Athletic Footwear Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in the Athletic Footwear Industry

Contemplating ESG into decision making and business strategies contributes to an effective due diligence and a better investment decision for the company as well as relevant stakeholders. Companies which are focused on the athletic footwear Industry have been disclosing ESG data for a while.

These companies disclose both social and environmental impact which have been addressed and along with corresponding action plans. Starting off with the planet, companies have disclosed their progress for climate action, especially reducing energy use and greenhouse gas emission within a specific target period. Transition to renewable energy has also been a key agenda to shift to a net-zero society.  Along with this, business models have been focused on changing to a circular model to reduce products to reduce packaging waste. There has been a room for innovation of footwear which reduces end of life waste. The companies have policies which focus on human and labor rights, but there have been a lot of disputes in the value chain operations.

The COVID-19 pandemic has a negative impact for this business segment, market revenue for many companies reduced by 25- 50 %. The United Nations’ Sustainable Development Goals (UN SDGs) is a comprehensive framework that helps companies in this market obtain a perspective on the impact of their products and operations on ESG parameters.

ESG Trends

Athletic footwear sector focuses on both environmental and social impact, progress for climate action (SDG 13- Climate Action) which is inclusive of reducing energy use and carbon emissions with a specific target year have been mentioned by most of the companies. Transition to net-zero by 2050 has been the most common target among the peers which is in alignment with the Paris agreement. This transition has been supported by growing renewable energy demand among stakeholders. Companies also mention both direct and indirect scope emission targets by 2030 with current progress, within which scope 3 emission focuses on purchased goods and services as well as end-of-life treatment of sold products. To reduce end of life waste using recycled polyester and biodegradable footwear have been an agenda for the majority of the companies. Both natural and synthetic polymers have been included in innovative space (SDG 9- industry, innovation and infrastructure) especially polysaccharides(natural) and aliphatic polyester(synthetic) are main materials. In order to reduce packaging waste companies are focusing on a circular business model, for example one of the companies is having shoes which are made from textile waste. Around 5 tons of textile waste which is equivalent to 25000 t-shirts have been recycled into new shoes.

ESG Challenges

Main challenges of this industry lies with both environmental and social impacts, even though there has been significant improvement in reduction of end of life waste and packaging waste with a circular business model. Transition or upgradation of technology has been a challenge for this sector because of various factors like capital, customer satisfaction and product quality. Path to complete transition will take a considerable amount of time to ensure a better circular business model with innovative products. In the past, this segment faced a lot of human rights disputes in the value chain operation. Even though companies ensure and comply with human rights via a lot of frameworks like International Labor Organization(ILO), OECD guidelines for Multinational enterprises and UNGC, there has been a room for human rights issues. There have been few initiatives by one of the top companies in China which reduces forced labor issues with improved and quality 3^rd party audits.

Growth of the Athletic Footwear Market

Overall, this segment has a promising future with a lot of innovative spaces which have been creating a more positive impact on the environment. Integrating a circular business model along with product innovation have a critical influence to sustain business growth. Moreover, initiatives which are in support of reducing human rights issues like forced labor have been major progress for the companies. In terms of revenue, the athletic footwear market was valued at USD 127.3 billion in 2021 and is expected to have a compound annual growth rate of 4.9% by 2030.

Key Companies in this theme

    • Adidas AG

    • ASICS Corporation

    • Fila Inc.

    • Under Armor, Inc.
    
    • Lotto Sport Italia S.p.A

    • New Balance Athletics, Inc.

    • Vans, Inc.

    • Nike, Inc.

    • Puma SE

    • Reebok International Ltd.

Scope of Athletic Footwear Industry ESG Thematic Report

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of Athletic Footwear Industry ESG Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the Athletic Footwear space, globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the athletic footwear industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment into the sector