Sourcing and manufacturing

Auditing suppliers

Our Environmental Assessment Tool

At the end of 2009, the SEA team completed the development of our initial Environmental Assessment Tool and a supplementary remediation guideline.

The Tool is a series of questions covering:

  • Sustainable resource use (including energy, water and materials)
  • Emissions (air, noise, waste, wastewater, soil and groundwater)
  • Hazardous materials (including hazardous/non-hazardous chemicals and products)
  • Associated questions in the area of health and safety.

It has been designed to provide a general overview of the environmental conditions at any given factory while also identifying specific issues which may require further in-depth assessment or follow-up. The remediation guideline, which is a live document, was developed to support the overall assessment process. It sets out our expectations and suggests remedial measures for common environmental issues found at factories.

“We have carried out a review of the comparability and compatibility of our tool with that of other similar tools currently being developed or tested by other organisations (for example the Environmental Module of the Global Social Compliance Programme and the Eco-Index of the Outdoor Industry Association/European Outdoor Group),” explains Lyn Ip, Regional Manager HSE in Asia Pacific. “We found that while there are significant similarities, our Assessment Tool also allows us to analyse issues specific to our industry”.

Summarised audit results

In 2010, the Tool was applied in the assessment of 97 supplier facilities in the Asia Pacific region.

Product type Number of
first audits
Number of verification audits Total number
of audits
Tier 1 Footwear 24 - 24
Tier 1 Accessories & Gear 10 5 15
Tier 1 Apparel 32 11 43
Tier 2 Material Suppliers 31 - 31
Better Place Corrective Action Plan Verification - 5 5
Total Audits 97 21 118

The results of the audits conducted in the past year have confirmed our assumptions about the environmental performance of the core sectors of our supply chain, namely, footwear, apparel and accessories and gear. In general, we found that apparel factories have a low environmental risk level, which we expected given that their production processes are not chemical or water-intensive. The main environmental issues identified have largely been related to energy (as cut and sew processes are equipment-intensive) and waste management (due to the volume of fabric or textiles used). The audit findings have also confirmed that chemical management and energy are the more pressing issues in footwear and accessories and gear. This validates the work that we are carrying out on integrated chemical management.

Screening other suppliers

While 2010 was focused on analysing suppliers within the core product sectors of the company, we recognise that there are other production processes within our supply chain which may have higher (or lower) risk than those we audited this past year. So we have developed a methodology to screen prospective and existing suppliers to determine their level of risk and whether a detailed environmental impact assessment is required.

The screening aims to identify whether the nature and type of the product processes employed by the manufacturing operation or the general site conditions and location present potential environmental risks, or place pressure on resources, thereby warranting further detailed investigation and reporting. This tool will be applied to suppliers from which the adidas Group directly sources products, as well as nominated Tier 2 suppliers.

Environmental KPI

With the rollout of the Environmental Sourcing Strategy (ESS), we required a tool to provide a systematic way of assessing and ranking our suppliers. So we developed an Environmental Key Performance Indicator (KPI) tool.

The Environmental KPI is comprised of three key units of measure - management systems, risk and performance - all key drivers of our ESS. Each section is given a score which is then weighted to give a total score out of 100.

All factories will undergo a pre-screening process through which they will be classified as high, medium or low-risk. High-risk factories will be subject to an environmental assessment during which the auditor will also complete the Environmental KPI. Unless otherwise warranted, for those factories which are categorised as medium to low-risk, the Environmental KPI will be conducted as a desktop exercise supplemented by inputs from SEA's Performance Audit and Compliance KPI results. Like the SEA Social Compliance KPI, the SEA Environmental KPI score for each factory will be reviewed annually and reported to Sourcing. They will then use it as part of their overall assessment of the supplier's performance.

The pilot testing of the Environmental KPI tool began in late 2010 and will be completed within the first quarter of 2011 with planned full implementation by mid 2011.

Read how one of our suppliers took steps to improve their performance.

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.