Executive Summary
The Adidas group is one of the largest sporting goods company in the world as well as one of the leaders in sustainability consistently placing in the ‘Global top 100 Most Sustainable Corporations in the World’ every year. The company has faced its challenges, this is evident by the numerous reports from NGO’s of labor problems at supplier factories in China. Furthermore, Adidas has come under fire from environmentalist group Greenpeace in 2013 for their ties with Pt Gistex Group and the finding of that company dumping industrial wastewater containing a cocktail of toxic and hazardous chemicals, as well as caustic water, directly into the Citarum river in West Java, Indonesia.
Introduction
Prolific economic, social, environmental and political challenges are acknowledged to have evolved synonymously with globalisation, and bolstered by capitalist thought; the world has seen significant amounts of commercial interaction between countries on an unprecedented scale1. The dismantling of the welfare state to achieving positive societal outcomes2 birthed significant public discourse about the role of the organisation and if it does in fact have a duty towards serving the public good through its operations.
The OECD (2016) defines CSR by referring to the symbiotic nature of the relationship between organisations and the thriving societies in which they themselves aim to thrive, and the need for measured efforts by both entities to nurture this very relationship; organisations aim to go beyond that which is required by law for the betterment of the community. ASX (2016) refers to CSR as the management of environmental, social and governance risks (ESG risks) for the benefit of the organisation and its shareholders. The United Nations, a champion body for the preservation of human rights describes the role of organisations in relation to CSR as precisely that – a moral obligation of organisations to uphold, protect and remedy (for any breaches of) the human rights of individuals, transcending what is legally required. These definitions will form the basis upon which this essay will aim to rationalise a company’s investment into CSR. Noting observations of organisational behaviour throughout history also intends to enrich the debate surrounding the inherent nature of CSR initiatives as decisions to benefit organisations, managers and their financial constituents.
Adidas, One of the most sustainable companies in the world
Adidas was established in post-war Germany in 1949 by Adolf Dassler and is a German multinational corporation, based in Herzogenaurach Bavaria, Germany. The company designs and manufactures sports clothing and accessories with it’s closest competitor being Nike.
Why should Adidas care about CSR?
Along with heightened societal expectations and demands of business, the globalization of large corporations has led to firms increasingly operating in countries with very different and generally much lower standards of living than found in their domestic base. (Smith,2003)
This is evident with Adidas having numerous suppliers from their supply chain based in China for cheaper labour/materials to gain an competitive advantage over competitors and increase profits to appease shareholders and stakeholders a like.
Presented here are CSR issues Adidas has faced recently
NGO: Ethical Corporation
Issue: 10 June 2008
A UK newspaper investigation in March found that workers supply Adidas at factories in Fuzhou, China, were subject to discrimination, wage cheating, inadequate pay and long working hours, while union leaders suffered abuse. Adidas was dogged by reports of labor problems at supplier factories in China, especially in supply chains it acquired from Reebok.
Greenpeace 2012 report accused adidas, of contaminating water systems through chemical residues left on clothing sold to consumers worldwide. Greenpeace appealed to the Adidas group again in more recent report for condoning the PT Gistex Group’s repeated contamination of the Citarum River in West Java, Indonesia. (Fields, 2016)
The rise of CSR has put pressure on brands to respond to accusations of unethical practices. Activist have a right to help protect the planet against big organisations such as Adidas group, that want to destroy it for the sake of larger profit margins. With the rise of social media and the upward trend of socially conscious consumers, we are seeing more protests in form of naming and shaming, boycotts and public demonstrations which will then negatively effect the brand.
Nowadays, many companies that want to expand into sustainable markets invest in CSR by ensuring their operations are transparent to the public.
Even being criticized by NGOs, with the business success that Adidas achieves, why does Adidas still care? As explained by Bob Willard, Author of the New Sustainability Advantage: Seven Business Case Benefits of Triple Bottom Line and leading expert in corporate sustainability, suggest by tackling environmental and social issues would theoretically give companies a competitive and substantial advantage over their competitors. Since public awareness and concerns regarding environmental and social issues increasing, there is reasonable assurance that tackling these issues may impact a company’s financial success.
Positive side effects of investing in CSR may include increased brand recognition, worker retention, productivity, customer loyalty, and external interest in the company’s stocks. Likewise, there are negative side effects. Some would argue that CSR is a distraction for companies – companies should only follow laws in addition to operating to maximize profits and shareholder value. Focusing company expenses on other objectives would be considered a distraction from a maximization of profits. Nowadays, many companies that want to expand into sustainable markets invest in CSR by ensuring their operations are transparent to the public.
3) What has the firm done to address the issues? Has the firm’s action been effective? If so, why? If not, why not?
How does Adidas practice CSR?
Key points – CSR policies newly introduced, Reduced emissions water waste etc, german based manufacturing with machines, china inspections of factories, how effective, why uneffective
REFERENCING*
Adidas has
Consider the example of Nike and its commitment to monitoring workplace conditions of its suppliers. The scale of this monitoring task is huge; Nike has over 800 contract suppliers, employing over 600,000 people in 50 countries.
For companies making a substantial commitment to CSR, a key strategic and implementation question is: How much is enough? For Nike, this extends to more specific issues such as: What level of resources should it devote to monitoring? How frequently should sites be audited? How should it respond to the dilemmas that often arise in this context, such as the use of child labor? If children above a set age are to employed by its suppliers, should it provide funding for their schooling? (Smith, 2003)
Bob Willard, Author of the New Sustainability Advantage: Seven Business Case Benefits of Triple Bottom Line and leading expert in corporate sustainability, suggest by tackling environmental and social issues would theoretically give companies a competitive and substantial advantage over their competitors.
les, A. and Mulvihill, M.J., 2012. Collaboration across disciplines for sustainability: Green chemistry as an emerging multistakeholder community. Environmental science & technology, 46(11), pp.5643-5649.
Sustainable solutions to our nation’s material and energy needs must consider environmental, health, and social impacts while developing new technologies. Building a framework to support interdisciplinary interactions and incorporate sustainability goals into the research and development process will benefit green chemistry and other sciences. This paper explores the contributions that diverse disciplines can provide to the design of greener technologies. These interactions have the potential to create technologies that simultaneously minimize environmental and health impacts by drawing on the combined expertise of students and faculty in chemical sciences, engineering, environmental health, social sciences, public policy, and business.
4) If you were given the responsibility of managing the firm, what additional or alternative actions would you have undertaken to address the issues? Provide justifications for your answer.
Looking into companies business practices/sustainability plans before linking or taking them over. Transparency in company supply chain – find example of company taking responsibility of issue and solving it=helped in long run, link to possibly how adidas can help out of their pocket thus improve brand image,
Conclusion
With the rise of CSR, Organisations are becoming more diligent in applying policies and innovation.
References
- Smith, N. (2003). Corporate Social Responsibility: Whether or How?. California Management Review, 45(4), pp.60-70.
- ASX 2016, ‘Corporate Social Responsibility’, ASX, viewed 20 September 2017, <http://www.asx.com.au/about/corporate-social-responsibility.htm>.
- les, A. and Mulvihill, M.J., 2012. Collaboration across disciplines for sustainability: Green chemistry as an emerging multistakeholder community. Environmental science & technology, 46(11), pp.5643-5649.
- Fields, Z. (2016). Collective creativity for responsible and sustainable business practice. p.271.
- The Economist 2005, ‘Profit and the public good: Companies that merely compete and prosper make society better off’, The Economist, viewed on 28 July 2016, <http://www.economist.com/node/3555259>.
- Jhunjhunwala, S., 2014. Intertwining CSR with strategy–the way ahead. Corporate Governance, 14(2), pp.211-219.
- Willard, Bob. The Sustainability Advantage: Seven Business Case Benefits of a Triple bottom line. Gabriola Island, B.C.: New Society, 2002. Print.
- Anon, (2017). FACTORY WORKERS Workers in our suppliers’ factories play a central role in our sustainability programme.. [online] Available at: https://www.adidas-group.com/en/media/news-archive/press-releases/2016/adidas-group-launches-new-sustainability-strategy-publishes-2015/ [Accessed 21 Sep. 2017].
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