Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

This	
   paper	
   was	   prepared	
   for	   the	   course	
   Corporate	   Social	
   Responsibility	
   taught	
   by	
  Professor	
  Peter	
  Gourevitch	
  in	
  the	
  winter	  quarter	
  2011	
  at	
  the	
  School	
  of	
  International	
  Relations	
   and	   Pacific	
   Studies	
   of	
   the	   University	
   of	
   California	
   San	
   Diego	
   (UCSD).	
   The	  papers	   have	
   not	   been	
   edited	
   after	
   having	
   been	
   submitted	
   to	
   the	   course.	
   They	   are	  posted	  here	  to	
  provided	
  others	
  with	  information	  and	
  ideas	
  about	
  CSR,	
  NGO's	
  and	  the	  private	  sector.	
  	
  
The	
   papers	
   are	   COPYWRITE	   	
  protected.	
   No	
   quotation	   or	
   citation	
   without	
  attribution.	
  	  Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

Adidas Corporate Social Responsibility
As one of the biggest sports company in the world, Adidas’ business success started
from 2006 when it merged Reebok. Furthermore, According to Markus Baumann,vice president Adidas Global Football, “the World Cup is the ideal stage to present
such innovations and our brand to a broad audience.” 1 2010 FIFA World Cup that
Adidas AG hold had brought not only huge company’s financial profits, at least 1.5
billion Euro in football category, but also brand recognition.2

However, except for focusing on its business success, the brand also put efforts on its
sustainability behaviors. Adidas Group is the parent company of Adidas, Reebok andTaylorMade Golf, and it is the group works on social works, sustainability work,
relationship with stakeholders and concern of workers. Furthermore, to maintain its
credibility, the group has the brand’s annual report that reveals process of its
sustainability targets.

How does Adidas practice it’s CSR plan?
According to Adidas Group, by collaborating with material suppliers, universities andscientific instituted, the company is able to embed its CSR practice in day-to-day
activities. With the help of these professional teams, Adidas Group first of all planand set proper and attainable 10-year-goals, and then they design strategies to reachthe goals. For example, if wants to reduce the traffic CO2 producing, how employees
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
1

	
   Fibre2fasshion,	
  2010	
  FIFA	  World	
  Cup	
  Already	
  sales	  success	
  for	
  Adidas,	
  Corporate	
  News,	
  06/22/2010,	
  retrieved	
  from	  http://www.fibre2fashion.com/news/company-­‐news/adidas-­‐salomon/newsdetails.aspx?news_id=87
696&page=2	  2
Wikinvest,	
  Adidas	
  AG	
  (ADDYY),	
  www.	
  Wikinvest.	
  Com/stock.Adidas_AG_(ADDYY)	
  Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

should change the way they travel? Or the business travel could be replaced byinternet conferences? How much reduction should one employee’s flying trip be per
year so that the company will get to its goal of 30% less CO2 emission in 10 years.
Lastly, the most important work for these professional team, is the post-workevaluation, which could test out the efficiency of the whole plans. With the steps ofplanning, designing, and evaluating, Adidas works their CSR work systematically.

The following is Adidas’ CO2 emission reduction results from 2007 to 2009, whichindicates that there is exact record every year since 2007 so that the group can put
them into track. 3

CSR of Adidas includes environmental issues concerns, sustainable materials usage
and labors’ rights. They do recycle in both companies and factories, and they produce
products by recycle materials like inlay soles, textiles, metals, plastics, packaging andrubbles. Moreover, Adidas works with organic cotton farmers and use their products,
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
3

	
   Adidas	
  Group(2009),	
  CO2	  Emission	
  From	  Transport	
  and	  Travel,	  2009	  Sustainable	
  Review	  Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

and they join Better Connon Initiative (CBI) two years ago4, which aims at reducing
water consumption and pesticide use in cotton framing.

With those movements,

Adidas claims itself cares about the society and sustainability.

The report, Adidas Group’s Sustainability Performance Review 2009, includes its
supply chain, audit systems, training sessions, environment plans, community
involvement, and green company targets.5 It has its 10 year plans for sustainableissues. Starts from 2005, the whole plan broadly includes goals of environmental
friendly plans, social compliance plans, and employee’s wage and working conditions.
Adida Group from their hardware facilities, factories to every pair of shoes; frommanagement strategies, wage fairness to employee’s mental conditions, according to
the annual reports of Adidas Group are being considered and audited.

The following is Adidas 10 year targets,2015 Adidas Sustainable Targets6
Environment

Reduce energy consumption 20%
Reduce carbon emissions 30%
Save water 20%
Reduce waste 25%

Social Compliance

80% of direct supplier factories to meet 3C or better under oursocial compliance model
Common industry-wide monitoring platform used to check

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
4

	
   Adidas	
  Group(2009),	
  Team	  Talk,	  2009	  Sustainable	
  Review	
  	
   Adidas	
  Group(2009),	
  Team	  Talk,	  2009	  Sustainable	
  Review	
  6
	
   Adidas	
  Group(2009),	
  Roadmap	
  to	
  Sustainability,	
  2009	  Sustainable	
  Review	  5

Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

workplace conditions
Top 10 publicity listed suppliers are independently producing
sustainability reports
Employees

To ensure succession readiness on all key leadership position:
80% of senior management positions to be filled by internal
employees.
To be a World Class Recruiter (quality, cost, speed, ranking)
To be a top 10 employer in every key market and for
employees (based on market surbey and employee engagementscores.)How does Adidas prove its CSR credibility?
According to Adidas, it has its own internal team for assessing how well the
suppliers are complying with our supply chain code of conduct, theworldplace Standards.7 In order to be impartial, those teams values transparency andstakeholder feedback, and it has regular reports on their compliance work. What’smore is that it submits programs to evaluation and public reporting by the Fair Labor
Association (FLA), and it practices full disclosure to researchers, trade unions andother concerned NGOs.8
Following are partnerships and engagements with different NGOs for different CSR
categories.9
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
7

	
   Adidas	
  Group(2009),	
  Awards	
  and	  Recognition,	
  2009	  Sustainable	
  Review	
  	
   Fair	
  Laboe	
  Association	  (2008),	
  Participating	  Companies,	
  Adidas	
  Group,	
  retrieve	
  from	  http://www.fairlabor.org/fla_affiliates_a1.html	
  9	
   Adidas	
  Group(2009),	
  Team	  Talk,	  2009	  Sustainable	
  Review	
  8

Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

1. Corporate responsibility:
World Federation of the Sporting Goods Industry(WFGSI)World Business Council for Sustainable Development (WCSBD)
2. Supply Chain Conditions
Fair Lavor Association (FLA)
Fair Factories Clearinghouse (FFC)
3. Environment
AFIRM Working Group
Better Cotton Initiative (BCI)
It seems like Adidas Group has pretty comprehensive CSR plans which addresses a
lot of issues and concerns about it’s credibility. Also, the other thing that cannot bedenied is that the company has their annual reports clear and complete. A periodical
report is an important index to tell how organized the company is, and it is the firststep for customers or shareholders to trust. But how convincing the words and graphs
in the reports can be? Even with all the credibility-proving strategies, how docustomers know the credibility credible? Does Adidas the one choose NGOs to workwith or vice versa? Is there any trade-off between them?
Moreover, Adidas not only gains approves from those CSR-certificating NGOs, but it
gains recognition and rewards from the CSR-ranking/testing NGOs.

The below are organizations that gave Adidas Group positive credibility and rewards
over time:10
 Daw Jones Sustainability Index
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
10

	
   Adidas	
  Group(2009),	
  Awards	
  and	  Recognition,	
  2009	  Sustainable	
  Review	  Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

(2010/11 AG has been selected to DJSI for the 11th consecutive time.) Global 100 Most Sustainable Corporations in the World Nachhaltiges Einzelhandels- unternehmen 2009 was selected as “Sustainable retail business 2009”
 B.A.U.M. Environmental Award 2008 for Frank Henke, Social &Environmental Affairs
 Stiftung Warentest in 2006
 Corporate Research Foundation
 The German Chamber of Public Accountants
The list can still go on, but the length of the list comparatively means little because
there is not enough of information to gauge the credibility.

As mentioned, the problem of credibility is the credibility itself. How is the credibilityof those organizations? If there are organizations like Daw Jones Sustainability Index
that gives credits to only big industries with strong financial ability, and organizations
like The German Champer Public Accountants that might only be heard in German,
how do customers in the US choose what and how much to believe?

This paper is not going to tell customers any scientific or quantitative skill to choose
what to believe. Actually, the number of sustainability recognitions is not important.
Even if Adidas gains the recognition of 50 organizations, while Nike only gains 49, it
does not necessarily follow that the sustainability performance of Adidas is more
successful. However, if instead of small NGOs, international organizations such as the
UN and WTO verify sustainability claims from the private sector, then people willmore likely trust them.

In many ways, organizations such as the UN and the WTO

Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

enjoy stronger credibility than the average national NGO. Not only do they havemore resources, and a history of important international roles, but they often havebetter operational transparency as well. If sustainability can be proved by these kindof organizations, credibility will be less doubtful.

Complains and Criticizes from NGOs
Instead of all the recognition and rewards, there are CSR problems that Adidas got
criticized. Here are two main CSR challenges that the company is facing in these twoyears.
NGO: Animal Liberation Victoria (ALV)
Issue:
Animal Liberation Victoria, an animal protection NGO in Australia, called for aninternational boycott of Adidas for the fact that they use Kangaroos’ skin producing
football shoes. The campaign’s target was Adidas and its “Predator” shoe, Join in
VIVAS, a UK animal rights group, They took the issue to the streets and urge
shoppers to stop buying Adidas products. 11
Response from Adidas:

None

NGO: Ethical Corporation
Issue: 10 June 2008
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
11

	
   Animal	
  Liberation	
  Victoria,	
  Boycott	
  Adidas	
  –	
  Save	  the	
  Kangaroos,	
  Campaign	  Adidas,	
  08/31/2010,	
  retrieve	
  from	  http://www.alv.org.au/issues/0207boycottadidas.php	  Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

A UK news paper investigation in March found that workers supply Adidas atfactories in Fuzhou, China, were subject to discrimination, wage cheating, inadequate
pay and long working hours, while union leaders suffered abuse. Adidas was dogged
by reports of labor problems at supplier factories in China, especially in supply chainsit acquired from Reebok.12
Response from Adidas:
In the news of 1 November 2010, headquarter of Social and Environmental Affairs,
Asia Pacific of Adidas, William Anderson came out to respond Paul French’s
September Column, “with over 393,000 workers in our supply chain in China, theAdidas Group has looked closely at the root causes of worker death. ““The greatest challenge for large-scale suppliers that employ tems of thousands ofworkers is making sure that the wellbeing of every individual counts.”13
So there is criticism from NGOs. When Adidas says how much they work on their
supplier chains’ labor rights, labor rights’ violation was still found and reported in
China. Furthermore, the purpose of putting these two cases together is to reveal thefact that Adidas pick issues to answer. It might be because they don’t have answers,
they are not ready to answer or the answer might hurt their brand image. Either thereasons are, customers should be awared of. Having responds or not is one kind of
responds and can tell the attitude that the company has when facing challenges.

	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
12

	
   Rajesh	
  Chhabara,	
  Adidas	
  in	
  China	  –	
  Giving	
  Supply	
  Chains	
  a	
  Sporting	
  Chance,	
  Ethical	
  Corporation	
  Magazine,	
  06/10/2008,	
  retrieve	
  from	  http://www.ethicalcorp.com/content.asp?ContentID=5948	
  13

	
   Paul	  French,	
  Letter,	
  Chinese	  Supply	
  Chains,	
  Ethical	
  Corporation	
  Magazine,	
  11/01/2010,	
  retrieve	
  from	
  http://www.ethicalcorp.com/content.asp?ContentID=7144	
  Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

Why sports industry like Adidas cares about CSR?
So, come back to this basic question. Even being criticized by NGOs, with thebusiness success that Adidas achieves, why does Adidas still care? When potential
growth of sports industry is still growing and brands like Nike and Adidas put more
and more investment on their brand marketing and products promoting in order to be
more competitive, why they still work on CSR work? Is CSR a part of competition?
Are companies going to gain benefits when putting efforts on sustainability works? Or
it’s more like companies conduct costs and benefits analysis first, and then they will
decide whether or not they want to work on CSR initiatives by seeing if the costs are
smaller than benefits?

Reasons of companies working on their sustainability are various. “ For the image”
might be the first answer most people think of. 14 It is indeed going to increase abrand’s reputation when a company is more environmental or human rights concerned.
And the increase of reputation will lead to better sales of the company products,
which is a big motivation for private sectors who want to gain benefit.

There are other reasons for companies to do sustainability. The second one should bethat companies’ leaders have good sustainable senses, therefore they think of future
generations when making decisions. Because the idea of sustainability is about
making profits today without hurting future generations, leaders who have the
	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
   	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  	
  
14

	
   Jeffery	  Ballinger,	  Counterpunch,	
  Why	
  “High	
  Profile”	
  Effects	
  to	  Protect	  Sweatshop	  Workers	
  Have	  Failed:	
  The	  Other	
  Side	  of	
  Nike	  and	  Social	
  Responsibility,	
  02/08/2006	
   	
  Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

sustainable idea will put future generations’ benefit into today’s cost and benefit
analysis.

Furthermore, is that possible that companies want to work on sustainability simply
because it is a right thing to do? I personally think so.

In the case of Nike, it is because the costs of not practicing social responsibility are
too high it started its CSR projects. In the beginning time of its CSR program, Nike’s
motivation came from the high costs concern, but in the later period, after people
started to give positive review of its brand reputation, Nike started to work on the
program with the will of making good brand image. As for Adidas, it is not clear
whether it started the sustainability work because of Nike case or because it wants thegood CSR reputation from customers. Customers can not really tell the motivationfrom Adidas’ reports, the only thing we can see is the well-organized reports and its
complete sustainability group.

What should Adidas’ Customers see the CSR work?
The last but not least two questions are, how much do customers care aboutsustainability of a company? If customers do not highly prioritize sustainable products,
will Adidas still strive to its sustainability performance?

The first question is easier to answer. Nike’s sustainability history is the best learn for
Adidas, since the two companies basically share the same market they share the same

Huang,	  (Annie)Shang-­‐Ching	  2011	
  Spring,	
  CSR	
  Final	
  Project	
  Copyright	
  2011.	
  No	
  quotation	
  or	
  citation	
  without	
  attribution.	
  

	
  

customer pool. Therefore when Nike suffered from its ignorance of labor rights andsuppliers’ factories conditions before 1998, Adidas learns the fact, “yes, customers
care”. Since student groups, which is the biggest athletic group, cares about howlabors’ working conditions, wages and their treatment are, no matter in which part of
the world, Adidas has to care.

The second question’s answer is more complicated. It depends on the leaders’ attitude.
Companies will no longer have the incentive to operate sustainably if they believe that
customers do not care about their efforts. On the other hand, if leaders dosustainability because they are aware of the importance of sustainability, theincentives come from the awareness, whatever customers’ attitude is companies
sustainability efforts will not be changed.

When it is very hard to gauge credibility of companies’ sustainability records, we ask
the motivation of their sustainability projects. But when companys knows that whatsustainability can bring to them is more than just images, there will be long term
benefits for either the company or the society, companys like Adidas should
consistently put efforts on the project. After all, the benefits of “doing the right thing
to the society and the globe” are immeasurable.