We expect our suppliers to conduct themselves in a manner consistent with our sustainability requirements.

In selecting and developing our suppliers, we consider alongside key commercial and operational indicators their performance in regards to sustainability. This is based on our globally applicable corporate purchasing standards and the Safety, Health and Environment standards that we formulated as early as 1997, thereby demonstrating even at that time our commitment to assuming responsibility along the entire value chain. We supplemented these with a Responsible Sourcing Policy, which we have systematically integrated into the sourcing process.

Worldwide purchasing markets

Henkel currently has suppliers and other business partners from about 135 countries. More than 77 percent of our purchasing volume comes from countries that belong to the Organization for Economic Cooperation and Development (OECD). However, we are also increasingly opening up new purchasing markets in states that are not OECD members. We place the same exacting demands on suppliers worldwide. Our suppliers are assessed in a comprehensive process that covers sustainability performance and risks as well as key commercial and operating indicators.

Binding supplier code

Compliance with the cross-sector Code of Conduct of the German Association of Materials Management, Purchasing, and Logistics (BME) is mandatory for all Henkel’s suppliers worldwide. Henkel joined the BME in 2009, as its code is based on the ten principles of the United Nations Global Compact and can therefore be used internationally. The BME code serves as the basis for contractual relationships with our strategic suppliers. This means that they have either recognized the crosssector BME code – and hence the principles of the Global Compact – or produced their own comparable code of conduct.

Together for Sustainability - Together for a sustainable supply chain

In 2011, Henkel and five other companies in the chemical industry established the initiative Together for Sustainability (TfS) – The Chemical Initiative for Sustainable Supply Chains. 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). The TfS initiative 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 initiative is the core idea: “An audit for one is an audit for all.” Suppliers only have to undergo one assessment or one audit. These are conducted by independent experts. Since the formation of TfS, the sustainability performance of more than 12,000 suppliers has been assessed and audited as part of the initiative. Performance is assessed in the areas of management, environment, health and safety, labor and human rights and issues of ethical corporate governance. The measures introduced are reviewed via re-assessments or audits. Follow-up monitoring and subsequent supplier management are the responsibility of the individual member companies. An online platform is used to make the results available to all members of the initiative for their information and approval. The TfS initiative grew once again in 2018 and the number of members has now more than tripled from the original six to 23.

Responsible Sourcing Process

Our six-stage Responsible Sourcing Process is a core element of our supplier assessment approach. This focuses on two main challenges: First, ensuring that all of our suppliers comply with our defined sustainability standards. Second, we aim to purposefully work with our strategic suppliers to continuously improve sustainability standards in our value chain – for example, through knowledge transfer and continued education about process optimization, resource efficiency, and environmental and social standards. The Responsible Sourcing Process is an integral part of our purchasing activities. We perform this process both at the beginning of our relationship with a supplier and as a regular check of our existing suppliers. Using this process for the assessment of sustainability performance, we currently cover about 87 percent of the volume we source from our suppliers in the areas of packaging, raw materials, and contract manufacturing.

Responsible sourcing together with our partners

In addition to our work in the Together for Sustainability initiative, Henkel is also member of AIM-PROGRESS, a forum of companies from the consumer goods industry. The objective here is also to encourage member companies to share experiences in the area of sustainable sourcing and utilize synergies. The forum also seeks to develop and promote shared assessment methods to determine CSR performance along the value chain.

The Consumer Goods Forumʼs Sustainable Supply Chain Initiative was initiated at the end of 2017. Representatives from our company actively shape its direction through involvement in the steering committee and working groups. The goal of the initiative is to support companies in their supply chain due diligence activities by publishing a list of sound and reliable sustainability schemes that have been audited. In this way, the Consumer Goods Forum Initiative supports continuous improvement processes in the supply chains of its members worldwide and increases efficiency by avoiding duplicate audits.

Intelligent procurement: Henkel@SAP Ariba

One of our success factors is that we at Henkel aim for valuable partnerships with our suppliers. To strengthen our relationships, we invite both our existing as well as new suppliers to our digitalization journey: Henkel@SAP ARIBA

The implementation of Ariba Network enables the transformation of our procedures to simplified and digitalized supply chain activities. The electronic purchase orders and transactions allow more efficient processes while reducing costs and supporting sustainability. Thus, this intelligent procurement leads to an improved collaboration.