Annual Report 2013

Fundamental principles of the Group

Detailed information and background reading on the subject of sustainability can be found in our Sustainability Report which is available in both printed and online versions.
www.henkel.com/
sustainabilityreport
Henkel Sustainability Report

7 years

in succession sector leader in the Dow Jones Sustainability Index (see here).

Sustainability strategy 2030


Our corporate values as the foundation

Commitment to leadership in sustainability is one of our core corporate values. Maintaining a balance between economic success, protection of the environment, and social responsibility has been fundamental to our corporate culture for decades. We aim to pioneer new solutions for sustainable development while continuing to shape our business responsibly and increase our economic success. This ambition encompasses all of our company’s activities – along the entire value chain.

Achieving more with less

We are facing immense challenges: The global human footprint is already greater today than the planet’s resources can bear. By the year 2050, the world’s population is expected to grow to 9 billion. The simultaneous increase in global economic output will lead to rising consumption and resource needs. The pressure on available resources will thus intensify in the coming decades. This is why the idea at the heart of our new sustainability strategy is to achieve more with less.

We want to create more value – for our customers and consumers, for the communities we operate in, and for our company – while at the same time reducing our environmental footprint. To accomplish this, we need innovations, products and technologies that can enhance quality of life while using less input materials. Building on our decades of experience in sustainable development, we aim to work together with our customers and consumers to develop and implement viable solutions for the future. By doing so, we will be contributing both to sustainable development and to our company’s economic success.

Our goal for 2030: triple our efficiency

Our long-term goal reflects the global challenges of sustainable development. We will have to significantly improve our efficiency in order to reconcile people’s desire to live well with the resource limits of the planet.

By 2030, therefore, we want to triple the value we create through our business operations in relation to the environmental footprint of our products and services. This means we want to be three times more efficient. We call this goal “Factor 3.” One way to achieve it is to triple the value we create while leaving the footprint at the same level. Or we can reduce the environmental footprint to one third of today’s level, and achieve our “Factor 3” improvement in efficiency by delivering the same value.

To reach this goal by 2030, we will have to improve our efficiency by an average of 5 to 6 percent each year. We have therefore set concrete interim targets for our focal areas for the five years between 2011 and 2015 (see chart). For the period up to 2015, we intend to improve the relationship between the value we create and the environmental footprint of our business activities by 30 percent overall.

Our ambition is to become three times more efficient by 2030. We call this “Factor 3.” That means tripling the value we create through our business operations in relation to the environmental footprint of our products and services.

Our contributions in six focal areas

To successfully implement our strategy, we are concentrating on six focal areas that reflect the challenges of sustainable development as they relate to our operations. In each of these focal areas, we drive progress along the entire value chain through our products and processes in two dimensions: “more value” and “reduced footprint.” Three focal areas therefore represent the value we want to deliver to our customers, shareholders and our company, for example in the form of enhanced health and safety, and contributions to social progress. The three other focal areas describe the ways in which we want to reduce our environmental footprint, for instance through reduced water and energy consumption and less waste.

Our focal areas and targets for the five-year period from 2011 to 2015

Our approach for sustainable business processes

In order to successfully establish our strategy and reach our goals, they must be ever-present in the minds and day-to-day actions of our employees and mirrored in our business processes. We have defined three strategic principles to achieve this: products, partners, and people.

Our products deliver more value for our customers and consumers. We achieve this through innovation and information, and through products that offer better performance with a smaller environmental footprint, thus reducing resource use and negative environmental impacts.

Our partners are key to driving sustainability along our value chains and in all areas of business and daily life. We support them with our products and expertise. And we work together with selected vendors, so that they can supply us with raw materials that have an improved environmental footprint. At the other end of the chain, we help our customers and consumers reduce their own environmental footprint.

Our people make the difference – through their dedication, skills and knowledge. They make their own contributions to sustainable development, both in their daily business lives and as members of society. They interface with our customers and make innovation possible, develop successful strategies, and give our company its unique identity.

Organization

The Management Board bears overall responsibility for our sustainability strategy and objectives, and their implementation in the corporation. Henkel's Sustainability Council steers our sustainability activities in collaboration with the individual business units and functions, and our regional and national affiliated companies.

Our understanding of responsible behavior has been specified and communicated to our employees worldwide in our Code of Corporate Sustainability and Code of Conduct. From these codes are derived our more detailed internal standards governing safety, health and environmental protection, our social standards and our Group purchasing standards. ComplianceCompliance
Acting in conformity with applicable regulations; adherence to laws, rules, regulations and in-house or corporate codes of conduct.
with these rules is regularly monitored throughout the Group by internal audits performed at our production and administrative sites, and increasingly also at our toll and contract manufacturers and logistics centers.

By joining the United Nations Global Compact in July 2003, we also publicly underscored our commitment to respect human rights, fundamental labor standards and environmental protection, and to work against all forms of corruption.

Stakeholder dialog

Viable solutions for promoting sustainability can only be developed in dialog with all relevant social groups. These include our employees, shareholders, customers, suppliers, civil authorities, politicians, associations, governmental and non-governmental organizations, academia, and the public at large. We view dialog with our stakeholders as an opportunity to identify the requirements of our different markets at an early stage and to define the directions which our activities should take. Our dialog with various stakeholder groups enables us to access new ideas for our company, which flow continuously into our strategy development and reporting.

We use a wide range of communication instruments in order to meet the specific information requirements of our stakeholders, ranging from our own publications and technical articles to events and direct dialog. More details and background reading on the subject of sustainability can be found in our Sustainability Report. In this report, we document the high priority sustainability has in our company, while at the same time satisfying the reporting requirements laid down in the United Nations Global Compact.

Progress in fiscal 2013

     

  • In all areas, we made considerable progress toward our goals for 2015, and achieved our targets for individual areas early, including an improvement of 15 percent (base year 2010) in energy efficiency and 50 percent (base year 2010) in workplace safety.
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  • To enable a systematic comparison of the sustainability profile of two different products or processes, we established the "Henkel Sustainability#Master®" as an assessment tool in all three business units.
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  • We have further integrated sustainability topics into our internal training programs and trained around 1,500 employees as "sustainability ambassadors."
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  • To monitor compliancecompliance
    Acting in conformity with applicable regulations; adherence to laws, rules, regulations and in-house or corporate codes of conduct.
    among our suppliers with our requirements in the areas of safety, health, environment, quality, human rights, labor standards, and the fight against corruption, we established the initiative "Together for Sustainability" in cooperation with five other companies, initiated around 600 self-assessments and conducted over 250 audits.
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  • Henkel's leading role in sustainability has been confirmed through many different national and international sustainability ratings and indices.
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Further information, reports, background details and the latest news on sustainable development at Henkel can be found on the following website: www.henkel.com/sustainability