Adidas said it worked closely with primary suppliers to reach lower tiers of its supply chain ©Adidas
Adidas said it worked closely with primary suppliers to reach lower tiers of its supply chain ©Adidas

Adidas reveals training is key to tackling slavery

13 December 2016

Adidas has been ranked the top clothing and apparel company for its efforts to eradicate slavery in its supply chain.

The firm demonstrated “a number of leading practices”, including going beyond the first tier to train second tier suppliers on forced labour issues, ensuring workers sign contracts directly with suppliers and making sure remediation takes place when rights are violated.

Adidas said it worked closely with primary suppliers to reach lower tiers of its supply chain.

“As part of our self-governance model we have trained our strategic suppliers, which account for over 80% of our global production volumes, to disclose and audit subordinate suppliers,” Bill Anderson, VP social and environmental affairs at Adidas Group told SM

Anderson said reaching second tier suppliers with training was not without its challenges. “We have significantly less leverage [over tier two suppliers], and hence need the support of tier one suppliers who hold the primary buying relationships.

“Tier one suppliers may themselves have limited leverage, depending on the depth and stability of their business relationships.”

Adidas is progressively rolling out forced labour training for suppliers in its extended chain, and has also trained specialist tier two suppliers, including paper and packaging providers, to complete audits in accordance with its own standards.

“Over the past three years we have also been progressively expanding our direct monitoring coverage of [tier two] material suppliers, where we have significant sourcing volumes,” said Anderson. 

Out of 20 firms, chosen because of their size, Adidas was ranked highest in its efforts to protect workers in its supply chain from forced labour by campaign organisation KnowTheChain

Gap was ranked second while H&M and Lululemon Athletica were joint third.

The report is KnowTheChain’s third in a trio industry benchmarks, which it hopes will help firms and investors improve their efforts to tackle supply chain slavery. Earlier this year it published similar reports for the food and beverage and the technology sectors. 

The apparel companies were ranked based on six key areas: commitment and governance, traceability and risk assessment, purchasing practices, recruitment, worker voice, monitoring and remediation.

KnowTheChain said it found a firms in the apparel and footwear sector performed relatively well when compared to the other sectors, in part due to a “constant pressure on apparel companies” over supply chain labour issues in the past few decades.

However, it said there was still significant room for improvement, especially in recruitment, where workers are vulnerable to exploitation from agencies, and in the area of worker voice.

Recruitment was one of the areas where Adidas was commended. “As part of our code, we mandate that agency workers have to enjoy equal pay and conditions with permanent employers, thereby removing the economic incentive that often favours contract labour over permanent employment,” said Anderson.

Since 2005 the firm has also had policies in place promoting direct and transparent contractual relationships between employers and migrant workers, who are vulnerable to exploitation from middlemen and offshore recruitment agencies.

Anderson also said firms should not undervalue the importance of auditing. Although auditing is often criticised, he said it played an important role in identifying “critical or high risk issues” in global supply chains. 

“But [auditing] must be complemented by other mechanisms, such as engagement with suppliers through training – to build awareness and identify root causes and promote self-declaration of critical issues – as well as building feedback and complaint mechanisms for workers and for third parties with local in-country knowledge,” he said.

Gap, ranked second, demonstrated higher levels of transparency than most of the other companies, KnowTheChain said, and performed notably well in recruitment and worker voice.

The firm told SM: “At Gap Inc we explicitly prohibit the use of forced labour in the making of our products… We also recognise the importance of increased transparency to bring about further change in our industry, and in September took the step of publishing the list of about 900 approved factories that manufacture our products around the world.”

H&M was praised in the report for its efforts to provide workers a living wage. It told SM it is working to build relationships between its suppliers and their employees.

“Our goal is that all our strategic suppliers – the ones we buy most from – should have democratically elected worker representatives and improved wage systems which supports fair living wages no later than in 2018,” said said Katarina Gustafsson, spokeswoman for H&M.

“We believe collaboration and a well-functioning dialogue between the parties on the labour market is necessary to achieve lasting improvements for the garment workers,” she added, and said H&M worked with many local stakeholders to achieve this, including unions. 

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