Frank Henke took over the development of adidas' sustainability program in 1995, at a time when sustainability was still considered a niche issue, and served as Senior Vice President of the Group's Sustainability function until 2023. In conversation with Steven Rohles from iron, he looks back on more than 30 years of ESG practice, tough discussions in Brussels and Berlin – and explains why he believes in the future of ESG despite the current political headwinds.
Steven Rohles: Frank, at what point in your career did you decide to pursue sustainability – and what motivated you to do so?
Frank Henke: As part of my business and economics studies, I had already dealt with corporate ethics academically – in other words, the gray area between the market and the law. It's a fascinating topic. How much leeway does a company have to be successful in a competitive environment, and how closely must it adhere to regulations? How do companies deal with this gray area? That fascinated me. I joined adidas as a trainee in 1991, where I first came into contact with specific environmental legislation: the German Packaging Ordinance in 1991. That was pretty much uncharted territory for all companies. I implemented it for adidas in Germany and later for Europe—data collection, reporting, correspondence with authorities, legislators, and the Dual System Germany ("Green Dot"), as well as coordination with trading partners.
Steven Rohles: And in the years that followed, criticism of globalization arose against companies like adidas, right?
Frank Henke: Exactly. Starting in 1994, this wave of criticism of globalization spread from US universities to Europe, and trade unions and civil society groups began to take up the issue. As a highly visible consumer-facing company with production in emerging and developing countries, adidas was one of the first to face this criticism. Action groups such as the "Clean Clothes Campaign" emerged, and various activist groups confronted us with accusations of inadequate working conditions and environmental standards in the sourcing countries.
Steven Rohles: Do you remember your first factory visit back then?
Frank Henke: Very well, in fact. In 1994, I went on my first extended trip to Southeast Asia. What impressed me most was the huge number of workers in these factories. The textile industry is known as a paradise for unskilled workers—people with very few qualifications can find employment there. This was extremely important for the economic development of these countries.
Of course, as a Western European, I noticed how inadequate and amateurish occupational safety and environmental protection often were. There was simply no safety culture like there is in Germany. At the same time, even back then, there was an enormous gap between very well-managed and very poorly-managed companies. I remember, among other things, companies in Thailand and Indonesia that already had energy recovery, closed water cycles, and material recycling, as well as outstanding occupational safety.
Steven Rohles: How can this gap be explained?
Frank Henke: It depended heavily on factory management. Those who understood that raw materials cost money were already investing in energy and water conservation and effective chemical management for economic reasons. And they realized that better conditions lead to better quality, a higher degree of innovation, and more stable working conditions. As competition intensified, this paid off very positively for factory management.
Of course, there were also poorly managed factories, which led to criticism of our sourcing strategy. And that was the starting point where we asked ourselves: How do we deal with such accusations? How much transparency do we need? What kind of dialogue do we want to enter into with stakeholders? This led us to consider regular stakeholder dialogues and comprehensive sustainability reporting.
Steven Rohles: In 2000, adidas published one of the first sustainability reports in the industry.
Frank Henke: That's right, we were the first company in the sporting goods and apparel industry to publish such a report. I wouldn't call it a classic sustainability report today—it was more of a status report that very transparently and openly highlighted the challenges in managing our supply chain.
We didn't want to hide where the problems lay, but rather work together with the companies and stakeholders to find solutions. These were representatives of trade unions, international NGOs, but also employers' associations in the sourcing countries – such as the Vietnamese Chamber of Commerce, which was already very committed to occupational safety at that time.
During the 2000s, we also closely followed the development of the Global Reporting Initiative and collaborated on the Sector Supplement for textiles and clothing. Many of our reporting elements were integrated into the GRI, which motivated us to continue in this frontrunner position.
Steven Rohles: Then came the NFRD in the 2010s. How did that affect adidas?
Frank Henke: From 2000 to 2017, we published a separate sustainability report every year to show our progress and make our challenges transparent. When the non-financial statement came into effect in 2017, we gradually integrated the sustainability report into the annual report. We also posted large parts of the qualitative and supporting data on our corporate website.
Steven Rohles: And the audit?
Frank Henke: From that point on, the report was audited externally. Previously, we had deliberately avoided using traditional auditing organizations and instead held regional stakeholder meetings. We wanted stakeholders to take our statements seriously and give their honest opinion on the reliability of the data and statements.
Steven Rohles: Perhaps this is also an interesting approach for medium-sized companies?
Frank Henke: Absolutely. For medium-sized companies that are no longer subject to CSRD requirements, an audit or assessment by stakeholders can be a good approach. But—and this is important—we never saw reporting as purely a communication tool. We fundamentally rejected reporting for the sake of reporting. Policy and measures come first, reporting second.
Steven Rohles: adidas also had to deal with harsh criticism – unfair working conditions, child labor, etc. Did you sometimes feel unfairly treated?
Frank Henke: We have to make a clear distinction between organizations that helped identify problem areas in the manufacturing countries and provided constructive support in finding solutions. Without these organizations, our sustainability program could not have been set up in this way.
On the other hand, there are international campaign organizations that have sometimes exploited the issue for their own political purposes. Their statements often did not correspond with what we heard from local groups, works councils, and trade unions on the ground. At the end of the day, it is only possible to agree on certain areas when you sometimes have fundamentally different worldviews.
Steven Rohles: How did you respond to that?
Frank Henke: At no point did we want to take on the role of global policeman in the sourcing countries. You have to ask yourself the question of legitimacy: Does a company even have the right and the mandate to determine the shape of labor rights in a country where it is not based? It is the primary task of local governments to formulate a viable legal framework and to provide resources to monitor it.
In retrospect, we certainly made mistakes – and this applies to many companies – by taking a far too fragmented approach with individual solutions instead of placing much greater responsibility on the governments in these countries. We should have approached governments more cohesively with other brands and formulated our point of view, but always taking into account the market economy development of these countries, which have the right to participate in global trade.
Steven Rohles: Let's jump back to the recent past: You were part of the EFRAG Working Group on the development of sector-specific ESRS for the textile sector. What was that like for you?
Frank Henke: The working group initially consisted of around 30 to 40 people. At the beginning, there were too few representatives from companies—many association representatives, but little practical experience. It would have been important to have company representatives who could provide a real reality check: How are regulatory requirements implemented in practice? Which objectives are realistic? How do you measure progress? Which standards really make sense?
I expressed my concern that we should not develop a reporting format that completely overwhelms companies. We should only include criteria from which real goals and measures can be derived that are relevant to companies and that can be used to monitor progress in a reasonable manner. It makes no sense to develop standards for companies that do not fit their business model.
Steven Rohles: The CSRD will soon affect many medium-sized companies. How do you assess this in terms of proportionality?
Frank Henke: In the wake of the Green Deal, we have seen a myriad of legal developments – CSDDD, CSRD, and so on. The EU has made a fundamental mistake here: too fragmented, too abstract, too academic, especially in its language. No one at the field level understands this. This has contributed significantly to sustainability fatigue. The debate must first find its way out of this valley.
Steven Rohles: Are you talking about disenchantment?
Frank Henke: Yes. In many companies, resources for creative programming and innovation, as well as the implementation of measures, have been shifted toward compliance and reporting. This has done the issue a real disservice. We have repeatedly pointed out this fundamental misstep to German government agencies and the EU – but there was a viewpoint that was unshakeable due to political majorities.
Steven Rohles: Despite all the setbacks, where do you see light at the end of the tunnel? And what can motivate small and medium-sized enterprises in particular to tackle ESG anyway?
Frank Henke: I see the need to view the issue in conjunction with future economic challenges. Especially against the backdrop of resource scarcity, we must promote closed cycles from an economic perspective – from waste to value. Everything that is waste must be seen as a raw material for products. However, we cannot achieve this through excessive regulation, but only through technical innovation. Let's give companies this freedom.
We also often focus the discussion too much on the climate. For many, this is often too abstract. Other issues such as water quality, water availability, and raw material availability are very tangible environmental and business issues where companies have even stronger intrinsic motivation.
Steven Rohles: You mentioned earlier that the mood was different before the Green Deal...
Frank Henke: Yes, and that's the crucial point. When I think back to discussions with other companies, there was much greater enthusiasm and motivation to really see the issue as a topic for innovation. That has been completely overshadowed by regulation.
"Before the Green Deal, there was much greater internal motivation to see sustainability as a real innovation topic. The inspiring element has completely disappeared – but that's exactly what we need again."
Steven Rohles: What advice would you give to a medium-sized company that wants to tackle ESG but doesn't know where to start?
Frank Henke: Start small, but with real substance. Don't try to report on everything at once. It's better to tackle three issues properly than twenty half-heartedly. The issues must fit 100% with the company's business model.
Steven Rohles: A kind of return to the roots?
Frank Henke: Exactly. Back to what ESG should actually be: a tool to make companies more sustainable, innovative, and resilient. Not a compliance monster that eats up all resources.
Steven Rohles: Frank, thank you very much for talking to us.
Frank Henke
Frank Henke studied economics and political science at Friedrich-Alexander University in Nuremberg-Erlangen and joined adidas in 1991. In 1995, at a time when sustainability was still considered a niche issue, he took on the task of developing adidas' sustainability program, including its sustainability reporting, and expanded the program from Europe to the global supply chain. From 2001 to 2019, he served as Senior Vice President of Sustainability and Social & Environmental Affairs, where he was responsible for developing the company's sustainability strategy. At the same time, Frank Henke was Chairman of the CSR Committee at the World Federation of the Sporting Goods Industry (WFSGI) from 1995 to 2023.
