The Supervisory Board of adidas AG has approved CEO Bjørn Gulden's revolutionary plan to overhaul the company. The new initiative "Own the Reality" is the most ambitious social and environmental responsibility plan ever undertaken by a major brand.
"Together with the board of directors, we are fundamentally reshaping the very structure of our company, from the top down, so that leadership will now also come from the bottom up," said Gulden.
The new direction begins with the appointment of Cambodian former garment worker and trade union leader Vay Ya Nak Phoan as Co-CEO, to serve alongside Gulden and assure consumers that adidas products are the most ethical brand they can buy. Gulden and Phoan will inaugurate the plan on January 16 by signing the Pay Your Workers agreement, a binding commitment to fair labour practices, wages and compensation in the supply chain. The agreement, which has been drafted with trade unions and labour rights organisations, will ensure all workers receive the full wages and severance owed to them since the pandemic began, and will establish a severance guarantee fund to cover all textile, garment, shoe and leather workers in adidas’ global supply chain. adidas will further correct course by making an immediate payment of €11.2 million in wages to Cambodian workers whose wages were withheld by suppliers during the pandemic. adidas will take immediate and decisive steps to ensure all workers, union members and union leaders who were fired from both Trax Apparel in Cambodia and the Pou Chen factory in Myanmar are reinstated with full back pay, and that their demands for better working conditions, higher wages and respect for their rights are met unequivocally. The agreement will also protect workers’ rights to freedom of association and collective bargaining, which adidas recognise as fundamental rights that enable all others.
"Signing the Pay Your Workers agreement is the first of many steps toward paying all adidas garment workers a living wage. My business leadership will now be complemented by Vay's expertise on the factory floor and the knowledge she honed as president of a union," said Bjørn Gulden. "We believe this marks a fundamental milestone that will benefit everyone in our supply chain as well as our shareholders and customers, who are passionately aligned with our belief that increasing returns are not at odds with increasing human rights protections."
Co-CEO Vay Ya Nak Phoan, whose appointment was approved by the board in December and commences work January 16th, will be overseeing compliance in the supply chain, a task for which she is uniquely qualified. Phoan started her career as a Cambodian garment worker. Appalled by unsafe working conditions and wage theft, she since served as a union negotiator and journalist. Phoan is credited for daring undercover research that helped reveal over a dozen scandals related to supply chain shortcomings, like the use of Uyghur slave labour in China and the mass wage theft by garment factories during the pandemic.
Phoan, like Co-CEO Gulden, is also a high-level athlete, having played SepakTakraw (Kick-Volleyball) on the international stage. She is also a master of Bokator (translates to "pounding a lion"), having learned the Khmer martial art from her grandfather as a young girl while in hiding from the Khmer Rouge.
"I know what it takes to fight for what is right," said Phoan. "I am prepared to transform adidas from being a company with good products into a company that also does good."
Gulden's previous post as CEO of Puma was characterised by numerous social responsibility and sustainability initiatives, under the umbrella "Forever Better." Gulden's attention to those goals led to a period of growth for Puma. In his new role at adidas, he promises to push these goals even further with "Own the Reality."
"Own the Reality is about taking real responsibility and committing to change. Industry leaders must reflect consumers’ evolving values and echo the moral compass of the moment," said Gulden. "This is the key to long-term growth and maximisation."
adidas launches "Own the Reality" with a new avant-garde line of "Realitywear" that debuts at Berlin Fashion Week on January 16. The unique streetwear designs have been pre-stressed by real garment workers to create a distinctive and individual style that allows the customer to reflect on how the garments were made.