PESTEL ANALYSIS:

A) SOCIAL: Human rights and social standards at Henkel

One foundation of our corporate culture is our commitment to respect the personal dignity and privacy rights of all employees and adhere to the principles of equality and fairness. As long ago as 1994, in our corporate mission and principles, we declared our commitment to incorporate social values in a responsible manner in our corporate policy and to "respect the social values and standards of the countries where we operate." We thus also assumed responsibility to protect and promote human rights within our sphere of influence. We further emphasized this commitment when we introduced our Code of Conduct in 2000 and when we joined the United Nations Global Compact in 2003. Our Social Standards, which we introduced in 2006, express in concrete terms what we stand for. They are derived from the following internationally accepted guidelines:

10 principles of the UN Global Compact 8 core labor standards of the International Labor Organization (ILO)

ILO Declaration of Principles Concerning Multinational Enterprises and Social Policy (MNE Declaration) OECD Guidelines for Multinational Enterprises, and Social Accountability Standard (SA 8000).

In 2010, we revised our Social Standards. Our objective was to make them more precise and thus more easily applicable for our employees as they should be used for daily guidance. Moreover, we wanted to ensure that they are up-to-date, in view of the further development in international standards. We use these Standards as a framework for decision-making and constructive engagement within our sphere of influence, while respecting local legal requirements as well as the responsibility of governments to protect and promote human rights. Our Social Standards also apply to our suppliers, who are assessed through our five-step "Responsible Supply Chain Process." This covers results and risks in regard to human rights as well as key commercial and operating indicators.

Working conditions
We provide working conditions for our employees that reflect both our own and globally recognized standards. The health and safety of our employees and business partners are top priorities for us. We also respect the right to rest and recuperation and offer our employees fair compensation and benefits in keeping with local standards. Regarding child labor and forced labor, Henkel resolutely follows a clear policy of "zero tolerance." Nor do we tolerate any form of discrimination. We respect the rights of employees and freedom of association and are committed to an open and constructive dialogue with our employees and their representatives. At locations where there are no representatives, or the employees' right to elect employee representatives is restricted by law, we ensure an appropriate social dialogue between employees and management.

Communication and implementation

Through presentations, training and e-Learning modules, we ensure that our social standards are firmly anchored throughout the company. We place special emphasis on training the managing directors and human resources officers of our companies in each country, so that they can act as "local ambassadors" in raising awareness of the importance of our social standards. The Social Standards are made available to all employees, including those at the production level, in the form of bulletins, posters or brochures.

Cooperation and knowledge transfer with our partners throughout the value chain are decisive for the successful implementation of social standards. This is why we engage in international initiatives such as the Global Compact of the United Nations, the World Business Council for Sustainable Development, as well as different workshops, expert groups, and governmental initiatives. The exchange allows us to learn from others and share our own experience with our partners.

B) ECONOMIC : Sustainability: Henkel a leader among international corporations

Achievements internationally recognized Combining economic success with corporate social responsibility (CSR) has been a constant feature of Henkels business philosophy for over 130 years now. And in international terms, too, Henkel counts among the leading companies in this domain. So when it came to conferral of the first ever European Corporate Responsibility Award in Prague on February 5 this year, Henkel was once again among the finalists. For Henkel, sustainability means ensuring that the company meets the needs of society and the requirements of its stakeholders without jeopardizing the development opportunities of future generations both through its brands and technologies and in its role as an employer. After winning the German Sustainability Award in December 2008, Henkel has now impressed another high-caliber jury with its firmly established sustainability strategy, taking its place among the 22 finalists from throughout Europe in the first ever competition for the European Corporate Sustainability Award. The company regards reaching the final as an important acknowledgment of its commitment in the sustainability field. We are delighted at this international affirmation of our strategy particularly given that this is the first pan-European sustainability award of its kind, said Christian-Andr Weinberger, Corporate Senior Vice President und Global Chief Marketing Officer at Henkels Laundry & Home Care business sector. We have no doubts that this issue is more important today than it has ever been. We see enormous potential here for driving innovation toward combining product performance and quality with responsibility for people and the environment, he added. The award recognizes innovative strategies that both promote business success and anchor sustainability and corporate social responsibility as factors for progress within the companies concerned. The competition was organized by the European Independent Consulting Group (E-I), a network of independent strategy and management consultants. The jury is comprised of representatives from the EU Commission and renowned national personalities from the fields of politics, business and society. The German jury member is Professor Dr. Klaus Tpfer, a former Minister for the Environment in Germany and

erstwhile Executive Director of the United Nations Environmental Program (UNEP). Chair of the Czech-based jury is the Minister for Human Rights and National Minorities, Dzamila Stehlikova. In putting itself forward as a candidate, Henkel was able once again to underline its credentials as a leader in this field. Examples of its activities and commitment to sustainability and CSR include the following: Active engagement in promoting the recognition of certificates for sustainable palm kernel oil, a raw material used in the production of wash-active substances (surfactants), through membership of the Roundtable for Sustainable Palm Oil (RSPO). Participation in Germanys Product Carbon Footprint pilot project with the aim of driving forward the development of reliable methods capable of generating transparent and comparable results for determining the full gamut of climate-relevant emissions. The Quality and Responsibility strategy aimed at combining product performance with the best possible degree of environmental protection in all the companys laundry and home care products. Extensive use of renewable raw materials, of recycled residues for product packaging, not to mention the introduction of accurate dosing aids. Henkels record on sustainability and corporate social responsibility has gained an excellent standing in various national and international rankings and ratings. For example, in December 2008 the company was recognized as Germanys Most Sustainable Brand at the first ever German Sustainability Congress. And in September 2008, Henkel was the only company in the FMCG (fast moving consumer goods) market segment to be included in the Dow Jones Sustainability World Index (DJSI World). Only 10 percent of the worlds 2,500 largest companies make the grade for inclusion in the DJSI World. In March of this year, moreover, Henkel also garnered the 2008 ESG Award in the DAX corporations category. This accolade recognizes companies listed in the German stock index (DAX) for their performance in the fields of environmental protection, social responsibility and corporate governance (ESG = Environment, Social, Governance).

C) ENVIRONMENT:
Henkel Chile was visited by the health Secretary of Chile and received Public Support for the Initiative. The Health Ministry prepared a national law to Prohibit the production and marketing of adhesive Containing Toluene. The Chilean Minister of Health awarded the Company with the national wealth award in recognition of its pioneering role in banning toluene.

Henkel focused on Eco-leader ship and sustainable development. Henkels market Success and its ability to strengthen Co-operation between various stake holders lead to multiple environmental and social benefits.
Ecological responsibility: Henkel develops, manufactures, and markets products and systems which according to acknowledged scientific criteria are compatible with the environment. The environmental compatibility of production processes and products is continuously undergoing improvement

Henkel's principles of environmental protection

In 1991, the until then most important international environmental conference of industry took place in Rotterdam - the Second World Industry Conference on Environmental Management (WICEM II). The central purpose of WICEM II was to formulate and adopt principles of environmental management. The outcome was a Business Charter for Sustainable Development, designed to provide comprehensive guidelines for a wide variety of industries throughout the world. Henkel is committed to the principle of sustainable development, of environmentally compatible corporate, product and research policies.

Eco-Audit
Environmental management at Henkel is based on the Group's own criteria, which go beyond statutory and voluntary obligations. The aim is to cement these criteria in uniform, Group-wide safety and environmental standards. For this purpose, the Management Board decided in November 1988 that an ecological audit should be carried out to provide a systematic and comprehensive overview of the actual environmental situation at all the Henkel Group's production sites, and with respect to all products. Audited were more than 140 production sites in 53 countries. The intent was to look beyond statutory obligations and to find out whether production processes exhibited weak points from the point of view of industrial safety and ecology, and whether environmental hazards were linked with Group products, and if so, to take corrective action. A standard procedure was applied to obtain specific information from all companies in the Henkel Group. Documented at Group headquarters in an 'Eco Register,' the findings were analysed and appraised by a group of experts, in some instances after obtaining specific additional data. Eco audit - products Altogether 116 substances were listed as a basis for the product audit. These were classified into the following groups:

substances very dangerous for aquatic organisms;

chlorofluorocarbons (CFCs);

 carcinogenic substances.

The eco audit looked at all Henkel products in the light of these criteria. It found that, for Henkel's more than 10,000 products, almost no action was needed with regard to especially hazardous substances. Only in about ten cases did production sites report the use of hazardous ingredients, and in all these cases the substances concerned complied with local regulations. Meanwhile, these substances are no longer used in the manufacture of Henkel products. They were either replaced by harmless substitutes, or production was stopped. An example: in South Africa it was found that a substance used to impregnate wooden fence posts was manufactured from coal-tar oil (a carcinogenic substance). Henkel immediately withdrew this product from the market, without providing a substitute. The eco audit also revealed that throughout the world Henkel no longer uses CFCs as propellants. Still, the Group does not intend to relax its efforts and does not regard the current state of affairs as final. A gradual study will be carried out into products based on less hazardous substances. Eco-audit production The eco audit of production processes is based on the hazardous substances listed in the German regulations regarding environmental hazards ('Strfallverordnung'). The following substance groups were of relevance in the context of the Henkel study:
substances very dangerous for aquatic organisms; highly toxic substances; flammable gases; liquids with very low flash points.

The list includes 130 substances and substance groups. The questions were formulated according to three main criteria:
annual consumption; emission and waste disposal situation; average inventories

A first important finding of this global audit is that the Henkel Group's production facilities maintain high safety standards. It also showed that at certain production sites, especially of acquired companies, some efforts are needed to raise safety levels. Initial steps have been taken in this direction. Group-wide Henkel safety and environmental standards will also be drafted to cover the use of a range of other substances employed in production processes. Everywhere the same basics principles of environmental and consumer protection: Henkel Corporation's Charlotte works in North Carolina, USA. Eco program An eco program at the headquarters then followed up on the eco audit. This provides for a greater emphasis to be placed on pro-environment research and development activities. Chemists and engineers from Research and Process Development have cooperated with their colleagues in Application Technology and Production to draft project proposals. From this pool, projects at a cost of some DM 23 million started in 1991. The most important were:
the development of new compounds to replace substances very

dangerous for aquatic organisms;

the development of new, low-waste technologies that cause a

minimum of atmospheric and wastewater pollution;

a search for possible methods of reducing energy consumption and

conserving resources. The experience gained will gradually be applied to our subsidiaries abroad. Waste management (Metal Chemicals) Unlike raw materials production, the manufacture of consumer goods is usually associated with only low levels of waste. This is why Henkel produces relatively little solid waste. Residual substances that cannot be exploited in the same production plant are not automatically classified as waste but are often recyclable. For instance,
residues from oil and fat processing can be used by the Holthausen

power station as special fuels;

scrap wood, from pallets for instance, is used to make chipboards; melting chamber granulates from the power plant are used as road

construction and drainage material. Solid waste material is collected, segregated and recycled.

Classical recoverable materials such as scrap metal, wood, paper and plastic sheet and film are recycled. Metal and plastic drums and barrels are either reconditioned and refilled or exploited in some other way. Metals from catalysts (copper, nickel) are reworked. For some time now, building rubble has also been reprocessed. In 1991,

the parent plant in Dsseldorf produced some 67,600 metric tons of residual material. 50,400 metric tons of this was reused and 17,200 metric tons was waste. Some 74,5 percent of residual materials was therefore recycled. Henkel is currently constructing a disposal center in its parent plant in Dsseldorf. In line with the latest technology, residues and waste will be stored safely before being treated and prepared for disposal. The first section of the plant has been in operation since early 1992.

Wastewater treatment
(Phosphate-free powdered detergents) The parent plant in Dsseldorf produces about 20,000 cubic meters of wastewater each day - as much as a town a population of 100,000 people. Henkel is an 'indirect discharger'; this means that the wastewater is discharged into the municipal sewage treatment works in the south of Dsseldorf. Before Henkel's wastewater leaves the parent plant it passes through a central wastewater treatment facility, where water-insoluble substances such as fats and oils are removed. In a neutralization stage the wastewater is given a preliminary treatment to ensure that the biological purification stage in the municipal sewage works is not overloaded. The individual wastewater streams flowing into the central facility are continuously monitored. For this purpose, automatically functioning control and sampling stations have been installed at five important points along the 40-kilometer drainage system in the plant. Temperature, conductivity, acidity (pH) and organic carbon content are measured at these stations, stored in a central computer system and the results displayed. Deviations from standard values are immediately detected, so that counter-measures can be taken promptly. Wastewater can be retained for specific treatment if necessary. Water that has been contaminated as a result of fire-fighting activities can also be collected and treated in the central wastewater treatment facility.

Environmental protection by the works fire department

Nowadays, environmental protection is an increasingly important part of the work of the fire department, alongside its traditional task of providing fire protection in preventive and defensive form. Great priority is now given to protecting air, water and

soil against the hazards to which they may be exposed when products accidentally escape. Emergency plans specify all the necessary steps to be taken if an accident does occur, from sounding the alarm and taking counter-measures to eliminating the effects of the damage. As a hazard prevention measure in the event of gaseous products escaping, fixed and mobile sprayers have been installed, which can generate an extensive cloud of water droplets to blanked and smother possible emissions. Mobile and stationary covers and barriers are available to prevent any substances from entering the drainage system or contaminating the groundwater. The range of potential incidents requiring counter-measures to avoid environmental damage stretches from a 'small acid leak' to an accident involving hazardous bulk substances. Within the framework of TUIS (a transport accident information and aid system), Henkel's fire department also provides help in accidents involving hazardous substances outside of the parent plant. Henkel's safety principles for protecting the environment, as exemplified at the parent plant in Dsseldorf, apply analogously to all the other Group companies throughout the world.

Wastepaper recycling
There is a long tradition of processing wastepaper into recycled paper and cardboard. The first Henkel patent for such a process dates from 1908. In West Germany, one quarter of all wastepaper is deinked, i.e. the printing ink is removed, and the paper is then recycled; the rest is used for packaging material. Although packaging material and some tabulation paper can now be manufactured completely from wastepaper, newsprint can only tolerate 50 to 60 percent and high-quality paper may not contain more than 5 percent. In Japan and Europe, printing inks are usually removed by means of flotation processes, and this type of process is steadily gaining in popularity on a global scale. Henkel has a major share of the market in flotation deinking chemicals. By developing new products and better processes for removing water-soluble flexographic printing inks, Henkel has made

another important contribution to relieving the burden on the environment. These developments even enable the deinking of paper that has been printed with modern solvent-free inks and its reuse in an environmentally responsible manner. Current development work is being carried out in close cooperation with the printing ink industry and a number of research institutes. The German Federal Research Ministry is supporting this project.

D) LEGAL:
Henkel had wide Customer base and Customer Loyalty. False Practices like bribery and Corruption were strictly rejected. Henkel always believed in attaining their goals by following ethical practices and maintaining the product Quality and standards.

E) TECHNICAL:
Achieves full business potential by Streamline product Portfolio, Strengthen Top Brands. Focus more on customers by offering right solution to their problems and consistently satisfying their needs. Henkels Mission is to become the trend setter in the market by creating and sustaining Competitive advantages by Development of premium brand, anticipation of customer needs, Professionalism and Competence, Product and service innovation.

F) LEGAL:
Respect and comply with applicable laws. Conduct political dialogue in compliance with Henkels Corporate Values and Standards. Work within the rules of the political institutions at both national and international level (for the EU, please also refer to the new Code of Conduct for Members of the European Parliament with respect to financial interests and conflicts ofinterest.

No conflict of interests or corruption Obtain information or decisions in an honest and respectful way. Behave with integrity. Never induce staff or public authorities to

contravene rules and standards of behavior applicable to them. Any business activities with and payments or other commitments to members of the European Parliament and other local or international politicians are prohibited unless prior written approval by the International Governmental Relations & Public Affairs department, Henkels Compliance and Risk Committee and/or its Chief Compliance Officer has been obtained.

SWOT ANALYSIS: