Engaging our stakeholders

2010 engagements

In 2010, the adidas Group continued to pursue many long-standing engagements with civil society, such as the International Labor Rights Forum, National Labor Committee and the Worker Rights Consortium in the USA, and with local trade unions and NGOs in Bangladesh, Cambodia and Indonesia. Ongoing concerns over the use of forced child labour in Uzbekistan's cotton fields required our close engagement with the Ministry of Foreign Affairs in Germany. In India we reached out to the Karnataka State Government, to call for proper enforcement of the law related to minimum wages, and in Cambodia we asked the government to support freedom of association for striking workers.

The 2010 FIFA World Cup South Africa™ was a focal point for the year, both for adidas as a sponsor and for several of our international stakeholders who voiced their concerns over labour rights in the football industry. Outreach also began with the Play Fair Alliance - a grouping of labour rights activists and unions - on the forthcoming London 2012 Olympic Games.

In the Progress against targets section we highlight how our engagements measured against our targets for the year. Here we describe the major stakeholder dialogues which took place around the world in 2010. These engagements are classified as:

  • Government outreach
  • Sporting events
  • Civil society.

Government outreach

Wage and freedom of association issues in Cambodia

The adidas Group joined four major brands in writing to the Cambodian Government to express our concern over the reported intimidation and harassment of trade union officials who had participated in a national strike to raise wages. Staff from the International Labour Organization's (ILO's) Better Factories programme - which monitors labour conditions in adidas Group supplier factories in Cambodia - provided us with regular updates on the situation and reached out to government, the local manufacturers association and the trade unions to obtain their perspectives.

A full statement, including a copy of the letter to the government, is on our corporate website.

Government enforcement of minimum wages in India

On 2 March 2009, the State of Karnataka issued a notice increasing the minimum wage for the apparel industry. This was the first increase to workers' basic wages since 2001. The Clothing Manufacturer Association of India filed a petition with the government, disputing the way in which the new minimum wage had been calculated. In response to the petition, the State Government wrote to the local Labour Commissioner requesting that he reviews the figure.

Despite repeated reminders to our suppliers that they were legally bound to pay the new wage, they all refused to do so, arguing that they were awaiting the outcome of the Labour Commissioner's review. After a year without any meaningful result, and despite numerous engagements, the adidas Group wrote to the Minister of Labour highlighting the failure of the government to uphold the law and the minimum wage for workers. On 30 March 2010, the Karnataka Government released a revised minimum wage notification replacing, and reducing, the previously published minimum wage. The adidas Group acted quickly to secure a commitment from all our suppliers to pay the revised minimum wage and to settle any arrears in wages owed to workers, including employees who had already left the employment of the factories since March 2009.

Cotton in Uzbekistan

In 2010, there were ongoing concerns regarding the continued use of government-backed forced child labour during the cotton-picking season in Uzbekistan. We joined an alliance of international investors, brands and non-governmental organisations that urged the Uzbek Government to eradicate this practice and to fully adhere to core conventions of the International Labour Organization. We took several steps in support of the alliance's aims:

  • We wrote to the Ministry of Foreign Affairs in Germany and asked them to urge the Uzbek Government to stop this practice, and to collectively work with the ILO on improvement measures. The German Government responded to us confirming that they have raised this issue with the Uzbek Government.
  • We have been working with our materials suppliers to support them in their efforts to track the origin of the cotton that is used in our products and to confirm that cotton from Uzbekistan is not knowingly used.
  • We have obtained assurances from our organic cotton suppliers that their fibres do come from safe and certified sources. Organic cotton suppliers are formally required to have independent tracking systems in place.
  • We have piloted and are in the process of rolling out other approaches and methods for tracing the origin of the cotton we use.

A full statement outlining our position is posted on our corporate website.

Sporting events

Playfair campaign and the London 2012 Olympic Games

The Playfair 2012 campaign is coordinated in the UK by the Trades Union Congress (TUC) and Labour Behind the Label (LBL) and involves a number of trade unions and campaigning organisations, including the International Textile, Garment & Leather Workers' Federation (ITGLWF) and the Clean Clothes Campaign (CCC). The campaign calls for workers who are producing sportswear with the Olympic logo to have their rights respected. In particular Playfair 2012 has requested that:

  • Contracts between the London organisers and sponsors of the Games, and the suppliers making Olympic goods include obligations to meet internationally recognised labour standards.
  • Supplier locations and audit results are disclosed.
  • Where workers' rights are violated, there is a procedure to enable workers to make a complaint and for this to be dealt with through the involvement of trade unions and local labour rights organisations.

In the lead-up to the Games, the adidas Group has reached out to TUC, LBL and ITGLWF and held an initial meeting to discuss adidas Group's Olympic production and the expectations of the international labour rights movement. As a local sponsor of the Games, the adidas Group has also maintained regular contact with the London Organising Committee of the Olympic and Paralympic Games (LOCOG), which is responsible for preparing and staging the 2012 Games. We have also met with representatives of the Commission for a Sustainable London 2012, an independent body which is tasked with monitoring and assuring the sustainability of the London 2012 Olympic and Paralympic Games. Building on these meetings, a more formal stakeholder dialogue involving a range of civil society and other interest groups will take place in London in 2011.

International Labor Rights Forum and the football stitching industry

On 2 June 2010, in the run-up to the 2010 FIFA World Cup South Africa™, the International Labor Rights Forum (ILRF) published a research focused on job security and pay for contract labourers making hand-stitched footballs in Pakistan, among other issues. We provided ILRF with our views on the research and supporting information on pay and conditions in the stitching centres and factories that make adidas ball products in Sialkot. A follow-up meeting was held in Pakistan in October 2010 with the ILRF and the International Textile, Garment & Leather Workers' Federation (ITGLWF) to discuss the research findings. Other buyers, suppliers and the representatives from the Sialkot Chamber of Commerce were also present, as was a representative from the ILO. Members of the Government, however, were absent. At that meeting, the NGOs presented a set of recommendations, and it was agreed that the ILO should take the lead in convening future meetings.

Independently, the ILRF has reviewed publicly available information on the adidas Group's social compliance programme and sought our comments and feedback on their rating of the labour conditions under which adidas Group's equipment and footballs are produced. The ILRF review has been published as a profile on www.Free2Work.org. With a rating of A-, adidas was ranked the highest out of the ten soccer ball companies rated.

As part of our ongoing efforts towards supply chain transparency, earlier in the year the adidas Group published a list of all suppliers making World Cup products, including details of their trade union status.

Civil society

The Leather Working Group/Greenpeace campaign on deforestation

The Leather Working Group is a group of brands, retailers, product manufacturers, leather manufacturers, chemical suppliers and technical experts that was created in 2005 to develop an environmental stewardship protocol specifically for the leather manufacturing industry. The environmental protocol that was developed is updated regularly - see www.leatherworkinggroup.com

Audits are carried out at all tanneries that supply leather to the LWG, and based on the outcome of this evaluation they are rated in Gold, Silver, Bronze, Compliant and Non-Compliant. We have made a commitment not to source from tanneries unless they have reached at least a bronze level.

Establishing hide traceability

Through a report issued by Greenpeace in 2009, we were made aware of the level of illegal deforestation in the Amazon rainforest caused by the increasing expansion of the cattle sector. The adidas Group and other companies such as IKEA, Nike, Timberland and New Balance responded to this report by working with Greenpeace and other NGOs to bring about improvements to the overall situation in the Amazon. We have channelled our efforts through the Leather Working Group. Our primary effort was to partner with the cattle and meat industry to develop a traceable and transparent system to provide credible assurances that leather used in adidas Group products is only from cattle raised on legally managed ranches.

The following decisions were made and actions taken:

1. To split the cattle-meat-leather supply chain in two parts, that would be handled separately:

  • The down-stream supply chain from the slaughterhouses back to the farms to be monitored by the meat packers.
  • The down-stream supply chain from the leather suppliers back to the slaughterhouses to be monitored by the tanneries through the audit protocol of the Leather Working Group.

2. Big meat packers have committed to only process animals from farms or fattening farms that comply with a number of requirements. These requirements include a detailed GPS perimeter mapping of the farm, certificates from the Brazilian Government for Environment, protection of indigenous lands and slavery-free certifications. Meat packers declared that, as of November 2010, most farms supplying animals to these big slaughterhouses are complying with the above.

3. Tanneries have agreed to mark their hides with a code that will allow them to trace back this hide to the slaughterhouse, which in time would link with the meat packer part (see point 2). This will allow us to trace back any leather used at our factories to the fattening farm.

4. Within the LWG protocol a classification for hide traceability was established. We are committed to only buy from tanneries that are able to tell us where their hides are coming from (down to the slaughterhouse). This practice is in place and followed by all our leather suppliers that undergo the LWG audit.

Please read the point of view from Greenpeace.

Worker Rights Consortium - Fire safety in Bangladesh factories

At the beginning of March 2010, the Worker Rights Consortium (WRC) wrote to the adidas Group, as well as US university licensees and other brands, calling for 'industry-wide solutions' to ongoing fire safety issues in factories in Bangladesh. The memo from the WRC had been prompted by the death of 21 workers, with many others seriously injured, following a fire at the Garib & Garib sweater factory in the Gazipur district of Dhaka. Although Garib & Garib did not produce for the adidas Group, we shared a common concern with the WRC regarding the poor state of fire and electric safety in many of the older manufacturing sites in Dhaka.

We provided a comprehensive response to the WRC's call to action and participated in subsequent multi-stakeholder calls. On the ground, we reviewed the conditions in each of the nine factories making Group branded goods in Dhaka at that time and provided additional training to safety officers in those factories. We also strengthened the capabilities of a local NGO, which has increased the frequency of fire safety inspections.

National Labor Committee report on the Chi Fung factory in El Salvador

The National Labor Committee (NLC) published a report in early February 2010, alleging several breaches of labour standards and ineffective auditing at the Chi Fung factory in El Salvador, which makes NFL-shirts for Reebok.

The adidas Group learned of the allegations at Chi Fung in late January 2010 and commissioned a respected local member of the civil society to conduct an investigation. A team composed of experts in law, business management and health and safety, started their work on 23 February 2010. They reviewed payroll documents back to 2006, interviewed dozens of workers on and off site, evaluated factory management systems and processes, and conducted a thorough inspection of the production floor's mechanical infrastructure. The preliminary findings were given to us on 15 March 2010. Some of the NLC allegations proved to be true. In all cases of non-compliant activities, corrective actions are underway.

Taking action

Allegations of breaches in employment rights have been fully addressed. All overtime is being paid correctly and is strictly voluntary. All compensation will be registered with the government, including the incentive programme. Communication channels, one internal and one external, have been implemented to receive employee grievances including complaints of harassment by supervisors. In the instance of health and safety allegations, there are corrective actions in place for bathroom hygiene, the availability of personal protective equipment, electrical wiring infrastructure and ambient ventilation. Improvements have been made in preventative maintenance procedures, and additional staff assigned to repairs. A surveillance camera which had been installed near the production floor bathrooms as a security measure has been moved to another location.

However, the allegation of ineffective auditing is more complex. Previous audits by the adidas Group's Social and Environmental Affairs staff have identified and remediated non-compliant issues at Chi Fung since 2003. One persistent roadblock has been inconsistencies between the findings and enforcement actions from Chi Fung's buyers and the Ministry of Labor Inspectorate. We will continue to engage the El Salvador Government in efforts that promote the efficacy of national regulatory agencies and the enforcement of employment, health and safety laws.

Read our statement on the initial allegations on our corporate website.

Clean Clothes Campaign - Workplace conditions at the factories
Ching Luh and Framas in China

Factory conditions and worker rights remained a topical subject during 2010, reflecting the mainstream concerns of many of our most vocal stakeholders. In June 2010, the Clean Clothes Campaign (CCC), Germany, published a report on two factories producing adidas Group products in China - one a footwear assembly plant, the other a component supplier. We followed our standard practice by launching an investigation to verify the claims being made and providing CCC with a detailed response to each allegation and issue. The majority of the concerns were focused on working conditions at Ching Luh, a large-scale athletic shoe supplier. Some of the allegations stated in the report were not corroborated, but others were confirmed through worker and management interviews, as well as document reviews. Ching Luh responded positively and took steps to remedy those issues, which we have verified. Improvements were made to hiring practices, the processing of worker leave applications, final payments of wages following a worker's resignation, bonus payments and the rotation of workers handling hazardous chemicals.

Oxfam Australia and Indonesia

Oxfam Australia has been monitoring worker rights in Indonesia for more than a decade and has regularly communicated and campaigned for improved working conditions in adidas Group suppliers. In Indonesia, Oxfam Australia's principal concerns relate to workers' job security and their inability to exercise their fundamental right of association through trade union membership.

Read more about Oxfam Australia's campaign.

Our engagement in 2010 centred on three topics, all of which carried forward dialogues from previous years:

  • We responded to calls from Oxfam Australia to 'live up to our promises', regarding support for the recruitment of former trade union officials and others who had lost employment due to factory closures.
  • We held meetings and exchanged correspondence with Oxfam Australia on specific factory issues and the infringement of trade union rights, including the injury of workers by police when a picket line was crossed during a strike.
  • We have been transparent in sharing information on the weaknesses of recruitment practices at our suppliers.

As one of the fastest-growing sourcing countries in Asia, the adidas Group has witnessed steady progress and improvement in the workplace conditions in Indonesia. Nevertheless, we also acknowledge and accept that our suppliers continue to face challenges as they strive to meet our Standards, as well as international NGO expectations.

In May 2010, we posted a statement responding to Oxfam Australia's concerns on our corporate website.

One area where we have been collaborating closely with Oxfam Australia and with the ITGLWF has been in the development of a Freedom of Association Protocol for Indonesia. The adidas Group has acted as the lead party in a supplier-brand caucus that has been formed to engage with Indonesia's trade union movement, to develop a basic framework for the exercise of trade union rights in the workplace. After one year of negotiations, agreement was finally reached on a draft protocol to be shared with other brands and suppliers in the sporting goods industry in Indonesia. We are hopeful that this will set an important benchmark for suppliers and that the provisions in the protocol will close the gap in expectations and reduce misunderstandings between factory managers and trade union officials with respect to trade union activities, rights of access and so on, thereby improving the overall industrial relations environment.

Reading this report

Performance counts and reporting is about making performance clear to readers.

So in this year's report each page identifies which Global Reporting Initiative (GRI) indicators it addresses, complementing the GRI Index.