Responsible Sourcing

A company’s supply chain is a highly important resource – collaboration between companies at every step in the chain can open up powerful opportunities to minimize the overall environmental impact and maximize the overall positive social impact. At Henkel, our global supply chain includes business partners from 119 countries. Together, we want to drive progress toward 100 percent responsible sourcing.

Enabling purposeful growth through responsible sourcing

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. For this reason, we maintain intensive dialog and collaboration with our suppliers to promote sustainable practices and respect for human rights. 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.

Our 100% Responsible Sourcing Strategy emphasizes 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. It reflects the key aspects of Henkel’s Purposeful Growth strategy while putting the three sustainability focal areas of climate-positive, circular economy and social progress at the heart of our responsible 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.

Image of Bertrand Conquéret, President Global Supply Chain Henkel and Corporate Senior Vice President Purchasing

   

Within our purchasing department, we are strongly committed to contribute to Henkel‘s Purposeful Growth agenda and its ambitions with our 100% Responsible Sourcing Strategy.

Responsible Sourcing Process

Our six-stage “Responsible Sourcing Process” is a core element of our supplier assessment approach. It focuses on two main aspects: First, ensuring that all our suppliers comply with our defined sustainability standards. Second, we aim to purposefully collaborate with our suppliers and strategic partners 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. This process is an integral part of all our purchasing activities worldwide and is implemented in all regions, in all business units and for all material groups. We perform this process both at the beginning of our relationship with a supplier and as a regular check of our existing suppliers.

  • Step 1

  • Step 2

  • Step 3

  • Step 4

  • Step 5

  • Step 6

Step 1: Pre-check and risk assessment

Henkel uses an early warning system for sustainability risks in global purchasing markets. We start by evaluating the potential risks in a region or country. In doing so, we concentrate on countries identified by international institutions as being associated with heightened levels of sustainability risks. The assessment includes the criteria “human rights,” “corruption” and “legal environment” as well as risk value chains. Risk value chains are related to industries and sectors that we consider to potentially represent a sustainability risk for our company. This helps us to identify countries and purchasing markets that may require special precautions.

The most prominent contemporary example for a risk country associated with materials posing a sustainability risk are the eastern provinces of the Democratic Republic of the Congo (DRC), where various armies, rebel groups, and outside actors have profited from mining while contributing to violence and exploitation during wars in the region. The four mined minerals which are extracted from Eastern Congo and its neighboring countries are the so called ‘conflict minerals’. These minerals embrace Columbite-tantalite (ore of tantalum), Cassiterite (ore of tin), Wolframite (source of tungsten) and Gold, used for the final production of the metals Tantalum, Tin, Tungsten and Gold, known as 3TGs.

Conflict-free supply chains are an integral part of our Responsible Sourcing Policy, in accordance with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas we conduct appropriate supply chain due diligence. We require our suppliers to provide documentary evidence that all the materials they source are conflict-free. Since Henkel has no direct business relationship with the smelters, we expect our suppliers to engage with these smelters on a conflict-free verified basis with the requirement to use exclusively Responsible Minerals Initiative (RMI) validated sources.

Step 2: Onboarding

The results of the pre-check and the risk assessment then flow into our supplier onboarding process. We expect our suppliers to acknowledge our Supplier Code of Conduct as well as our Responsible Sourcing Policy. Our onboarding process is anchored in a globally uniform registration system and provides a standardized summary of our sustainability requirements.

Step 3: Initial assessment or audit

At the start of a new business relationship, suppliers are asked to either disclose existing sustainability performance results, or to undergo a sustainability self-assessment that provides transparency about their sustainability performance. For the majority of our suppliers, we do this using an evaluationmethodology developed by EcoVadis, an independent sustainability assessment specialist. These questionnaires cover expectations in the areas of safety, health, environment, quality, human rights, employee standards and anti-corruption.

We also piloted the software-as-a-service solution, IntegrityNext, in 2021 for suppliers with lower risk and lower purchasing volumes. IntegrityNext uses a compact assessment questionnaire to make the sustainability performance and risks of suppliers in various purchasing segments transparent. 

In addition, selected suppliers undergo audits as an alternative to the above mentioned self-assessment questionnaires. In this process, Henkel works with independent # audit companies to check compliance with the defined standards. The audits consist of on-site inspections (e.g., at production sites) and include both factory inspections and discussions with employees at all levels of the hierarchy.

Step 4: Analysis of the performance assessment

External sustainability experts, as well as the supplier owners in our Purchasing team, analyze the results of the audits or the results of the self-assessment questionnaire to identify sustainability deficits and improvement areas. At the same time, the suppliers are assigned to different sustainability risk classes. A standardized process following an assessment or audit ensures that our suppliers implement the corrective actions that have been specified. Repeated serious non-compliance leads to termination of the supplier relationship.

Step 5: Corrective actions and continuous improvement process

Independently of the results of an audit or assessment, we ask our assessed suppliers to draw up a Corrective Action Plan and to work on the defined i areas of potential optimization. 

We monitor the progress made in implementing the corrective actionstogether with our suppliers in the course of the period until the re-assessment or re-audit takes place.

Step 6: Re-Assessment / Re-Audit

We use recurring re-assessments or re-audits to monitor the performance progress of our suppliers and ensure a continuous improvement cycle consisting of evaluation, analysis and corrective measures. Data on the measured sustainability performance of our suppliers is made available in real time via digital platforms.