Introduction to Adidas

Adidas, a global leader in sportswear and athletic footwear, is at the forefront of sustainability efforts within the industry. Founded in 1949, the brand has embraced innovation and collaboration to pioneer eco-friendly materials and manufacturing processes.

As a global brand with a profound impact on culture and society, Adidas recognizes the responsibility it bears in shaping a more sustainable future. By embracing innovation, collaboration, and a steadfast commitment to sustainability, Adidas invites individuals around the world to join in its mission to make a positive impact, one step at a time. ‘Through sport, we have the power to change lives.’

However, there are areas where Adidas faces criticism and acknowledges the need for improvement. Concerns have been raised about the brand’s policies related to deforestation, biodiversity protection, and human rights abuses in its supply chain. Despite these challenges, Adidas remains committed to sustainability and continuously strives to address these issues for a more ethical and environmentally conscious approach to business.

Impossible is Nothing

Criteria

Carbon Footprint, Medium

Adidas is actively reducing its environmental impact through innovative production methods like the Color With Care initiative, aimed at cutting water usage and chemical use to lower its carbon footprint. The company targets a 15% reduction in emissions per product by 2025 and aims for a 30% decrease in all emission scopes by 2030, aligning with the Paris Agreement. Notably, Adidas achieved a 6.5% reduction in annual GHG emissions per product from 2017 to 2022.

Ecological Impact, High

Adidas has set ambitious sustainability targets to minimize its environmental footprint. By 2024, the company plans to exclusively utilize recycled polyester in all its products, introducing innovative fabrics like PRIMEBLUE and PRIMEGREEN made from 100% recycled polyester.

Furthermore, Adidas aims to reduce greenhouse gas emissions by 30% compared to 2017 levels by 2030 and achieve complete climate neutrality by 2050. Initiatives are underway to phase out coal-fired boilers at supplier facilities and promote the adoption of on-site renewable energy sources such as rooftop solar energy. Engaging in partnerships like Parley for the Oceans, the German company actively participates in endeavors to combat plastic waste and foster sustainable product development.

Energy Consumption, High

Since 2011, Adidas has achieved a 15% reduction in energy consumption and aim to further reduce emissions by 3% annually. The company is working to decrease absolute greenhouse gas emissions by 30% across its entire value chain by 2030 and achieve climate neutrality by 2050. To achieve these goals, Adidas is investing in renewable energy projects such as on-site solar installations and energy efficiency improvements.

Freight Density, Medium

Adidas leverages technology and analytics to optimize logistics, manufacturing, and sourcing processes, enhancing supply chain efficiency and transparency. This approach ensures the procurement of quality materials, precise demand forecasting, and prompt product delivery. The company monitors the environmental impact of its transportation methods, with a significant portion of goods transported by sea freight (81.4%) and truck (16.6%). Despite a slight increase in air freight by 2% in 2022 due to COVID-related challenges, Adidas maintains its commitment to minimizing the environmental footprint of its transportation operations.

Recycling Rates, High

Adidas is well on its way to achieving its goal of fully transitioning to recycled polyester by 2024, with an impressive 96% already accomplished by 2023, a year ahead of schedule. Through strategic partnerships with innovative startups, the company is leading the charge in developing materials sourced from natural resources, aiming to replace fossil-based plastics with

eco-friendly alternatives. Furthermore, Adidas has launched a unique recycling initiative for its Futurecraft Loop sneakers, inviting customers to return their old trainers to be repurposed into material for new shoes. This program involves creating sneakers specifically designed to be returned to Adidas, recycled, and transformed into another pair of shoes, forming a closed-loop process that aims to reduce waste and prevent items from ending up in landfills or oceans.

Saving Levels, High

Adidas has consistently demonstrated a proactive approach to reducing inventory levels, surpassing expectations with a 23% decrease year-on-year, amounting to 4.85 billion euros ($5.18 billion) in the third quarter. This reduction is attributed to the company’s strategic decision to limit selling into wholesalers.

Specific Product Monitoring, High

Adidas is dedicated to enhancing sustainability in its supply chain, aiming to eliminate virgin polyester by 2024 and transition entirely to recycled polyester. Collaborating with partners like the Parley network and Fashion for Good, Adidas drives impactful initiatives such as the Futurecraft.LOOP program and the Stan Smith Mylo project.

Through investments in technology like TrusTrace, Adidas ensures transparency and traceability in its supply chain, down to the material level. These efforts align with Adidas’ broader goals of sourcing 100% recycled polyester by 2024 and increasing environmentally preferred materials in its products by 2025.

Utilizing AI-driven analytics, Adidas streamlines material sourcing reduces waste, optimizes energy consumption, and promotes sustainability throughout its operations.

Supply Chain Waste, Medium

Adidas is committed to increasing transparency and traceability within its supply chain through technology investments and partnerships like TrusTrace, enabling real-time traceability of supplies and materials to enhance sustainability efforts. By leveraging digital traceability platforms, Adidas gains better visibility into its supply chain down to the material level, ensuring compliance needs are met and promoting transparency in sustainability practices.

Sustainability Scorecards, Medium

According to Corporate Knights’ 2023 Global 100 ranking, Adidas enhanced its position from 82 to 66 (Grade C+). This advancement reflects the company’s commitment to sustainability.

Additionally, in 2022, Adidas received a notable ESG Evaluation Score of 85 from S&P, further highlighting its dedication to environmental, social, and governance practices.

Water Management, Medium

Adidas has implemented robust initiatives to manage water efficiently and sustainably across its operations and supply chain.

The company aims for significant reductions in water usage, targeting a 40% reduction in water intensity at Tier 2 supplier facilities by 2025 compared to 2017 levels. Adidas focuses on improving water efficiency and quality, having surpassed its 2020 water intensity reduction goals for both Tier 1 and Tier 2 suppliers and expanding efforts to include additional Tier 2 suppliers. Moreover, the company is committed to reducing water waste and ensuring responsible wastewater management, setting targets for suppliers to achieve wastewater discharge standards by 2025.

Conclusion

Adidas is a global leader in sustainable sportswear but faces areas for improvement. While the company has made significant progress in reducing its carbon footprint and managing energy, there are criticisms regarding supply chain concerns such as deforestation and labor rights, enhancing transparency, and meeting water management targets. Improving in these areas is crucial for the company.

Despite challenges, Adidas remains committed to sustainability, actively working to address these concerns for a more ethical and eco-conscious business approach. It has earned a notable 3.75/5 rating for its sustainability efforts, showing significant progress in various areas.

Related to other brands

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ESCP Business School Team

Research developed by five curious international ESCP Business School students who have worked together to successfully complete their consulting project. They analysed four brands in four different categories -20 brands: sneakers, pod coffee, jeans, makeup, and chocolate, according to 10 environmental criteria.

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