1.1 AkzoNobel's Biobased Raw Materials Strategy in Context
This chapter sets out AKZONOBEL as a company, its position in the value chain, and sustainability approach and describes how the company has responded to recent developments in biobased materials. AKZONOBEL has developed and implemented a white biotechnology strategy to help respond to the sustainability challenges of its customers and to contribute toward its corporate sustainability goals. Guided by this strategy the company is now partnering with innovators and leading companies in the rapidly developing field of industrial biotechnology and biobased raw materials to bring economic competitive developments delivering meaningful sustainability improvements to our markets.
AKZONOBEL is a committed and recognized leader in chemical industry sustainability and our proactive effort has been recognized through our presence in the top three of the Materials Industry group of Dow Jones sustainability index (DJSI) for each of the last 5 years. We have even been Materials Industry group leader for each of the last three years. The DJSI benchmarks the sustainability performance of leading companies based on environmental, social, and economic performance, including forward-looking indicators, and is regarded as the world's foremost sustainability index. It assesses various criteria, including supply chain management, operational eco-efficiency, product stewardship, human capital development, and occupational health and safety. AKZONOBEL is building on the basis of active health, safety, and environment (HSE) programs internally and through supplier support visits (SSV) and works with our key suppliers to improve HSE performance though our value chain. AKZONOBEL also takes a leading position in cross-sectoral initiatives such as the World Business Council for Sustainable Development and Together for Sustainability.
We are further building on this base with eco-premium solutions (EPS) and our Carbon Strategy. As part of our sustainability effort, AKZONOBEL is helping its customers to address their sustainability challenges by offering products that enable them to reduce their environmental footprint at competitive price points. To add impetus to this effort, we developed the concept of EPS in 2007 to translate the eco-innovation challenge into an operational target for our company. This eco-innovation challenge was defined by the World Business Council for Sustainable Development as the introduction of any new or significantly improved product – which can be either goods or services – process, organizational change, or marketing solution that reduces the use of natural resources (including materials, energy, water, and land) and decreases the release of harmful substances across the whole life cycle.
EPS are measured using a quantitative analysis or a qualitative assessment of performance in seven categories: toxicity, energy efficiency, use of natural resources/raw materials, emissions and waste, land use, and risks (e.g., accidents) and health and well-being (added in 2013) against the most commonly available equivalent commercial products or industrial processes (mainstream solutions) from a life cycle (value chain) perspective. The EPS must be significantly better with respect to at least one criterion and have no significant adverse effects with respect to any of the other criteria. The assessment is carried out by an experienced cross-functional group, including experts in R&D, marketing and sales, purchasing, manufacturing, and eco-efficiency. Since 2008, the EPS assessment has been audited as part of a broader sustainability audit.
Our 2020 target is to achieve 20% of revenue from products and services that provide customers and consumers in our downstream value chain with a significant sustainability advantage. This is in addition to our target of increasing revenue share from EPS (with benefits at any stage of the value chain) to 30% by 2015. Both are challenging goals because the assessments are made against equivalent mainstream or standard commercial products and as such are an upward moving target, as both we and our competitors introduce new and more sustainable products into the market.
Addressing concerns about contribution to and the impact of climate change prompted AKZONOBEL to establish a Carbon Policy in 2009. In this we recognize the need to move beyond controlling emissions from our own operations toward – throughout our product chain – identifying and addressing both the opportunities for more sustainable sources of materials and the strategic risks arising from dependence on fossil fuels and fossil-based raw materials. In line with our commitment to develop eco-efficient solutions for customers, the company acknowledges that managing our carbon footprint through innovative products, technology, and energy management constitutes both a business opportunity and a social imperative. Our target is to reduce our cradle-to-grave carbon footprint by 25–30% per ton of sales between 2012 and 2020. The cradle-to-grave footprint adds the impact from our customer applications and end of life of our products to the cradle-to-gate measure we have used since 2009. Since 2007, we publicly disclose our Policy, Management and Performance on Energy Efficiency and Carbon Footprint by our annual reporting to the Carbon Disclosure Project (CDP).
To support these sustainability efforts, AKZONOBEL set out a biobased strategy that identified opportunities in biobased materials where these might be delivered economically and maximize the environmental impact reduction. This strategy aims to forge supply chain relationships that connect these innovations and opportunities to our markets and application areas.
We have meanwhile struck a number of partnerships as a result of this strategy and are working through our value chains to bring these to market. Developing and implementing this strategy have required considerable thought on selection of the target molecules, engagement with current and emerging suppliers in new ways, and significant attention on how to address sustainable sourcing and integrating these materials into existing value chains.
1.2 AkzoNobel in the Value Chain
AKZONOBEL is a leading global paints and coatings company and a major producer of specialty chemicals that holds leadership positions in many markets. In 2013 the company employed approximately 50,000 people and reported revenue of €14.6B with high-growth markets in Latin America and Asia Pacific representing 44% of this revenue.
The company is divided into three business areas, each of which represents approximately one third of our revenue:
- Performance coatings. Performance coatings are used predominantly for protection, mainly to industrial consumers having hundreds of uses across a wide range of industries and sectors including automotive, consumer electronics, aviation, shipping and leisure craft, sport equipment, construction, furniture, and food and beverage.
- Decorative paints. Our decorative paints business is the world's leading decorative architectural paints company supplying a full range of interior and exterior decoration and protection products for both the professional and the do-it-yourself markets. The product range includes paints, lacquers, and varnishes as well as products for surface preparation (predeco products). We also supply building adhesives and floor leveling compounds for tile, floor, and parquet layers.
- Specialty chemicals. AKZONOBEL is a major supplier of specialty chemicals with leading positions in selected market segments. Our products are used in a wide variety of everyday products such as ice cream, soups, disinfectants, plastics, soaps, detergents, cosmetics, paper, and asphalt.
AKZONOBEL by and large is not vertically integrated back to the primary extraction of resources but occupies a position in the value chain as a formulator and convertor of chemicals. While AKZONOBEL as the corporation is not widely known, many of our brands are household names, trusted by customers to brighten, protect, and preserve their homes, buildings, offices, and factories. These brands include Sikkens, Dulux, Jozo, International Paints, and Interpon, among others.
