WEC’s IEF European Roundtable Cleaner production: Downstream Expectations and Industry Cases

2. WEC’s IEF European Roundtable Cleaner production: Downstream Expectations and Industry Cases April 15. 2004, Hamburg Michael Bahn

3. Content • The Henkel Group • Sustainability orientation and management • Case studies • Examples of Henkel projects • Examples of Henkel know how used at customers • Stakeholder dialogue • Sustainability Reporting

4. Sales 10,592 mill. euros • 50,000 employees • 125 countries Henkel Worldwide 2005

5. Home Care PersonalCare Adhesives, Sealants &Surface Treatment Consumer Industry Quality with Brands & Technologies Three Areas of Competence, Four Business Sectors

6. 3 % 26 % 34 % 26 % 33 % 14 % 23 % 16 % 25 % Business Portfolio Sales and EBIT by business sector in 2004 Sales: 10,592 mill. euros EBIT:800 mill. euros1) EBIT business sectors: 910 mill. euros EBIT Corporate: –110 mill. euros 1)excluding Corporate Laundry & Home Care Consumer and Craftsmen Adhesives Cosmetics/Toiletries Henkel Technologies Corporate

7. Sustainability at Henkel 1959Regular ecological checks for detergents and household cleaners 1971 Central department for environmental and consumer protection 1982 Principles of Environmental and Consumer Protection 1983 Market launch of the first phosphate free laundry detergent 1991 Signing of Business Charter for Sustainable Development 1992 First Environment Report 1994 Strategy: competitive advantages through eco-leadership 1997 Integrated management systems and world-wide audits for safety, health, environment and quality 2000 Code of conduct and business ethics 2003 Henkel joins the Global Compact Initiative of the UN 2004 Code of Coporate Sustainability

8. The three dimensions of sustainability are interdependent; Synergies as well as conflicts can arise. Expectations and priorities differ, between regions, stakeholders and over time  Single „reconciliation“ of interests cannot achieve sustainable development and a sustainable society; It demands: Continuous reassessment and readjustment Specific solutions for each case Continuous and open dialogue with stakeholders Sustainability at Henkel Economic success Social responsibility Environmental protection

9. Example 1 of Henkel projects Use of GMO • Use of genetic modified organism (GMO) for the production of alkaline proteases and their use in detergents • High concern of „green“ oriented people

10. 95°C 155 l " worst case " P BWG BWG " best case " 30°C 70 l Mp MG MG 0 20 40 60 80 100 MJ per washing process Manufacture of washing powder Washing Drying Ironing Example 1 of Henkel projects LCA washing 90 oC, HDD, cotton 45 oC, compactat, mixed fibres

11. Persil Example 1 of Henkel projects Alkaline proteases in detergents • they perform in detergents as protein catalyst • remove protein spot, e.g. blood, milk... Protein particles waste water Protease • set up by microorganisms • not replaceable through other substances

12. Example 1 of Henkel project LCA protease production energy waste water fermentation production of protease waste water treatment reconditioning enzyme concentrate extraction sterilization by-product: Fertilizer packing disposal dispatchable Protease Granular Material “packing" of the enzyme in granular material air emission raw material

13. renewable energy BLAP-260 BLAP-260 fossile energy BLAP-140 BLAP-140 P300 P300 0% 20% 40% 60% 80% 100% Example 1 of Henkel projects LCA protease production, primary energy consumption

14. Energy (regenerierbar) Energie (fossil) Example 1 of Henkel project Protease production, primary energy consumption BLAP -170 BLAP -140 BLAP-wild P 300 0% 20% 40% 60% 80% 100%

15. Enzyme granulate Inherent energy by photosynthesis: 17 MJ Total energy requirement: 52 MJ Energy required: 27 MJ Energy required: 12 MJ of agri- cultural origin Inherent energy: 9 MJ Inherentenergyyield: 7 MJ Energy required: 2 MJ of mineral origin Organic fertilizer Energy required: 2 MJ of fossil origin Energy requirement: 5 MJ Energy required: 8 MJ Inherent energy by fossilised resources: 3 MJ Inherent energy: 4 MJ Manufacture of pre-products Production of the protease Wastewater treatment Example 1 of Henkel projects LCA, protease, primary energy

16. dispersion solvent-less solvent-based 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Example 2 of Henkel projects LCA, laminating adhesive primary energy consumption

17. polyol initial other initial products products 43% 49% Liofol logistics 6% polyol Liofol production production 1% 1% Example 2 of Henkel projects LCA, laminating adhesive primary energy allocation

18. crude oil equivalent greenhouse effect eutrophication solid wastes acid rain smog much better than solvent-based adhesive solvent-less adhesive better than solvent-based adhesive water-based adhesive similar to solvent-based adhesive solvent-based adhesive Example 2 of Henkel projects LCA, laminating adhesive, environmental impact

19. Chemicals Water Disposal Energy 2% 5% 7% Raw material Personnel 8% 23% 10% Maintenance 10% Administration Depreciation 15% 20% Example 1 of customer projects Production costs of a beverage production

20. Example 1 of customer projects Process optimization, dairy, customer view 450 Konzentratverwertung at 2.5 DM/m³ waste water Membrananlage 400 Energie Frisch-/Abwasser 350 R & D chemicals 300 250 TDM/year 200 150 100 50 0 P3- Paradigm/ Ecocare P3- Ecocare P3- Paradigm/ One-phase P3- Paradigm/ Two-phase One- phase Two- phase

21. Example 1of customer projects Process optimization, dairy, expanded view 450 Konzentratverwertung at 2.5 DM/m³ waste water Membrananlage 400 energy fresh-/waste water 350 C & D chemicals 300 250 TDM/year 200 150 100 50 0 P3- Paradigm/ Ecocare P3- Ecocare P3- Paradigm/ One-phase P3- Paradigm/ Two-phase One- phase Two- phase

22. 450 waste Membrane plant 400 energie fresh-/waste water 350 C & D chemicals 300 250 TDM/year 200 150 100 50 0 P3- Paradigm/ Ecocare P3- Ecocare P3- Paradigm/ One-phase P3- Paradigm/ Two-phase One- phase Two- phase Example 1of customer projects Process optimization, dairy, scenario input at 2.5 DM/m³ waste water

23. conv. 2-phasecleaning conv. 1-phase cleaning P3-paradigm Example 1 of customer projects Dairy summary Water consumption Energy demand Greenhouse effect Acid rain Water pollution Solid waste Cleaning costs* * average, (depending on waste water fees) 0% 50% 100%

24. uncontrolled, critical failures uncontrolled failures controlled, critical failures controlled failures Example 2 of customer projects FMEA, comparison of failure situations Product A Product B 11 19 4 64 7 6 2 16 (0) (0) (0) (6)

25. Example 2 of customer projects FMEA categories of failures people organization customer technology

26. Stakeholder Dialogue, Germany Project appoach • Discussion of the goal of the study between IKW and Oldenburg* • Working definition of a sustainable detergent industry • Check of previous (mainly environment-orientated) activities of IKW • Development of sustainability matrixes • 1st stakeholder-workshop: Presentation and discussion of sustain-ability matrixes • Identification of selected research fields • Determination of Indicators for each research field • Stakeholder-Interviews: Examination of the research fields and the indicators • 2nd stakeholder-workshop: Final predefinition of the research fields and Indicators • Preparation of the final report * Meetings between IKW and Oldenburg after all relevant steps

27. N 1 Effectivness of consumer information N 2 Fullfillment of voluntary commitments of detergent industry N 3 Number of companies publishing a sustainability report N 4 Implementation of nine principles of Global Compact N 5 Energy consumption per kg wash N 6 Part of poorly degradable organics per kg wash N 7 Use of detergent per kg wash N 8 Ratio of cost für detergents vs all private money spending N 9 Average ROI in detergent industry N 10 Time for implementation of innovations as result of environmental problems and consumere needs N 11 Innovations during a certain time periode N 12 Number of washing cycles of during textiles life time N 13 Time spending per kg wash N 14 Distribution of time in a houshold N 15 Number of accidents at workplace N 16 Ratio of health related questions to number of sold detergent packs N 17 Competence and willingness fordialogue of industry N 18 Wash temperature with constant hygiene standards Stakeholder Dialogue, Germany First list of indicators

28. Stakeholder Dialogue, Germany Agreed quantitative indicators so env eco • N 1 Efficiency of consumer information • N 5 Energy consumption per kg wash • N 6 Part of poorly biodegradables per kg wash • N 7 Use of detergent per kg wash • N 15 Number of work place accidents • N 17 Competence and willingness for dialogue of industry so social indicator en environmental indicator ec economic indicator

29. Stakeholder Dialogue, Germany Industry specific definition of Sustainability “A detergent industry (people in industry, the companies and associations) contributes to sustainability when it accepts its social, economic and ecological responsibility within the frame of its own responsibility (products, production, value chain) and for the foreseeable future, as well as it participates and actively promotes the industry related, relevant actions towards a sustainable development using optimal means and methods.” (agreed at the stakeholder-workshop of 2nd October 2001)

30. Stakeholder Dialogue, Germany Selection of research fields State Consumers NGO’s Production of Ingredients Disposal Detergent Product Life Cycle Detergent Industry Supplier /Shippers Production of Detergent Use Trade Management Job Holder Packaging Distribution Shareholders/ Investors

31. Life steps Production of Ingredients Production of Detergent Packaging Distribution Use Disposal Energy CO2 CSB/BSB Waste Resources Risks Stakeholder Dialogue, Germany Selection of research fields, environment (black = high relevance, grey = moderate relevance, white = low relevance)

32. Actors Social Sustainability Aspects Supplier Shippers Companies Trade Consu-mers State NGO’s Job Holder Manage-ment Health Share-holder/Investors Social Responsibility Equity IndividualContentment Satisfaction of Needs Participation/ Integration/ Communication (black = high relevance, grey = moderate relevance, white = low relevance) Education Stakeholder Dialogue, Germany Selection of research fields, social aspects

33. Actors Economical Sustainability Aspects Companies Trade Consu-mers State NGO’s Job Holder Supplier Shippers Manage-ment Share-holder/Investors Economical Responsibility Stability Qualitative Growth Development of price Employment (black = high relevance, grey = moderate relevance, white = low relevance) Sustainable co-vering of succ. Future/ Innovation Quality Stakeholder Dialogue, Germany Selection of research fields, economic aspects

34. Stakeholder Dialogue, Germany Identified research fields after 1st workshop • Reduction of wash temperature / energy • Reduction of pollutants to the aquatic environment • Protection of resources • Price stability through competition • Innovative ability • Washing as value pertinent of fabric life • Convenience • Role allocation in the washing process • Health / hygiene as a result of laundry

35. Stakeholder Dialogue, Germany Research fields and indicators I

36. Stakeholder Dialogue, Germany Research fields and indicators II

37. Stakeholder Dialogue, Germany Research fields and indicators III

38. Stakeholder Dialogue, Germany Conclusion • The detergent industry did their environmental homework. • The central challenges exist within the scope of an extended sustainability understanding (Ease of household tasks, rate of return, role understanding). • Further progress will emerge only in co-operation with other actors (consumer behaviour, system innovations).

39. Industry and Sustainability The A.I.S.E. Charter for Sustainable Cleaning A common industry approach aiming to promote and demonstrate continual improvement in the industry’s sustainability profile

40. Industry and SustainabilityA.I.S.E. • International Association for Soaps, Detergents and Maintenance products • In place since 1952 • 35 National Associations in 31 countries • 988 companies, from SMEs to multinationals • Representing both consumer good and Industrial/Institutional services • Interacting with key EU/international stakeholders (EU Commission, Parliament, NGOs, UN etc) Source: A.I.S.E.

41. Industry and SustainabilityA.I.S.E. record • An industry perceived as having a key role in bringing hygiene and well-being to society, • but somewhat suffering from its “chemicals” links… • A great number of individual activities towards human & environmental safety, • coupled with an evolving legislation framework • A good record of voluntary pan-European industry action: • 1998-2003 : A.I.S.E. Code of Good Environmental Practice in 18 countries, incl. great achievements, coupled with the washright campaign • 2000-2004 : Joint A.I.S.E./Cefic HERA project on Human and Environmental Risk Assessment Source: A.I.S.E.

42. Industry and SustainabilityA.I.S.E expectations We want to be considered as a responsible and sustainable industry. • Reinforce the importance that our industry attaches to operating towards the best interests of society • Address the external perception that our industry is not always operating in the best interests of sustainability • Thus, demonstrate that: • Enormous strides are already being made towards sustainability among our member companies throughout Europe; • Our record is impressive and will become more so as the Charter progresses Source: A.I.S.E.

43. Industry and SustainabilitySustainable Development Definition,translated for industry World Business Council for Sustainable Development (WBCSD): • Business must continue to do the things that we have been doing like innovation and eco-efficiency • But we need to go beyond this to pro-actively set up partnerships with governments and NGOs to deliver products and services that meet existing and emerging consumer and societal needs • We need to establish the models and framework to make such innovation possible and economically feasible.’’ Source: A.I.S.E.

44. Voluntary safety information

45. A.I.S.E. CHARTER FOR SUSTAINABLE CLEANING POLICIES PROCEDURES INDICATORS OUTPUT Life cycle phase Raw materials (incl. chemical & packaging) Resource use Manufacturing Distribution Product use & review Charter logo economic Economic Annual Sustainable Development Report social Social Environment environ- mental Data aggregation Verification of company procedures Verification of data calculation Report to A.I.S.E. Source: A.I.S.E.

46. Industry and SustainabilityConclusion A.I.S.E. With the Charter in place we: • Promote sustainability as the guiding principle of all our work • Further contribute to the image of a ‘responsible and sustainable industry’ • Promote the dialogue • Between suppliers and users (consumers / customers) of our goods and services • Between our industry and external stakeholders, and the public in general Source: A.I.S.E.

47. Sustainability Report Henkel 2004 Published on 16.03.2005

48. Sustainability Report Sustainability Performance Henkel 2004

49. Sustainability Report 2004Expert statements from regions „Trust takes years to build, but only a mistake or two to lose.“ „Recognizing and utilizing social challenges as a motor for sustainable product innovations.“ Dr. Allen White, Tellus Institut, Boston, Massachusetts, USA „Successful companies can exist in successful and sustainable societies." Christian Hochfeld, Öko-Institut e.V., (Institut for Applied Ecology) Berlin, Germany „Accepting national challenges as a way to gaining public confidence.“ Dr. P.D. Jose, Indian Institute of Management Bangalore, India „Being a good citizen and an active participant in society." Dr. Mikhail Kozeltsev, Russian Regional Environmental Center (RREC) Moscow, Russia Henrique B. Cavalcanti, Präsident of FUNATURA, Brasilia

50. Our Vision Henkel is a leaderwith brands and technologies thatmake people's lives easier, better and morebeautiful.