What is a Circular Supply Chain?

A circular supply chain extends the life cycle of products and materials.

It focuses on:

· Design for disassembly and recyclability

· Using recycled materials

· Take-back programs for used products

· Remanufacturing and refurbishing

Key Note: A circular supply chain moves away from the traditional linear model of take-make-dispose.
Instead, it emphasizes keeping products and materials in use for as long as possible. This reduces
reliance on virgin resources, minimizes waste generation, and lowers the environmental impact.

Why is Circularity Important for Adidas?

Growing consumer demand for sustainable products

Depleting resources and environmental impact of traditional production

Regulatory pressure to reduce waste

This aligns with the UN Environmental Programme's definition as laid out in their report ‘Sustainability
and Circularity in the Textile Value Chain’.

Key Note: Consumers are increasingly looking for brands that prioritize sustainability. A circular model
helps Adidas address this growing demand. Additionally, traditional production methods consume vast
amounts of resources and generate significant pollution. Circularity offers a way to lessen this
environmental burden. Finally, regulations around waste management are becoming stricter, making
circular practices more relevant for Adidas.

Challenges & Barriers of Circular Supply Chain for Adidas

· Design for circularity requires a shift in mindset and innovation

· Complex global supply chain with diverse partners

· Consumer behavior and willingness to participate in take-back programs

· Lack of robust infrastructure for recycling certain materials

Key Note: Transitioning to a circular model requires significant changes in product design, manufacturing
processes, and collaboration across the supply chain. Adidas' complex global network with numerous
partners adds another layer of challenge. Encouraging consumer participation in take-back programs is
crucial, but it requires a shift in behavior. Finally, the lack of proper infrastructure for recycling some
materials poses a hurdle for Adidas' circular ambitions.

Adidas' Sustainability Efforts

· Recycled Materials: Committed to 100% recycled polyester by 2025. Partnered with Parley for
the Oceans to use recycled ocean plastic in products.

· Sustainable Cotton: Increasing use of organic and Better Cotton Initiative (BCI) cotton.

· Responsible Sourcing: Supplier audits and codes of conduct to ensure ethical practices.

Made To Be Remade (MTBR)

Circular Loop: The heart of Adidas’s strategy.

MTBR Concept: When one product reaches the end of its lifecycle, it must be remade into another.

Example: Ultraboost Made To Be Remade – the first commercial launch.

Waste Management

Recycled Materials: Use of Global Recycled Standard (GRS) and Recycled Claim Standard (RCS)-certified
materials1.

Collection & Recycling: Collaborating with partners for efficient waste collection and sorting2.

Decarbonisation:

Adidas is committed to reducing their carbon footprint across their entire supply chain.They have set
ambitious science-based targets to achieve climate neutrality by 2050. This includes a 30% reduction
in emissions by 2030 and achieving climate neutrality for their own operations by 2025. To achieve
this, they are working with suppliers to reduce emissions, develop low-carbon materials and
manufacturing methods, and improve data collection. In 2023, they saw a 3% decrease in emissions
per product and a 24% decrease in total emissions.

Targets:

Achieve climate neutrality (CO2e) across its own operations (Scope 1 and 2) by 2025.

Reduce absolute greenhouse gas (GHG) emissions across the entire value chain by 30% by 2030 (baseline
2017).

Achieve climate neutrality (CO2e) across the entire value chain by 2050.

2023 Results:
Average Scope 1, 2, and 3 annual GHG emissions per product decreased by 3% compared to 2022.

Total absolute GHG emissions decreased by 24% compared to 2022.

( Adding Table with Excel SHeet)

Deforestation & Plastic Reduction

· Goal: Achieve climate neutrality by 2050 and end plastic waste.

Materials Sourcing: Ensuring sustainable sourcing of materials like cotton, leather, and natural rubber.

· Plastic Reduction: Innovations to reduce plastic waste, including recycled polyester(Share of

recycled polyester in 2023 99%)

Key Note: Adidas is making significant strides in using recycled materials. Their partnership with Parley is
a prime example of this commitment. They are also increasing their use of sustainable cotton, reducing
the environmental impact of cotton production. Additionally, Adidas upholds high social and
environmental standards with supplier audits and codes of conduct.

Reducing land-related emissions (‘FLAG’)

Focus on Reduction: adidas prioritizes reducing land-related emissions (Forest, Land, Agriculture - FLAG).

Quantification Efforts: They began calculating FLAG emissions in 2023 (based on 2022 data).

Minor Impact: FLAG emissions make up a small portion of adidas' total greenhouse gas emissions.

Main Culprits: Sourcing cow leather, cotton, and natural rubber contribute most to FLAG emissions.

Below Threshold: The 7% FLAG emission rate falls short of requiring a formal reduction target from SBTi
(Science Based Targets initiative).

Continued Efforts: Despite not needing a formal target, adidas remains committed to lowering FLAG
emissions.

Responsible Procurement:

Material Selection: Adidas prioritizes recycled and sustainable materials throughout their supply chain.
This includes:

Recycled Polyester: A major focus, aiming for 100% by 2025. Partnerships like Parley for the Oceans help
incorporate ocean plastic waste.

Sustainable Cotton: Increasing use of organic cotton and Better Cotton Initiative (BCI) cotton reduces
environmental impact of cotton production.

Bio-materials: Exploring innovative materials like Mylo (mushroom leather) to minimize reliance on
traditional resources.

Supplier Partnerships: Adidas collaborates with suppliers who share their commitment to sustainability.
This involves:

Supplier Audits: Regular assessments ensure ethical labor practices, fair wages, and environmental
responsibility throughout the supply chain.

Codes of Conduct: Clear guidelines outlining expectations for social and environmental responsibility are
established and enforced.

Transparency: Adidas strives for transparency in their supply chain, allowing consumers to understand
where their products come from and how they're made.

Responsible Consumption:
Product Design for Longevity: Adidas designs products built to last, reducing the need for frequent
replacements. This includes using high-quality materials and construction techniques.

Consumer Education: Adidas aims to empower consumers to make informed choices. This involves:

Marketing and Labeling: Products are clearly labeled with information about recycled content,
sustainable materials, and care instructions to promote product lifespan.

Educational Campaigns: Campaigns raise awareness about the environmental impact of clothing
production and the benefits of circularity.

Repair Services: Exploring offering repair services to extend product life and reduce waste.

Collaboration: Adidas recognizes that circularity requires a collective effort. They work with:

Retail Partners: Developing take-back programs in stores for used clothing and footwear.

Consumers: Encouraging participation in take-back programs and proper product care for extended life.

By focusing on both responsible procurement and consumption, Adidas aims to create a closed-loop
system where resources are used efficiently, waste is minimized, and the environmental impact of their
products is significantly reduced.

Packaging:
Paper-Based Packaging:

Most of Adidas’s paper-based packaging, including shoe boxes and shipping boxes, contains recycled
content.

Plastic Packaging (Polybags):

Material: The plastic packaging (polybags) used to protect finished products during shipping is made
from 100% recycled LDPE (low-density polyethylene).

Exceptions: Currently, there are exceptions in the DCs (Distribution Centers) where e-commerce returns
are repackaged. These exceptions account for less than 1% of polybags.

Carrier Bags:

All carrier bags distributed in Adidas retail stores are made with recycled paper.

Environmental Impact

While packaging accounts for only around 1% of total emissions, Adidas recognizes the importance of
minimizing its impact.