Suppliers – A shared responsibility to the future

With our leading approach to Responsible Sourcing, we aim to enable purposeful growth by driving sustainability throughout our supply chain – for the benefit of people and the planet. Our mission is to go beyond compliance, to drive impact and change across our entire value chain, and to create sustainable value for our customers. For this reason, we maintain intensive dialog and collaboration with our suppliers to promote sustainable practices and respect for human rights along the value chain.

In 2020, our new 100% Responsible Sourcing Strategy was published, emphasizing our aim to make 100 percent Responsible Sourcing decisions globally, across all regions, business units, and material groups. The strategic framework is built on our robust risk management as well as compliance approach and puts Henkel’s three sustainability strategic focal areas of climate-positive, circular economy and social progress at the heart of its sourcing agenda. Our contributions to these focal areas are facilitated by the four key strategic enablers of collaboration, transformation, innovation and empowerment that will guide our progress toward 100 percent Responsible Sourcing.

Our supplier base is one of our most important resources. It constitutes millions of workers around the world and is a huge lever for accelerating our joint impact on a sustainable future. Thus, 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 operating indicators their performance with regard to safety, health, environment, social standards and fair business practices as decisive criteria. 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 as an integral part of our sourcing processes. 

Henkel currently has suppliers and other business partners from around 120 countries. More than 76 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.

Compliance with the cross-sector Code of Conduct of the German Association of Materials Management, Purchasing, and Logistics ‏(BME) is mandatory for 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 cross-sector BME code – and hence the principles of the Global Compact – or produced their own comparable code of conduct.

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). The vision that the six Chief Procurement Officers shared was “An Audit for one is an audit for all”. The aim of TfS is 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.

Around 16,000 assessments and audits have been conducted since TfS was founded. Performance is assessed in the areas of management, environment, health and safety, labor and human rights, and issues of ethical corporate governance. The TfS initiative has grown strongly in recent years and now consists of 30 members that represent a total spend of more than 228 billion euro ‏(status: March 2021).

In September 2020, TfS launched its new strategic framework “TfS Grow&Deliver.” This new strategy builds on the initiative’s past achievements and will pivot TfS  from an initiative focused on measurement to a community that delivers tangible impact. TfS members will continue their commitment to promoting higher standards, as well as improving the insights and data gathered from assessments and audits. This will enable TfS to train suppliers in topics and areas that offer the largest potential sustainability impact. TfS has also decided to expand its work in emerging markets such as China and India. Taking collaborative action is another building block for the new strategy. In this way, TfS aims to further extend its contribution to sustainability. On top of this, fostering the TfS community is another key factor that will enable TfS to achieve its aims.

Since May 2019, Bertrand Conquéret, Chief Procurement Officer (CPO) at Henkel, has been President of the TfS initiative. He played a key role in developing the new “Grow&Deliver” strategy.
 

The central element of our strategic risk and compliance management is our six-step Responsible Sourcing Process which we established to assess the sustainability performance of our suppliers. Through this six-step process, we support our purchasers and suppliers in making their contribution to continuous sustainability improvements in the supply chain through targeted collaboration and cooperation – 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 and is applied both at the beginning of any cooperation and in the repeated cycle of review, analysis and continuous improvement with existing suppliers. Using this process for the audit and assessment of the sustainability performance of our suppliers, we cover about 91 percent of our purchasing volume in the areas of packaging, raw materials, and contract manufacturing.

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 seeks to develop and promote shared assessment methods to determine CSR performance along the value chain.

In line with our strong belief in the power of multi-stakeholder and cross-industry initiatives, we are also a founding member of the “Action for Sustainable Derivatives” (ASD). It brings together organizations from along the palm oil derivative supply chain to support efforts to increase transparency and promote compliance with NDPE (No Deforestation, No Peat, No Exploitation) principles, with the overall aim of positively transforming the palm oil industry.

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, being a standard part of doing business with Henkel around the globe