Update on Allegations on Working Conditions for 2012 Olympic Production in Indonesia

Herzogenaurach, 11 September 2012 – On April 14, 2012, The Independent newspaper in the UK ran a series of articles on working conditions in Indonesia, labelling the LOCOG suppliers “sweatshops” and asking whether these factories breached the adidas Group’s Workplace Standards – our code of conduct - and the aspirations for an ethical and sustainable supply chain for the London 2012 Olympic Games. The Independent’s story triggered questions, and expressions of concern, from the Games organisers.

adidas Group takes all such allegations seriously and we immediately launched in-depth investigation into each issue raised by The Independent newspaper. Our initial conclusions were that many of the claims were either inaccurate or lacked substance. The results of our full investigations have been shared with LOCOG, who commissioned a third party to review our findings and conduct independent off-site worker interviews. The findings of that independent review have been published by LOCOG and can be found on their website.

LOCOG conclusions and adidas Group’s agreed actions are summarised below:

• Allegations related to non-payment of minimum wages were not substantiated.
• At most factories, allegations around lack of union recognition and excessive working hours were not substantiated. Where there were issues identified at individual factories, actions were agreed with adidas Group related to support for on-going collective bargaining agreements and improved production planning.
• Issues related to lack of awareness of the adidas worker grievance hotline were substantiated. The adidas Group recognises that we have been overly reliant on issues raised by the local trade unions, with whom we have regular contact, and remedial action is needed to improve the promotion and communication of our hotline with the general workforce.
• In some of the factories, there were issues with verbal abuse from supervisors or workers feeling under excessive pressure to reach production quotas. In those cases where this issue was substantiated, we have agreed to implement training for managers and supervisors on harassment and abuse.
• Both adidas’ investigations and the independent worker interviews revealed some additional issues at each of the factories. These have been addressed with appropriate remedial actions which will be subject to monitoring and review by LOCOG.

Protecting the interests of workers who make our products is a priority for the adidas Group and our efforts in this area are married to our long term commitment to transparency and engagement with our critical stakeholders. For the 2012 London Olympic Games, we believe we have fulfilled and indeed exceeded the expectations of LOCOG in our management of workplace conditions in conformance with their Sourcing Code.