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Beyond the Factory Gates: Sustainability in Today's Business World


Guest Article by Kathrin Menges, Executive Vice President Human Resources, Chair of Sustainability Council, Henkel AG & Co. KGaA

Sustainability has taken on a new relevance in recent years. What was once regarded as an add-on to be maintained as long as it didn't compromise competitive strength is now making its way into business planning.

While the topic of efficient industrial processes has been with us for some time, the past ten years have seen a shift of perspective in much of the corporate world. Defining and working toward meaningful sustainability goals throughout the entire value chain are becoming integral components of a successful business strategy. More and more leading companies have moved beyond mere efficiency and risk management and are now looking at addressing global challenges by developing products and services that create value for their customers, the community and themselves while reducing their footprint.

The reasons for this change are in plain view: The world's population is growing continuously, and the associated acceleration in global economic activity is leading to rising consumption, resource scarcity and emissions. The huge increase in the flow of information also plays an important role. Social media tools such as YouTube, Facebook and Twitter are driving new possibilities and expectations for real-time information and transparency. In addition, standards and laws have expanded. Regulations on non-financial disclosure, for example, mean that companies must release more information than ever before.

Many consumers desire more environmentally and socially responsible products, yet remain unwilling to compromise on cost, quality or convenience. According to consumer research spanning 18 countries worldwide, sustainable consumer behavior has grown only slowly since 2008. Consequently, companies need to offer products that continue to deliver the performance consumers expect while at the same time improve these products' sustainability profile.

In response, Henkel has established a sustainability strategy based on Vision 2050 of the World Business Council for Sustainable Development (WBCSD). It states: "In 2050, about 9 billion people live well and within the resource limits of the planet." To achieve this, Henkel has to become five times more efficient by the year 2050. Thus, the company has set itself the goal to triple the value created in relation to the footprint of its operations, products and services by 2030. This ambition to increase the value or to reduce the footprint by three times was named "Factor 3".

Three principles of sustainability

For Henkel, becoming more efficient means systematically developing products that deliver more value with reduced ecological footprint, creating partnerships that drive sustainability throughout value chains, and engaging all people within the organization in pursuit of the company's goals. By effectively combining these three principles – products, partners, people – real change can be achieved.

But like any change process, it requires clearly defined targets and processes to measure progress toward these goals. Also, innovation is key to significantly improving the sustainability of operations and products. But there can be no denying: It also requires substantial efforts and collaboration.

Products

If increased quality of life is to be decoupled from resource use, product innovations will play a major role. In order to systematically integrate sustainability into the company's innovation processes, Henkel has developed an array of instruments and methods. The Sustainability#Master tool, for example, enables Henkel to effectively assess and steer product development and improvement according to sustainability criteria. At the heart of the tool is an easy-to-read matrix based on the individual steps of the company's value chains and the six focal areas (social progress, performance, safety and health, energy and climate, materials and waste, water and wastewater). Products in the pipeline are evaluated in terms of their environmental footprint and the value they create within relevant sustainability parameters.

With the Sustainability#Master tool, Henkel's Research & Development experts get a clear view of each product's contribution toward the company's goals and how it compares to a benchmark product, usually its predecessor or the market standard. Based on these results, Henkel then makes adjustments to improve performance if necessary and feasible. The decision to pursue or abandon an innovation project hinges on its promise to generate value, reduce environmental impact or, ideally, to do both at the same time.

Partners

For Henkel, collaboration with its partners in the value chain plays an important role, beyond providing high-quality products. Together with its partners, the company defines objectives and sets new standards. For example, Henkel works closely with its customers to understand their specific processes, products and markets. From this approach, it can support them in achieving their own sustainability targets by developing tailor-made solutions that increase resource efficiency and reduce environmental footprint. Especially retail groups offer excellent platforms for informing consumers about more sustainable products and encouraging them to use these products in an environmentally responsible way.

With the Sustainability#Master tool, Henkel's teams can provide a transparent view of a product and its sustainability performance as a process to its partners. This aspect is especially important considering that much of the value and/or impact of Henkel's products is realized when they are no longer in the hands of the company itself. Therefore, a realistic assessment of sustainability must take the entire product lifecycle into account.

People

Engaging employees in the topic of sustainability and Henkel's specific approach to it – to create more value with a smaller environmental footprint – is key to success. Accordingly, the company dedicates considerable resources to inspiring and motivating its employees to work toward sustainability.

Since 2012, more than 5,000 Henkel employees have joined the company's "Sustainability Ambassadors" program, which is designed to develop a clear understanding of sustainability and enable employees to convey its importance to others. By mid-2015, these ambassadors have shared their knowledge with almost 47,000 students worldwide. In 2014, the program was expanded with a campaign. Rolled out globally, the campaign encourages employees to contribute to a sustainable society in their everyday lives through simple tasks such as turning off lights and printing less.

Employees in sales have a special role to play, as they are the interface with retailers and industrial customers. With a special initiative, including training and sales toolboxes, the sales team is enabled to deliver more and better sustainability information about Henkel's products and solutions.

Systematic progress is vital

Considering the growth of the global population and the current rate of depletion of the world's resources, it is necessary not only to take action but to achieve tangible progress – by systematically integrating sustainability criteria in all processes and products and focusing on what matters. Henkel, as a globally leading company, has the reach and the resources to live up to this task. Working to ensure the well-being of future generations must be a challenge and goal for every company. At Henkel, commitment to leadership in sustainability is a core corporate value.

There is no one-size-fits-all sustainability strategy – each company needs to find its own way to contribute. The future viability of our planet and our businesses depends on it: Only companies that begin to seek more sustainable solutions will be able to create long-term value for themselves, their partners and society. The adoption of the 2030 sustainable development agenda by the UN in September sent a positive signal to the political, civil society and the business community that the world is ready to change course. It's time to step up and make a difference.

Contact

Kathrin Menges
Executive Vice President
Human Resources, Chair of
Sustainability Council
Henkel AG & Co. KGaA
W www.henkel.com

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