1-INTRODUCTION
The expansion of the sustainability and corporate social responsibility efforts has increased and expanded the interests of market analysts and regulators. Many governments and organizations have even issued guidelines and rules for CSR activities. The market analysts have set many gatekeepers and publish periodical reports and rankings for encouragement.
Corporate Social Responsibility is dependent on three foundations; the financial, social and environmental. These provide the core for all the CSR activities going beyond the legal requirements regarding the social and environmental obligations. The paper would aim at providing the business case for the sustainability activities adopted by Adidas. Adidas has been selected because of the considerable amount of information that it publishes periodically on its sustainability activities. It has shown that the company has preferably placed its largest supply chain in the emerging economies and is very resilient and sensitive to criticism (Mishra and Modi 27).
Studies have shown that sustainability has promoted convergence in the corporate governance and provided the foundation for longer-term sustainability in a twofold manner; firstly by gaining the trust of stakeholders and secondly by management with the long run perspective (Salvioni, Gennari and Bosetti 1206). Our aim of this paper is to look for the sustainability efforts that Adidas has put forward and evaluated it regarding the standard sustainability system. Furthermore, it is to be analyzed that how the company Adidas is defining and organizing the information functions of the sustainable system. Moreover, the measures that the company Adidas uses for the performance measurement will be looked at as well (Kotler 132).
The methodology which will be used for this purpose will be to use literature review of the Adidas sustainability reports, the Dow Jones Sustainability Index, The Forbes ranking of the sustainable companies, and academic journals.
2-THE COMPANY
Adidas is among the companies which most admired regarding its sustainability efforts. The magazine of the clean capitalism graded the apparel goods giants as No three on the 100 Most Sustainable Companies list of the world. In reality, Adidas was the lone company from the textile industry.
It raises the query of why and how the company is so committed to being sustainable, even with all the financial pressures that are lurking over the athletic apparel market. The company uses the approach which is commonly used by the IT industry, the open source innovation. This concept which makes us think of any IT Company means a lot to Adidas. As per the sustainability director, this concept is comprised of the crowd sourcing ideas from outside and within the company. The concept is based on the creators; the ones including artists and athletes, the communities; the groups and individuals who want to work with Adidas, the partners; the collaboration with NGOs, nonprofits and companies, and the customers; having open and consistent communication as well as feedback (Blaustein).
Adidas is already in the lead regarding the operational sustainability. The company was among the first one among global consumer goods industry to remove PVC completely from its products. The company does not only take sustainability efforts seriously for its products, but also for its complete supply chain (Wagner, Lutz and Weitz 81). Even though the product development of organic products like the Element Refine shows the thought process that is committed to it, Adidas is much more than that in actual. It also emphasis on what actually and how these products are manufactured (University of Missouri-Columbia).
How come Adidas is so committed to sustainability and how it all started? Adidas was found to be very proactive in its approach towards the sustainability from its start. The company wanted to become a leader in the sustainability movement at that time, and as an international brand, it was motivated to be more sustainable to grasp at the opportunity of exposure to the FIFA organization.
The sustainability report of the company has the slogan: Sport Needs a Space. This slogan is backed by the core values of; 1) we value water, 2) We conserve energy, 3) We innovate materials, 4) We empower people, 5) We improve health and lastly 6) we inspire action.
The company established its commitment to the sustainability by saying that’ we produce responsibly, and we take Responsibility for the Entire lifecycle of Sports.
3-FINDINGS
Strategy
The policy of sustainability adopted by Adidas answers the relevant shortcomings of past aimed at the prevention of their repetition in future. The academic literature has shown that the multinationals do not take responsibility for the outsourced activities and its impact on sustainability. A study, for example, has shown the disagreement in the usage of chemicals in the sector, including the Adidas which was solved by the interaction of the stakeholders. Another study has shown that the overall poverty in Cambodia was reduced by the integration of the CSR activities in the core strategy. Adidas uses the sustainability strategy as a part of the general strategy (Ven 340). The strategy of Adidas follows a holistic approach which makes sustainability to be linked to its value creation. Adidas has used an Integrated Performance Management Program for the integration of the tangible, intangible, financial, nonfinancial drivers in its value chain. Adidas expresses the nonfinancial drivers by considering options like the investment for the creation of the financial value with implicit capacity. The company aim of monitoring its footprint by also maximizing the value of a business can hardly be more explicit.
The sustainability strategy of the company develops in three directions, the innovation in material, the water savings, and the energy conversation. On the other hand, the sustainability strategy in social terms is defined in three; the improving health, empowering people, inspiring actions (Adidas AG).
Leadership
The Adidas group can be easily considered as an ambidextrous company which exemplifies itself, but its keen interest in the emerging markets. The company comes up with innovative concepts like the Blue sign technology by which the supplies can be helped and monitored for their sustainability efforts in the manufacturing and operational segments. The company leadership is constantly looking for innovative products which revolutionize the world. The company growth is based on the community-based structure and the multi-firm network, which fosters innovation and the creation of business ideas.
Organizational Culture
The organizational culture of the company is found to be very encouraging for new and innovative business ideas. The glass door website which shows the reviews of ex-employees show that most people have rated as recommended and has given positive feedback for the organizational culture. The work environment of the company enables people to look forward to being a part of the sustainability efforts of Adidas. The company sustainability report shows that it cherishes and is motivated to develop a corporate culture which celebrates collaboration, confidence, and creativity, the three behaviors considered crucial for its success.
BUSINESS CASE FOR SUSTAINABILITY
Reputation
The company has earned the reputation of being the leader in sustainability efforts in the luxury and the athletic textile sector. The company is not only part of the Dow Jones Sustainability Index but is also highly regarded for its efforts for going beyond its own company and looking at the whole supply chain for sustainability adaptation.
Financial Performance
The company Adidas had a very successful financial year of 2016, because of which it increased its long-term guidance for the 2020 financial goals. It now is aiming to achieve neutral currency sales to improve by 10 to 12% on an average basis per year from 2015 to 2020. The company has projected its sales to grow by 20% in the next five years (Adidas Group).
Monitoring of Sustainability
The company uses performance evaluation of its sustainability efforts at four points. The internal controls are one of them which are applied by the company for submitting to the external supply chain producers. The external controls which include the sustainability stock index. The aims for 2020 are set as the standard and benchmark and each year it showed how much of it is achieved. The report on its sustainability also provides information on the working conditions of its supply chain. RobecoSAM and the Corporate Knights measure the sustainability performance of Adidas. Corporate Knights latest rank for Adidas positions it at 49.
4-DISCUSSION
The paper in light of the sustainability report of Adidas and the academic journals has aided us in analyzing the sustainability policy of the company. The company as multinational athletic apparel and footwear company face gigantic environmental and sustainability challenges predominately in its supply chain which is focused more on the emerging markets. The sheer scale of these challenges has forced the company to develop into the leader in the sustainability domain. The company has not only been successful in becoming the leader but has also made possible the integration of its sustainability strategy into its general strategy. The marketing campaign based on the sole basis of its sustainability efforts has raised the awareness of its market and consequently its goodwill.
5-CONCLUSION
It can be concluded that Adidas provides a substantial business case for sustainability by showing how sustainable business can achieve not only sustainable but also goodwill and financial success. The company with its focused approach towards making the world a better place and producing with the responsibility of the complete lifecycle shows its commitment and consequently its results of the sustainability efforts. For further research, it is to be noted that the techniques which are used to analyze the CSR activities regarding value creation should be researched and specifically regarding the reputational risk.
Work Cited
Adidas AG. “Sustainability Report 2015.” Adidas Group. Adidas Group, 2015. Web. 15 May 2018. https://www.adidas-group.com/media/filer_public/9c/f3/9cf3db44-b703-4cd0-98c5-28413f272aac/2015_sustainability_progress_report.pdf.
Adidas Group. “Annual Report 2017.” Adidas Group. Adidas Group, 2017. Web. 15 May 2018. https://report.adidas-group.com/#3.
Blaustein, Lew. “How Adidas is pioneering open-source sustainability for sports.” Gren Biz. Green Biz, 24 July 2015. Web. 15 May 2018. https://www.greenbiz.com/article/how-adidas-pioneering-open-source-sustainability-sports.
Kotler, Philip. “Reinventing marketing to manage the environmental imperative.” Journal of Marketing 75.2011 (2011): 132–135.
Mishra, Saurabh and Sachin B Modi. “Corporate social responsibility and shareholder wealth: The role of marketing capability.” Journal of Marketing 80.1 (2016): 26-46.
Salvioni, Daniela, Francesca Gennari and Luisa Bosetti. “Sustainability and convergence: The future of corporate governance systems?” Sustainability 2016.8 (2016): 1203-1229.
University of Missouri-Columbia. “Corporate sustainability should be core strategy, requires paths unique to each business: Case study of Nike, Adidas reveals no perfect way to reach sustainability.” Science Daily. Science Daily, 19 April 2016. Web. 15 May 2018. https://www.sciencedaily.com/releases/2016/04/160419130139.htm.
Ven, Bert van de. “An ethical framework for the marketing of corporate social responsibility.” Journal of Business Ethics 82.2 (2008): 339–352.
Wagner, Tillmann, Richard J Lutz and Barton A Weitz. “Corporate hypocrisy: Overcoming the threat of inconsistent corporate social responsibility perceptions.” Journal of Marketing 73.6 (2009): 77-91.
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