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.
Our responsible sourcing approach focuses on sustainability aspects along our supply chains for the benefit of people and our planet with the aim of driving transformational change together with our partners. 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.
We aim to take responsible sourcing decisions globally, across all regions, business units, and material groups, based on our responsible sourcing strategy. We are convinced that we can only establish sustainable procurement practices if every single decision-maker in the global supply chains acts in the spirit of sustainability. This requires a fundamental recognition of this responsibility, as well as adopting the right attitude and building skills and knowledge.
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.
Bertrand Conquéret, Chief Procurement Officer (CPO) at Henkel and President of the TfS initiative
Responsible Sourcing Process
Our six-stage “Responsible Sourcing Process” is a central element of our strategic risk management and compliance approach, which focuses on risk identification and defining appropriate measures to minimize risk. Based on the assessment of our suppliers’ sustainability performance, we use the resulting transparency to support our buyers in working with suppliers to make lasting improvements in the value chain. These continuous improvement processes are based primarily on knowledge transfer and competence building with respect to process optimization, resource efficiency, and environmental and social standards. This process is an integral part of all our purchasing activities.
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 2: Onboarding
The results of the pre-check and the risk assessment are then incorporated into our onboarding process for supplier. We expect them 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 complete a questionnaire that provides transparency about their sustainability performance. We do this for the significant share of our external purchasing volume using an assessment methodology 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.
In 2021, we introduced the software-as-a-service solution IntegrityNext for suppliers with a lower purchasing volumes. This software solution is based on a compact self-assessment questionnaire on sustainability performance and risks.
Selected suppliers undergo an audit in addition to the assessment. Henkel works with specialized independent audit companies to check compliance with the defined standards. Our 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 EcoVadis assessment to identify sustainability deficits and improvement areas. At the same time, the suppliers are assigned to different sustainability risk classes. A standardized process ensures that our suppliers implement the corrective actions that have been specified. Repeated serious non-compliance is handled via a defined escalation process and 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 areas of potential improvement. We monitor the progress made in implementation together 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.
Step 1
Step 1: Pre-check and risk assessment
This approach to assessing sustainability risks in the supply chain is part of the Group-wide risk management system. We assess risk potential at the regional and country level, as well as at the level of the value chain, including industry-specific risks. In doing so, we concentrate on countries identified by international institutions as being associated with heightened levels of sustainability risks. The assessment includes criteria related to human rights, environment and corruption.
Step 2
Step 2: Onboarding
The results of the pre-check and the risk assessment are then incorporated into our onboarding process for supplier. We expect them 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
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 complete a questionnaire that provides transparency about their sustainability performance. We do this for the significant share of our external purchasing volume using an assessment methodology 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.
In 2021, we introduced the software-as-a-service solution IntegrityNext for suppliers with a lower purchasing volumes. This software solution is based on a compact self-assessment questionnaire on sustainability performance and risks.
Selected suppliers undergo an audit in addition to the assessment. Henkel works with specialized independent audit companies to check compliance with the defined standards. Our 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
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 EcoVadis assessment to identify sustainability deficits and improvement areas. At the same time, the suppliers are assigned to different sustainability risk classes. A standardized process ensures that our suppliers implement the corrective actions that have been specified. Repeated serious non-compliance is handled via a defined escalation process and leads to termination of the supplier relationship.
Step 5
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 areas of potential improvement. We monitor the progress made in implementation together with our suppliers in the course of the period until the re-assessment or re-audit takes place.
Step 6
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.
Together for a sustainable supply chain
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). TfS 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 audits and online assessments of the TfS initiative is the core idea: “An audit for one is an audit for all!”. Suppliers then only have to undergo one assessment or one audit. The audits are carried out by a number of selected, independent audit companies. For the online assessments, TfS works with EcoVadis, a sustainability performance assessment specialist. Performance is assessed in the areas of management, environment, health and safety, labor and human rights, and issues of ethical corporate governance. In 2023, TfS had a pool of around 17,900 active TfS assessments and audits. In the same year, around 2,830 Henkel suppliers underwent a TfS assessment or audit. The TfS initiative has grown strongly in recent years and consists of members that are internationally operating chemical companies.
One significant milestone in the history of the TfS initiative was the release of the Scope 3 Product Carbon Footprint (PCF) Guideline for the Chemical Industry in 2022. The guideline consolidates existing PCF calculation approaches with regard to the specifics of the chemical industry and enables business and industrial customers as well as consumers to establish direct comparability and an assessment of the climate impact of products in the future. Another core element of the TfS initiative is the TfS Academy – a tailored learning and skill-building platform that is designed to provide member companies and their suppliers with continuing education on key sustainability topics in the supply chain.
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.
