You need this ingredient to make soap from scratch because without it, you just have oils, and that is sodium hydroxide. It’s needed for the chemical reaction that turns the oils into soap. Sodium hydroxide is caustic, so you need to take the proper safety precautions when making the soap. But don’t worry, the final bar soap will not have any sodium hydroxide in it. The sodium hydroxide will be completely used up during the chemical reaction that turns the oils into soap.