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January 16, 2023

Adidas names ex-garment worker co-CEO, cuts Canada jobs to boost ESG efforts

German sports brand Adidas has a new 'bottom up' ESG plan that includes making a former Cambodian garment worker co-CEO and combining US and Canada operations to free up resources for those working at the end of its supply chain.

Shemona Safaya

(Photo by Spencer Platt/Getty Images)

Adidas’ Supervisory Board has approved the new direction recently appointed CEO, Bjørn Gulden, wants to pursue which includes a fundamental structuring of the company to ensure leadership also comes from the bottom up.

‘Pay Your Workers’ agreement: making amends

The brand’s new social and environmentally responsible initiative, which is called ‘Own the Reality,’ has started with the appointment of former Cambodian garment worker and trade union leader, Vay Ya Nak Phoan, as co-CEO.

The aim of the move is to assure consumers that Adidas products are ethical, which is also why Phoan will serve alongside Gulden at the signing of the ‘Pay Your Workers’ agreement, which is taking place today (16 January).

The agreement is a binding commitment to fair labour practices, wages and compensation in the supply chain. It has been drafted with trade unions and labour rights organisations and will ensure that 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.

The sports brand says it is making amends moving forward and will correct its course by making an immediate payment of EUR11.2m (GBP12.1m) in wages to Cambodian workers, whose wages were withheld by suppliers during the pandemic.

Adidas further added it 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 new ‘Pay Your Workers’ agreement will also protect workers’ rights to freedom of association and collective bargaining, which Adidas states it recognises as fundamental rights that enable all others.

Gulden said: “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 Phoan’s expertise on the factory floor and the knowledge she honed as president of a union. 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.”

He added: “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. This is the key to long-term growth and maximisation.”

The new co-CEO of Adidas, Vay Ya Nak Phoan, will be overseeing compliance in the supply chain, a task for which Adidas says, she is uniquely qualified.

Adidas explains Phoan started her career as a Cambodian garment worker and appalled by unsafe working conditions and wage theft, she since served as a union negotiator and journalist.

Phoan explained: “I know what it takes to fight for what is right. I am prepared to transform Adidas from being a company with good products into a company that also does good.”

In November 2022, Adidas put an end to speculations and confirmed former Puma CEO Bjørn Gulden would start his position from 1 January 2023.

Consolidation of US and Canada operations

Adidas confirmed to Just Style that it is also restructuring the operations of its US and Canada stores by consolidating the two as part of a larger reorganisation within the brand.

The German sports brand said: “Yes I can confirm the details of the consolidation. The merging of our operations in US and Canada is part of a larger reorganisation within the Adidas brand as we increasingly work to honour garment workers’ rights.

“Beginning with the appointment of Cambodian former garment worker and trade union leader Vay Ya Nak Phoan as co-CEO with Bjørn Gulden, we are restructuring our brand and this consolidation frees up resources we can move down the supply chain towards supply chain labourers who have long suffered the conditions that make our products possible.”

The implementation of these changes is said to be complete by spring and business operations will be based out of Adidas’ US headquarters in Portland.

Adidas wished to thank Alim Dhanji for his leadership and contributions as the general manager for Canada, but explained: “Unfortunately this will lead to a reduction of our Canada based corporate employees. We sincerely thank our entire team in Canada for their many contributions to Adidas. We are committed to keeping an open dialogue with impacted employees and supporting all our people throughout the transition to our new integrated One NAM organisation.

The brand was keen to explain that these changes will not affect the availability of products to consumers in Canada and customers will be able to purchase products online, in the store or with wholesale partners.

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Shemona Safaya

Shemona is a rookie on the Just Style team and would love to hear from you! She's passionate about sustainability, cinema and anything new and exciting within the apparel industry. If she's not sat at her desk writing, you'll find her in the nearest coffee shop with her book.

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