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 packaging⁶ and raw materials we need for our products. The calculations of these GHG emissions are based on 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 further advanced our digitalization in the area of sustainability. For example, we integrated additional analysis tools and further improved both the framework and level of detail of our reporting. We are thus able to analyze key figures such as CO₂e emissions or figures relating to plastic packaging and raw materials throughout the year and – if necessary – identify measures at an early stage that will help us achieve our emissions reduction targets.

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 sectors.⁷ These surveys collect 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 2023, the data we gathered in these surveys covered 86% of our outsourced finished goods production and 85% 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.

A total of 86% of the emissions resulting from the transport of our products by sea freight are of biogenic origin. We ensure this is the case by purchasing fuel certificates based on the mass balance approach. The aim to increase the amount of biofuel used in the global maritime freight industry. However, it is not possible to reliably track whether the ships transporting our products are actually powered by biofuel. Overall, Beiersdorf aims to drive the transformation toward a lower-emission 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 Deutsches Reisemanagement, 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. Compared to our 2018 baseline, our business travel emissions declined by 25%.

We calculate the included Scope 3 emissions from our investment NIVEA-KAO based on the results of life cycle assessments (LCAs) conducted in 2022 and 2023 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.

Transition toward climate neutralization

We have created a climate neutralization plan that will drive forward our transition to net zero emissions. Our “Climate Neutralization Framework” describes the entire neutralization process for selected products and was developed based on the principles and requirements of the internationally recognized standard PAS 2060. TÜV Rheinland has reviewed the methodology and verified 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 toward 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 want 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 operating independently of 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 are used to generate cold water and heat the buildings. The heat pump solution will make the Argentona site our first carbon-neutral production facility in Spain in 2024, and at the same time Beiersdorf’s first factory that is independent of any direct fuels and only requires electricity.

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 14 of our production sites and office locations that cover part of our own electricity needs. In the reporting year, these systems generated 7,100 MWh 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. That includes our new Group headquarters in Hamburg’s Eimsbüttel district. In addition to the LEED standard, we also aim to achieve certification according to the “WELL Building Standard” in 2024 for the more than 100,000 square meter building.

We are working on obtaining LEED sustainability certification for our new production site in Leipzig, Germany as well. Besides implementing energy-efficient processes, we will be greening the building’s facades and roofs and installing solar panels.

We are also increasingly replacing fossil fuels in our existing facilities: In 2022, our site in Berlin, Germany, for example, became the first Beiersdorf facility to purchase only biomethane instead of natural gas, thus cutting GHG emissions by 99%. The manufacture of our products at this site is therefore climate neutral. The biogas is produced in Denmark from organic waste and fed into the European gas grid. Our new facility in Leipzig likewise uses biomethane instead of natural gas and has been climate neutral in Scopes 1 and 2 since the start of production in 2023.

Our factories in Berlin and Leipzig use biogas certificates to procure gas from renewable sources for our production. These biogas certificates are intended to ensure that the gas contributes to the reduction of greenhouse gases. They are based on a mass balance approach whereby the biogas supplied in Denmark corresponds to our consumption in Germany.

Reducing emissions along the value chain

Cutting our Scope 3 emissions is a great challenge, 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 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.

However, the prevailing global crises resulted in supply bottlenecks, particularly for recycled aluminum, in previous years. During the reporting year, we began to close this gap with low-carbon aluminum, which is produced using renewable energy in the main production steps.

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 CO₂e 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 and
• 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 of our products and packaging is the switch 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 2023, 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 to France and Italy. On top of this, we are investigating ways of using alternative forms of energy, such as electricity and gas, to power trucks. 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 pass this knowledge on to our logistics service providers around the world as well.

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, 77 suppliers participated in the CDP survey. We also work with our suppliers on new concepts and strategies. For example, we invested in the Swiss start-up company DePoly in the reporting year. DePoly’s chemical recycling technology enables new recycling solutions for plastic and polyester waste streams that are currently not recyclable. The aim of this collaboration is to accelerate the development of more sustainable technologies that improve circular packaging usage in the cosmetics industry.

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 these projects, we aim 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 comply with the Paris Agreement and are independently 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. With CO₂ certificates from these projects, we offset the remaining GHG emissions of selected products as well as the flight emissions of our business trips.