adidas is a global business and operates across the globe. We therefore have a responsibility to look after the environment, both for people today and for future generations.
Managing our environmental impacts at our own sites and along the value chain, where our products are designed, created, manufactured, transported, and sold, is a key focus of our work. Sustainability is an integral component of our strategy ‘Own the Game’ and we have a clear roadmap for 2025 and beyond. We have developed an approach to address our carbon footprint, water efficiency and quality and are committed to steadily increasing the use of more sustainable materials in our production, products and stores while driving toward circular business solutions.
The responsible use of energy is critical for our planet to survive. In order to mitigate climate change, we are committed to reducing our absolute energy consumption and CO2 emissions, transitioning to clean energy, and looking into energy harvesting opportunities. adidas is proactively addressing the impacts of climate change through several initiatives in its own operations, its supply chain and through various partners. As a signatory to the UN Fashion Industry Charter for Climate Action, adidas has committed to reduce both its own and its suppliers’ greenhouse gas emissions compared to 2017 by 30 percent by 2030 and to achieve climate neutrality by 2050.
We have established and maintain a certified Integrated Management System (IMS), covering Health, Safety, Environment and Energy and are taking various measures to reduce the environmental footprint of our own operations. Firstly, the Green Company program targets improvement of the environmental performance at our own sites around the world, which includes administration offices, own manufacturing sites, distribution centers and retail stores. We also have dedicated budget, the greenENERGY Fund, which helps us accelerate energy and carbon reduction projects. Secondly, as part of our commitment to transparency, we have been reporting about our carbon emissions and our progress on an annual basis through the Carbon Disclosure Project (CDP), an independent not-for-profit organization, since 2007. And lastly, as air travel is widely used by adidas employees we monitor and record all air travel managed through our in-house travel agency regularly since 2006 and keep a close eye on the environmental footprint caused. In addition, a Green Company Initiative, in the form of an additional monetary car bonus amount, encourages and incentivizes our employees and management to use low-carbon vehicles and public transportation.
Green Company (program for own operations)
Green Company is the name of our environmental program at our own sites around the globe. Since its launch in 2008, the program and its ambitious targets have driven continuous improvement regarding the environmental impacts of our own operations (administration offices, manufacturing sites and distribution centers). We developed the second generation of our Green Company program in 2015, including targets to be achieved by 2020. Building on seven years of achievements, these targets did not only demonstrate our continued focus on industry leadership in environmental stewardship but also took our ambitions one step further. For the very first time our program covered our own retail stores and included the phasing out of plastic bags at all own-retail locations, as well as achieving LEED certifications for our new flagship stores globally. Further highlights of our 2020 targets included the fact that our carbon reduction target encompassed an absolute annual emissions reduction designed to deliver carbon neutrality for our own operations globally. As managing water as a vital resource has always been a key strategic priority, we had also defined individual and ‘context-based’ water reduction targets for our sites that took local watersheds into account.
Although 2020 was a difficult year due to the coronavirus pandemic, we were, overall, able to advance our initiatives and deliver against our targets. For a detailed review of our 2020 targets please click here. By 2025, we aim to achieve carbon neutrality for our corporate and own-retail sites through implementing on-site energy production, improving energy use efficiency, sourcing renewable energy, and balancing our emissions through various partnership methods. We will also continue to monitor and improve the water efficiencies at our biggest consuming sites. We will further strengthen our sustainability foundation by increasing the environmental performance data coverage. Furthermore, we will continue to push implementing eco-efficiency standards through the IMS at key sites.
Examples of our Green Company initiatives are:
- Expansion of integrated management system (IMS): adidas has successfully applied an IMS which helps us to gain certification for key locations for their environmental management (ISO 14001), health and safety management (ISO 45001) and energy management (ISO 50001). Building on an overarching corporate IMS policy, adidas aims to further expand these certifications to more key sites every year and have them verified through both external and internal audits. By the end of 2020, 42 sites globally held an ISO 14001 certification, 39 sites held an ISO 45001 certification, and 53 sites held an ISO 50001 certification. Due to the coronavirus pandemic, the IMS implementation, as well as internal and external audits were mostly done remotely for the first time.
- Green Funds: Launched in 2012, the greenENERGY Fund acts as a source of capital for energy efficiency and green energy projects across all adidas locations. It has proved to lead to carbon reduction, with almost 80 projects already supported by this financial source. High-return projects are used to subsidize projects that may be less appealing financially but promise major reductions in carbon emissions.
- Transparency and reporting: To carefully track the progress of our environmental initiatives and their impacts against our targets, we have established a detailed environmental data recording and reporting system. Every year we publish a special Green Company Performance Analysis that details the progress towards targets sites around the globe have made in the year.
- Collaboration with suppliers: As most of our carbon emissions come from the manufacturing of our products, we work in close cooperation with our suppliers in various ways to increase energy efficiency in our manufacturing processes. In addition to promoting an EMS, like we have at our own sites, to make continuous improvements in performance, we help our suppliers to improve environmental conditions, increase energy efficiency and reduce carbon emissions. Secondly, even though our products have to deliver, it does not mean they cannot be made in a sustainable way. And lastly, we work with carriers who operate sound EMS in accordance with the ISO 14001 standard and reduce the environmental impact by shipping most of our cargo by sea.
- In collaboration with policymakers and industry alliances: We engage with critical stakeholders and collaborate with partners to improve our industry in various ways, for example, as a founding member of the Fashion Pact , by joining the UN Climate Neutral Now Initiative, by engaging with EU policymakers on mandatory carbon reporting and environmental impacts of products, as a member of the Business for Innovative Climate and Energy Policy (BICEP) , as well as by being among 33 consumer brands which have signed a ‘Climate Declaration’ urging U.S. federal policymakers to collaborate on a bold response to climate change.
We create the best for the athlete, while optimizing our environmental impact. We are committed to steadily increasing the use of more sustainable materials in our production, products and stores while driving towards closed-loop solutions. From 2024 onwards, adidas will use only recycled polyester in every product and on every application where a solution exists. The first fully recyclable running shoe Futurecraft.Loop has been in the test phase since 2019. The market launch is planned for 2021.
The following programs and collaborations allow us to improve water efficiency and quality throughout our own operations and in our supply chain. For a detailed progress reporting toward the targets set, please see our Annual Report.
- In our own operations: Since 2008, our ‘Green Company’ program strives to achieve ambitious savings in water at adidas own sites globally, our target for 2020 was to reduce water usage by 35% per employee by 2020 (2008 baseline), which we have overachieved with a 48% reduction per employee.
- In our supply chain: Most of our production is outsourced and a significant part of our environmental impact occurs, at different intensities, throughout the supply chain. For this reason, we are working with our suppliers to ensure the highest environmental standards are applied, supporting them to reduce their overall water consumption and improve their overall quality of wastewater. ‘E-KPI’ is our tool designed to measure and improve environmental performance of our strategic Tier 1 suppliers by setting them 20% water intensity reduction targets to be achieved by 2020. And we overachieved this target as our strategic Tier 1 suppliers delivered a 36% water intensity reduction in 2020.Using a benchmarking approach, the E-KPI allows for a high level of transparency into suppliers’ actual water consumption and reduction opportunities, supporting us to define suppliers’ specified areas for improvement and training needs that match their respective situation. We follow a similar approach for our strategic apparel material Tier 2 suppliers, with the aim of them achieving a 35% water reduction by the end of 2020 (baseline 2014). They also overachieved the target and delivered a 43% reduction by the end of 2020. In addition, we have initiated a system of multi-level and cross-functional advisory and training sessions with our global supplier network.
2025 Target: We are expanding our water reduction efforts to include additional Tier 2 suppliers. Through the application of new technologies, our aim is to achieve a 40% reduction in water consumption against the 2017 baseline year by 2025.
- By using more sustainable materials and processes: We innovate materials and processes and are committed to steadily increasing the use of more sustainable materials in our production, products and stores, and we are driving toward closed-loop solutions which can also lead to a positive impact on water.
- By advancing chemical management: Sustainable chemical management has a positive effect on water quality. adidas follows a holistic chemical management program that is continuously updated and developed, also in consultation with external stakeholders. Building on our long-standing collaboration with ZDHC, which promotes sustainable chemistry, we aim to have 80% of supplier facilities that manage chemicals in their production process to achieve Level 3 compliance with the Manufacturing Restricted Substances List (MSRL) from ZDHC for their input chemicals by 2025.
All our strategic suppliers are required to test their wastewater according to the ZDHC Wastewater Guidelines twice a year, and test results have to be disclosed on the IPE DETOX platform and the ZDHC Gateway platform. We aim for 80% of applicable suppliers that operate on-site effluents plants to achieve a ‘ZDHC Wastewater Foundational Level’ (direct discharge) by 2025.
- In collaboration: We believe in collaboration to achieve lasting change. We hold strong relationships within the sustainability area and engage openly with stakeholders. On water-related topics, we actively engage with organizations such as the Zero Discharge of Hazardous Chemicals group (ZDHC), , the International Chemical Secretariat (ChemSec) Business Group, the Better Cotton Initiative (BCI) and the Leather Working Group (LWG). We believe that transparent communication to our stakeholders is critical, and we will continue to regularly disclose important sustainability updates, including on water, in our Annual Report and on our corporate website.
Managing Water Risk
Water is a highly complex public resource. Due to its dependency on local basin conditions, there are many factors that contribute to increased water risk at local level which cannot, or can only to a limited extent, be influenced by adidas directly. Examples are water scarcity, e.g. caused by water depletion, groundwater over-abstraction, droughts or climate change impacts. Therefore, in addition to the water programs as outlined above, we also analyze our water basin-related risk exposure and act on the findings.
In 2017/2018, we did a water risk assessment to check the specific risk exposure of our own sites and key suppliers. Digging down into the details, e.g., risk categories, site attributes or sourcing volumes, helped us to expand our understanding of the issue. We used the results to raise awareness and inform discussions to further initiate improvements within our company.
For example, for our own sites, we took immediate action focusing on the high-risk sites. To complement the water basin-related score, we collected and analyzed additional site-specific water risk information. We plan to have a water program in place at all high-risk sites or, if one already exists, to critically review it. In future, we will develop targeted awareness-raising and training material for site managers, include water risk in our greenWATER Fund decision criteria which determine fund allocation, explore how a water risk assessment could become part of the selection criteria for new sites, and include water risk in future program development and target-setting exercises. In our supply chain, we use the HIGG Facility Environmental Module (FEM) 3.0 to help identify suppliers in high water risk areas and, as we continue to strengthen and evaluate our environmental program for our supply chain, we will explore how water risk could be included in the overall risk assessment.
Human Right to Water
We recognize the human right to water, as first developed under the UN’s International Covenant on Economic, Social and Cultural Rights of 1966 as well as through the UN resolution 64/292, adopted in 2010, which acknowledges the importance of equitable access to safe and clean drinking water and sanitation as an integral component of the realization of all human rights. In line with our company’s commitment to human rights throughout our operations, both at our own sites and in our supply chain, we are fully committed to respect the human right to water
As a responsible company we are aware of the human dimension of water and other environmental impacts, and we strive to respect and integrate it into our work. This includes water management to minimize impacts on local communities, supporting the sustainable use of materials and the conservation of natural resources and recognizing that uncontrolled consumption of resources may have dire implications for local communities and for the planet. We are therefore committed to act wherever we have direct influence – in the design of our products and in the selection of materials – and where we see measurable adverse impacts from the manufacture and transportation of our goods. We expect suppliers and business partners to be aligned with our globally agreed policies and frameworks for sustainable resource use and have a clear strategic roadmap in place for a stepwise improvement in their efficiency, with specific measures to eliminate all forms of waste and to reduce their:
- energy consumption, with a primary focus on energy efficiency,
- carbon emissions and associated impacts on greenhouse gases (GHG),
- water footprint, with a focus on water conservation and recycling efforts.
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. For years, adidas has been running leadership programs that address this topic within its area of direct influence.