Sustainable 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. We work both with the companies from which we source our raw materials and with other partners such as smallholder farmers to exert influence on the palm oil supply chain. 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.

We use 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 for our detergents and hair and body care products. These derivatives 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.

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.

Henkel, along with other leading consumer goods manufacturers and companies in the oleochemical industry, is also a founding member of the cross-industry Action for Sustainable Derivatives ‏(ASD) initiative. 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. To that end, Henkel also supports the efforts by ASD to develop an enhanced monitoring approach for the proactive detection and tracking of abuses and non-compliance with zero net deforestation requirements. Additionally, we collaborate in the harmonization of requirements, tools and criteria to create fair conditions for competition among companies who produce ingredients and with their direct suppliers.  In the framework of our partnership, ASD achieved collective transparency for 1.13 million tons of palm-based materials in 2023. This represents around 1.3 percent of the global palm production,15 percent in terms of volume of the global palm-based oleochemicals market and 31 percent of the palm kernel oil-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 2023, our Global Supply Chain organization was again successfully certified in line with the RSPO’s supply chain standard.

We have partnered with the development organization 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. In 2024, we are engaged in projects in Colombia, Indonesia, and Honduras. 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:

1. 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 2023, we were able to source 96 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. 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.
2. 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. A survey conducted in 2023 on the transparency of our supply chains for ingredients based on palm oil and palm kernel oil showed that we were able to maintain the traceability rate up to the mill at 89 percent and increase the traceability rate up to the plantation from 50 percent to 52 percent compared to the previous year.¹ 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 2023. This tool helps us to identify potential improvements and define action plans together with our suppliers. 
3. Improve the livelihood of smallholder farmer and protection of nature: 
   Smallholder farmers produce 40 percent of the world’s palm (kernel) 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 (kernel) 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 (kernel) 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 farmers into our supply chain. Greater consideration is also given to supporting climate-friendly agriculture. To date, more than 39,300 smallholder farmers have been reached on over 351,000 hectares under cultivation. 

¹ The survey was conducted in 2023 based on the supplier data for 2022.

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.
 

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