ESRS E4 – Biodiversity and Ecosystems

Material Impacts, Risks, and Opportunities

Beiersdorf understands the impact that palm oil and natural rubber have towards biodiversity and ecosystems. In our double materiality assessment, we identified both raw materials as key commodities for our business throughout the value chain, and the continued availability of them is crucial for the success of our company. Yet the expansion of oil palm and natural rubber plantations frequently entails the clearing of extensive areas of (tropical) rainforest and other valuable ecosystems, leading to significant biodiversity loss due to large-scale deforestation and habitat destruction. This is particularly the case in Indonesia and Malaysia, which accounted for around 82% of global palm oil production in 2024. Indonesia has one of the highest deforestation rates globally, largely driven by palm oil expansion. This is why we have identified land degradation in the upstream value chain as a material topic for Beiersdorf. Overall, Beiersdorf sources both palm oil-based raw materials and natural rubber in quantities that account for only a very small share of global production.

Our company primarily sources palm (kernel) oil derivatives, which are integral components in a wide range of products; including shampoos, shower gels, and creams. The derivatives supply chain is multi-tiered and involves a large number of players. Therefore we have only limited control over sourcing.

In our double materiality assessment, we did not identify negative impacts with regards to soil sealing and desertification. We have also determined that our own sites do not have a material negative impact on biodiversity-sensitive areas. We furthermore did not identify any operations to have negative impacts on threatened species.

A detailed overview of all identified impacts, risks and opportunities and the methodology used for the double materiality assessment can be found in the chapter “ESRS 2 – General Disclosures.”

Policies Related to Biodiversity and Ecosystems

We aim to limit our negative impact on ecosystems and biodiversity to meet our legal, environmental and social responsibilities. To achieve our commitments, Beiersdorf sets binding biodiversity standards in our corporate policies. In 2025 tesa is planning to introduce a policy dedicated to the sustainable sourcing of natural rubber. Until now, there has not been a separate policy for natural rubber in place, as most of the raw material we purchase is already certified.

Beiersdorf’s policies on palm oil include production and sourcing practices that aim to preserve or promote conditions for biodiversity. This commitment is reflected in initiatives such as the “Sustainable Palm Roadmap,” which includes principles to prevent deforestation, promote sustainable cultivation practices and proactively engage with stakeholders to protect ecosystems and livelihoods in sourcing regions.

Sustainable Palm Policy

Beiersdorf’s “Sustainable Palm Policy” underscores our commitment to environmental stewardship as well as preserving biodiversity; it addresses our material impacts on biodiversity, resulting in particular from the use of palm (kernel) oil derivatives. The policy gives guidance to mitigate the adverse effects of palm oil cultivation on ecosystems, and to promote sustainable agriculture practices. The policy is designed to align our business performance with biodiversity conservation. It supports smallholder and landscape projects in sourcing countries and aims to increase the availability of physical, sustainably certified palm-based raw materials. The “Sustainable Palm Policy” does not cover aspects related to oceans and/or seas practices, as it is not material to Beiersdorf.

The key environmental objectives of the “Sustainable Palm Policy” are as follows:

1. Prevention of deforestation and ecosystem conversion:
   
   We intend to ensure that palm oil sourcing does not lead to deforestation or the conversion of primary and secondary forests or other natural ecosystems. By preventing the conversion of natural habitat into agricultural land, we aim to help protect biodiversity-rich areas. Forests provide crucial habitat for countless species, and their preservation is essential to maintaining the biodiversity that supports ecosystem services.
   
   Addressed impact driver on biodiversity loss: Climate change, land use change, direct exploitation, impacts on ecosystems, impacts on the status of species and ecosystem services.
   
   
2. Conservation of High Carbon Stock (HCS) and High Conservation Value Areas (HCVA):
   
   We want to avoid the development of palm oil plantations in HCS and HCVA as defined under the “High Carbon Stock Approach” (HCSA). HCS areas are typically rich in biodiversity and play a significant role in carbon sequestration. HCVA are critical for the survival of endangered species and the maintenance of ecosystem functions. Protecting these areas, e.g. through banning cultivation and fires on peatlands and other HCS areas, helps ensure the survival of many species and the health of ecosystems.
   
   Addressed impact driver on biodiversity loss: Climate change, land use change, direct exploitation, impacts on ecosystems, impacts on the status of species and ecosystem services.
   
   
3. Promotion of sustainable landscape management:
   
   Our goal is to implement sustainable landscape management practices to maintain the ecological balance and support biodiversity. Sustainable landscape management involves maintaining the integrity of ecosystems while allowing for sustainable agricultural practices. This includes creating buffer zones around protected areas, which serve as transitional habitat and corridors for wildlife, thereby reducing the fragmentation of habitat and supporting biodiversity.
   
   Addressed impact driver on biodiversity loss: Climate change, land use change, direct exploitation, impacts on ecosystems, impacts on the status of species, invasive species, ecosystem services.
   
   
4. Promotion of sustainable palm oil cultivation:
   
   We aim to promote the sustainable cultivation of palm oil. Sustainable palm oil cultivation minimizes habitat destruction and promotes biodiversity-friendly cultivation practices. It reduces the need to expand agricultural land into forested areas, thus conserving wildlife habitat.
   
   Addressed impact driver on biodiversity loss: Climate change, land use change, direct exploitation, impacts on ecosystems.

The policy moreover promotes working with supply chain partners to trace palm-based raw materials back to the refinery, mill, and plantation level. The policy addresses social consequences by including social principles that prohibit exploitation, respect human and workers’ rights, ban child and forced labor, and support local communities’ land rights. To acknowledge dependencies on palm-based raw materials as well as to addresses transition risks, we implemented a “Sustainable Palm Roadmap.” It focuses on sustainability certification, supply chain transparency, and transformation in sourcing countries.

The “Sustainable Palm Policy” does not explicitly tackle biodiversity and ecosystem protection at sites within our own operations. This is because we have not identified material impacts, risks and opportunities related to biodiversity and ecosystems for these sites.

The policy scope includes all palm-based raw materials purchased by Beiersdorf’s Consumer Business Segment, products manufactured in Beiersdorf’s own global operations and third-party manufacturer operations as well as suppliers and their entire upstream value chains. The Sustainability Council oversees the implementation of the policy, and the Vice President Sustainability approves it.

Third-party initiatives addressed by the policy are the “Roundtable on Sustainable Palm Oil” (RSPO) and the “Forum for Sustainable Palm Oil” (FONAP), as well as standards like the “High Carbon Stock Approach” (HCSA), the “UN Guiding Principles for Business & Human Rights” and the “International Labor Organization’s” (ILO) conventions. It furthermore considers the interests of key stakeholders such as smallholder farmers and local communities, including Indigenous peoples (see chapter “ESRS S3 — Affected Communities”), as well as supply chain partners and multi-stakeholder initiatives.

We make the policy accessible and actionable for interested parties by publishing it on our website and informing our relevant suppliers. Additionally, as part of our Code of Conduct process and through our grievance channels, we review compliance with our policies.

Actions Related to Biodiversity and Ecosystems

Palm oil supply chains are complex and involve multiple stakeholders, including smallholder farmers, brokers, and large estates. This complexity makes it difficult to trace the origin of palm oil accurately. Using a multi-lever approach, we have developed and are implementing a range of actions to respond to this challenge and address our material impact on biodiversity. The actions are intended to make a positive contribution to achieving the environmental goals outlined in the “Sustainable Palm Policy.”

Sustainable certification

Description: Our goal is to only use sustainably certified palm (kernel) oil and derivatives, which means that 100% of the palm-based raw materials we use in our products need to come from sustainable sources in accordance with the RSPO’s “Mass Balance” model.

Scope: Upstream value chain

Time horizon: Achieved and maintained since 2020.

Expected outcome: According to the “Mass Balance” model, products can be certified that contain both RSPO-certified and non-certified palm oil. In this context, companies must ensure that the processed quantity of RSPO-certified palm oil corresponds to the purchased quantity of RSPO-certified palm oil. This model is particularly relevant to the use of derivatives based on palm (kernel) oil, as the derivative supply chains are even more complex than the palm oil supply chains. Therefore, there is no infrastructure for an RSPO-segregated supply chain, i.e., a supply chain in which RSPO-certified and non-certified derivatives are traded separately.

Sourcing through deforestation-free sources

Description: We continue to work toward our goal of purchasing our palm (kernel) oil derivatives from deforestation-free sources. As part of this process, the “Action for Sustainable Derivatives” (ASD) initiative is gathering comprehensive information about the upstream supply chain by contacting Beiersdorf’s direct suppliers to create transparency along the entire palm oil supply chain (further information can be found in chapter “ESRS S3 — Affected Communities”). This information serves as the basis for the use of the satellite monitoring program “Nusantara Atlas,” which allows us to measure our progress toward deforestation-free supply chains.

Scope: Upstream value chain

Time horizon: Annual implementation since 2023.

Expected outcome: In the summer of 2024, the “Nusantara Atlas” program published its results for 2023. On this basis, we were able to prove that approximately 64% of the palm-based raw material volume from palm (kernel) oil mills in Indonesia and Malaysia was of deforestation- and conversion-free origin.  In doing so, we comply with the requirements of the “European Union Deforestation Regulation” (EUDR), cut-off date December 31, 2020. The EUDR imposes restrictions on the sale of certain products in the EU market if they are linked to deforestation or violations of land and human rights. It specifically targets key commodities such as palm oil, wood, or rubber.

FONAP landscape project

Description: Beiersdorf leverages its partnership with the FONAP and a consortium of 26 partners to support a project in Sumatra, Indonesia. The initiative aims to address biodiversity conservation and to promote sustainable palm oil cultivation in a critical ecological area.

Scope: Upstream value chain. The project focuses on a specific location in Sumatra, which is known to be one of the last refuges for endangered species such as the Sumatran orangutan, Sumatran tiger, and Sumatran elephant.

Time horizon: These actions were extended from March 2022 to September 2024.

Expected outcome: The buffer zone around the national park serves as a critical habitat for threatened species. The primary intended outcome is to help preserve this buffer zone through the implementation of sustainable landscape management, improved water management, and the promotion of more sustainable oil palm cultivation practices.

Projects in collaboration with the WWF

In collaboration with the WWF and Evonik, Beiersdorf is involved in biodiversity projects in Indonesia and Malaysia. In West Kalimantan, Indonesia, smallholder farmers are being trained in sustainable palm oil cultivation practices with the aim of certifying 200 plots of land to RSPO standards and securing their legal recognition to protect the habitat of local flora and fauna. In Sabah, Malaysia, a landscape project aims to create a forest corridor for wildlife such as orangutans and promote sustainable agricultural practices. Both initiatives actively contribute to biodiversity conservation by preventing human-animal conflicts and protecting natural resources. The projects are described in detail in chapter “ESRS S3 — Affected Communities.”

Our current actions related to biodiversity and ecosystems do not involve the use of biodiversity offsets. Therefore, there are no aims, key performance indicators, or financing effects related to biodiversity offsets to report. Additionally, we presently have not incorporated local and indigenous knowledge or nature-based solutions into our biodiversity and ecosystem-related actions.

Targets Related to Biodiversity and Ecosystems

Beiersdorf is currently developing a biodiversity strategy and targets related to biodiversity and ecosystems. We aim to publish these targets by our next reporting cycle. Therefore, no targets are reported for 2024.

To date, we have set the following ambitions and use both qualitative and quantitative indicators to evaluate our progress:

• Beiersdorf aims to achieve a deforestation-free palm supply chain by end of 2025. This amplifies our commitment to zero deforestation of primary and secondary forests and natural ecosystems from mid-November 2018.
• Since the end of 2020, we have sourced 100% of our palm oil-based raw materials from sources certified as sustainable according to the RSPO’s “Mass Balance” model and maintain this target annually.
• For the project in West Kalimantan, Indonesia, Beiersdorf has set a goal to certify at least 200 smallholder farmers according to the RSPO standard by 2026.
• In addition, we track the number of smallholder farmers involved in our sustainability projects and the area of land under sustainable management practices.