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 more than 120 countries. Together, we want to drive progress toward 100 percent responsible sourcing.

5 palm oil farmers of Colombia in a field with young palm oil trees
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.

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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 begin 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.

Since it is difficult to know, if a sourced raw material is funding human rights abuses or other crimes, we request every year that our direct suppliers of metals provide recognized documentation as evidence that they do not purchase or process metals from such critical 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, new suppliers are asked to either disclose existing sustainability performance results, or to undergo a sustainability self-assessment that provides transparency about their sustainability performance. Our assessment approach uses questionnaires drawn up 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.

Selected suppliers undergo initial audits as an alternative to the self-assessment questionnaires. In this process, Henkel works with independent audit companies to check compliance with the defined standards in audits. 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 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 improvement areas. We monitor the progress made in implementing the Corrective Action Plan 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. The resulting transparency about the development of our suppliers’ sustainability performance is made accessible in real time via digital platforms.

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Responsible Sourcing

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