Compliance and Audits
In the context of business compliance and governance, companies are faced with a growing number of rules and regulations from legislators and financial markets regarding business management and controlling. In view of the increasing requirements and growing complexity, Henkel has merged previously decentralized compliance functions and appointed a Chief Compliance Officer in 2007. He steers compliance activities on the corporate level and helps the Company to apply and continuously develop its codes and standards. In addition, he monitors and reports on the implementation of and compliance with external and internal requirements. He is assisted by the Internal Audit department, which also reports directly to him.
In 2008, the Chief Compliance Officer continued to expand his worldwide organization, so that responsibility for compliance is now also clearly defined at the national level. Locally appointed compliance officers ensure that information flows smoothly, and that requirements are acted on and implemented. They also organize training courses aligned to regional challenges.
Company-wide Audit Program - Zero tolerance for violations of regulations
Henkel’s interests can never be served by actions that violate rules and regulations. We carry out regular audits to ensure that our standards are implemented at our production and administration sites, and, increasingly, we also audit our subcontractors and logistics centers. The audits are a key instrument for identifying risks and potential improvements and play a crucial role in the transfer of knowledge. In the course of audits by the Corporate Internal Audit department, some 1,800 individual actions were agreed in 2008 with employees in Accounting, Purchasing, Sales/Distribution, Marketing, Information Technology and Production, in order to make processes and workflows even safer and more efficient. Audits focusing specifically on safety, health and environment were carried out at 21 sites, and 266 binding corrective actions were initiated. Implementation of the agreed actions and the widespread communication of examples of best practice are steered and monitored by our auditors.
Infringements of our codes and standards are thoroughly investigated. Depending on their nature and gravity, there may be far-reaching disciplinary consequences for the individuals concerned. In 2008, besides written warnings, there were 36 dismissals for serious misconduct.
Compliance Hotline
Since 2007, our reporting and complaints channels have been augmented by a compliance hotline, which was set up to enable employees to report major infringements of our codes and standards. It is run by an independent external provider. In particular, it should be used when incidents cannot be cleared up directly with the employee concerned or a supervisor. Regular evaluations show, however, that the established internal reporting channels and direct contact points in the Company are used much more frequently than the hotline.
Assuring Henkel standards after acquisitions
Immediately after purchasing the National Starch businesses in April 2008, we established an intensive dialogue between those responsible for environmental protection and occupational health and safety at both organizations. Besides the integration of the National Starch sites into the Henkel data processing systems, the topics discussed included, above all, a comparison of Henkel’s existing SHE standards, reporting and management systems with those of National Starch. On the basis of this comparison, each newly acquired site assessed its own performances in the areas of environmental protection and occupational health and safety. The results clearly showed that there is a high level of correlation between the standards and systems. It was therefore possible to incorporate the new sites into a uniform reporting system in 2008. Only in certain areas were measures needed to ensure compliance with Henkel standards. At the same time, areas were identified in which Henkel can learn from existing procedures in the National Starch organization.
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In 2008, we discussed local challenges in relation to our Social Standards with our general managers and human resources officers in selected emerging and industrial countries. It became clear that national legislation on minimum social standards has progressed considerably, especially in the emerging countries. Many requirements of our Social Standards, such as the number of working hours per week, are now regulated by law. Other requirements, such as freedom of association, personnel development and equal opportunities are anchored in our corporate culture by numerous human resources instruments. For example, the interests of about 75 percent of our employees are represented by works councils, independent trade unions, or similar bodies. In countries in which no employee representation is provided for or has been established, a dialogue with our employees serves as a voluntary and informal instrument for ensuring an open exchange of views. There are still major cultural differences in the perception of equality, e.g. with regard to traditional views of male and female roles, or the inclusion of minorities. These differences are addressed in our globally applicable standards.
