Climate Protection

Consumer

Consumer

Improved Scope 3 calculations

For all defined categories included in our target boundary, we have developed methods of calculation that rely on precise data as far as possible. This enables us to better monitor the progress of our reduction measures. The majority of our Scope 3 emissions are generated by the manufacturing processes of the packaging⁵ and raw materials we need for our products. The calculations of these GHG emissions are based primary data for material consumption, and secondary emission factors derived from life cycle databases. We work together with service providers to consistently improve data on emissions factors for life cycle analyses (LCAs).

Over the course of the reporting year, we implemented numerous analysis tools as part of our comprehensive digitalization activities in the field of sustainability. These allow us to evaluate and make projections for material KPIs during the year, such as Scope 3 emissions or key figures related to plastic packaging.

In order to calculate the emissions from our outsourced production and warehousing operations, we conduct surveys of supplier companies in the finished goods and warehousing sectors⁶. These surveys collected data on energy consumption as well as emission factors for purchased electricity. This data is allocated based on the quantities of goods produced for us or on goods turnover. The calculation methodology is congruent with the Scope 1 and Scope 2 calculations for our own sites. In 2022, the data we gathered in these surveys covered 86% of our outsourced finished goods production and 95% of our warehousing activities. The values in the following table are extrapolated emission values to cover all our finished goods suppliers and warehousing.

To calculate global upstream and downstream GHG emissions from transportation activities, we mostly use the EcoTransIT tool in accordance with the European EN 16258 standard. Data on distances, loads, and the various modes of transportation are obtained from our internal logistics network and calculated by EcoTransIT. The emissions resulting from the transport of our products by sea freight are 77% of biogenic origin. We ensure this is the case through the purchase of fuel certificates based on the mass balance approach. This does not mean that the ships carrying our products are actually powered by biofuel, however, as this level of traceability is not currently available. Rather the aim is to increase the amount of biofuel used in the global maritime freight industry. Overall, Beiersdorf aims to be part of the transformation toward a greener logistics network.

To quantify our emissions from business travel, information on distance and modes of transportation is either exported from our travel management system or reported directly by our affiliates. For the data collected via our travel management system, we calculate emissions according to the methodology established by the German Association of Business Travel Agents (Verband Deutscher Geschäftsreiseveranstalter, VDR), taking into account a “radiative forcing index” (RFI) factor of 2 for business flights. In the case of directly reported business travel data, we calculate emissions based on IEA data. The 2021 flight emissions of our German companies were offset in the reporting year 2022 retroactively, and we will do the same for our flight emissions in the upcoming reporting year. Compared to our 2018 baseline, our business travel emissions declined by 47%. This development can be attributed, among other things, to the continuing impact of the COVID-19 pandemic.

We calculate the included Scope 3 emissions from our investment NIVEA-KAO based on the results of life cycle assessments (LCAs) conducted in 2022 for certain reference products. We estimated the emissions generated in previous years on the basis of the quantity of reference products sold. NIVEA-KAO’s raw material and packaging emissions are calculated using the reference products’ bill of materials and the LCA emission factors. To calculate the upstream transport emissions, we consider the product weight, the average distance transported, and the emission factors of the different modes of transportation. The calculated emissions are included in the respective Scope 3 categories.

In addition to the Non-financial Statement, we disclose our management approaches and data on climate topics as part of an annual survey conducted by the CDP organization. The organization then assesses, among other aspects, our climate-related strategy and its effectiveness on a scale from A to D–. In 2022, we received a score of A and were therefore included on the CDP’s “Climate Change A List.”

Transition towards climate neutralization

We have created a climate neutralization plan which will drive forward our transition to net zero emissions. Our “Climate Neutralization Framework” describes the entire neutralization process for our products and brands and was developed based on the principles and requirements of the internationally recognized standard PAS 2060. TÜV Rheinland Energy was engaged during the fiscal year to review the methodology and process to ensure that Beiersdorf follows international standards and a science-based approach.

Our climate neutralization process consists of three steps. The first step is “Measure.” All GHG emissions are quantified in accordance with the GHG Protocol. The second step is “Reduce.” This is reflected in our ambitious climate targets, which are based on scientific findings to limit global warming to 1.5 degrees Celsius. We are focusing our activities and our resources primarily on achieving these reduction targets. The third step is “Neutralize.” In order to leverage additional CO₂ storage potential while we are still transitioning towards our net zero target, we are investing in certified climate projects to neutralize the remaining GHG emissions. For us to achieve a net-zero state globally, we must neutralize unavoidable emissions by removing greenhouse gases from the atmosphere.

As our GHG emissions and the accounting methods have been detailed in the previous sections, we will focus on the second and third steps below.

Reducing operating emissions

At our production sites especially, energy-related emissions can be reduced to increase their energy efficiency. Our goal is to ensure all of our production facilities are climate neutral by 2030. To achieve this, we are relying on various measures:

In order to operate the sites in a climate-neutral manner, we aim to reduce the use of fossil fuels by 2030. Particularly in light of the geopolitical situation in 2022 and the associated energy crisis, we have set ourselves the goal of no longer being reliant on natural gas in Europe. To achieve this, we are drawing on a number of different alternatives. Some temporary alternative solutions – such as diesel-powered steam generators that we have installed at our production facilities – are used to ensure sufficient capacity is available when there are legally mandated restrictions on natural gas consumption. These systems require other fossil fuels, however, and are therefore not compatible with our efforts to achieve climate-neutral sites in the long term. Beiersdorf is therefore increasingly using more sustainable solutions, including two electric steam generators for the Technical Center at the Group’s headquarters and one heat pump system each for the production facilities in Argentona, Spain, and Hamburg, Germany, which will be used to generate cold water and heat the buildings. With the heat pump solution we strive to make the Argentona site our first carbon-neutral production facility in Spain in 2023, and at the same time Beiersdorf’s first factory that does not rely on any fuel.

To reduce emissions, we are not only modernizing our technical systems. Energy-saving measures are also helping to reduce fuel and electricity consumption – such as by heating buildings less and dimming the lights.

In addition to purchasing 100% green electricity, we have installed photovoltaic systems at twelve of our production sites and office locations that cover part of our own electricity needs. In the reporting year, these systems generated 3,799 MWh of electricity worldwide. In addition, our Sustainability in Manufacturing initiative, launched in 2020, is helping us achieve our climate, waste, and water targets by 2025. The initiative encompasses all 15 production sites worldwide. The team responsible for the project breaks down the company’s targets by production site, analyzes energy consumption, and derives the necessary measures from this data. Locally gained knowledge is exchanged in the form of best practice examples within our international network and, where it makes sense, also applied to other locations.

Modern, energy-efficient buildings and production facilities are helping us achieve our climate targets. When we construct a new building or redesign an existing one, we examine its full life cycle and implement sustainable energy concepts. In our new construction and expansion projects, we strive to achieve certification to the Leadership in Energy and Environmental Design (LEED) standard. This includes our new Group headquarters and Research Center in Hamburg’s Eimsbüttel district, scheduled for completion in 2023. In addition to the LEED standard, we aim to achieve the “WELL Building Standard” for this project, which will extend to over 100,000 square meters.

We are also striving to achieve carbon-neutral operations and the relevant sustainability certification for the planned hub in Leipzig. In addition to implementing energy-efficient processes, here we will also be greening the building’s facades and roofs and installing solar panels.

In the case of existing facilities, we are also increasingly replacing fossil fuels – the Berlin site has become the first Beiersdorf facility to purchase only biomethane instead of natural gas as of 2022, cutting the site’s GHG emissions by 99%. The biogas is produced in Denmark from organic waste and fed into the European gas grid⁷. By purchasing biomethane instead of natural gas, the manufacture of our products at our production facility in Berlin has been climate neutral since the reporting year. Our new production site in Leipzig also uses biomethane instead of natural gas, and the aim is to operate the production plant as climate-neutral in Scope 1 and Scope 2.

Reducing emissions along the value chain

Cutting our Scope 3 emissions is a greater challenge than Scope 1 and Scope 2, as their origin lies beyond our direct operational control. For this reason, we work cross-functionally, as well as with our suppliers to identify innovative measures to reduce our carbon footprint. In the reporting year, we also developed an action plan to reduce emissions within our most important Scope 3 categories, which are listed below:

Packaging

Most of the emissions from packaging are caused by using plastics and aluminum. We are therefore working on innovative solutions to prevent, reduce, reuse, and recycle our product packaging by 2025. We are striving to use more recycled material in aluminum packaging and to source aluminum with a lower carbon footprint. More on this can be found in the “Circular Economy” section.

However, the prevailing global crises resulted in supply bottlenecks, particularly for recycled aluminum, in previous years. We would now like to close this gap with low-carbon aluminum. To this end, we are in talks with our packaging suppliers in order to work towards the use of a greater percentage of renewable energy in their production systems.

Product formulations

We also plan to make our product formulations more environmentally friendly. To achieve this, we developed an action plan in 2021 that encompasses the following measures:

• Further transitioning to plant-based raw materials with a lower carbon footprint
• Increasing the use of materials from renewable carbon sources, e.g., biobased materials, materials made from chemical recycling, and materials derived from carbon capture and utilization
• Cooperating closely with our main suppliers to introduce renewable energy at their production sites, thus reducing the carbon footprint of our raw materials
• Sourcing further renewable raw materials from sustainable and deforestation-free cultivation To this end, we are entering into various partnerships, including with the Roundtable on Sustainable Palm Oil (RSPO) (see the “Sustainable land use” section).

Finished goods manufacturing and third-party warehousing

A key driving force for the reduction of GHG emissions from our products and packaging is to switch over to renewable electricity at our suppliers too. To achieve this goal, we are leading intensive discussions with suppliers and third-party manufacturers to find mutual solutions for switching to renewable energy. In 2022, all third-party manufacturers and third-party warehouse operators included in our data query purchased electricity from renewable energies or their electricity purchases were covered by corresponding energy certificates.

Transportation

Along with our packaging and formulation emissions, we are exploring ways to reduce and prevent transportation emissions. Wherever possible, we plan to shift the transportation of our goods to rail. This applies in Europe and North America especially, where our largest markets are located. For our global ocean freight shipments since 2021, we have been purchasing mass-balanced biofuels from waste streams via certificates. In addition, our truck transportation service providers used biofuels in the reporting year to transport our products from the “Hub Nordics” to the Scandinavian countries, as well as from two other hubs in France and Italy. In addition, we are investigating possibilities for the use of other alternative fuels, such as the use of trucks powered by electricity or hydrogen. We are working closely with our logistics providers to achieve this goal. In our drive to understand and implement new transportation technologies, we are in close talks with external consultants and scientific experts. One example is our cooperation with EcoTransIT to calculate our transportation emissions. We then share this knowledge with our logistics providers worldwide.

In dialog with suppliers

We engage in dialog with our suppliers through various measures to create a more sustainable, shared future. For example, we call on our suppliers to also participate in the climate data surveys conducted by the CDP organization. The data they disclose will also enable Beiersdorf to improve the quality of its own data analyses. During the reporting year, 99 suppliers participated in the CDP survey. Because we view ourselves as an innovative Group, we also work with our suppliers on new concepts and strategies. In the reporting year, for example, an interdisciplinary team including members from Procurement and a supplier launched a care product with recycled carbon. For this particular ingredient, carbon is captured via the CCU (carbon capture utilization) process and processed into cosmetic ethanol.

Neutralizing remaining emissions

In addition to its efforts to reduce GHG emissions in the value chain, Beiersdorf also systematically invests in climate change mitigation projects and acquires voluntary emissions certificates. Through their efforts, the aim is to build up natural carbon sinks over the long term and curb the accumulation of greenhouse gases in the atmosphere. In this context, we select projects that are certified by internationally recognized organizations such as Verra or the Gold Standard. We also focus on projects that sequester carbon from the atmosphere – through reforestation and soil management, for example – while simultaneously providing additional benefits for biodiversity or local communities. Through these projects, we aim to offset remaining GHG emissions from selected products that have not yet been reduced.