Material Impacts, Risks, and Opportunities and Their Interaction with Strategy and Business Model
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General Disclosures
The table below lists the material sustainability-related impacts, risks, and opportunities (IROs) that we have identified in our ESRS-compliant materiality assessment. The IROs are allocated to the topical ESRS and the sub-topics listed in ESRS 1. All listed IROs are covered by the ESRS requirements and no further entity-specific topics were identified. The IROs generally apply to both, the Consumer Business Segment and the tesa Business Segment; exceptions are clearly indicated in the table.
The identified impacts on the environment and people are all to be put into the context of our business model as a global consumer goods manufacturer. The impacts in our own operations are primarily associated with the process of manufacturing our products. Impacts in the upstream and downstream value chain arise through our business relationships with suppliers that supply us with raw materials and intermediate products or deliver our products. Impacts also arise through the use and disposal of our products by consumers or at the end of the product life cycle.
Our business model and strategy are heavily influenced by the necessity for sustainable conduct. The direct effects of the impacts, risks, and opportunities listed below are already noticeable: They include the increasing regulatory pressure, potential reputational risks, transitioning our production sites, and the need for good working conditions both for our own staff and throughout the value chain. We expect additional challenges going forward, such as rising costs, stronger shifts in consumer preferences, and operational adjustments to meet regulatory requirements.
Beiersdorf performed a qualitative analysis of the resilience of its corporate strategy and business model with a view to the material IROs in 2024. The focus was on the extent to which these topics are integrated in the business processes, strategy, and reporting. The results of the analysis underpin the assessment that the company is capable of addressing the material impacts and risks and taking advantage of its material opportunities. Sustainability is firmly enshrined in our business strategy and integrated in our strategic planning with the objective of ensuring the long-term success and resilience of our company.
As regards the identified opportunities and risks, we do not expect any material financial effects on Beiersdorf’s net assets, financial position, results of operations this reporting year or next.
Further information on the actions we are carrying out in the various areas is provided in the topic-specific chapters under “Environment,” “Social,” and “Governance.”
E1 Climate Change
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Climate change adaptation |
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Risk (physical) |
Own operations |
The increase in extreme weather events due to climate change increases the risk of damage to material property and higher insurance costs at our sites in regions under climate threat. |
Medium term |
Risk (transition) |
Upstream |
Prices of raw and other materials may rise due to the effects of resource depletion caused by climate change and because of new regulations. |
Medium term |
Risk (physical) |
Upstream and downstream |
The increase in extreme weather events due to climate change increases the risk of disruptions in the supply chains and transportation networks, which may result in delayed dispatch of goods, damage to the infrastructure, and increased costs for rerouting. |
Medium term |
Climate change mitigation |
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Negative impact (actual) |
Own operations |
Some of the energy used for production and office buildings is from non-renewable sources and therefore causes greenhouse gas (GHG) emissions. |
Short term |
Negative impact (actual) |
Upstream |
The business activities in the upstream value chain, such as sourcing of raw materials and packaging manufacture, are energy intensive and currently rely on fossil fuels, which results in GHG emissions. |
Short term |
Negative impact (actual) |
Downstream |
The end products are distributed via fleets with internal combustion engines operated with non-renewable fuels, and the disposal of products results in GHG emissions. |
Short term |
Risk (transition) |
Own operations |
Governments around the world are introducing policies to mitigate climate change. The European Commission’s “European Green Deal” laid down a large number of new climate-related requirements for businesses. Companies that fail to comply with these requirements can expect fines, legal action, or reputational damage. |
Medium term |
Opportunity |
Own operations (Consumer Business Segment) |
Consumers increasingly expect companies to have a positive impact on the environment. Developing products with a reduced carbon footprint drives innovation and presents Beiersdorf with an opportunity to set itself apart from the competition. |
Medium term |
Energy |
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Negative impact (actual) |
Upstream |
The extraction and production of some materials used, such as aluminum for packaging purposes, is highly energy intensive. |
Short term |
E2 Pollution
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Pollution of air |
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Negative impact (actual) |
Upstream |
Energy-intensive business activities in the upstream value chain, such as sourcing of raw materials, manufacture of packaging, management of third-party manufacturers (3PMs), and transportation and distribution of raw materials and intermediate products are often associated with the use of fossil fuels. This may cause emissions of pollutants and adversely affect air quality. |
Short term |
Pollution of water |
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Negative impact (potential) |
Upstream |
Water pollution caused by suppliers in the chemical industry who may release pollutants into the environment. Production of paper (pulp) for tesa is among the largest industrial water pollutants in some countries. |
Long term |
Negative impact (actual) |
Downstream (Consumer Business Segment) |
Use of skin care products by consumers may transfer substances into wastewater, thereby adversely affecting the water quality. |
Long term |
Substances of very high concern |
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Negative impact (potential) |
Downstream (Consumer Business Segment) |
Some products such as deodorants may contain substances of very high concern. Use of such products may cause these substances to be released into wastewater and build up in the environment. |
Medium term |
Microplastics |
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Negative impact (actual) |
Downstream (Consumer Business Segment) |
Some products may contain microplastics that can be released into the environment through consumer use. They do not decompose, but build up and may have an adverse effect on the environment, and – via the food chain – also on human health. |
Long term |
E3 Water and Marine Resources
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Water consumption and withdrawal |
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Negative impact (actual) |
Own operations (Consumer Business Segment) |
The Consumer Business Segment in particular manufactures products that require large amounts of water in the production process that cannot be returned to the water cycle. |
Long term |
Negative impact (potential) |
Upstream |
Large amounts of water are consumed for some intermediate products and raw materials (e.g., on palm oil and cotton plantations, etc.) that cannot be returned to the water cycle in the region. |
Long term |
Negative impact (potential) |
Own operations |
The major water withdrawal in the production process may lead to water scarcity in the vicinity of production sites. This ultimately has an impact on the natural environment and may result in a depletion of groundwater. |
Medium term |
Risk |
Upstream |
The shortage of raw materials for materials with high water consumption (e.g., agricultural products) may result in an increase in procurement costs. |
Medium term |
Risk |
Own operations |
An acute water shortage in regions with very high water risk may disrupt industrial processes and lead to production delays, reduced efficiency, increased downtime, and costs for alternative solutions. |
Medium term |
E4 Biodiversity and Ecosystems
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Direct impact drivers of biodiversity loss |
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Negative impact (actual) |
Upstream |
Beiersdorf sources palm oil and natural rubber from Southeast Asia. The associated destruction of habitats through deforestation of large areas of tropical rain forest for the purpose of expanding plantations and monocultures results in a loss of biodiversity. |
Medium term |
E5 Resource Use and Circular Economy
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Resource inflows |
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Negative impact (potential) |
Own operations |
A large volume of many different biological materials, new fossil materials, and packaging are used in the manufacture of our products. |
Short term |
Risk |
Own operations |
A plastic tax on packaging made from fossil plastics has been agreed at European level. This results in increased procurement costs, as Beiersdorf products fall under this rule. |
Medium term |
Resource outflows |
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Negative impact (potential) |
Own operations |
The products contribute to a significant outflow of materials and plastic packaging. |
Short term |
Negative impact (actual) |
Downstream (tesa Business Segment) |
Most tesa products (e.g., adhesive tape) cannot be recycled at the end of their life cycle, which has a negative impact on the circular economy of the plastics stream. |
Long term |
Risk |
Own operations |
New EU regulations concerning the circular economy are causing additional fees and investment in sustainable packaging innovations. |
Medium term |
Waste |
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Negative impact (potential) |
Downstream |
Packaging waste is created at the end of the life cycle. The products are primarily packaged in plastic and/or cardboard boxes, and although these can be recycled, they are not fully biodegradable. These may ultimately be incinerated in countries without a proper recycling system. |
Medium term |
S1 Own Workforce
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Working conditions (working time, work-life-balance) |
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Positive impact (actual) |
Own operations |
The enforcement of collective agreements ensures that working conditions for our own workforce are appropriate or above the industry standard (in terms of working time, work-life-balance, parental leave, etc.). |
Medium term |
Working conditions (social dialog, freedom of association, collective bargaining) |
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Positive impact (actual) |
Own operations |
Our own workforce is represented by a trade union. There is a works council that ensures the involvement and consultation of the employees, freedom of association, and collective bargaining. |
Medium term |
Working conditions (health and safety) |
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Negative impact (actual) |
Own operations |
The staff at the production sites handle dangerous materials and machinery that could jeopardize their general health and safety. |
Medium term |
Equal treatment and equal opportunities (gender equality and equal pay for work of equal value) |
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Positive impact (actual) |
Own operations (Consumer Business Segment) |
By signing the “Consumer Business Gender Parity Ambition,” the Consumer Business Segment committed to achieving gender parity across all management levels (1–4) by 2025. |
Medium term |
Equal treatment and equal opportunities (diversity) |
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Positive impact (actual) |
Own operations (Consumer Business Segment) |
The principles of diversity and inclusion are incorporated in the “Global DE&I Roadmap” and enable a strategic approach to promoting diversity in the corporate culture and company processes. |
Medium term |
Equal treatment and equal opportunities (training and skills development) |
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Positive impact (actual) |
Own operations |
Training and upskilling programs enable employees to develop their skills on an ongoing basis. These programs are supported by regular, constructive performance appraisals. The aim of this approach is to provide the best possible support for employee development and ensure the effectiveness of the programs. |
Medium term |
S2 Workers in the Value Chain
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Working conditions (working time, adequate wages, freedom of association) |
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Negative impact (potential) |
Upstream |
The business activities in the supply chains of our global activities are associated with high pressure on workers in various sectors, such as agricultural products. This is an indirect contribution to difficult working conditions, particularly at the lower end of high risk supply chains, such as production of raw materials based on palm oil or rubber. Negative impacts may include deductions from wages, working time or wage violations under local law, and suppression of freedom of association. |
Medium term |
Equal treatment and opportunities for all (measures against violence and harassment) |
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Negative impact (potential) |
Upstream |
The business activities in the supply chains of our global activities are associated with high pressure on workers in various sectors, such as agricultural products. This is an indirect contribution to difficult working conditions, particularly at the lower end of high risk supply chains, such as production of raw materials based on palm oil or rubber. Negative impacts may include discrimination in the workplace. |
Medium term |
Other work-related rights (child labor, forced labor) |
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Negative impact (potential) |
Upstream |
The business activities in the supply chains of our global activities are associated with high pressure on workers in various sectors, such as agricultural products. This is an indirect contribution to difficult working conditions, particularly at the lower end of high risk supply chains, such as production of raw materials based on palm oil or rubber. Negative impacts may include child or forced labor. |
Medium term |
S3 Affected Communities
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Rights of indigenous peoples (free, prior, and informed consent) |
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Negative impact (actual) |
Upstream (Consumer Business Segment) |
The expansion of palm oil plantations may be associated with displacement of indigenous communities and conflicts regarding land rights. |
Long term |
S4 Consumers and End-Users
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Personal safety of consumers (health and safety) |
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Positive impact (actual) |
Downstream (Consumer Business Segment) |
The products from the Consumer Business Segment help to prevent and treat dermatological conditions for end consumers. |
Short term |
Negative impact (potential) |
Downstream (Consumer Business Segment) |
Despite a detailed and comprehensive safety assessment of all products, individual sensitivities, improper application or misuse of products may result in adverse health effects to consumers, for example, skin reactions such as irritant or allergic contact dermatitis. This is unavoidable and does not confirm that the products have not been properly evaluated. |
Short term |
Risk |
Downstream (Consumer Business Segment) |
The sale of products that are not safe or do not meet quality criteria may result in product recalls and potential legal action. This would involve financial loss due to the associated costs. Reputational damage is another possible consequence. |
Short term |
Opportunity |
Own operations (Consumer Business Segment) |
Beiersdorf’s focus on high quality, safe, and health-promoting products enables it to set its brands apart in the market, build a loyal customer base, and position itself as a leading company in the health-conscious cosmetics sector. |
Short term |
G1 Business Conduct
IRO |
Value chain |
Description |
Time horizon |
|---|---|---|---|
Corporate culture |
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Positive impact (actual) |
Own operations |
The Consumer and tesa Business Segments have guidelines on business conduct that promote the corporate culture. This creates the obligation to actively identify, report, and investigate behavior that violates the law or the Code of Conduct. |
Long term |
Protection of whistleblowers |
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Positive impact (actual) |
Own operations |
There are whistleblowing channels open not only to our own employees, but also to customers, consumers, suppliers, and other external stakeholders who wish to report possible misconduct. |
Long term |
Corruption and bribery |
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Positive impact (actual) |
Own operations |
There is a Group-wide compliance management system (CMS) that helps to prevent and detect corruption and bribery through targeted training. The participation rate has been close to 100% in recent years. |
Long term |
Risk |
Own operations |
If employees are not properly trained on preventing and detecting corruption and bribery, this may result in unintended breaches with legal consequences, fines and penalties. |
Medium term |
Risk |
Own operations |
Cases of corruption – even if they are unintentional – may result in negative attention in the media, which causes reputational damage and a potential threat to the brand value of the company. |
Medium term |