It was our concern for the well-being of workers in our factories that led us to establish our "Workplace Standards," the supply chain code of conduct, which covers workers’ health and safety and provisions to ensure environmentally sound factory operations. A number of topics related to the workers' well-being are of special interest to our stakeholders. These range from fair wages, child labor and freedom of association to health and safety.
The idea of a living wage is that workers, and their families, are able to afford a basic, but decent, standard of living that is considered acceptable by society at its current level of economic development. A fair compensation approach goes further than this.
As a responsible business we do not want the workers employed in our supply chain to face hardship in their daily lives. Our aspiration, as set out in the core principles of our Workplace Standards, is that workers earn enough for their basic needs and those of their family, and have income remaining to cover discretionary spending, as well as savings. We seek business partners who progressively raise employee living standards through improved wage systems, benefits, welfare programs and other services which enhance quality of life.
The question of calculating and paying fair compensation within global supply chains is complex. Wages are determined by the general economic conditions and cost of living in a country, national laws and government policy, the size and availability of its workforce, a worker’s skill levels, the competitiveness and productivity of the supplier, the customers’ purchasing practices and the workers’ ability to organize and collectively bargain with their employer.
Definitions and Benchmarks
As a Fair Labor Association (FLA) Participating Company, we have aligned our Workplace Standards’ wages and benefits code provision and our fair compensation definition and strategy with FLA benchmarks and fair compensation methodology. Accordingly, fair compensation ensures factory wages meet both the workers’ basic needs, in terms of housing, food, water, healthcare, transportation, and clothing, as well as providing for some discretionary income. As part of our fair compensation concept, we have also adopted the Global Living Wage Coalition’s (GLWC) definition and benchmarks, where available, to measure and track wage progress.
Our approach to payment of fair compensation in our global supply chain is built around five levers that influence wage development: Legal Obligations, Responsible Purchasing Practices (RPP), Productivity, Government Engagement and Industrial Relations.
For each lever we have a program of work, which supports fair compensation and wage progression. To support this work, we deployed FLA fair compensation assessment tools and guidance to our suppliers. Since 2017, we have conducted wage assessments in 48 factories in Cambodia (17 assessments), Honduras (6 assessments), Indonesia (9 assessments), Ukraine (3 assessments), and Vietnam (13 assessments); including approximately 27% of our global strategic factories in our sample. These assessments helped shape our current fair compensation strategy and priorities.
In the next 5 years (2021-25), our wage assessments via the FLA Fair Compensation tools and dashboard will be used to provide suppliers with measurements of the strengths and weaknesses of the wage-setting system and to evaluate the linkages between pay and skills, pay and company performance, and the need for effective social dialogue in the workplace. We will also build on our efforts, with a focus on gender equality, pay equity and responsible sourcing practices that support fair compensation for workers. Our ambition is to see progressive improvement across all fair compensation benchmarks and achieve gender wage parity for workers in each of our strategic Tier 1 suppliers by 2025. As a starting point, in 2021 we will concentrate our efforts in Cambodia, Indonesia and Vietnam, which together represent 50% of our strategic suppliers.
To support this strategic direction, we will continue to pursue targeted actions around our 5 levers, as follows.
Fair compensation cannot be achieved without first ensuring factories meet the legally required wages and benefits. For our business partners, our starting point is full legal compliance. We insist on adherence to our Workplace Standards. We demand that our suppliers, as employers, pay the legally required wage and benefits, on time and in full, and we monitor our suppliers to ensure this. We expect there to be equality in pay for men and women. We verify the compliance status of our suppliers through internal and third-party audits, worker hotlines and grievance processes. If we find evidence of non-compliance, we recommend remedial steps and actively engage with our suppliers to implement corrective action, drive improvement, and prevent further non-conformance. However, where a supplier fails to meet our expectations or take the necessary remedial or preventive steps, they will be subject to enforcement action; up to and including termination of the business relationship. Wherever new and higher wages are set (whether through collective agreement or government minimum wage adjustment), we require our suppliers to meet those wages and any other legally mandated allowances and benefits. Our purchase price is adjusted accordingly, within the normal cycle of price negotiations, to reflect our business partners’ costs of doing business.
As part of this lever, we will in the coming 5-year planning cycle:
- Conduct due diligence on compensation related issues at a factory level and advance the concept of equal pay for equal work. Our goal is to ensure that all wages and benefits related non-compliance findings are promptly addressed and closed-out within the annal audit cycle.
- Continue to assess factories against various wage benchmarks, including the national or sectoral minimum wage and living wage benchmarks such as Global Living Wage Coalition’s benchmark.
- Take enforcement actions when suppliers fail to uphold legally mandated compensation and employment conditions, including failure to pay the government mandated wages and benefits; or when there are breaches of freedom of association and negative impacts on collective bargaining.
Responsible Sourcing & Purchasing Practices
As a company we are committed to responsible sourcing practices. At the end of 2017, adidas launched its Responsible Sourcing & Purchasing Practices Policy to ensure our sourcing and purchasing decisions, and their supporting processes, do not impede or conflict with the fulfilment of the adidas Workplace Standards, including wage payment to workers. To supplement this policy, in 2020, we added a set of 10 Buyer Commitments to guide our responsible purchasing. Our commitment to Responsible Sourcing and Purchasing Practices continues to support our work on Fair Compensation by:
- Building capacity and knowledge of our internal sourcing teams and our licensee partners in applying Responsible Purchasing Practices.
- Measuring and regularly reviewing the application and impact of our Buyers’ commitments.
- Ensuring that the prices that are negotiated and paid recognize the full payment of legally mandated minimum wages and benefits and agreements negotiated through collective bargaining.
- Promoting stable, long-term sourcing relationships with suppliers.
The question of calculating and paying fair compensation within global supply chains is complex and often linked to productivity and efficiencies. We support productivity initiatives and technologies to reduce work hours and improve pay for performance. Additionally, as we look to the future, we believe that technology and automation will increase demand on retention of skilled workers, creating an opportunity for an improvement in wages and benefits. However, automation may also reduce the overall demand for workers. As a result, we must capitalize on the positive impact of technology and automation, while also being sensitive to the impact on employment that comes with new ways of working. Over the next five years we plan to:
- Research and develop Best Practices for suppliers that attract, motivate, develop, and retain workers.
- Measure outcomes, to ensure they meet or better our industry wage benchmark, and provide compensation that attracts, motivates, and retains skilled workers, which helps improve productivity.
Governments play a key role and have a responsibility in protecting and promoting human rights, including upholding ILO labor conventions and fundamental rights of work. The global pandemic caused by Covid-19 also illustrates the importance of strong government policies to protect workers’ economic rights and needs. Governments can also help normalize industrial relations and workers’ ability to organize and collectively bargain. If we wish to see long term and sector wide improvement in wages and worker welfare, it is necessary to engage with policymakers and national governments. Our outreach in the coming years will continue to focus on:
- Engagement with multilateral agencies, governments and other stakeholders over long-term social protection mechanisms, building on dialogues already underway with labor advocacy groups and the ILO Call to Action for the garment industry.
- Advocating with governments to ensure that minimum wage setting considers workers’ living costs and needs.
Strong and effective industrial relations foster dialogue, transparency and problem-solving capabilities between employers and workers. It also provides a mechanism for workers to negotiate their working conditions through collective bargaining, which may not only lead to better pay and working conditions but is also covered by two of ILO’s fundamental rights at work Conventions, Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87) and Right to Organise and Collective Bargaining Convention, 1949 (No. 98). The path to improve the general welfare of workers is to promote wage-setting mechanisms which are transparent and have been developed with the direct input of workers. Ideally, this occurs through negotiation or collective bargaining with established and freely elected trade unions, or through alternative legal means, such as workers’ councils or welfare committees. As such, for the next 5 years we plan to:
- Support local efforts to democratize and strengthen freedom of association and collective bargaining.
- Encourage suppliers to improve social dialogue, including improvements to collective bargaining processes (i.e., good faith bargaining).
- Partner with non-governmental organizations and specialized institutions, which can support the development of social dialogue mechanisms.
adidas issues its Standards of Engagement which includes wages and benefit expectations for suppliers
We publish our Employment Standards to explain how wages and benefits (and a range of other labor rights) should be respected and delivered
We commission a two-year study on fair wages in Indonesia, which examines different living wage methodologies
We appoint a leading economist to review the research outputs from the Indonesia Living Wage Study and advise on wage benchmarks for Indonesia
adidas hosts the first-ever MNC-led fair wage workshop bringing together government, manufacturers and trade unions to discuss living wage concepts, wage growth and the impact of wages on employment
We publish a Guideline on Worker Cooperatives to support savings and loans for housing and the establishment of worker food cooperatives
We commission an econometrics study for a cross section of footwear and apparel suppliers in China, which examines wage, productivity and incentive payments for workers
We issue a new set of Workplace Standards which updates the wage provisions and highlights the need for discretionary expenditure and savings
We provide access to selected factories in Asia, as part of the initial research into fair wage concepts conducted by Professor Daniel Vaughan-Whitehead and the Fair Wage Network.
We revise and update our Employment Guidelines, incorporating fair compensation language into our guidance
We engage with the Fair Wage Network to assess the fairness of wages paid by 26 suppliers in seven countries
We extend the Fair Wage Network assessment to a quantitative evaluation of the outcomes from assessments in four suppliers
We share our work and experiences on fair wages at the European Conference
on Living Wages, hosted in Berlin, Germany
|2015||We adopt our Fair Compensation Strategy based on the UN Guiding Principles’ three pillars and aligned with human rights concepts. We begin to work in tandem with the newly adopted FLA Fair Compensation Strategy.|
|2016||Our Workplace Standards are updated to include additional commitments related to human rights and to various code provisions, including wages and benefits. We conduct initial pilots of the FLA’s Fair Compensation wage gathering tool in Brazil, Cambodia, China, Honduras, Indonesia, Mexico, Turkey, and Vietnam.|
|2017||adidas joins the FLA’s Fair Compensation Practitioners’ Working Group with the aim to improve the FLA’s wage gathering methodology and tool. We conduct data collection in Cambodia, Honduras, and Ukraine to test the upgraded FLA Fair Compensation wage gathering tool and to begin to conduct wage analysis in our supply chain.|
|2018||We publish our Responsible Sourcing & Purchasing Policy. We participate in the Better Buying survey seeking supplier feedback. We complete wage data collection in two of our biggest sourcing countries, Indonesia, and Vietnam.|
|2019||Through our ongoing participation in FLA’s Practitioners’ Working Group, we support FLA efforts in improving their wage gathering tools and online dashboard to facilitate wage data gathering and analysis. We review and analyze collected data and share results of our Better Buying results with our internal sourcing partners.|
|2020||In response to Covid-19, we commit to pay for all orders completed, or in process. We join ILO Call to Action to help address the impacts of Covid-19 to the garment industry and to the workers. We integrate our 10 Buyer Commitments into our existing Responsible Sourcing & Purchasing Practices Policy.|
Although everyone’s human rights and fundamental freedoms must be respected and upheld, particular attention must be given to vulnerable groups, minorities, or those whose circumstances open them up to exploitation or the abuse of their rights. It is for this reason that we have developed specific programs and initiatives to address topics such as child labor, migrant labor, trafficking and forced labor, and women’s rights. These initiatives are summarized below.
According to the International Labour Organization, child labor is often defined as “work that deprives children of their childhood, their potential and their dignity, and that is harmful to physical and mental development”. This includes work that interferes with children’s schooling. Our Workplace Standards state that our suppliers must not employ children less than 15 or less than the age for completing compulsory education, if that is higher than 15.
The adidas Social and Environmental Affairs program was formed as a result of concerns over the presence of child labor in global supply chains. It was a core area of our work in the late 1990s. The founding director of our program was a former Director of Save the Children and our policies and practices led the industry. With the growing football stitching industry in Sialkot, Pakistan, we recognized at an early stage the need to address the underlying issues of poverty, employment and access to schooling for children through a combination of educational and social development programs. For the past years, we have now sponsored education programs in Sialkot, to improve access to schooling for children from the rural locations where home-stitching was once prevalent. One such program started as an industry-wide initiative supported by the ILO and UNICEF, establishing an independent child labor monitoring body which is now self-governing.
Our approach to children's rights
The adidas Labor Rights Charta committs the company to uphold labor and human rights for its employees and to respect and promote such rights through our business relationships. The Charta describes our support for the United Nations’ Universal Declaration of Human Rights and the core labor principles of the International Labour Organization, including a prohibition on the employment of child labor. Within this broad framework, adidas is committed to upholding children’s rights as set out in the UN Convention on the Rights of the Child (CRC) and the principle that: “In all actions concerning children … the best interests of the child shall be a primary consideration.” (Article 3, CRC)
Eliminating Child Labor
adidas’ commitment to child rights is demonstrated through our policies, procedures and daily practices, both internally and in terms of how we manage our business relationships, as illustrated below.
Policies and Standards
Our policies on child labor have always been centered on a concern for the child and protecting their interests, as well as recognizing the importance of income to support households and schooling. Although it is many years since we have dealt with a case of child labor in our core supply chain, we do have developed approaches to dealing with such cases. Our past experience in working with the United Nations and industry partners on eliminating the worst forms of child labor, informs our due diligence and risk mitigation strategies, as we continue to extend our efforts and reach to upstream suppliers, including raw materials sources.
Any finding of child labour would require a supplier to pay an on-going wage to the family of the child laborer and for the child to return to school until they are of a legal age to work. They must then be offered re-employment by the supplier, in a role that would not involve excessive hours or hazardous work. In the past we have often partnered with local NGOs to manage and track such activities, or support in the identification of school options.
It is important for our brand that all production takes place in authorized locations, both for compliance and quality reasons. We do not permit home working or unauthorized subcontracting, both of which may increase the risk of child labor. To support this policy, we employ tracking systems to ensure that we have knowledge and visibility of each stage of the production process and trace the movement of product components and materials up until the finished product is shipped to the customer.
All new suppliers must be screened for the presence of child labor and, if found, this issue must be immediately addressed. If a prospective supplier is unable or unwilling to establish a human resources management system with the relevant ID-checking and verification processes, to minimize the risk hiring of child labour, or to address a specific instance or finding of child labor, they cannot qualify as an approved supplier for adidas. In such circumstances we would reach out to the labor authorities and, where appropriate, to local NGOs for assistance. Our requirements in managing child labor, as well as the employment of juvenile labor (those who are of a legal age to work, but under 18) is presented in our Employment Guidelines. These guidelines, which were first issued in 2001 and updated in 2010 and 2016, are shared with every supplier and apply equally to all subcontracting relationships and materials suppliers.
We are committed to transparency and make public the names and locations of our main suppliers and their immediate subcontractors, including those making indirectly for us through licensees and agents. We also publish lists of our Tier 2 materials suppliers.
We recognize that there are parts of our supply chain which our mainstream monitoring program does not reach. For example, the sourcing of raw materials such as cotton. As an agricultural product, cotton is often grown on smallholdings or by tenant farmers in the developing world. Such farming practices come with a risk of child labor, as the farmers and their families struggle to survive and generate an income from this water sensitive crop. To control this risk and manage other labor and livelihood concerns, as well as supporting environmental improvements and water resource management objectives, we source 100% of our cotton through the Better Cotton Initiative (BCI). BCI-sourced cotton is subject to an assurance system that follows international labor standards, including restrictions against the use of forced and child labor. We also joined an alliance of international investors, brands and non-governmental organizations to fight against government-backed child labor in Uzbekistan during the cotton-picking season. Click here to read more about the pledge we signed calling for the Uzbek government to end forced child labor.
For relevant case studies and evaluations of our work on addressing child labor in our supply chain, please see:
- Stop Child Labour, Child Labour in the Leather Footwear Industry, December 2012
- CSR Asia, Joining the dialogue: Vulnerable children and business, 2013
- Fair Labor Association, adidas assessment for reaccreditation, October 2017
‘The rights of the child’ are enshrined in international human rights law and are a State obligation. The 1989 Child Rights Convention goes beyond a prohibition or elimination of child labor, it also considers the protection and promotion of a broader set of child rights that are incapsulated in four key principles:
- Non-discrimination and equality of opportunity for children
- The best interests of children must be a primary consideration
- Children’s right to life, survival and development
- The views of the child matter
adidas upholds the the Children’s Rights and Business Principles (CRBP) published by UNICEF in 2012. The CRBPs identify a range of actions business should take, to address the potential impacts business could have on children in the workplace, marketplace, community and environment.
We are committed to respect children’s rights. We do so through our efforts to eliminate child labor and provide decent work for young people in our global supply chain, as described earlier, and by our commitment to:
- ensuring the protection and safety of children in all of our business activities and facilities;
- ensuring that products and services are safe;
- using marketing and advertising that respect and support children’s rights;
- respecting and supporting children’s rights in relation to the environment;
- helping protect children affected by emergencies, and
- reinforcing community and government efforts to protect and fulfil children’s rights.
Ensuring Products and Services are Safe
Our product safety team ensures that all products likely to be used by children are designed and tested in line with relevant national and international standards. Moreover, product safety legislation that sets out specific requirements for defined children ages or size formats, is applied with a special level of care.
We continue to lead our industry in safety-related chemical management and physical product requirements and seek to ensure that products and services for children or to which children may be exposed are safe and do not cause harm. Our product labelling and information for instance is clear, accurate and complete, including age restrictions and consumer guidance. This enables parents and children to make informed decisions.
We also seek to prevent and eliminate the risk that products and associated services could be used to abuse, exploit or otherwise harm children in any way. This includes the development of social media and privacy policies to protect the rights of children who seek to interact with our business through e-commerce or online platforms.
Responsible Marketing and Advertising Practices
As a company, adidas is committed to responsible business practices and ensuring that our marketing activities do not have an adverse impact on children’s rights. For example, we are an active member of Incorporated Society of British Advertisers (ISBA). One of ISBA’s core responsibilities is to champion the rights of responsible advertisers. Accordingly, adidas and its selected agencies are committed to follow ISBA’s guidelines and rules to protect children and other vulnerable groups.
With respect to our online data management, we comply with the EU General Data Protection Regulation (EU GDPR) and the United States’ Children’s Online Privacy Protection Act (COPPA).
Protecting Children in Emergencies
Our emergency relief efforts and humanitarian aid have been centred on protecting children. We have decades long partnerships with SOS Children Villages, Save the Children, Habitat for Humanity and other non-profit agencies. Recently, we have actively supported and funded relief efforts for families and children impacted by the Rohingya refugee crisis. This has included both cash and in-kind donations to child-rights organisations operating within the Rohingya refugee camps in Bangladesh. Similar cash and in-kind donations have been made to relief agencies working in the Syrian refugee camps in Turkey, where almost 50% of those housed in such camps are unaccompanied minors.
We have also helped protect Syrian refugee children who have fled to Turkey, by raising awareness of the increased risks of violence, abuse and exploitation of children in such contexts. We have partnered with the Fair Labor Association and Turkish Ministry of Labour to create and distribute an Arabic and Turkish leaflet for employers for the prevention of child labor, informing about relevant laws and regulations and the fines in case of any noncompliance that was
The Right to Play and Child Safeguarding in Sport
As a global sporting goods company, adidas has long championed children’s right to play, including access to sports. To achieve this, we have both launched and participated in several initiatives. In 2012, for example, our subsidiary business Reebok supported Former First Lady Michelle Obama ‘Let’s Move’ initiative for schools, part of a larger US government-backed program to tackle childhood obesity in America. More recently, adidas has worked with the Ministry of Education in China, providing training for around 50,000 Chinese sports teachers, who in turn are teaching soccer skills in more than 20,000 schools, reaching 20 million youngsters in total. In partnership with UNESCO, adidas has also had a part to play in the Fédération Internationale de Football Association’s (FIFA’s) Football for Schools program, which aims to make football more accessible to children, by incorporating football activities into physical education curricula. This international sports programme targets over 700 million school children.
As a sponsor of clubs, players and sports bodies, such as FIFA, we have engaged with our partners over the question of child safeguarding, especially for young professionals. That engagement has included outreach to the Centre for Sports and Human Rights in Geneva, which is actively promoting child safeguarding around major sporting events, such as the FIFA World Cup events. adidas is a member of the Centre’s Advisory Council, along with UN agencies, governments, unions and other civil society groups.
The ILO Forced Labor Convention No. 29 defines “Forced Labor” as “work or service exacted from a person under threat of any penalty, which includes penal sanctions and the loss of rights and privileges, where the person has not offered himself/herself voluntarily”. In accordance with our Workplace Standards, business partners must not use forced labor, whether in the form of prison labor, indentured labor, bonded labor or otherwise. No employee may be compelled to work through force or intimidation of any form, or as a means of political coercion or as punishment for holding or expressing political views.
In a world where modern-day slavery continues to impact tens of millions of people, we have developed a policy to address forced labor and concerns over human trafficking. adidas strictly prohibits the use of any form of forced labor or the trafficking in persons across all of our company operations and in our global supply chain.
Click here to read our Modern Slavery Policy, as well as our Policy on responsible recruitment. Below you can find detailed summaries about our activities per year.
We have worked closely with the ILO and non-government organizations to safeguard the rights of migrant workers who have found employment within our supply chain. This has included the development of guidance and industry best practice to eliminate the exploitative actions of middle men and unscrupulous employment agencies, as well as ensuring freedom of movement, equal treatment and proper employment contracts for migrant workers. Details of our policies and guidance can be found in our Guidelines on Employment Standards.
We are signatories to the American Apparel Footwear Association – Fair Labor Association [AAFA-FLA] pledge on responsible recruitment. Early in 2019, we communicated our zero recruitment fee directive to all business partners globally. We signed a two-year partnership with the UN’s International Organization for Migration. This partnership comprises specialized trainings and due diligence measures, for our business partners in receiving countries and for recruitment agencies in sending countries. As part of our foreign labor risk mapping efforts, we have identified high risk migrant countries such as Taiwan and Thailand and are working closely with business partners to support their compliance with our zero recruitment fee requirement. We work with more than 20 recruitment agencies with locations across Taiwan, Thailand, Philippines and Vietnam.
Respecting Human Rights
On May 1, 2011, adidas signed off on its Labor Rights Charter to commit the company to uphold labor and human rights for its employees and respect and promote such rights through our business relationships, and with that to support the United Nations’ Universal Declaration of Human Rights and to follow policies and procedures which “adhere to all applicable domestic laws and are consistent with core labor principles of the International Labour Organization.” Although the Charter does not make specific reference to “Women’s Rights” or the 1979 UN Convention on the Elimination of All Forms of Discrimination against Women, those rights are protected by umbrella commitments made to ensure that employees, and workers within the supply chain, are treated equally and are free from discrimination.
The Charter makes it clear that “equal opportunities for all employees and a prohibition on discrimination based upon one’s membership in a lawfully protected category are fundamental principles of our corporate policy. No person is to be unfairly disadvantaged, favored or ostracized because of (…) gender, gender identity, (...). Harassment of any kind is forbidden. (..) We believe Diversity is a key success factor for our business.” adidas lives these principles through its policies, procedures and daily practices, both internally and in terms of our business relationships. “We deeply believe that the respect for people is fundamental for business excellence. With this position we confirm our commitment to internationally recognized principles in the areas of human rights and labor conditions. We expect the conduct of our employees and business partners worldwide to reflect this commitment.”
Aligned with that commitment, we follow a holistic approach to uphold women’s rights, ensure gender equality and protect against all forms of gender-based discrimination, internally, and through our business relationships.
Our Own Employees
As a truly international company with more than 80 nationalities at its German headquarters in Herzogenaurach alone, and numerous ethnicities and languages across its global operations, adidas embraces diversity and strives for inclusion and equality. There are many facets to diversity. Parity and equality across them all is essential in creating the ideal culture and protecting rights. Our goal is that at adidas every single person feels welcome. We believe in equal opportunity for all, regardless of race, age, abilities, gender, gender identity, sexual orientation, ethnicity or religion. We hold ourselves to the same high standard for all our workplaces around the world, without exception. This is supported and communicated by our Executive Board. To support this drive for equality and diversity we have various initiatives in place, including
- Female mentoring programs and networks: Members of the Executive Board have been proactive in mentoring female talents. We have applied an equal gender split to our Global High Potential program, to guarantee that our succession pipeline is balanced. In addition, we have a very active Women’s Network in place across the company, which is developing mentoring circles to foster the professional development of junior colleagues.
- Mixed leadership teams: We believe that it is important that both women and men have equal opportunities to contribute and succeed. By the end of 2020, the company had recorded a total of 35% of women globally in management positions (2019: 34%), exceeding the 2020 target of 32%.
- Equal pay: Under our Charter, adidas has committed to “provide our employees with fair and competitive compensation and benefits”. We are continuously improving our remuneration approach and are therefore investing in a number of projects and initiatives to increase the significance of our remuneration programs, as well as to ensure we are investing in the right people at the right level. One of the improvements we conducted was the initiation of a new salary adjustment approach. It was applied in Germany and the US in 2017 to minimize salary differences and, more importantly, inequity of employees on the same positions and grades. It is based on a higher level of detail for external market data and addresses internal pay gaps – also helping ensure that we pay equally at the same level for female and male employees.
- Sexual harassment: Harassment of any kind is forbidden. To track complaints, we have established a network of 20 compliance officers worldwide. In 2013, we installed a global hotline called the ‘Fair Play Hotline’. With the Fair Play Hotline, our employees can submit complaints anonymously.
Click here to read more about all programs and intiatives for employees.
Women in Our Supply Chain
Women make up half of adidas’ current global employee base and are the dominant gender in our supply chain; more than 80% of workers making our product are women. Women are given special status and protection under international human rights law. The International Labour Organization also regulates the treatment of women in the workplace through several conventions that specifically address fair treatment, non-discrimination and equal pay and conditions.
We require that our business partners respect and promote women’s right to health, education and work. The latter includes both equality of opportunity (for example, through fair hiring and retention strategies) and equality of outcome (for example, ensuing equal pay and benefits while in employment). Our approach is closely aligned with the expectations laid out in the UN Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). (For a definition of discrimination by the Convention on the Elimination of All Forms of Discrimination against Women 1997, see UN Office of the Commissioner for Human Rights, 2014, UN Women’s Rights are Human Rights, p. 6. Indeed the underlying principles of CEDAW are reflected in the language of our Workplace Standards and in our supporting Guidelines on Employment Standards (click here), which our business partners must follow.
Through our guidance to suppliers we seek to uphold and protect women’s rights. Our guidelines explicitly state that “workers must not be discriminated against on the basis of their gender, marital status, or because they are pregnant or breastfeeding.” Moreover, women are to be guaranteed “equality of opportunity and treatment in access to training, employment, promotion, organization and decision making, in addition to securing equal conditions of remuneration, benefits, social security and welfare services.”
We have developed specific guidance and offer tailored programs and initiatives in collaboration with organizations aimed at securing the rights and ensuring the occupational safety of female workers in our supply chain.
- Gender equality and non-discrimination: Within our supply chain we have supported gender equality and non-discrimination by delivering specific programs and initiatives. For example, we have actively monitored and sought remedies for breaches of women’s rights, including discrimination in the hiring or treatment of female workers, based on gender, age or reproductive status; we have followed a zero-tolerance policy towards sexual harassment, conducting investigations into claims and developing remedies for victims; we have supported specific reproductive and post-natal health projects, such as the establishment of breastfeeding areas, special canteen areas/food for pregnant workers and the provision of child-care facilities; we encourage our suppliers to go beyond legal requirements and support and subsidize the cost of education and health care for women and their children; we have participated in joint industry initiatives, such as HER project from Business for Social Responsibility and the ‘Women in Factory’ program in China to support workplace-based interventions on health, financial inclusion, and gender equality; we have commissioned empowerment projects to support the hiring of women workers – where cultural norms had restricted job opportunities – and training initiatives to build skills for female workers whose employment has been displaced due to the introduction of new technologies. See below for more details about these projects.
- Equal pay for equal work: Everyone has the right “to fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work”. (See Article 7(i), International Covenant on Economic, Social and Cultural Rights, 1966.) Ensuring that our suppliers recognize and pay workers the same wages and benefits, irrespective of gender, is a core component of our approach to fair wages in the supply chain. This is supported by our strict enforcement of government-mandated minimum wages and legal overtime rates for workers. Based on the wage research we have commissioned in the past and the wage data we collect during our regular factory monitoring activities, we have achieved a high level of compliance with this wage requirement.
- Benefits and entitlements: To complement our work on fair wages, our close engagement with suppliers has resulted in consistently high levels of compliance in fulfilling female workers’ employment rights and benefits, such as maternity leave allowance, restricting overtime for pregnant women, menstrual leave, provision of day-care and nursing facilities. For example, as early as 2001 we engaged with Phulki, a Women and Child Rights NGO in Bangladesh, to promote improvements and access to day-care facilities, which are essential for young mothers re-entering the workforce. From this initial partnership, Phulki has been retained to engage directly with women workers to understand and track their concerns and issues.
- Sexual harassment and gender-based violence: Sexual harassment or abuse, repeated use of rude or improper language, or any type of behavior which is inappropriate or used to intimidate workers is unacceptable. Sexual, physical or verbal harassment or any other types of activity which create an intimidating, hostile or offensive work environment are prohibited and are treated as a serious breach of our Workplace Standards. To address such issues, we require our suppliers to have in place appropriate policies, procedures and training programs for workers and managers, as well as grievance systems to handle worker complaints. (See detailed guidance given in our Guidelines on Employment Standards on pages 104-107.) We independently review the effectiveness of these systems and will intervene directly if we see evidence of sexual harassment taking place in our suppliers’ factories.
Modern Slavery and Human Trafficking
In the absence of a legal definition for modern slavery, adidas defines it as the risks posed by forced labor, prison labor, indentured labor, bonded labor, debt servitude, state-imposed forced labor and human trafficking, where coercion, threats or deception are used to intimidate, penalize or deceive workers, thereby creating situations of involuntary work and exploitation. It is estimated that there are 40.3 million victims of modern slavery in the world. Of these, 24.9 million people are in forced labor and 15.4 million in forced marriage. There are more females (71%) than males (29%) in modern slavery. Where people have migrated for economic reasons, women are particularly vulnerable to the risks of slavery-like practices.
To address these issues, we have been progressively working closely with our supply chain business partners beyond our Tier 1 in high-risk locations, providing them with the guidance to identify and remedy unscrupulous employment practices. We conducted assessments of our Tier 3 raw material supply chain, to identify and address risks of modern slavery and use an external benchmark, managed by Corporate Human Rights Benchmark and others, to track our performance and programs in relation to our industry peers.
Women’s Empowerment Projects
WORKER SATISFACTION SURVEY: FEMALE WORKERS' FEEDBACK
In line with our strategic ambition for 2020 to empower workers across our entire supply chain we started to conduct worker satisfaction surveys in factories of our strategic suppliers back in 2016. The aim is to better understand and respond to workers’ needs. Supported by an external partner, one of the latest surveys was conducted in 2017 and included female respondents, both workers and supervisors. Results show a clear trend toward a positive perception on the topic of fair wages and the absence of sexual harassment.
In detail, out of more than 7,500 female workers surveyed, 81,4% believe their wages to be “fair” or “very fair”, while only 1.3% stated it was “unfair”. A further 62,6% also stated they are rewarded for good performance. On the topic of sexual harassment three quarters of female survey respondents confirmed they have not experienced or witnessed any harassment or abuse in the factory.
Overall, we conducted worker satisfaction surveys in around 50 factories across nine Asian countries including China, Cambodia, India, Indonesia, Philippines, Thailand, and Sri Lanka in 2017. The survey results serve as good overview of our continuous quest to understand our workers’ needs through listening to them. We use the survey results to further ensure a stable and beneficial working environment, and we will track the trend and progress in the next round of survey.
As a responsible business we believe that worker-management communication is vital for the success of any business enterprise. Workers must have access to effective communication channels with their employers and managers, both as a means of exercising their social and economic rights and to help them resolve workplace issues and disputes.
One important channel for worker-management dialogue is through trade union representation. Our Workplace Standards are clear that our supplier partners must recognize and respect the right of their employees to join associations of their own choosing and to bargain collectively. Our business partners must also develop and fully implement mechanisms for resolving industrial disputes, including employee grievances, and ensure effective communication with employees and their representatives.
A worker’s right to freely associate must be protected and no employee should be discriminated against because of their trade union affiliations. Our approach to effective workplace communication and ensuring Freedom of Association in our global supply chain is built on three pillars and aligned with basic human rights concepts.
We respect rights, ensuring that our own activities do no harm: adidas recognizes and respects the rights of all workers to freely associate, choose their representation in the workplace, and collectively bargain.
Effective communication in the workplace is the cornerstone of our social compliance efforts. Therefore, it is essential that employees exercise their right to freely communicate and engage with the management. adidas does not seek to promote, nor prevent, the lawful formation of workers’ organizations, in particular trade unions. Through our engagement with our business partners, we strive to protect the right of employees to make their own choices in this regard, free of unlawful interference, and ensure that employees have a voice in the workplace.
We seek to secure worker rights by monitoring and remediating issues we find and by preventing issues occurring whenever we see opportunities to do so: Our suppliers must recognize and respect the rights of workers to freely associate, choose their representatives in the workplace, and collectively bargain. If we find evidence of non-compliance, we recommend remedial steps and actively engage with our suppliers to help drive improvement and prevent further non-conformance.
For our business partners, our starting point is full legal compliance. We insist that our suppliers recognize and respect the right of employees to join and organize associations of their own choosing, to bargain collectively and, when necessary, to participate in lawful strike action. Where the national laws restrict freedom of association, suppliers should take steps to create an open and effective means of communication for employees to discuss issues and express concerns in a positive environment.
Through internal and third party audits, worker hotlines and grievance processes, we verify the compliance status of our suppliers. The direct feedback of workers and their elected representatives is a key indicator for us, when checking the implementations of Freedom of Association. If we find evidence of non-compliance, we recommend remedial steps and actively engage with our suppliers to help drive improvement and prevent further non-conformance. However, where a supplier fails to meet our expectations or take the necessary remedial or preventive steps they will be subject to enforcement action, up to and including termination of the business relationship.
We seek to build leverage and influence. We encourage our suppliers to act in accordance with their own obligations as business enterprises in upholding the UN Guiding Principles: We guide and encourage our business partners to find ways and actions that build good industrial relations, primarily through the facilitation of worker representation systems, the management of employee grievances, and by ensuring effective communication with employees and their representatives.
We believe that effective communication between employers and employees is an integral part of good industrial relations and the key to a fair and compliant workplace. We actively encourage our suppliers to establish mechanisms for resolving industrial disputes and employee grievances in a positive environment. These mechanisms should enable open and effective communication with employees and their representatives.
- Worker representation system: suppliers should create an environment which permits their employees to choose their own representatives, by common consent or election, and meet with them on a regular basis to help resolve workplace issues and disputes, and where unions have been formed to collectively bargain.
- Suggestion and grievance systems: suppliers are required to have grievance systems in place where workers can freely and (should they decide to) anonymously post or share any complaints or suggestions they may have. All grievances and suggestions received must be properly considered and responded to in a timely manner.
- Worker hotline: the adidas SEA team requires all authorized suppliers to post a corporate hotline poster in which we encourage employees to raise any concerns or complaints they may have either to the internal communication channels provided by the employer or directly to the SEA team via a corporate email address, postal address or by telephone.
Where we see evidence of governments failing in their duty to properly investigate and protect the Freedom of Association of workers in our supply chain, we will petition them and call for effective remedies. At times we have taken steps to expand the space for the exercise of representative rights.
For example, in Indonesia we were a leading party in a multi-stakeholder process with local trade unions, non-government organizations and suppliers to develop an FOA Protocol – a basic framework for the exercise of trade union rights in the workplace. Elsewhere, we have worked with labor officials, trade unions and suppliers to run FOA awareness training sessions, to strengthen workers’ understanding of their associational rights to form and join organizations of their own choosing and their right of access to trade union representation.
Workers in factories face risks from fire, accidents and toxic substances. Our Workplace Standards are explicit about the need to protect workers from these risks and ensure they have a right to adequate lighting, heat and ventilation as well as access to suitable sanitary facilities. Taking a structured approach is the best way our suppliers can ensure workers’ health and safety. So we require them to establish a health and safety management system that adheres to the standards and procedures of the international standard OHSAS 18001.
We are committed to track and report on health and safety incidents and performance in our supply chain. In 2018, we started to track the Incident Rate and Severity Rate across our strategic suppliers globally and plan to report this figure in the coming years. In addition, we have initiated a machine safety project at major footwear suppliers in Indonesia, one of our main sourcing countries. The aim was to precisely assess machine safety conditions and associated risks, as the majority of accidents in footwear factories are caused by machines. We will track and measure the outcome of the project in 2019 and have expanded the project scope to cover additional suppliers and sourcing countries.
Through our own monitoring we are aware that breaches of good health and safety practices have historically been responsible for approximately half of all cases of non-compliance with our Workplace Standards. We therefore remain diligent in supporting suppliers to establish health and safety management systems by producing guidelines and training modules that help to meet the requirements of our Workplace Standards. We also support an academy to increase the pool of qualified environment, health and safety managers in southern China.
Chemicals are widely used in global textile and apparel supply chains: from the cotton fields, to the mills and dye houses that make the fabric and the garment production. It is our goal to work with our suppliers and the chemical industry to eliminate and to reduce the discharge of hazardous chemicals in our sphere of influence as far as possible. But 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.