RESPONSIBLE SOURCING

Our Foundation: Risk Management & Compliance

Our strategy is based on our comprehensive risk management and compliance approach. The aim here is to gather and provide transparent key figures on the sustainability performance and risks of our suppliers as a basis for fact-based decision-making in sourcing processes and the awarding of contracts. The transparency gained in this area also benefits dialog and cooperation with our suppliers.

Henkel currently has business partners from over 120 countries and places the same exacting demands on all business partners worldwide. We expect their business conduct to be consistent with our sustainability requirements. In selecting and working with our business partners, we also consider their performance with regard to safety, health, environment, social standards and fair business practices. This is based on our corporate Safety, Health and Environment Standards. Our corporate purchasing standards continue to apply. The Chief Procurement Officer (CPO) is responsible for all procurement activities and for ensuring responsible supply chain management. He reports directly to the Chief Financial Officer (CFO). 

Compliance with the cross-sector Code of Conduct of the German Association of Materials Management, Purchasing, and Logistics (BME) is mandatory for all of Henkel’s suppliers worldwide. The BME Code of Conduct is based on the ten principles of the UN Global Compact. This Code of Conduct makes international application possible and, in addition to the Responsible Sourcing Policy also serves as the basis for contractual relationships with our strategic suppliers. The Responsible Sourcing Policy that is integrated into the purchasing-supplier cycle was revised in 2023 to add specific aspects of supply chain due diligence.

Our strategic approach

Our “100% Responsible Sourcing Strategy” puts Henkel’s dimensions of the 2030+ sustainability ambition framework – regenerative planet, thriving communities and trusted partner – at the core of its sourcing agenda. To this end, we focus on the following areas:

• Together we enable a net-zero future by driving reduction of supply chain greenhouse gas emissions, implementing circular sourcing solutions and protecting nature and biodiversity.
• Together we commit to drive sustainable practices by supporting equity, education and wellbeing of people in our supply chains while respecting human rights in all our activities.
• Together we secure a high-performing, transparent and sustainable supply chain and collaborate with our suppliers and partners to drive transformation and create sustainable business value.

In the areas of strategic sustainability in sourcing mentioned above, a large number of indicators are collected and made available to measure the value contribution as a basis for strategic sourcing decisions.
 

Key enablers for implementation

In order to implement our 100% Responsible Sourcing Strategy, the following factors are key enablers – collaboration, transformation, innovation, and empowerment. We accelerate our efforts by intensifying our internal and external collaboration with business partners and key stakeholders. Our global purchasing structure allows us to drive transformation by fully integrating the respective sustainability strategies of the business units and functions in our responsible sourcing agenda. Furthermore, we will focus on sustainable innovations, boosting innovation of digital solutions and on driving the change to a 100 percent responsible sourcing mindset by empowering internal and external stakeholders through capability building opportunities.

Together for a sustainable supply chain

In 2011, Henkel and five other companies in the chemical industry co-founded the initiative “Together for Sustainability – Chemical Supply Chains for a Better World” (TfS). It is based on the principles of the United Nations Global Compact and the Responsible Care Initiative of the International Council of Chemical Associations ‏(ICCA). TfS aims to harmonize increasingly complex supply chain management processes with regard to sustainability and to optimize dialog among worldwide business partners. Above all, synergies are to be created so that resources can be used more efficiently and with a minimum of administrative effort, not only among the member companies but also with all of our shared suppliers.

At the heart of the audits and online assessments of the TfS initiative is the core idea: “An audit for one is an audit for all!”. Suppliers then only have to undergo one assessment or one audit. The audits are carried out by a number of selected, independent audit companies. For the online assessments, TfS works with EcoVadis, a sustainability performance assessment specialist. Performance is assessed in the areas of management, environment, health and safety, labor and human rights, and issues of ethical corporate governance. In 2024, TfS had a pool of around 20,600 active TfS assessments and audits. In the same year, around 3,200 Henkel suppliers underwent a TfS assessment or audit. As a number of TfS members are also direct suppliers of Henkel, and these suppliers also assess and audit their suppliers, we achieve a more in-depth approach ‏(tier n) to sustainability practices along the value chain.

One significant milestone in the history of the TfS initiative was the release of the Scope 3 Product Carbon Footprint ‏(PCF) Guideline for the Chemical Industry in 2022. TfS members have worked with global NGOs, corporate sustainability experts, chemical industry experts, and organizations such as the World Economic Forum ‏(WEF) and the World Business Council for Sustainable Development ‏(WBCSD) to ensure compatibility of the TfS PCF Guidelines with global best practices for emissions accounting. Henkel was represented by experts in the PCF working groups. The recently updated guideline consolidates existing PCF calculation approaches with regard to the specifics of the chemical industry and enables business and industrial customers as well as consumers to establish direct comparability and an assessment of the climate impact of chemical products in the future. In 2024, the TfS initiative officially launched the PCF Exchange – a standardized data platform enabling suppliers and companies to generate and securely exchange carbon data from across their supply chains. 

Another core element of the TfS initiative is the TfS Academy – a tailored learning and skill-building platform that is designed to provide member companies and their suppliers with continuing education on key sustainability topics in the supply chain. The courses cover topics including health and safety, the environment, sustainable procurement, labor and human rights, management and governance, as well as information about TfS itself. The learning content is all linked to corrective actions resulting from TfS audits and assessments. This provides suppliers who have been evaluated with a range of concrete learning opportunities that are directly related to the results of the audit, and which support them in their continuous improvement efforts. By the end of 2024, more than 280 learners at Henkel were enrolled in 790 courses at the TfS Academy.