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Adidas Sustainability Report: Misses Goal to Verify Supplier Data

Adidas missed its goal to verify supplier data last year, according to the company’s 2012 Sustainability Progress Report. The verification is a necessary step towards Adidas’s targeted 10-15 percent cut in relative energy consumption at core suppliers by 2015.

The sportswear maker says it could not fully verify the data in 2012, meaning it could not finalize a baseline or fully develop its energy reduction targets for suppliers. The company plans to complete these tasks in 2013.

Back in its 2010 sustainability report, Adidas said it missed its goal to map and roughly calculate the environmental footprint of its value chain in 2010. Last year, the company said it rolled out a new environmental reporting and management tool for its sites and suppliers during the 2011 reporting period. It was able to publish results from that year for its own facilities, and said that a selected group of suppliers had started reporting their environmental data through the tool.

About 80 percent of Adidas products are made by direct suppliers, and the company says it has limited control over the direct environmental impacts of the manufacturing process. The best way to influence the environmental impacts at suppliers’ factories, the apparel maker says, is to encourage the introduction of environmental management systems. Adidas has made implementing such a system mandatory for all core suppliers. In 2012, 73 percent of its athletic footwear suppliers were certified to the ISO 14001 environmental management standard.

The group operates more than 300 offices, own production sites and distribution centers worldwide. But the majority of these are small and don’t cause significant emissions, Adidas says. For its own sites, the company elicits environmental data representing about 70-75 percent of the area it occupies and about 80 percent of employees, excluding its retail business.

Report overview

The report is detailed in some ways, but lacking in others. A separate Green Company performance analysis report includes 2012 energy, carbon, waste and water results for each region and type of site. But the company presents percent changes only against its 2008 baseline, not against 2011. The report does not say what the current figures are for relative energy, carbon and so on. And it does not provide such figures – relative or absolute – for previous years.

The company applied GRI guidelines to the reports and its corporate website, although it does not specify an application level.

Energy

At its own sites, Adidas’s energy per square meter was down six percent last year against its 2008 baseline, shy of the 8.7 percent target the company had set for the year.

Adidas has set a 20 percent reduction target for 2015, for energy use overall and individually at its offices, own production sites and distribution centers. The group is on track at its own production sites, having so far cut 15.3 since its 2008 baseline, and says it is on target at its distribution centers, with a 9 percent cut – putting the company above its “linear target” of a 7.5 percent reduction. But it is not clear how this target is calculated or what it represents, since to keep a steady pace towards a 20 percent cut, at this point Adidas would need to have sliced 11.4 percent of its relative energy consumption.

 

The company says it is off-pace for its goal of a 20 percent energy reduction at administrative offices, with a 3.5 percent cut so far. But it says that last year it achieved the maximum virtualization possible – 70 percent virtual servers and 30 percent physical – at its data center in Herzogenaurach, Germany. Adidas says it also implemented a new backup technology that eliminates duplication to reduce the volume of data stored by 90 percent, which cut power and cooling requirements by more than 80 percent.

The company also has a goal of 5 to 15 percent “savings of resources” (an undefined term) at its own retail stores. In 2012 it retrofitted LED track lighting at 124 Reebok and Rockport stores, for a projected drop in lighting energy use of 45 to 73 percent, and forecast total carbon reduction of 960 metric tons per year. The installation is expected to pay back in 17 months and deliver a 49 percent rate of return.

The project was one of seven at North American sites funded by the Adidas Group GreenEnergy Fund, which the company’s corporate real estate team launched in July. The sustainability venture capital fund is designed to accelerate investment in cost-effective energy efficiency and renewable energy projects, while making a profit. Adidas calls this the first fund of its kind in the footwear and apparel industry.

The group targets a 20 percent internal rate of return (IRR) across the GreenEnergy portfolio, but allows flexibility at individual project level, so the company can pursue both “low-hanging fruit” and high-impact projects with a lower IRR. The 2012 North American projects are expected to yield an ROI of 39 percent. 

Adidas says that in 2013, the fund will scale up to invest in energy efficiency initiatives across North America and Europe. Projects include lighting retrofits, heating and cooling upgrades, improved building controls and on-site generation projects.

Carbon

For carbon, the company says it is on-target for its distribution centers, but off-target for administration offices and own production sites. In total, it has cut carbon emissions per square meter by 10.9 percent since 2008, on its way to a 30 percent target for 2015. 

Water

Adidas says it is on track to meet its target of a 20 percent cut in water use per person, with a 13.5 percent reduction since the 2008 baseline. Relative water use is down 15.8 percent at distribution centers and 15.3 percent at offices but only 2.1 percent at own production sites.

In its Fall/Winter 2012 season, the company rolled out selected men’s, women’s and children’s ranges using DryDye technology, a polyester fabric dyeing process that injects dye into fabric using compressed carbon dioxide. The process uses no water, 50 percent fewer chemicals and 50 percent less energy than traditional fabric dyeing, on a lifecycle basis. Adidas says it will increase the use of DryDye fabric in future seasons.

Waste

Adidas says that domestic waste per person is down 23.2 percent since 2008, putting the company close to its goal of a 25 percent reduction by 2015. At its own production sites it has already exceeded the target, with a 36 percent cut.

The company says it is off-target with its paper saving efforts. Overall it has cut tons of paper per person by 16.7 percent since 2008, far short of its 50 percent goal for 2015.

Product design

The company is a founding member of the Sustainable Apparel Coalition, which in July 2012 launched the Higg Index to measure the environmental impact of apparel products across the supply chain. In 2012, Adidas conducted mappings of brand and product modules to identify do a gap analysis against the Higg Index, and says it scored well in supplier tracking, chemical responsibility, materials selection and other areas. But it says it could improve its environmental performance in end-of-life and product care.

Hazardous chemicals

Since 1999, Adidas’s athletic footwear suppliers reduced the use of volatile organic compounds (VOCs) from about 130 grams per pair to close to 20, by applying environmentally friendly bonding and priming technologies and following the group’s guidelines, Adidas says. Most of the reduction occurred before 2003, however, with levels roughly steady since then. The company says that for 2013, it aims to achieve an additional improvement and consistently reduce VOC emissions below 20 grams per pair of footwear.

In August 2011, Adidas committed itself to the goal of zero discharge of hazardous chemicals from its supply chain via all pathways, with a 2020 deadline. In 2012 it developed a manual for this strategy, and this year it is completing internal reviews of the manual. It plans to work with other members of the its zero-discharge collaboration to develop a management framework, helping to ensure measurable targets and results.

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