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Sustainability

Workers in the Supply Chain

Workers in our suppliers’ factories play a central role in our sustainability program.
Workers in the Supply Chain

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.

Fair Compensation

The idea of a living wage is that workers – and their families – are able to afford a 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 themselves and their families’ basic needs 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, by national laws and government policy, and a number of other variables.

As a member of the Fair Labor Association (FLA), we have aligned our compensation definition, approach, and strategy with FLA benchmarks and fair compensation methodology. Additionally, 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.

Between 2016 and 2018, we conducted wage assessments in 48 factories across countries like Cambodia, Indonesia, Vietnam, and Honduras, covering approximately 27% of our global strategic factories. These assessments helped shape our current fair compensation strategy and priorities as they stand today.

Going forward, our wage assessments conducted via the FLA Fair Compensation tools and dashboard will be used to benchmark, track, and measure wage progress. The results of these assessments will also be used to help evaluate the links between pay and skills, pay and company performance, and the need for effective social dialogue in the workplace. We will also build on our existing efforts with a focus on gender equality, pay equity, and responsible sourcing practices. Our ambition is to see progressive improvements across all fair compensation benchmarks and achieve gender wage parity for workers in each of our strategic Tier 1 suppliers by 2025.

Starting in 2021, we have scheduled to collect wage data from strategic suppliers for the following calendar years: 2020 (benchmark year), 2023 (mid-point year), and 2025 (final year of our five-year strategy), allowing us to track wages throughout the duration of our five-year strategic plan. Due to logistical challenges created by the global pandemic, we were forced to divide the 2020 data collection into three phases: In 2021, we collected wage data from more than 60% of selected suppliers in Cambodia, Indonesia, and Vietnam. The results of this data collection cycle can be found directly below. In late 2022, we completed data collection from the remaining selected suppliers in these three countries; selected suppliers located in the rest of the world will have their 2020 benchmarking data collection completed in 2023. In 2024, we plan to collect 2023 wage data (mid-point year) from all selected suppliers globally. Finally, data collection for the final year of this strategy (2025) will be completed in 2026.

Factory wage data will be compared and tracked against wage ladders composed of various wage benchmarks in line with the FLA’s Living Wage Public Reporting Guidance. Initially, we will use the following wage benchmarks to measure and track wages: i. applicable legal minimum wage; ii. World Bank international poverty line, iii. Global Living Wage Coalition (GLWC), when available.   

BENCHMARKING RESULTS

The figures below illustrate the results of our 2020 wage benchmarking conducted in more than 60% of our selected strategic suppliers located in Cambodia, Indonesia, and Vietnam. The scope of our benchmarking includes workers’ net average wage and excludes consideration of any income derived from overtime. Therefore, workers’ total take-home pay can be higher than the wage data presented below. It is important to note that our collected data coincides with the first year of covid-19, a time where wages were impacted by the disruptions caused by the pandemic, particularly in countries where suppliers experienced long periods of work suspensions and/or shorter hours of operations.

For these results, we compared the collected wage data against external benchmarks, such as the applicable legal minimum wage, the FLA Country Average, which represents the industry average. The FLA Country Average Benchmark  is currently only available by country, and not for each applicable minimum wage group and/or region for countries with multiple minimum wage requirements. As a result, to avoid inaccuracies, we will only apply this benchmark in countries where the minimum wage is calculated for the entire country and not by various regions or groups. As our living wage benchmark, we have selected the GLWC benchmark, whenever available. Finally, we are using the World Bank international poverty line as a constant benchmark in all applicable countries. In the future, we will be able to compare wage progression between our applicable countries by tracking and measuring the relationship between factory wages and the World Bank international poverty line. Our goal is to move wages away from this benchmark. All amounts reflected below except for adidas’ suppliers’ wage averages and the Global Living Wage Coalition (GLWC) estimate are in their gross format (without any legal deductions).     

CAMBODIA

The data collected shows that payment of wages in these factories did surpass all of the aforementioned benchmarks. In detail, the data collected for eight factories (almost 24,000 workers) in Cambodia, the major sourcing country for apparel, shows that

  • 2020 monthly factory net wage average paid by adidas suppliers in Cambodia was US $ 284.
  • adidas’ suppliers surpassed the minimum wage (USD $ 190) by 50%, the World Bank international poverty line (US $ 88) by 223%, and the FLA Country Average (US $ 221) by 29%.

INDONESIA

Our eight surveyed factories (covering around 75,000 workers) in Indonesia are located within five different legal minimum wage groups. As such, their wage data analysis results are reported under their respective minimum wage requirements. Across all zones, wages paid surpassed the legal minimum wage by between 7% and 45%. Results for the individual wage groups are as follows:

Group 1: City Legal Minimum Wage – Kabupaten Jepara

  • This minimum wage group has the lowest minimum wage requirement. 
  • The 2020 monthly factory net wage average for factories located under this minimum wage group is IDR 2,182,411.
  • adidas suppliers’ net wage average surpassed the minimum wage by 7%, and the World Bank international poverty line by 94%.

Group 2: City Legal Minimum Wage – Kota Semarang

  • The 2020 monthly factory net wage average for factories located under this minimum wage group is IDR 3,429,548.
  • adidas suppliers’ net wage average surpassed the minimum wage by 26%, and the World Bank international poverty line by 205%.

Group 3: Sectorial Minimum Wage – Kabupaten Serang (Sector II: Textile, Leather, Apparel, Bags & Shoes)

  • The 2020 monthly factory net wage average for factories located under this minimum wage group is IDR 6,192,938.
  • adidas suppliers’ net wage average surpassed the minimum wage by 45%, and the World Bank international poverty line by 450%.

Group 4: Sectorial Minimum wage – Kota Tangerang (Sector IV: Leather, Footwear)

  • The 2020 monthly factory net wage average for factories located under this minimum wage group is IDR 4,987,489.
  • adidas suppliers’ net wage average surpassed the minimum wage by 15%, and the World Bank international poverty line by 343%.

Group 5: Sectorial Minimum Wage –Kabupaten Tangerang (Sector IIIA: Textile, Apparel)

  • The 2020 monthly factory net wage average for factories located under this minimum wage group is IDR 5,143,247.
  • adidas suppliers’ net wage average surpassed the minimum wage by 18%, and the World Bank international poverty line by 357%.

VIETNAM

The eleven factories (around 75,000 workers) in Vietnam, the major sourcing country for footwear, are located within three minimum wage zones. Therefore, their wage data analysis is grouped by their respective minimum wage requirements: In all three zones, wages paid at adidas factories all surpassed the applicable legal minimum wages by at least 65%, up to 78%. Where applicable, wages also surpassed the net GLWC Benchmark by 18%. Results for the individual wage zones are shown as follows:

Zone 1: Urban Hanoi and Ho Chi Minh City

  • The 2020 monthly factory net wage average for factories located under this minimum wage zone is VND 7,875,288.
  • adidas suppliers’ net wage average surpassed the minimum wage by 78%, the (net) GLWC living wage benchmark by 18%, and the World Bank international poverty line by 282%.

Zone 2: Hanoi and Ho Chi Minh City, Can Tho, Da Nang, Hai Phong

  • The 2020 monthly factory net wage average for factories located under this minimum wage zone is VND 6,743,658.
  • adidas suppliers’ net wage average surpassed the minimum wage by 72%, and the World Bank international poverty line by 227%. GLWC is not available for this zone.

Zone 3: Provincial cities and districts of Bac Ninh, Bac Giang, Hai Duong and Vinh Phuc provinces

  • The 2020 monthly factory net wage average for factories located under this minimum wage zone is VND 5,654,948.
  • adidas suppliers’ net wage average surpassed the minimum wage by 65%, and the World Bank international poverty line by 174%. GLWC is not available for this zone.

To support this strategic direction, we will continue to pursue targeted actions around our five levers, as follows.


Legal obligations

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 wages 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 occurrence. 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 perform the following activities in the upcoming five-year planning cycle:

  • Conduct due diligence on compensation-related issues at 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 the 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

At the end of 2017, we launched our Responsible Sourcing & Purchasing Practices Policy to ensure our sourcing and purchasing decisions are acted upon 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 10 Buyer Commitments to guide our responsible purchasing.

Our commitment to responsible sourcing & purchasing practices continues to support our work on fair compensation by:

  • Building capacity and knowledge within our internal Sourcing teams and those of our licensee partners in applying responsible purchasing practices.
  • Measuring and regularly reviewing the application and impact of our 10 Buyer Commitments.
  • Ensuring that compensation that is negotiated and paid recognizes the full payment of legally mandated minimum wages and benefits, as well as agreements negotiated through collective bargaining.
  • Promoting stable, long-term sourcing relationships with suppliers.

Productivity

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 the demand for skilled workers, creating an opportunity for improvements 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.

We plan to research and develop best practices for suppliers to attract, motivate, develop, and retain workers. Once this research has been completed, we will measure the outcome to ensure it meets – or exceeds – our industry wage benchmark and provide compensation accordingly.

Government Engagement

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 covid-19 pandemic 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 engaging 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. In parallel, we will align with governments to ensure that minimum wage setting considers workers’ living costs and needs.

Industrial Relations

Strong and effective industrial relations foster dialogue, transparency and problem-solving capabilities between employers and workers. They also provide 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 Organize Convention, 1948 (No. 87) and Right to Organize and Collective Bargaining Convention, 1949 (No. 98). The path to improving the general welfare of workers is supported by the creation of 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 three 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.


OUR PROGRESS

  • 1998 | adidas issues its Standards of Engagement which include wages and benefit expectations for suppliers.
  • 2001 | We publish our Employment Standards to explain how wages and benefits (and a range of other labor rights) should be respected and delivered.
  • 2003 | We commission a two-year study on fair wages in Indonesia, which examines different living wage methodologies. Also in 2003, we appoint a leading economist to review the research outputs from the Indonesia Living Wage Study and advise on wage benchmarks for Indonesia.
  • 2004 | 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.
  • 2004 | We publish a Guideline on Worker Cooperatives to support savings and loans for housing and the establishment of worker food cooperatives.
  • 2005 | 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.
  • 2007 | We issue a new set of Workplace Standards which updates the wage provisions and highlights the need for discretionary expenditure and savings.
  • 2009 | 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.
  • 2010| We revise and update our Employment Guidelines, incorporating fair compensation language into our guidance.
  • 2011 | We engage with the Fair Wage Network to assess the fairness of wages paid by 26 suppliers in seven countries.
  • 2012 | We extend the Fair Wage Network assessment to a quantitative evaluation of the outcomes of assessments at four suppliers.
  • 2013 | 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 Practices 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 insights gained through our Better Buying report 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.
  • 2021 | We revise our Fair Compensation Plan by identifying two primary goals and five wage levers, and incorporate Fair Compensation into our 2025 strategic priorities. We publish adidas’ 10 Buyer Commitments as part of our Responsible Sourcing & Purchasing Policy on our website.
  • 2022 | We complete 2020 data collection across our three primary sourcing countries Cambodia, Indonesia, and Vietnam. We join FLA’s Fair Compensation Pilot in Vietnam and continue to support FLA in their improvement to the Fair Compensation Dashboard. We pilot freedom of association training in Vietnam to support our industrial relations/social dialogue lever.

Fair Compensation Glossary

  1. Cash Benefits: Employer payments of cash allowances which are not linked to performance or productivity. Examples: allowance for housing, allowance for transport, any non-production-based bonus. Holiday/annual, hardship/hazard, and profit-share bonuses are also included. This may also include legally required benefits, such as a 13th month’s pay, national and holiday cash bonuses, if received within the year.
  2. Fair Compensation: Compensation that ensures workers earn enough for themselves and their families’ basic needs, and have income remaining to cover discretionary spending as well as savings. 
  3. In-Kind Benefits: Goods and services provided by the employer to the employee towards their compensation package. These goods and services should be free of charge or offered at a reduced cost to employees. Examples: housing (such as a house or apartment), utilities for housing (such as water or electricity), meals, food rations, commodities provided at a discount, transportation, childcare, education for workers' children, and private medical insurance, if not legally required.
  4. Living Wage (Anker Research Institute definition): remuneration received for a standard work week by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. Elements of a decent standard of living include food, water, housing, education, health care, transport, clothing, and other essential needs, including provision for unexpected events.
  5. Minimum Wage (ILO definition): The minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract. 
  6. Net Wage Formula (Fair Labor Association’s methodology definition): Net wage includes the basic contracted wage, in-kind and cash benefits, and deducts taxes and other deductions. Net wage does not include incentive or leave wages, unless otherwise specified, and never includes overtime wages.
  7. Wage benchmarks: a wage or economic indicator used for comparison purposes. Examples of wage benchmarks include the minimum wage, a living wage benchmark, international poverty lines, etc. During the length of the strategy, we will compare factory net wages against various wage benchmarks to track and measure wage progress. 
Vulnerable Groups

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, forced labor, trafficking and women’s rights. These initiatives are summarized below.

Child Labor

According to the International Labor Organization (ILO), child labor is 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 the schooling of children. Our Workplace Standards state that our suppliers must not employ children under 15 years of age, or below the age for the completion of compulsory education, if that is over 15.

The adidas Social and Environmental Affairs team was formed as a result of concerns over the presence of child labor in global supply chains, which was a clear focus for us 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. We have 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 Human Rights Policy commits the company to upholding labor and human rights for its employees, and to respect and promote such rights through our business relationships. The Policy describes our support for the United Nations’ Universal Declaration of Human Rights and the core labor principles of the International Labor 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)

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. 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 to reach upstream suppliers, including raw materials sources. Any finding of child labor will require a supplier to pay an ongoing 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 labor, or to address a specific instance or finding of child labor, they will not 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 and 2020, are shared with every supplier and apply equally to all subcontracting relationships and materials suppliers.
  • Transparency: 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 Better Cotton (BC). BC-sourced cotton is subject to an assurance system that follows international labor standards, including restrictions against the use of forced and 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.
  • Committed to respect children’s rights: The rights of children 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: (1) Non-discrimination and equality of opportunity for children; (2) The best interests of children must be a primary consideration; (3) Children’s right to life, survival and development; (4) The views of the child matter. adidas upholds the Children’s Rights and Business Principles (CRBPs) 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 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; 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.
  • Protecting children in emergencies: Our emergency relief efforts and humanitarian aid have been centered on protecting children. We have decades long partnerships with SOS Children Villages, Save the Children, Habitat for Humanity, and other non-profit agencies. In the past, we have actively supported and funded relief efforts for families and children impacted by the Rohingya refugee crisis. This included both cash and in-kind donations to child-rights organizations 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 Labor to create and distribute a leaflet in both Arabic and Turkish for employers for the prevention of child labor, informing them of relevant laws and regulations and the fines in case of any non-compliance.
  • 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. 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 program 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.
Forced Labor

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. We treat forced labor, human trafficking and slavery with a zero-tolerance approach. 

Click here to read more about our approach. 

Migrant Labor

We have worked closely with the ILO and various NGOs to safeguard the rights of migrant workers who have found employment within our supply chain. This includes the development of guidance and industry best practice to eliminate the exploitative actions of intermediaries 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 of 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. Our partnership with the UN’s International Organization for Migration 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.

Indigenous People

Indigenous peoples are generally identified as Tribal or First Nations peoples whose social, cultural, and economic conditions distinguish them from other sections of their national community. Their relationship with the land and natural resources on which they depend is inextricably linked to their identities, cultures, livelihoods, and physical and spiritual well-being. As a result, indigenous peoples are often disproportionately affected by climate change, environmental degradation, loss of resources and displacement, and face high levels of poverty and poor access to education, and health.  

adidas is committed to respecting the rights of indigenous peoples in line with the United Nations Declaration on the Rights of Indigenous Peoples and ILO Convention No. 169 (Indigenous and Tribal Peoples Convention). We require our manufacturing partners to obtain free, prior and informed consent for any greenfield developments that may require land acquisition in proximity to tribal areas, or in locations where land rights have been disputed. We have modeled our approach and expectations on IFC Performance Standard No.7: Indigenous Peoples  and related IFC guidance on land acquisition.

In the upstream parts of the value chain, we require suppliers of raw materials such as cotton and rubber to conduct human rights and environmental due diligence and to follow standards that take into account the rights of Indigenous peoples. For example, adidas is a founding member of Better Cotton. The Better Cotton Standard System outlines a High Conservation Value (HCV) approach to cotton farming. This means that before Better Cotton farmers can convert any land to cotton production, they must complete an HCV assessment. The assessment guides them to collect field data, consult with local stakeholders such as community leaders and Indigenous people, and analyse any existing information to identify HCVs in their landscape. Once farmers have identified HCVs, Better Cotton helps them manage and protect them. 

Indigenous peoples may also face exploitation or misappropriation of their cultural and economic rights. When marketing and designing products, adidas strives hard to respect indigenous artwork, designs, symbols and other forms of cultural expression. We have conducted internal training to raise awareness of the importance of protecting such rights. 

Women in the Supply Chain

Although the adidas Human Rights Policy 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 free from discrimination.

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.

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 products are women. Women are given special status and protection under international human rights law. The International Labor Organization also regulates the treatment of women in the workplace through several conventions that specifically addresses fair treatment, non-discrimination and equal pay and conditions.

Our business partners are required to respect and promote women’s rights 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. The underlying principles of CEDAW are reflected in the language of our Workplace Standards and 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 aim to bring a gender lens to our strategic suppliers’ operations ensuring that all workers enjoy the same opportunities, rights, and obligations. To support this aim, in 2022 we launched our ’Gender Strategy for Business Partners’ to guide and help our strategic suppliers in this process. In addition, we introduced and shared guidelines alongside a self-assessment tool to help them develop and implement their own gender strategy. The tool is designed to help suppliers identify gender-related gaps in their operating practices and procedures and provide the building blocks they need to develop their own gender strategy. In 2023, suppliers will develop improvement plans aimed at closing potential identified gaps. These insights will help us to track their progress against their plans.

We have also 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: We have supported gender equality and non-discrimination within our supply chain through a variety of 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 HERproject 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. These include maternity leave allowances, restricting overtime for pregnant women, menstrual leave, provision of daycare and nursing facilities. For example, as early as 2001 we engaged with Phulki, an NGO focused on women and child rights in Bangladesh, to promote improvements and access to daycare 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 the appropriate policies, procedures and training programs for workers and managers in place, as well as grievance systems to handle worker complaints (see detailed guidance given in our Guidelines on Employment Standards). We independently review the effectiveness of these systems and will intervene directly if we see evidence of sexual harassment in our suppliers’ factories.

Women empowerment projects

  • Pathways for Promise Program (Bangladesh): In partnership with the Asia University for Women, adidas supplier factories in Bangladesh are participating in a program whereby workers are supported while seeking further education at the university and students from the university are able to participate in an internship program with the factories. In this program, workers receive a salary from the factory while they are attending classes.
  • Women in Factories (China): Initiated in collaboration with Walmart in 2011, this program has been continued at one of our key suppliers in North China with more than 16,000 workers. It aims to provide capacity building to female workers through fundamental life skills training for women in the workplace. Topics include health, communication, skills necessary for career advancement and for gaining practical knowledge that can enhance quality of life for workers and their families. Every year, a new batch of female workers is enrolled into this program.
  • Americas Group (El Salvador and Honduras): Through its active participation in the multi-stakeholder initiative the Americas Group (AG), adidas has been collaborating with other brands, the Maquila Solidarity Network, the Fair Labor Association (FLA), and local labor rights and feminist CSOs on finding sustainable remediation to macro-level issues heavily affecting women maquila workers. Much of the AG work in Central America derives from the Women’s Labor Rights Agenda for the Central American Maquiladora Industry published in 2014 by the Central American Women’s Network in Support of Maquila Workers (REDCAM). As a priority, the AG has been focusing on supporting local efforts in identifying sustainable ways for employers to meet their legal obligations around child-care provision. In addition, in 2017 the AG began exploring possible ways to help improve how brands and factories prevent, identify and remediate sexual harassment and other forms of gender-based violence in the workplace.
  • Women’s Empowerment with Baidarie (Pakistan): Launched in 2017, this project aims to provide women with economic opportunities by strengthening their knowledge and skills. It has equipped home-based women workers impacted by the automation of the football stitching industry with locally marketable and demand–driven skills, creating opportunities for the induction of trained female workers into the formal sector and enabling women to set up their own profitable micro- and small-sized business enterprises. Click here to read more. 
  • Women Empowerment Program (Turkey): adidas currently runs a pilot project with an apparel supplier to promote gender equality and to empower female workers. Our aim is to increase the awareness of female workers on gender mainstreaming and women’s rights, increase the solidarity and communication among women workers and strengthen communication between female/male employees and the factory management through training, briefings, workshops and workplace activities.
  • UNICEF (Vietnam): UNICEF is implementing a workplace program at footwear and apparel suppliers in Vietnam covering issues of breastfeeding, maternity protection, maternal health & nutrition, wages and working hours, among others. Two adidas suppliers, with a total workforce of close to 76,000 workers, are enrolled in this program.

Female worker satisfaction survey

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 in 2016. The aim is to better understand and respond to workers’ needs. Supported by an external partner, the most recent survey 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.

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.

Freedom of Association and Industrial Relations

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 clearly emphasize 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.

Our approach

A worker’s right to freely associate must be protected. No employee should be discriminated against because of their trade union affiliations. Our approach to effective workplace communication and ensuring freedom of association (FOA) in our global supply chain is built on three pillars and aligned with basic human rights concepts.


Respect

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. 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

Remedy

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 implementation FOA. 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.

Promote

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.

For instance:

  • Worker representation systems: 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 must be properly considered and responded to in a timely manner.
  • Worker hotline: adidas requires all authorized suppliers to post a corporate hotline poster in which we encourage employees to raise any concerns or complaints they may have. This can be done through 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.


Health and Safety

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. 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 tracking and reporting health and safety incidents in our supply chain. In 2018, we started to track the incident and severity rates 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 of this is to precisely assess machine safety conditions and associated risks, as the majority of accidents in footwear factories are caused by machines. We have expanded the project scope in 2019 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.

Managing chemicals

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 stakeholders to play a role in achieving effective and sustainable solutions.


Chemical management at adidas

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