Annual Report 2023

Annual Report 2023

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. We do not tolerate any form of corruption, forced labor, child labor, or discrimination – that applies to our own sites and employees worldwide as well as to all workers along the value 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 reevaluate the risk of human rights violations involving our employees and our supply chain every year. If minimum social standards are not met, it may affect the safety, health, and well-being of employees. As a result of Germany’s Lieferkettensorgfaltspflichtengesetz (Supply Chain Due Diligence Act, LkSG) coming into force, human rights violations can now result not only in considerable damage to our reputation, but also in substantial fines for companies. One of the ways we counter the risk is with a cross-functional task force: Employees from the Procurement, Compliance, Legal, and Sustainability departments are preparing the company’s internal processes for additional requirements arising from this act and other draft legislation in the area of human rights. 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 human rights 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 rely on long-term relationships with business partners who subscribe to our principles of sustainable and responsible corporate governance and demonstrably act accordingly. 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. If we identify violations of our standards, we proceed as follows: Our first step is to define mandatory corrective measures for the business partner in question. Should we then be unable to identify any improvements, we reserve the right to terminate the business relationship either temporarily or permanently. In this way, we want to ensure that our business partners live up to their social, environmental, and economic responsibilities.



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 2023, 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. Furthermore, we revised the CoC in the reporting year in order to meet the requirements of the German 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, with the exception of the new facility in Leipzig. The audits take place every three years and are carried out in accordance with our internal Environmental Protection and Safety Management Audit Scheme (ESMAS). This scheme is based on internationally recognized standards such as ISO 14001 (environmental management systems) and DIN ISO 45001 (occupational health and safety management systems).

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 Tres Cantos, Spain, Poznań, Poland, and Nairobi, Kenya were audited in accordance with the ESMAS scheme.

In addition to the ESMAS audits, our facilities in Poznań, Poland, Nairobi, Kenya, and Silao, Mexico were audited by external auditors from Intertek in the reporting year in accordance with the standardized 4-pillar audit protocol of the Sedex Members Ethical Trade Audit (SMETA). These audits have taken place at all production facilities over the last three years, with the exception of the new facility in Leipzig, Germany. They are valid for three years and are repeated at regular intervals.

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. We last revised this assessment in 2023. The risk classification, which has been carried out by the external platform EcoVadis IQ since 2023, examines whether more in-depth screening and thus further measures beyond signing the CoC are required. The following risks play a role here: country- and industry-specific risks supplied by EcoVadis IQ, the purchasing volume, and an internal prioritization of all procured product groups. 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.

The German Supply Chain Due Diligence Act, the introduction of the EcoVadis assessment portal with corresponding supplier surveys, and the company-wide implementation of our updated CoC are currently creating additional fields for action. To be able to fulfill all of these tasks, we expanded our Procurement team in the reporting year.

In addition to using Sedex and EcoVadis, we participate in international collaboration initiatives such as AIM-Progress to continually drive forward our commitment to sustainability along the supply chain together with other companies in our industry. Our aim is to help shape the transformation of the sector in addition to making internal improvements.



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 Labour Organization (ILO), and the OECD Guidelines for Multinational Enterprises. We expect our suppliers to comply with our standards and to remedy any shortcomings. In light of Germany’s Supply Chain Due Diligence Act, we have also expanded the CoCS and thus made the issue of human rights even more relevant. The new CoCS has been valid since April 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 Procurement Compliance Guideline (PCG), which also forms part of our Group-wide Compliance Manual. This policy contains binding rules of conduct for tesa as a purchasing company and is currently reviewed and revised by the Global Procurement Excellence function. From March 2024, it will be communicated and trained as Global Procurement Policy (GPP). The GPP will also apply to all tesa sites worldwide and its mandatory applicability will come into force in the course of the year.

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 therefore introduced a systematic, two-stage process for screening suppliers and evaluating them using an EcoVadis scorecard already in the reporting year 2022. 8,734 suppliers have already been screened until the end of 2023. As a first step, our Procurement and Sustainability departments examine whether a more in-depth risk analysis of the suppliers is necessary. This screening process takes place once a year. 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.

The second step – already in place since 2020 – is to invite our direct suppliers to carry out a self-assessment via EcoVadis. Suppliers with a 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. At the end of 2023, suppliers that are responsible for 70% (2022: 54%) of our purchasing volume of direct materials had submitted EcoVadis self-disclosures. In the coming years, our aim is to gradually increase this figure, with a goal of having self-disclosures completed for a total of 80% of our purchasing volume of direct materials by 2025.

If suppliers exhibit risks according to our two-stage process, we initiate appropriate improvement measures. Potential for improvement can occur in the areas of environment, labor and human rights, ethics and sustainable procurement and are prioritized by EcoVadis employees as “low”, “medium” and “high”. Improvement measures are therefore very individual and range from uploading evidence of submitted responses to defining new company guidelines in areas of occupational health and safety. Audits in accordance with the SMETA 4-pillar protocol are planned from 2024 for suppliers with a particularly high risk. 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.

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