Lessons for Brands Looking to Eliminate Forced Labor from Their Supply Chains

Presented by Aditi Wanchoo, Adidas Senior Manager - Development Partnerships Social & Environmental Affairs, APAC

As the leader of the Modern Slavery Outreach Program implemented by the major sporting brand Adidas, Aditi Wanchoo shared the brand’s experience mitigating modern slavery risks at multiple tiers of a supply chain.

Highlights:

• Different approaches for addressing modern slavery risks at tier 1 (direct suppliers), tier 2 (processing facilities) and tier 3 (raw material suppliers)

• Optimistic outlook for supplier engagement and willingness to improve, given adequate training and capacity building

• The importance of cross-sectoral collaboration, multi-stakeholder engagement and local partnerships

Lessons for Brands Looking to Eliminate Forced Labor from Their Supply Chains

Adidas’ sustainability strategy was launched approximately 20 years ago, originally focused on child labor concerns. Today, the brand’s supply chain spans 782 independent factories in 56 countries, all of which are subject to Adidas’ rigorous CSR standards.

The Modern Slavery Outreach program was launched to examine Adidas’ supply chain past the direct supplier tier: namely, processing facilities (tier 2) and raw material suppliers (tier 3). As brands don’t have direct purchasing contracts with their upstream suppliers, they cannot simply present these upstream facilities with a code of conduct and expect them to comply. Improvement is contingent on negotiation, education and collaboration – but the good news is, the majority of suppliers are receptive to human rights messages and willing to engage.

Tier 1: Direct Suppliers

At tier 1 (direct suppliers), the sustainability focus is placed on careful supplier selection, long-term relationships, training and continuous improvement. Up to 40% of potential suppliers to Adidas get filtered out during the initial screening, but those who make the cut enjoy a long-partnership with the brand. To deal with any non-compliances among existing suppliers, Adidas focuses on training and capacity building rather than penalties. Nevertheless, a three-strike system is in place to handle repeated breaches of the brand’s standards.

Tier 2: Processing Facilities

For tier 2 suppliers (all processing facilities), Adidas places emphasis is on education and influence through targeted modern slavery training, particularly in high-risk locations (which includes China and a number of APAC countries).

The brand found training to be a very effective strategy to bring about change. Based on the results of two rounds of training conducted together with the ILO (International Labour Organization) and the IOM (International Organization for Migration), Adidas concluded that the most effective approach is to “make it personal” and explain the real impact that modern slavery makes on each supplier’s factory and supply chain (rather than simply explaining the overarching legislation regulating modern slavery issues in different countries).

Follow-up was the crucial part of the process, with clear action plans outlined for suppliers and reviews scheduled for suppliers 6-8 months after the training.

One of the main positive takeaways from these trainings was the fact that no supplier actually wants slavery in their supply chain. The overwhelming majority of suppliers are willing to change, but sometimes lack the capacity and knowledge. After the training, they are much more likely to open up about the instances of labor violations in their factories, and willing to make improvements.

To scale the training programs for larger supply chains, it is important to train internal personnel on the issues of modern slavery, while creating internal engagement. In order to be persuasive about the issues of modern slavery, a brand’s own employees must understand what’s at stake, and be on board with the ethos of “worker lives matter.”

Tier 3: Raw Material Suppliers

As a brand’s leverage tends to be minimal at the raw material supply tier, stakeholder engagement, NGO cooperation and local partnerships are paramount in order to bring about change. Adidas’ supply chain include examples of all: to ensure that its cotton is ethically sourced, the brand engaged with the Better Cotton Initiative; in high-risk countries for leather sourcing, Adidas collaborated with the meat processing industry to ensure decent working conditions at farms and ranches; for rubber suppliers, the brand engaged with local NGOs in Vietnam to investigate and address forced labor risks.

Conclusion

In summary, Adidas outlined the main steps of a strategy for any brand that wants to address modern slavery risks in its supply chain:

• Assess your risks

• Prioritize which countries to focus on

• Ensure you have the right policies in place

• Invest in capacity building and training

• Collaborate with other stakeholders – because no brand can or should try to address modern slavery risks alone.