Statement on the proposal of the USAS on designated suppliers programme

Herzogenaurach, 4 October 2005 - The proposal from united students against sweatshops is asking for university logo apparel goods to be produced in a designated pool of suppliers who pay their workers a living wage and have legitimate trade unions representing the workforce. As a company committed to fair, healthy and safe working conditions in our supply chain, adidas sources products with factories who can achieve that expectation. As a company that values transparency, we report annually on our compliance work with the supply chain, and submit our programme to evaluation and public reporting by the Fair Labor Association.

We have explored the issue of Fair Wages for several years, and are promoting supportive activities by our suppliers. This includes mechanisms for factory worker cooperatives, and the effective implementation of production efficiency programmes like Lean Manufacturing. We have also worked with academic groups in Asia and the Americas to benchmark national living wage formulas with the wages paid in local supply chain, to develop plans for supplier implementation of worker coops, and to identify Lean Manufacturing data points that will measure changes in working conditions.

Our position on freedom of association is clear. We expect our suppliers to respect and not interfere with legitimate worker representation, to have the ability to resolve workplace disputes through effective methods of negotiation and mediation, and to establish management worker communication systems that provide workers with direct access to management. Our monitoring practice supports this with an ongoing presence in factories, dialogues with union members and officials, and direct feedback from workers regarding working conditions.

It’s important to note however, that the term “sweat free” must include compliance with all of the Standards of Engagement (SOE): Freedom of Association and Fair Wages as well as Child Labor, Discrimination, Working Hours, Forced Labour, Health, Safety and Environmental practice. We expect all of our supply chain to be in compliance with each of the standards, and to ensure this, we deploy the SEA team to monitor our supply chain and identify appropriate steps for suppliers to continuously improve compliance practices. Suppliers are also submitted to external monitoring by the Fair Labor Association (FLA), a tripartite organisation of brands, US universities, and NGOs dedicated to a collaborative effort to improve working conditions around the world. This combination of internal and external oversight results in approximately 1,000 factory visits per annum and more than 200 training modules delivered to factory managers and employees.

There are key unanswered questions about the design and implementation of the USAS proposal in ways that promote effective and sustainable compliance. These include the duplication of ongoing licensee compliance activities (including third party engagements), the designation of a small supply chain that is compliant and technically qualified to produce logo products, an objective definition of fair wages, the management of supplier financial data to determine appropriate logo production volumes, and the employment impact to workers who’s employers are currently making logo products but lose their status as selected suppliers. There are also questions related to the business viability of an exclusive, collegiate only, sourcing model.

adidas-Salomon welcomes the opportunity to join a discussion of these questions with all of the concerned actors, including university licensors, suppliers, and the Fair Labor Association. We remain committed to our current model of internal monitoring and to the obligations of the FLA for verifying workplace compliance with all of the Standards of Engagement.