Adidas Sustainable Development Strategy Essay

The textile and the apparel industries face nowadays a lot of evolution due, first to macroeconomic consequences and then because of the growing eco-friendly influence. To understand the key challenges of the sustainable development in the textile and the apparel industries, we, first, need to get the whole picture of the situation. The global textile industry is getting through a struggling time for the global economy due to crisis. This situation increases the price volatility of raw materials and energy resources. We can also add-up to this trend, the rising labor cost that contributes to amplify the negative effects on the industry. This uncertainty in the marketplace leads to lack of projection for years to come. At a worldwide stage, the textile market knows different situations. Europe is facing a recession while North American market is struggling. This current trends leads to reduced worldwide sale perspective. In Asia, the situation is more complex. China is the major actor in the market. More and more, price rises in China due to a higher domestic demand and higher wages. See more: Distinguish between problem-focused coping and emotion-focused coping Essay This economic trend creates opportunities for other Asian countries to become new sourcing targets (Bangladesh, Vietnam, Cambodia, India, Sri Lanka and Indonesia). However, new countries doesn’t have necessary quality and quantity requirement, which put companies in a huge dilemma in 2012 and for years to come†¦ Concerning sustainable development in the textile and apparel industries, many challenges are expected. For years and years, consumers have wanted cheap and trendy clothes, no matter where they came, who produced it and the material composition of the purchase. Now, they have changed their mind in many aspects. Consumers expect more and more socially acceptable workplaces to employees in production. They want companies to focus on improving human being, which includes better work conditions and better salary. However, this desire is problematic and contradictory for the industry. Indeed, this change will imply higher price that only a minority of consumers are up to pay. Key actors on this market need also to be responsible and active in the society and towards communities. Apart from this, consumers also require that companies produce in environmentally friendly way, which represent the main key challenge. Consumers care more and more to let enough raw materials for future generations and avoid global over consumption. The Chemistry industry brings solution to replace these raw materials. However, it can’t replace every material: water, which is an essential factor for production of textile, energy (it concerns mainly non-sustainable sources, except solar and other sustainable energies) and raw materials (real organic cultivations are insignificant in the industry). However, instead of raw materials, regenerative raw materials are more and more used. There is line and hemp that are resistant and doesn’t need pesticides. However, it can be only use for particular textiles. Besides, we can find chemical fibers, which represent 60% of the current market. They are better than natural fibers but are dependent on petroleum. This problem is a bit compensated by the fact it can be recyclable in PET bottle for instance. Cotton represents only 38% of the market in volume and wool, 2%. For dyestuffing, Chemistry has also played a huge role. Now the synthetic process replace natural because it turns out to be more ecological and with a better quality. Moreover, we can also save resources like energy and chemicals by using sustainable development energies like solar, wind or hydroelectric energies. We have to consider fossil energy and try to replace them by renewable energies to avoid price pressure and volatility. Companies want also to develop environment-friendly production technologies for textile industry. Most of the time, Chemistry helps to save resources because they are less demanding in water for finishing and dyestuffs and in energy for washing. They clean fibers better, reduce amount of defective goods and preserve machines. However, huge tests and controls are required to avoid toxic and harmful component to spread into our daily life through our clothes Another key challenge for the industry is to develop the recycling economy. A model called 3R illustrates this targeted economy: Reduce, Reuse, Recycle. It follows this chain: â€Å"resources-products-consumer-renewable resources† to implement the closed-cycle logistics. Moreover, this cycle allows controlling the process of contamination in this cycle. The second-hand purchases can optimize purchases and sustainability by creating a new business out of the current one. Besides, improving quality of final can be seen as a key challenge. It prolongs life cycle and also improve reuse value. Eco-tax on new materials could be set up to allow development of material re-use technology and business. After seeing the global situation of the current market, actors that want to play a major role in the future have to turn these challenges and strains into opportunities to differentiate and bring new standards in the textile and apparel industries. What are the stakeholders’ expectations? Employees of the Group  The employees of Adidas have the expectation that we can expect from different workers. They expect to have good working conditions to properly conduct they everyday job. Thus, some flexible hours, good working environment, ergonomic machinery are some expectations that Adidas employees might have. Of course, the salaries needs to be fair and the possibility of career evolution should be interesting too. They would prefer a merit-based rewarding system and a fair policy. Then, working in an ethical company can make them proud to work for Adidas and avoid internal conflict of interest. Also, they expect to have the freedom of joining a work council or any other unions. Finally, having the guaranty to have their health and safety assured during their working hours, with proper social protection. All these aspects are employee’s expectations that can be encountered worldwide. Authorizes government, trade associations, shareholders, Board of Directors All those stakeholders have different expectations. The government aims to see their citizen rights preserved, the legislation respected and the economy supported. A government needs to be objective and act for the benefits of â€Å"its people†. Thus they can on one side wants to impose restrictions on companies to prevent abuses but also want to support them financially or administratively to attract them and push them to invest in their country, and supporting the economy. The trade associations expect Adidas to respect international treaties on trade and to act in respect of the International regulations. On the other side, board of directors wants to see Adidas following the strategy they established to be sustainable. They want the company to be profitable but in a sustainable way. The board of directors wants the company have a better image and increase its sustainable development reputation. Finally Shareholders expect the company to be profitable and to have a direct result from its sustainable development strategy. They want Adidas to be sustainably profitable. Business partners unions, suppliers, service providers Business partners unions wants Adidas to respect the labor rights for the workers. They want working conditions to be assured and health & safety policy respected. They expect Adidas to secure the job of employees and avoid economic firing. The suppliers expect Adidas to respect their contract and fulfill their contractual obligations toward sustainable development. Also, they want Adidas to have fair practices and have equitable deals with them. On their own sides, service providers also wants Adidas to have fair practices and to involve them in their sustainable strategy by training them and providing them the means to be real partners. Workers in our suppliers’ factories These stakeholders are those who have the highest expectations toward Adidas. They expect Adidas to treat them equitably and to have fair practices with them. They want to have the same working conditions and the same rights than the Adidas employees. They want to have a decent wages, without child labor, with the acceptable health and safety benefits. They want Adidas to train them and to help them to evolve without remaining simple second-hand workers. They want to be fully integrated in the sustainable strategy of Adidas and in the future of the company. Opinion-formers journalists, community members, special interest groups Opinion formers such as journalists, expect Adidas to respect its engagement toward sustainable development. They want to be assured that the sustainable strategy of the company is a real commitment and not a simple â€Å"faire-valoir†. Community members on their own side, expect Adidas to respect their community and its environment but also to serve its interest. They want Adidas to offer them employment, to support education and to help the community to benefit from Adidas activities. Special interest group will push Adidas to respect their own interest. For instance, Greenpeace will push Adidas to respect environment, â€Å"SOS racisme† will expect Adidas to have non-discriminatory human resource policy, etc. Customers: Professional sports people, distributors, retailers, consumer Customers are the final people to satisfy. They are lat but not least. Customers expect Adidas to have fair prices, to respect their engagement in terms of sustainable development while maintaining the quality of their product. They also expect that the new sustainable development strategy will not impact their buying power by tremendously increase the price of Adidas products. Sports people want to be sure that the various Adidas products are ethical, with low impact on the environment and that are made by factories that respect sustainable working conditions. Distributors and retailers want Adidas to respect its positioning and identity but expect that Adidas will continuously improve its sustainable development policy. How does the company meet the challenges of the industry? Being a global business: This involves a strong and worldwide suppliers network. To be sure that suppliers rules are respectful of Adidas engagement, Adidas is fully transparent on its activities.  « We seek to be open about our operations, for example, by disclosing our global factory list to the public or submitting our global supplier compliance programme to evaluation and accreditation by the fair Labor Association. (Adidas,5) Beyond all contractual regulations that we will see below, transparency is an essential way to enable external organizations, such as the Fair Labor Association, to check the working conditions in Adidas suppliers. However, there is always information’s that kept secrets and not disclosed. It is important to keep a strong control on it. Being competitive: According to Adidas, the response to this challenge is: not at any price. â€Å"The adidas group Workplace Standards are fundamental to our relationships with our suppliers and are contractual obligations. While we have our own team that assesses how well our suppliers are complying with our supply chain code, we also work with external monitors to complement our measures. † (adidas, 5) Adidas apply strict rules and regulations that are contractually based in order to respect the company regulations on health, safety, labour rights and environmental conditions. On all these aspects, Adidas provides training and detailed guidelines to its suppliers. It has also involved a strong information system such as Fair Factory Clearinghouse platform, to monitor the conduct of its supplier. Apparently Adidas has done everything possible in this sector. However, it is essential to keep a strong control on supplier to avoid some â€Å"under-the-radar† issues such as the ones in Indonesia: (http://www. peuples-solidaires. org/suite317-indonesie-adidas/). Being environmentally responsible: Adidas is fully engaged in reducing its footprint. Adidas aims to: Save energy and reduce carbon emissions, save water, reduce the use of raw materials, using more environmentally friendly materials, reduce waste, reduce toxicity, for example through using less toxic chemicals and through fforts to reduce the pollutants in waste water at supplier factories, improve the environmental footprint of raw materials, improve the environmental footprint of products, manage supplier performance through auditing, measuring and reporting against key performance indicators, use management systems to drive continuous improvement (Adidas, 9). Adidas is acting in every step of its value chain and also by controlling its suppliers. However, this is useless if the distributors are not committed. For example distributing an eco-friendly product by using trucks that will strongly pollutes during the transportation is not coherent. Adidas is so powerful that it can make pressure on distributors to be committed in its environmental program. Being an employer of choice: This objective passes through managing people in a sustainable way. Adidas has developed an entire Human Resources Strategy based on three pillars: â€Å"create a working environment that stimulates team spirit, passion and engagement, instill a performance culture based upon strong leadership, be an employer of choice†(Adidas, 5). To do so, Adidas has developed a performance-based rewarding system throughout bonus program, profit sharing and additional compensation components. Moreover the training of employees is emphasized with different talent management programs (Adidas, 59). This enables people to enhance their perspectives. The whole working environment is made to be attractive with health and safety policy, respect of labor rights and liberty to join work council. Nonetheless, in the 2012 sustainable report, Adidas focus on Germany and USA. There are few words on the working environment offshore. We are not sure that those conditions are respected worldwide as it was in Indonesia. Moreover if the rewarding system is performance-based, we do not know anything about the career evolution system.