Climate Strategy and Targets within our Sustainability Framework

Emissions of carbon dioxide and other greenhouse gases ‏(GHG) caused by humans are responsible for increased climate change and global warming. These emissions are also increasing due to our lifestyle and our economic systems. And yet the global “climate budget” is limited.

The UN’s global Paris agreement on climate change represents a commitment by the community of nations to limit global warming to well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. To achieve this, carbon dioxide emissions must be reduced by 2050.

Henkel is committed to the 1.5 degrees Celsius target and sees it as an essential prerequisite if more than nine billion people are to be able to live well within the resource limits of our planet in 2050.

Three main levers are available to stop global emissions from increasing further, and to make sure emissions are reduced by the required amount:

1. Increase our carbon-efficiency: save energy and raw materials
2. Fast and deep decarbonization: replace CO₂ in energy and raw materials manufacturing
3. Neutralisation of CO₂ impact: permanently remove CO₂ or convert CO₂ into raw materials

In accordance with the Science Based Targets initiative ‏(SBTi) Henkel derived its own science-based emission reduction targets based on its long-term targets. The Science Based Targets initiative  by the UN Global Compact, World Resources Institute, World Wildlife Fund for Nature (WWF) and Carbon Disclosure Project (CDP) aims at encouraging companies to set such targets.

In 2020, Henkel’s science-based targets were approved by the initiative as consistent with levels required to meet the goals of the Paris Climate Agreement. The targets as approved by the initiative are:

• Henkel commits to reduce scope 1 and 2 GHG emissions 67 percent per ton of product by 2030 from a 2017 base year. 
• Henkel also commits to increase annual sourcing of renewable electricity from 6 percent in 2017 to 100 percent by 2030. 
• Furthermore, Henkel commits to reduce scope 3 GHG emissions from purchased goods and services 30 percent per ton of product by 2030 from a 2017 base year.

The targets covering greenhouse gas emissions from Henkel’s operations ‏(scopes 1 and 2) are consistent with reductions required to keep warming to 1.5 degrees Celsius, the most ambitious goal of the Paris Agreement. 

Henkel’s target for the emissions from its value chain ‏(scope 3) meet the SBTi’s criteria for ambitious value chain goals, meaning they are in line with current best practice. 

We are aiming to reduce the carbon footprint of our production by 67 percent by 2030 compared to the base year 2017. To do so, we continually improve our energy efficiency and use more energy, particularly electricity, from renewable sources.

Conversion to renewable energy:

In addition to our efficiency targets, we are striving to source 100 percent of the electricity we purchase for production from renewable sources by 2030. 

To implement the target of sourcing 100 percent renewable electricity, it is important to consider differences in legislation and infrastructure, as well as levels of regulation and variations in climate conditions in each of the countries we operate in. For this reason, we are following country-specific approaches that are flexible and leverage a portfolio of options. With this in mind, we are basing our conversion to renewable energy on a combination of three models: 

1. On-site production: This model involves generating green power at our sites through wind turbines, solar cells or other technologies. The infrastructure is either funded by Henkel itself or paid for by collaboration with external partners.
2. Direct purchase: For this model, we purchase green power straight from the grid of a local energy utility company, or as part of a long-term Power Purchase Agreement (PPA).
3. Virtual coverage: If the two options above cannot be implemented at one of our sites – meaning we cannot generate or purchase renewable electricity directly – green power requirements can be covered virtually. For example, by entering into long-term PPAs that feed green power from specific sites into the supply grid in an amount that is equal to the amount consumed.

Overall, production only accounts for about one percent of our carbon footprint along the entire value chain. The use of our products accounts for around two thirds, and the raw materials for around one quarter. This is where we see big potential to reduce emissions and contribute to climate protection.

CO₂ emissions during product use

Our products are used millions of times every day in households and industrial processes. As our analysis shows, the product use phase has the greatest impact on our carbon footprint.  For this reason, our goal is to leverage the potential of our brands and technologies and to offer our expertise to help our customers and consumers save 100 million metric tons of CO₂ over the ten-year period from 2016 to 2025. To achieve this, we have developed a CO₂ savings portfolio that can be used as a basis for quantifying the exact contributions made by products to reducing emissions (Scope 4).

Our goal includes two approaches. With our engagement, we want to help reduce CO₂ emissions that are generated by customers when they use our products (called Scope 3 emissions). In addition, we want to help customers avoid CO₂ emissions by using our products and technologies (called Scope 4 emissions). Through our brands and technologies, we make products that are used and applied in ways that directly linked to the use of energy, such as detergents, shower gels, or hotmelt adhesives. We want to contribute to improving the efficient use of energy with innovations that cut energy consumption and the related CO₂ footprint. On top of this, we use targeted communications activities to encourage responsible-minded behavior when end consumers use our products.

In relation to the leverage points we have identified along our value chain, we have set a target of saving 100 million metric tons of CO₂ together with our customers, consumers and suppliers over the ten-year period from 2016 to 2025. We have developed a CO₂-savings portfolio 1 for this purpose. The evaluation of the contributions in this portfolio is based on a company-wide, standardized process that sets out the criteria for the selection of the products and the calculation of CO₂ emissions. In the following, we have summarized some examples of our products and technologies in six groups. These products all contribute to energy and material efficiency. With regard to the products sold between 2016 and 2023, we enabled our customers and consumers to save more than 89 million metric tons of CO₂, or depending on the application, avoid potential emissions. In the future, we want to evaluate additional applications and further expand the portfolio of products that contribute to CO₂ savings in the use phase.

CO₂ emissions from raw materials

By building on our existing SBTi targets for 2030 and following our ambition to be climate positive by 2030 for our own operations we want to explore the global SBTi net-zero standard on how to set a pathway for our scope three emissions. Emissions from raw materials and ingredients play a significant part here.

Contribution by our suppliers:

The raw materials and ingredients we purchase have a decisive impact on our carbon footprint along the value chain.We therefore expect our partners and supplier to make a contribution to the reduction of CO₂ along the entire value chain. This is reflected in our ambitious target to reduce the carbon footprint of our raw materials and packaging that we use by 30 percent per ton of product by 2030 compared to the base year 2017.

Replacing CO₂ in raw materials:

In order to reduce emissions further, we have studied our portfolio to see where we can replace carbon-intensive raw materials with low carbon alternatives.

Many of the raw materials and ingredients we use are “organic” chemical compounds, i.e. those based on carbon, for example the surfactants in detergents and shampoos, resins in adhesives and plastics for packaging. These release CO₂ when they are biodegraded or burned. We therefore plan to gradually replace the fossil carbon in our raw materials respectively as basis for ingredients and packaging with renewable carbon as we move toward a resource-efficient, climate-neutral future. In particular, the focus is on the use of carbon from plants or parts of plants as part of the renewable biosphere. Carbon from the air and from waste materials such as plastics can also be utilized as a source in the future.

For carbon from renewable sources, it is particularly important to select and evaluate these sources responsibly, and in doing so, to consider potential competition for land ‏(such as forests or cropland) and associated emissions calculations. Often, biomass is not processed in a segregated process, but is incorporated into established production processes that also process fossil raw materials as the basis of ingredients, in line with the principle of mass balance. As such, in 2022, we began purchasing ingredients produced by BASF under the biomass balance approach for use in most consumer products manufactured in Europe in the Consumer brands division. This requires the establishment of closed control chains from the renewable raw materials to the end product. These have been certified accordingly.

Palm ‏(kernel) oil is a key raw material for Henkel. Its cultivation can lead to deforestation of primary or secondary rainforests of significant environmental value, including peat lands and forests that absorb high levels of carbon. Drainage of these areas, for example, causes considerable carbon emissions. Our target is therefore to purchase all palm and palm kernel oil used as a basis of ingredients in our products from sustainably-cultivated sources in line with the RSPO’s Mass Balance ‏(RSPO = Roundtable on Sustainable Palm Oil) model by 2025. In doing so, we want to avoid the abovementioned activities that drive carbon emissions during the production of palm ‏(kernel) oil. RSPO-certified palm oil performs better than non-certified with around 35 percent lower greenhouse gas impact.

Neutralisation of CO₂: permanently remove CO₂ or convert CO₂ into raw materials

To maximize our efforts to reduce carbon dioxide emissions along the value chain, Henkel is also focusing on technologies that are still at the development stage – and which offer huge potential for making even better use of temporary or local energy peaks in the future. This also includes exploring technologies to remove carbon from the atmosphere and permanently store it. Therefore counterbalancing the impact of emissions that cannot be completely avoided or abated.

One of these is “power-to-X”, which enables the CO₂ to be used for positive outcomes and is expected to be ready for large-scale technical application within the next 15 years. The technology is the subject of a government research project that is supported by several companies: Henkel is also planning to participate.

Using power from renewable energy sources, this technology makes it possible to blend CO₂ with other chemical elements and convert the energy it contains.

The “power” in power-to-X is green power that is generated through water electrolysis and stored as hydrogen. “X” represents the numerous valuable raw materials into which this hydrogen can be converted in conjunction with carbon dioxide – e.g., gas fuels, synthetic fuels or chemical raw materials. These raw materials are climate-neutral if made from CO₂ taken from industrial processes. They are climate-positive if CO₂ from the atmosphere is used as the resource.

This opens up new possibilities for Henkel: Firstly, we can use gas from power-to-X to fuel our production ‏(spray towers, power plant). Secondly, we can replace carbon-intensive raw materials with raw materials from the power-to-X process.

If used on a wide scale, the technology can help to significantly cut CO₂ emissions in the atmosphere, reducing the carbon footprint of our value chain in the future. Over the long term, it could even make it possible to extract more CO₂ from the atmosphere than is emitted into it, making a positive overall impact on the climate.

We identify and assess climate-related risks based on the recommendations of the Task Force on Climate-related Financial Disclosures ‏(TCFD).

When assessing the potential impact of climate change on our business activities, we consider the entire value chain – from the raw materials and ingredients we purchase through to the marketing of our products. We draw on the findings of our comprehensive risk and opportunity assessment process.

Together with our customers, consumers and suppliers, we aim to achieve reductions in CO₂ emissions. This includes emissions from the raw materials and ingredients we use. We also want to help customers and consumers reduce CO₂ emissions that are generated when they use our products (called Scope 3 emissions). In addition, we want our products and technologies to help to avoid CO₂ emissions from being generated (in this context called Scope 4 emissions).

The two documents below describe

• the boundaries and the GHG Scope 3 reporting categories relevant for the Henkel scope 3 reporting
• the boundaries and the GHG Scope 4 reporting categories relevant for the Henkel scope 4 reporting

Each document further outlines the methodology behind the relevant reporting categories.