Sustainable Palm (Kernel) Oil
Henkel wants to drive progress toward sustainable palm oil and palm kernel oil – and make a positive impact on both the environment and the people affected.
- At Henkel, we recognize our responsibilities regarding the purchase and use of ingredients based on renewable raw materials. This includes palm (kernel) oil – an essential basis for surfactants that we use in our products.
- Our palm oil targets for 2025:
- Cover 100 percent of our demand with oils whose responsible sourcing is certified or externally confirmed: All palm and palm kernel oil used as a basis of the ingredients in our products should be derived from sustainably cultivated sources in line with the RSPO’s Mass Balance model. We are also aiming at sourcing selected palm oil and palm kernel oil-based materials where feasible and available according to the RSPO’s segregation model.
- Establish full traceability and transparency of the palm oil and palm kernel oil used in our products: We have learned from our activities that the issue of transparency and traceability needs further development, especially for palm-kernel-oil-based derivatives. We are also convinced that cross-industry initiatives are needed to verify targets for zero net deforestation. With this in mind, we continue to pursue the target of full transparency and traceability by 2025, together with our partners.
- Improve the livelihood of smallholder farmers and protection of nature: We are building on the success of our collaborative projects with smallholder farmers and will continue strengthening our commitment to integrate raw materials from these smallholder farmer into our supply chain. Consideration is also given to ecological aspects while supporting climate-friendly agriculture and a positive impact on biodiversity.
Sustainable sourcing of palm (kernel) oil
At Henkel, we recognize our responsibilities regarding the purchase and use of ingredients based on renewable raw materials. For this reason, we are committed to ensuring that the ingredients for our products are made from sustainable palm oil and palm kernel oil. With this in mind, we work both with the companies from which we source our raw materials and with other partners to exert influence on the palm oil supply chain, from smallholder farmers to consumers. We have set ambitious targets for 2025 and, building on existing certifications, we intend to develop our supply chains to ensure full NDPE compliance (No Deforestation, No Peat, No Exploitation). We aim to guarantee that the palm oil and palm kernel oil and their derivatives used as a basis of the ingredients in our products do not contribute to the deforestation of primary or secondary rainforests with significant ecological value. These include peat lands and other high-carbon stock areas. In addition, we intend to continuously develop traceability and transparency capabilities and we aim to improve the livelihoods of smallholder farmers.
Our purchase of palm oil-related materials accounts for less than 0.2 percent of the palm oil and palm kernel oil produced worldwide. The majority of this is palm kernel oil is the basis for surfactants that we use in our detergents and hair and body products. These materials are at the end of a long and often highly complex supply chain. For this reason, Henkel is committed to driving progress toward achieving sustainable practices across the palm oil industry and along the entire value chain.
Collaboration in the palm oil industry
We support, both, the industry’s physical transformation and the market’s transformation to certified sustainable palm oil products. A multi-stakeholder approach is at the core of our initiative for sustainable management of palm oil and palm kernel oil. Through partnerships, projects and dialog, we engage with key players and we are expanding our contribution to sustainable practices in the palm oil industry.
Henkel is a committed founding member of the Forum for Sustainable Palm Oil (FONAP) in Germany and is a member of various working groups dedicated to palm (kernel) oil sustainable sourcing. Through these engagements with other companies, NGOs, associations and political bodies we advocate for finding ways to increase the proportion of sustainably produced palm (kernel) oil, and improving existing standards and certifications.
In November 2019, Henkel joined the cross-industry initiative Action for Sustainable Derivatives (ASD) as a founding member, together with other leading consumer goods manufacturers and companies in the oleochemicals industries.The primary objective of the initiative is to generate more transparency in the complex value chain for palm derivatives. Activities include assessing identified risks, promotion of the sustainable production and procurement of palm (kernel) oil derivatives, and sharing best practices and solutions that can comprehensively transform the complex palm oil derivatives sector. One of several initiatives we joined in 2022 was the effort by ASD to develop an enhanced monitoring approach for the proactive detection and tracking of abuses and noncompliance with zero net deforestation requirement. Additionally, we collaborate in the harmonization of requirements, tools and criteria to create fair conditions for competition among companies and with their direct suppliers.. After three years working together, we have achieved collective transparency for 1.03 million tons of palm-based materials – almost a 25 percent increase of the volume compared to the previous year. This represents around 1.4 percent of the global palm production and 11 percent of the global palm-based oleochemicals market.
We are also actively involved in the Roundtable on Sustainable Palm Oil (RSPO). The RSPO standard includes compliance with human rights along the entire supply chain, in addition to addressing environmental issues. In May 2022, our Global Supply Chain organization was again successfully certified in line with the RSPO’s supply chain standard.
We have partnered with Solidaridad on initiatives in Ghana, Honduras, Indonesia, Colombia, Mexico, Nicaragua and Nigeria since 2013. Our projects’ focus is on improving palm oil smallholders’ livelihoods, incomes and resilience, simultaneously making a positive contribution to the environment and climate. Many of our projects were successfully completed in 2020 and 2021. In 2022, we were engaged in projects in Colombia, Indonesia, and Nigeria. Building on the very good collaboration with Solidaridad, we have developed specific plans for the next few years to expand the commitment further.
Building on our 2020 objectives, we have set more far-reaching targets for 2025 that we believe will address the key priorities for successfully transforming the palm oil industry. These targets are focused on the specific challenges where we can make our strongest contribution. The targets for 2025 are:
- Establish full traceability and transparency of the palm oil and palm kernel oil used in our products:
From our activities, we have learned that there is a need for further optimization with regard to transparency and traceability and that cross-industry initiatives are necessary to make the achievement of the “zero net deforestation” target verifiable. In 2022, we increased traceability rate to the mill to 89 percent and 50 percent to the plantation by engaging with our key suppliers to map our joint palm-based supply chain1. We did this with the support of an external sustainability consultancy. As part of our supplier management activities, we collaborate intensively with our strategic suppliers to ensure the procurement of sustainable raw materials. We use the Sustainable Palm Index (SPI) to assess the progress of our suppliers with respect to their level of supply chain knowledge, sustainable sourcing practices and compliance with the NDPE Principles and human rights. We once again used the SPI to create a compliance profile of our major suppliers of palm oil-based raw materials and ingredients in 2022. This tool helps us to identify potential improvements and define action plans together with our suppliers.
- Improve the livelihood of smallholder farmer and protection of nature:
Smallholder farmers produce 40 percent of the world’s palm oil, yet their productivity and quality levels are much lower compared to large plantations. They often lack access to technical knowledge and to financial services that are crucial to improving their production. Some smallholder farmers are also concerned that access to the palm oil market will be limited if their harvests do not meet the criteria set out by the RSPO. This is because many major buyers of palm oil have committed to buying only oil products that are certified as sustainable.
We are building on the success of our collaborative projects with smallholder farmers and will continue strengthening our commitment to integrate raw materials delivered by these smallholder farmer into our supply chain. Greater consideration is also given to supporting climate-friendly agriculture. To date, around 38,500 smallholder farmers have been reached on some 347,000 hectares under cultivation.
- Cover 100 percent of our demand with oils whose responsible sourcing is certified or externally confirmed:
We plan to continue to expand the certification of our raw materials in accordance with RSPO’s Mass Balance model. We are also aiming at sourcing selected palm oil and palm kernel oil-based materials where feasible and available according to the RSPO’s segregation model. We have achieved considerable progress in recent years with a wide range of measures. In fiscal year 2022, we were able to source 89 percent of our total demand for palm oil, palm kernel oil and its derivatives, which are mainly used by Henkel, as certified raw materials in line with the RSPO’s Mass Balance supply chain model. Derivatives account for the majority of the palm-based materials used by Henkel. The decrease from fiscal year 2021 (93 percent) was primarily due to the impact of our Russian portfolio, for which certified supplies were no longer available beginning in the second half of 2022. We still encounter a lack of availability of RSPO-certified raw materials in some of the markets where we operate and for a number of selected derivatives of palm kernel oil-based ingredients used in small quantities. In these circumstances, we maintain an intensive dialog with our suppliers to look for solutions. We are confident that we will make further progress in the years ahead, yet we must acknowledge that full transition of our global supply chains to sustainable palm oil and palm kernel oil remains challenging.
1 The survey was conducted in 2022 based on the supplier data for 2021.
Supply chain Transparency and Traceability
We are committed to full transparency and traceability of our palm (kernel) oil supply chain and work in collaboration with our suppliers and industry peers toward this aim. In addition to the related collaboration efforts and progress to the target detailed above, below we publish our list of mills potentially connected to our top 90 percent volumes of palm-based derivatives supply chain and our list of key palm (kernel) oil suppliers.