Annual Report 2022

Annual Report 2022

Respect for Human Rights

Beiersdorf actively promotes compliance with laws, codes of conduct, and human rights. This responsibility is deeply anchored in how we see ourselves, as well as in our core values. This not only applies to our own sites and employees around the world, but also to all employees along the value chain. We do not tolerate any form of corruption, forced labor, child labor, or discrimination – neither at our own locations nor at any point in our supply chain. Furthermore, we support the health and safety of employees in the workplace, employees’ right to freedom of association, including collective bargaining, and environmental protection. We are also committed to equal rights and treatment as well as diversity.

Upholding human rights throughout the value chain

We primarily see risks relating to compliance with human rights in purchasing and procurement, for example of raw materials or services – and thus in our supply chains. Our goal is to eliminate or minimize all threats to human rights to the greatest extent possible.

Due to our responsibility as a multinational company that operates across the globe and the legal requirements with respect to human rights due diligence, we reevaluated the risk of human rights violations involving our employees and our supply chain in the reporting year. This was conducted as part of our annual risk management process. If minimum social standards are not met, it may affect the safety, health, and well-being of employees. As a result of Germany’s Supply Chain Due Diligence Act coming into force, human rights violations can now result not only in considerable damage to our reputation, but also in substantial fines for companies. We are responding to this risk with, among other measures, a task force that is preparing the company’s internal processes for the additional requirements imposed by the law. In addition, we implement numerous preventive measures when it comes to human rights to reduce negative impacts as far as possible.

As mentioned in our “Declaration of Principles on Respect for Human Rights,” we are not only a signatory to the United Nations Global Compact (UNGC) but also steer our own business activities and our collaboration with business partners based on fundamental principles and guidelines. These include the UN Universal Declaration of Human Rights, the International Labour Organization (ILO) Conventions, and the OECD Guidelines for Multinational Enterprises. In addition, we fully comply with all regulations and official requirements applicable in specific countries.

We focus on long-term relationships with business partners who commit to and align with our principles of sustainable, responsible corporate governance and explicitly promote these. The internal and external codes of conduct for our employees and our suppliers contain binding requirements on upholding human rights.

We require our business partners to meet our standards and communicate them to their upstream supply chains. This applies both in terms of required product quality as well as transparent, fair, and responsible business practices. In this way, we want to ensure that our business partners live up to their social, environmental, and economic responsibilities – and ultimately manufacture high-quality products.



Consumer Business Segment creates binding standards

With our Code of Conduct for Business Partners (CoC), the Consumer Business Segment has committed all our business partners along the supply chain with an annual purchasing volume of more than € 50,000 to comply fully with our standards. The CoC is aligned with our core values and establishes uniform, binding criteria for responsible business activities, including critical aspects such as prohibiting corruption, child labor, forced labor, and discrimination as well as promoting occupational health and safety, the right to freedom of association and collective bargaining, and environmental protection.

In 2022, we procured more than 90% of our goods and services through partners who have explicitly committed to our CoC; we aim to increase this share in the future. We also revised the CoC in the reporting year to meet the requirements of Germany’s Supply Chain Due Diligence Act which came into force on January 1, 2023.

Risk screenings and audits

In addition, environmental protection and occupational safety audits have been carried out at all Beiersdorf Consumer facilities since 2013. These audits are aligned with the requirements of the Environmental Protection and Safety Management Audit Scheme (ESMAS), which are based on the internationally recognized ISO 14001 (environmental management systems) and ISO 45001 (occupational health and safety management systems) standards.

ESMAS audits verify whether appropriate measures are implemented to guarantee compliance with our globally applicable environmental as well as occupational health and safety standards at our sites. During the reporting year, Beiersdorf’s production sites in Hamburg and Berlin (Germany), Argentona (Spain), Sanand (India), Bangplee (Thailand), Malang (Indonesia), Shanghai (China), Itatiba (Brazil), Mexico City (Mexico) and Lagos (Nigeria) were audited in accordance with the ESMAS standard.

In addition to the ESMAS audits, our facilities in Germany (Hamburg and Berlin), Spain (Argentona and Tres Cantos), India, Indonesia, China, Brazil and Nigeria were audited in the reporting year in accordance with the standardized 4-pillar audit protocol of the Sedex Members Ethical Trade Audit (SMETA). All of the audits performed are valid for three years and are therefore repeated every three years.

The Vice Presidents of the functions Sustainability and Procurement are responsible for sustainability in our overall sourcing operations and throughout the supply chain. A risk classification assessment is performed on all of our more than 21,000 direct suppliers; it examines whether more in-depth screening and thus further measures beyond signing the CoC are required. Country-specific risks, the quantity of goods purchased, and the proximity of the respective goods or service companies to Beiersdorf’s brands are risks that all play a role in the risk classification process. Direct suppliers with a medium risk rating must submit a comprehensive self-disclosure via the Sedex or EcoVadis platforms. On this basis, we conduct a more detailed risk assessment, which the Responsible Sourcing team then uses to decide whether a subsequent audit is required. Direct supplier facilities with a high risk rating are required to undergo an on-site audit.

To ensure objectivity, the audits are carried out by independent certified auditors according to the standardized SMETA 4-pillar audit protocol. The results of the audits highlight concrete challenges and fields for action and serve as a basis for the joint development of action plans with our suppliers. In extreme cases, audit results may lead to the termination of business relationships. By leveraging international collaboration platforms such as Sedex, EcoVadis, and AIM-PROGRESS, we can continuously improve our sustainability engagement right along the supply chain. In addition, we are currently restructuring the risk classification process. The goal is to integrate even more external insights, indices, and data sources and make our processes even more robust from 2023 onward.



Designing procurement processes in a responsible manner

We require direct suppliers to the tesa Business Segment to sign our Code of Conduct for Suppliers (CoCS). The CoCS forms the foundation for designing our global procurement processes in a responsible manner and outlines fundamental rules and commitments in the areas of human rights, labor standards, environmental protection and the prevention of corruption. It is based on the ten principles of the UN Global Compact, the conventions of the International Labor Organization (ILO), and the OECD Guidelines for Multinational Enterprises. We expect our suppliers to comply with our standards and to remedy any shortcomings. In this context, we are implementing our own auditing process. In light of Germany’s new Supply Chain Due Diligence Act, we also expanded the CoCS in the reporting year and thus made the issue of human rights even more relevant. The new CoCS will be valid from 2023.

Our supply chains are global and complex, as we source raw materials, products, and services from all over the world. By working together closely, we aim to establish long-term, trusting partnerships with regular suppliers. Our goal is to ensure that product quality, supply reliability, and our shared commitment to sustainable growth remains on a high level.

The rules for our global procurement processes are defined and described in the Purchasing Compliance Guideline (PCG), which also forms part of our Group-wide Compliance Manual. This policy contains binding rules of conduct for tesa’s procurement activities and is reviewed and revised on an ongoing basis.

More transparent supply chains

We not only require our major suppliers to comply with the tesa CoCS, our goal is also to gradually increase transparency and sustainability across our entire supply chain.

In the reporting year, we introduced a systematic assessment process for our approximately 10,000 suppliers. In this process, our Procurement and Sustainability Departments examine whether a more in-depth risk analysis of the suppliers is necessary. This supplier screening process is carried out once a year and as required, for example in the case of new suppliers. In addition to risks specific to individual countries and industries, the quantity of goods purchased also plays a role in classification, which extends across the risk categories very low, low, medium low, medium high, high, and very high. Factors such as strategic relevance are also included, for example if the company is a supplier for an important raw material or a single-source supplier.

We have already been inviting direct suppliers to complete an assessment via the EcoVadis platform since 2020. Suppliers with a good rating can thus demonstrate the extent to which they uphold human rights, maintain fair working conditions, and take environmental aspects into account, as well as responsibly produce and procure their products, raw materials, and services. In the future, these invitations will be linked to risk factors in an even more targeted manner.

At the end of 2022, suppliers that are responsible for 54% (2021: 43%) of our direct purchasing volume had submitted EcoVadis assessments. In the coming years, our aim is to gradually increase this figure, with a goal of having sustainability assessments completed for a total of 80% of our direct purchasing volume by 2025. Furthermore, our goal is that by 2030, 80% of our purchasing volume will be sourced exclusively from suppliers who meet our responsible supply chain standards – this means that, among other things, they have an EcoVadis assessment of at least 45 points.