Adidas AG on Friday announced plans for a summit next month in Switzerland with manufacturers, financing institutions, insurance experts and others to discuss creating a private insurance fund for workers affected by factory closures. The event, coordinated in partnership with The Global Forum for Sustainable Supply Chains, “looks to close one of the critical gaps in governance where countries have legislation providing for severance pay, but very few require the employer to make provisions for eventual severance obligations,” Adidas said in a prepared statement.
The group will explore the creation of a “Provident Fund” that can be made available for workers affected by factory closures and non-payment of wages and benefits. An Adidas spokesperson told the Oregonian that Nike is among the companies that have been invited to participate in the summit meeting.
Adidas said that since 1997, it has worked to identify root causes of breaches of workers’ rights and work with hundreds of factories across its supply chain to ensure fair, healthy and safe working conditions. Yet it still gets criticized over workers' severance payments, particularly among U.S. universities that issue licenses to Adidas. Last month, Cornell University in New York became the first campus to sever its ties with Adidas over an issue with an Indonesian factory, PT Kizone, that suddenly closed last year without issuing severance pay to 2,800 workers.
Adidas also announced Friday that it was committing $275,000 in aid to the workers in addition to a $250,000 food aid program it already had created. A job placement program has also been formed by Adidas.
The full statement follows:
STATEMENT FROM THE ADIDAS GROUP
September 28, 2012
Protecting the interests of global workers involved in producing our footwear and apparel is an ongoing priority for the adidas Group. Importantly, we are making headway in leading industry efforts to develop sustainable business solutions that address the systemic root cause of unethical factory closures around the globe, and protecting workers impacted by them.
We are pleased to announce today an important development in these efforts. At our request, the Global Forum for Sustainable Supply Chains will convene a summit of manufacturers, financing institutions, insurance experts, and other interested parties to consider options for a private insurance fund what we’ve termed a Provident Fund that can be made available for workers affected by factory closures and non-payment of wages and benefits. This summit, in partnership with the Global Forum, will take place in late October in Switzerland. This unique approach looks to close one of the critical gaps in governance where countries have legislation providing for severance pay, but very few require the employer to make provisions for eventual severance obligations.
Today, as we have since 1997, we work to identify root causes of breaches of workers’ rights, and to develop effective sustainable resolutions. We work with hundreds of factories in our supply chain every year to ensure fair, healthy and safe working conditions. We measure factories’ performance, as well as our efficacy in resolving these issues. We do this in collaboration with other brands, the Fair Labor Association, governments and regulatory authorities, and civil society groups. Because of our approach to these issues, our programs are recognized as best practice by leading socially responsible investment agencies like the Dow Jones Sustainability Index and the FTSE4Good index. In fact, earlier this month, for the 13th consecutive time, the adidas Group was included in the Dow Jones Sustainability Index and was rated as the industry leader in sustainability issues and corporate responsibility in the Clothing, Accessories and Footwear category. Regardless of this recognition, we always strive for increasingly effective ways that influence change.
We protect the interests of global workers because it is critical to our business and because it is the right thing to do. As a company, we are sympathetic to the plight of workers impacted by the unethical closure of the PT Kizone factory in Indonesia. In addition to the job placement program and the $250,000 food aid program we have already established for these former workers, we are committing another $275,000 in humanitarian aid in recognition of the continuing hardships they and their families are facing. Although the adidas Group had no business relationship with the factory for nearly six months prior to its closure, we are the leaders in the industry and, accordingly, the adidas Group has directly dedicated more towards the former PT Kizone workers than any other brand. Our $525,000 in humanitarian aid, job placement program for former workers and our ongoing leadership in facilitating sustainable business solutions underscores our commitment to promoting global workplace standards.
