Adidas CEO: Partnerships Are Key to Leading on Sustainability

Adidas CEO Kasper Rorsted renewed the athletic giant’s commitment to making sustainability a key component to its business model on Wednesday.

“If we succeed in sustainability — or when — we also succeed as a business,” Rorsted said during CNBC’s Evolve Global Summit on Wednesday.

The executive restated Adidas’s commitment to having nine out of 10 of its products be sustainable by 2025, and said the company sees itself as the leader in sustainability in the retail sector. Adidas plans to reach climate neutrality by 2050, according to its 2020 annual report.

Rorsted said the company, which has used ocean plastics in its athletic shoes since 2015, has evolved and remained competitive as the costs to use sustainable materials have come down and it’s been able to better scale up production of the sustainable products that customers want.

Importantly, he said, customers need to be given the choice to purchase sustainable products, and the company has learned that customers want to pay the same prices for sustainable goods as for unsustainable products. Rorsted added that the company has found that 70% of Adidas customers prefer buying sustainable products.

“A lot of the challenges lie around innovation, and getting the right costing into place that actually makes it a competitive offer. Because in the beginning, it will never be,” he said, referring to finding cost effective sustainable materials, such as Parley, and to offer products at prices consumers will pay.

Adidas recently released a non-leather version of its iconic Stan Smith sneaker in April in an effort to give customers choices for their purchases, even if the company will have to wait for sales margins on that shoe to normalize. “As long as we can deliver a product that doesn’t compromise on performance or price to the consumer, eventually the consumer will be very open,” said Rorsted.

The brand, which has also partnered with Allbirds to create an athletic shoe that will be released later this year, initially said in May 2020 that the shoe meets the performance standards of the Three Stripes with a carbon footprint that’s analyzed using Allbirds’ carbon emissions measuring life cycle assessment tool.

Though Allbirds might be considered a competitor, Adidas has a different view — that cost is more important than competing with other firms. “It’s super important that we get the best innovation from everybody,” Rorsted said.

On the subject of social justice, the CEO said that as a leader in the retail market, he knows it’s important to acknowledge varied opinions and to employ people with diverse opinions. He said that his company must stand up and have the conversations about topics such as discrimination, hate crime, and child labor as they are happening.

“I think we are a learning organization. We don’t get all things right at the same time, you know, but when we get something wrong, I think we need to recognize we’re getting wrong and be fully committed to it,” Rorsted said. “If you make mistakes, recognize the mistakes and correct them and move forward to make certain that you correct the mistakes.”

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