In view of developments on the international purchasing markets, being able to rely on the support of a network of committed top suppliers is of considerable strategic importance. We expect our suppliers and other business partners to satisfy our standards of corporate ethics. When selecting suppliers, we therefore consider their performance in regard to sustainability and corporate social responsibility.

We acknowledged our responsibility throughout the value chain as long ago as 1997 when we formulated our corporate Safety, Health and Environment standards. Based on these standards, our corporate purchasing departments have established processes for assessing how our suppliers operate in regard to safety, health, and the environment. As part of this, audits are regularly carried out, as appropriate for the products and services supplied, the region, and the type of business relationship. If our standards are not met, we come to an agreement with the supplier on improvement measures and, if necessary, carry out follow-up audits. If the supplier’s performance is again judged to be inadequate, as a final resort we terminate the business relationship and seek an alternative source of supply. About 20 percent of our purchasing volume is now accounted for by suppliers and other business partners whose production sites have been audited by Henkel.

We purchase raw materials, products and services from suppliers and other business partners in 113 countries. Some 85 percent of the total purchasing volume comes from member countries of the Organization for Economic Cooperation and Development (OECD). We have consolidated responsibility for sustainability standards in the supply chain in our newly created Global Purchasing Sustainability department.

Our aim in 2007 was to assess the sustainability performance of 80 percent of our global purchasing volume of 5.6 billion euros (2006) for raw materials, consumables and auxiliary materials, as well as packaging materials, finished products, and bought-in services. We therefore began to survey the relevant suppliers and other business partners worldwide on the topics of safety, health, environment, quality, human rights, employee standards, and anti-corruption. At the same time, the questionnaire again clearly communicated our concrete expectations concerning sustainable and socially responsible business practices.

So far we have only been able to reach a certain proportion of the suppliers, as the survey proved more difficult than anticipated, especially with regard to locally purchased goods and small purchasing volumes. Priority will therefore be given this year to further improving our structures and programs for surveying suppliers, and to developing alternative concepts for assessing supplier sustainability performance.