Adidas is among the most admired companies in the world, especially when it comes to sustainability.
In January, Corporate Knights, “the magazine for clean capitalism,” ranked the sporting goods and apparel giant No. 3 on its list of the “Global 100 Most Sustainable Corporations.” In fact, Adidas was the only textile, apparel or luxury good company that made the list.
That raises the question of what makes the company tick so consistently when it comes to sustainability, despite the financial pressures of the athletic apparel marketplace. It uses an approach most commonly associated with the tech world: Open source innovation.
Think of the phrase “open source,” and perhaps a company such as Google or Facebook or Tesla comes to mind. But what does the concept mean in the adidas context?
According to Alexis Haass, director of sustainability at the company’s global headquarters in Herzogenaurach, Germany, open source is “comprised of crowd sourcing ideas from four pillars within and outside of [A]didas”:
- Creators — including athletes and artists.
- Communities — individuals and groups of people who want to work with the company. For example, the Brazuca soccer ball, official ball of the 2014 FIFA World Cup in Brazil, was named by Brazilians themselves.
- Customers — which results in consistent and open communication and feedback.
- Partners — collaboration with other companies, non-profits and NGOs. BASF, a leader in the sustainable chemistry and green sports worlds, worked with Adidas to create a revolutionary new cushioning material, BOOST, that provides the highest energy return in the industry.
Oceans as innovation catalysts
One of Adidas’ open source innovation partners sits squarely in the sustainability world: Parley for the Oceans, which has a primary goal of getting plastic out of the ocean.
The company was open to partnering with Parley, as there was, per Haass, “an alignment with our principles of how to drive sustainable innovation for our brand.”
A key practical effect of the collaboration, which launched in April, will be the integration of materials made from ocean plastic waste into Adidas products in 2016 and beyond.
In fact, Adidas created a first: A shoe upper made entirely of yarns and filaments reclaimed and recycled from ocean waste and illegal deep-sea gillnets. Long term, the Adidas/Parley partnership will focus on communication and education, research and innovation, as well as direct actions against ocean plastic pollution.
The company is not planning to run TV advertising with a “Parley” theme at the moment, but consumers still will play a role in the partnership through future retail rollouts and other promotions.
While ridding the oceans of plastics has no downside, engaging consumers and fans of sports Adidas sponsors (soccer, track and field) on climate change is more challenging.
“We can only engage with fans on topics they can relate to, and people relate to cleaning oceans,” Haass said. “We can’t come off as preaching from on high. That said, climate change is a big topic; we are not going run away from it. We just need to connect with fans in a relatable way when we do talk about and/or take action on climate change.”
The bigger game plan
Adidas is already walking the green walk in terms of its operational sustainability.
About 96 percent of the company’s footwear suppliers are ISO (international quality standard) certified. Building performance, CO2 emissions and water usage are all becoming more efficient. The company committed in 2008 to reduce its carbon emissions by 30 percent by the end of this year, and also has focused heavily on supply chain energy efficiency.
Sustainability also does not only mean environment at Adidas. The issue is looked at through a wider lens of ESG (environmental, social and governmental) issues.
In the run up to the Brazil 2014 World Cup, Adidas focused on the social end of ESG by working with local organizers on a number of grassroots programs, including the “Ginga Social” initiative. This sports-based initiative uses coaches to teach values and life skills to young people ages 7 to 17 in favelas (low-income, high-crime neighborhoods) in Rio de Janeiro, Sâo Paulo and three other host cities.
The “train the trainer” approach equips local coaches with the communication and leadership skills to make an ongoing positive difference in the lives of vulnerable young people in their neighborhoods. In addition, local sports facilities, always in short supply, are refurbished and their lives extended.
Thus far, 2,200 children and teenagers directly have benefited from Ginga Social — and, when one includes family members and others affected, the total number touched by the program rises to about 7,000. Adidas Brazil also decided to continue investing in Ginga Social well after Germany hoisted the championship trophy last July.
Over the long haul, Adidas is betting that ESG and sustainability will be a key business driver, not a drag.
“Consumers make decisions based on the brands they prefer. Sustainability and innovation are two of the key criteria of selection,” Haass said. “Successful companies in the future will be those where sustainability is well integrated in terms of core values, operations as well as consumer acceptance.”