as follows:

• A comprehensive Restrictive Substances Policy for product materials has been adopted since 1998 prohibiting the use of chemicals considered as harmful or toxic. The policy not only covers strictest local requirements, but also includes best practice standards as recommended by consumer organisations. The policy is regularly reviewed and updated in consultation with non-governmental organisations like Greenpeace. Adherence to this policy by material suppliers is strictly checked by external auditing institutes. Please find the restricted substances list here.

• Comprehensive and detailed standards for suppliers on handling, storage and disposal of chemicals are part of the adidas Group’s Health & Safety Guidelines, Environmental Guidelines and the Guide to Best Environmental Practice. These guidelines specify standards for waste water treatment and effluents. The guidelines are the basis for factory inspections and assessments conducted by our Social & Environmental Affairs Team and also external auditors. Please see our Guidelines on the corporate website.

• With the launch of the adidas Group 2015 Environmental Strategy, a detailed Environmental Sourcing Strategy was rolled out at the end of 2009. The sourcing strategy is built on in-depth risk assessments of suppliers at different tiers in our supply chain and the use of tailored tools for factory assessments and performance rating. In 2010, nearly 100 environmental audits were conducted in our supply chain. Mills and dye-houses are one of the primary targets for these environmental audits.Read more about the Environmental Sourcing Strategy.

• The adidas Group strongly promotes and supports collaborative actions within the sportswear and apparel industry to gain greater leverage in improving the environmental impacts of factory operations. This is shown through our active membership within key industry groups. For example, the Sustainable Apparel Coalition, the AFIRM Working Group on restricted substances, the toxics working group of the Outdoor Industry Association (OIA) and in the Global Social Compliance Program (GSCP).

Looking forward, the adidas Group already has strategies and plans in place for:

• Chemicals management, including additional focus during our audits
• Driving industry collaboration for the development of a dye-house audit protocol
• Supporting industry collaboration to develop integrated chemicals management programmes
• Developing and/or applying screening tools on the use of chemicals by our suppliers
•  Applying additional standards, as agreed with suppliers.

The adidas Group is committed to developing further actions and procedures in close consultation and collaboration with its stakeholders to maintain and further strengthen our programmes. We welcome the continued engagement with Greenpeace in this matter.

UPDATE - August 4th, 2011 - Verification of waste water testing results

Youngor’s Management carefully investigated Greenpeace’s claims and commissioned an independent testing institute in China to conduct tests of waste water samples at its sites. The adidas Group also commissioned a German-based independent testing institute specialised in water analysis to compare testing results as reported in the Greenpeace report with German and European waste and drinking water regulations.

Based on the information which has been shared to date, we understand the following:

• The waste water treatment system at Youngor complies with local regulations, and none of the certified dye stuffs (supplied by major chemical companies) contains the hazardous and persistent chemicals that Greenpeace has detected, at low concentrations, in the discharges. So investigations are continuing, to identify the source of these chemical residues.

• The German testing institute concluded in its report that the low concentrations of hazardous substances as detected by Greenpeace in the waste water of the Youngor plants meets advanced international standards.

Notwithstanding the factual findings, the adidas Group remains committed to the collective goal aiming to eliminate hazardous chemicals in the textile industry. We welcome the continued engagement with Greenpeace in this matter.