Beyond individual factory compliance, we monitor supplier performance and take enforcement action when standards are not met. Where systemic wage challenges exist, we take targeted action at the country level. Below are two examples where we applied this lever to address broader wage-related issues: 

• El Salvador – Final Severance Pay-Out: In 2023–2024, we commissioned special audits across suppliers in El Salvador in response to the FLA’s 2022 Advance Severance Payments to Garment Workers in El Salvador Issue Brief. The audits gave us detailed insights into supplier practices where annual severance advances (‘indemnizaciones’) are made but not regulated by local law. While improvements have been achieved across several factories, remediation plans remain in place for others.  
• Mexico – Overtime Pay (OT): Together with other participants in the Americas Group initiative, adidas supported the drafting and implementation of a memo requiring overtime premiums to be based on full integrated wages, including incentives and benefits, rather than based on hourly wages. After verifying Tier 1 supplier compliance, we expanded enforcement to Tier 2 suppliers.  

To better understand and improve the impact of our purchasing practices, we actively seek feedback from our manufacturing partners, both anonymously and openly. We do this through subscription to the Better Buying Institute Better Buying InstituteAn independent organization that assesses and reports on the purchasing practices of participating brands. and through our own engagement with our suppliers. Based on this feedback, we have implemented several RPP improvements related to fair compensation, including:  

• Enable greater transparency on demand forecasts to help suppliers plan ahead. This includes monthly market forecasts, qualitative outlooks, and an annual capacity roadmap (at least two seasons forward). These detailed forecasts significantly help suppliers manage financials, impacting on their ability to pay workers on time and in full.  
• In 2025, we updated our standard Apparel lead time from 60 to 90 days to give suppliers more flexibility, more accurately reflect material preparation time, and bring us in line with industry standards.
• Revised costing framework to better reflect inflation in overhead calculations.  
• Provide greater visibility into existing financial support programs such as prepayment options and vendor financing programs.  
• Adopt new ways of working from 2023 that give suppliers greater ownership and self-governance, along with clear expectations and transparent guidelines.  
• We are continuously working on simplification projects that target to simplify the ways we work and create more efficient processes for both us and our suppliers

Furthermore, in partnership with Better Buying, we have implemented an e-learning training on responsible purchasing practices that has been rolled out to all Product Development and Sourcing colleagues. In 2023, the training was also shared with the US Demand Planning team and adidas strategic licensee partners to further improve their understanding of effective responsible purchasing policies. Refresher trainings are planned for 2026 to ensure the information remains top of mind.

We understand that fair compensation across our global supply chain is closely tied to productivity and efficiency. As part of our efforts, we continue to explore ways to align productivity gains with wage growth. We are also focused on harnessing the benefits of technology to improve operations, while carefully considering its impact on jobs and evolving work environments.  

From 2022-2024 we participated in an FLA-sponsored pilot in Vietnam making use of our productivity lever amongst other fair compensation levers: 

• Vietnam – FLA Pilot: Between late 2022 and mid-2024, adidas participated in an FLA-sponsored pilot project in Vietnam, funded by GIZ’s Initiative for Global Solidarity with field support from the Research Center for Employment Relations (ERC). The project aimed to enhance responsible purchasing and production practices, social dialogue, and wage progression. FLA reviewed adidas’ RPP policies, factory management and compensation systems, and worker-management communication on wages and benefits. In 2024, adidas submitted its final remediation plan. FLA’s final report is expected by mid-2025. 

To support countries’ ongoing efforts to strengthen wage-setting mechanisms or social protection systems, we actively engage with governments and other stakeholders to support progress. This includes co-hosting training, contributing to policy dialogue, and promoting frameworks that help strengthen labor rights and improve wages at scale. Through these efforts, we aim to contribute to more resilient and inclusive labor systems. 

• Jordan – Multi-Stakeholder Training (2024): Co-hosted with Better Work Jordan and the FLA, adidas facilitated two seminars on effective internal monitoring for labor and occupational safety and health (OSH) compliance. Participants included Ministry of Labor officials, labor inspectors, and factory compliance officers. Led by adidas’ SEA team and FLA staff, the sessions aimed to improve oversight, promote fair recruitment, and strengthen working conditions across the sector. 

The path to improving the general welfare of workers is supported by the creation of wage-setting mechanisms that 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. Below are some examples of how we supported stronger industrial relations in 2024: 

• Cambodia – Freedom of Association (FOA): Dispute Prevention and Resolution Program: Since late 2023, adidas suppliers in Cambodia have joined a capacity-building program led by the Arbitration Council Foundation (ACF) and supported by local civil society, the government, and international donors. The initiative trained trade union leaders, factory HR staff, and workers’ and employers’ representatives to strengthen social dialogue and lawful dispute resolution. By the program’s end, the ACF had helped establish worker-management committees and factory ground rules. Over half of adidas’ Cambodian suppliers completed the training and reached an agreement with their unions to establish and/or revise their worker-management committees’ ground rules. 
• El Salvador – FOA Guidance Rollout: As a participant of the Americas Group, and following up on the 2023 launch of The Employer Guidance in El Salvador, we have continued to increase knowledge and awareness of the guide. In 2024, we sponsored a training session led by one of the guide’s co-authors for all local suppliers. A longer-term implementation program is now in development, with a rollout planned in late 2025. 
• Indonesia – Training on the FOA Protocol: In 2024, we delivered a refresher training to suppliers on the 2011 FOA Protocol, a multi-stakeholder framework, to which adidas was an original signatory. The sessions emphasized legal obligations for collective bargaining and reinforced the importance of ongoing implementation.