Note 2: Reporting principles

Reporting scope

This Report 2014 integrates our financial and sustainability reporting and is addressed to readers interested in both areas. In particular, we seek ways of linking sustainability performance to business results in areas such as resource efficiency, carbon emission reduction, eco-premium solutions, safety, people development and engagement, and operational eco-efficiency.

The information in this Report 2014 offers an update on our implementation of the ten principles of the United Nations Global Compact (UNGC). More sustainability information is available on our corporate website, including an index of the Global Reporting Initiative (GRI) G4 indicators and a summary of our UNGC communication of progress.

The topics in this Report 2014 were selected on the basis of the sustainability aspects of our strategy, the GRI G4 guidelines and input from various external stakeholders. These include our engagement with:

  • Shareholders
  • Customers
  • Employees
  • Rating organizations, notably RobecoSAM – the rating agency for the Dow Jones Sustainability Indices – and the Carbon Disclosure Project
  • Sustainability organizations such as the World Business Council for Sustainable Development (WBCSD), Forum for the Future and the International Integrated Reporting Council

Reporting process and assurance

The reporting period is 2014. Data has mainly been obtained from our financial management reporting systems, corporate HR information management systems, corporate compliance information reporting systems and the AkzoNobel corporate reporting systems for health, safety and environment performance indicators, each of which have associated approval and verification processes. These processes continue to be updated and improved. Data collection for the newer value chain reporting aspects is carried out using standard templates and procedures. More details on all reporting processes are available on our website.

We are confident in the overall reliability of the data reported, but recognize that some of the information is subject to an element of uncertainty, inherent to limitations associated with measuring and calculating data. Senior managers approved the content and the quantitative data used in the Sustainability statements section relating to their respective areas of responsibility. The integration of sustainability in day-to-day business is part of our routine internal audit process.

The Sustainability statements section has been reviewed by independent, external auditors. The Assurance report, including the scope of the audit, can be found in the Independent assurance report at the end of this section.

Reporting policies

Reporting boundaries

The Report 2014 integrates sustainability aspects of our processes and business operations in each section, in particular the How we create value, Strategic performance, Business performance and Governance and compliance sections.

This Sustainability statements section summarizes the global, cross-business elements of the sustainability agenda and company performance. It includes quantitative and qualitative information relating to the calendar year 2014 and comparative data for 2013, 2012 and 2011. We report on consolidated data from entities where AkzoNobel is the majority shareholder (more than 50 percent) and joint ventures where we have management control, but exclude all data from entities where we have minority ownership, or no management control.

Comparability

Since 2010, we report acquisitions from the date of purchase, recognizing that reporting improvements may be required at these facilities. Recent significant changes:

  • 2014 data includes updated definitions on regulatory actions and executive potential. See also Note 11 and Note 12 respectively. It also includes the result of the divestment of our Building Adhesives business
  • 2013 data excludes Chemicals Pakistan as it was divested at the end of 2012. We include data from Decorative Paints North America until April 1, 2013, when it was divested
  • 2012 data includes the Boxing Oleochemicals acquisition and our new facilities at Ningbo, China
  • 2011 data includes the acquisition of the Schramm/SSCP businesses

Our value chain (cradle-to-grave) carbon footprint is measured per metric ton of product sales leaving AkzoNobel. In 2012, the definition of product was clarified to reduce variability in the indicator. It now excludes sold by-products and sold energy. Previous years’ data have been restated on the same basis, so there was no impact on the percentage change in carbon footprint. For our own operations, environmental impact and improvements are quoted relative to production quantity, i.e. the product volumes leaving every manufacturing plant.

Since 2013, we include the climate impact of VOCs in our overall carbon footprint targets. This increased our scope 3 downstream CO2(e) by about three million tons. The 2012 data have been restated to provide a sound baseline for our 2012 to 2020 targets.

We identify issues that affect comparability in the text or footnotes.

Materiality

We have used the principle of materiality to assess the topics to include in this Report 2014, which are current and important for the company and key stakeholders.

In order to determine the materiality of topics, we made a long list of all (more than 200) possible material topics, using the following as our key sources:

  • The AkzoNobel strategy
  • The AkzoNobel Report 2013
  • Issues raised by investor associations such as the VBDO
  • Reporting guidelines and frameworks such as GRI G4 and SASB
  • Sustainability ratings agencies such as RobecoSAM and Carbon Disclosure Project
  • The most recent reporting of peers
  • Media analysis

This long list was then reduced by reviewing the dominance of the topics, before being clustered into 18 final topics which are plotted in the matrix opposite.

A full explanation of each topic featured in the matrix can be found in the table below.

For further information please go to
www.akzonobel.com/sustainability

Materiality matrix

Materiality matrix (graphic)Materiality matrix (graphic)

Sustainability topics

 

 

 

 

 

 

 

 

 

 

 

 

 

Economic

 

Importance

 

Qualitative information

 

Quantitative information

 

Reported

4

 

Integrity

 

High

 

Insight on policies and procedures

 

Code of Conduct reporting, Code of Conduct investigation, Compliance monitoring, Code of Conduct training

 

Report 2014: Integrity and compliance, website

5

 

Customer needs

 

High

 

Insight on end-user segment trends Customer excellence programs

 

 

Report 2014: How we create value, Strategic performance, Business performance

9

 

Circular economy principles

 

High

 

Renewable energy and raw material programs, waste reuse

 

Renewable raw materials, Renewable energy

 

Report 2014: Business performance, Sustainability statements Notes 4 and 5

11

 

Economic performance and strategy

 

High

 

Market segmentation Description of economic performance

 

Economic performance and strategy

 

Report 2014: How we create value, Strategic performance, Business performance

13

 

Product and margin management

 

High

 

Operational excellence initiatives

 

 

Report 2014: Strategic performance, Business performance

17

 

Resource scarcity/material availability risks

 

Medium

 

Risk description and mitigation actions Renewable energy and raw material programs

 

Renewable raw materials, Renewable energy

 

Report 2014: Risk management, Business performance, Sustainability statements Notes 4 and 5

 

 

Environmental

 

 

 

 

 

 

 

 

1

 

Energy, resource use, carbon emissions throughout the value chain

 

High

 

Value chain descriptions
Insight on impacts throughout the value chain

 

Resource Efficiency Index, Cradle-to-grave carbon footprint, Renewable raw materials, Energy use, Renewable energy, Greenhouse gas emissions per ton of production

 

Report 2014: How we create value, Strategic Performance, Business performance Sustainability statements Notes 4, 5, 15, 16 and website

3

 

Eco-premium solutions and
value chain management

 

High

 

Lifecycle assessment value chain impacts
Customer partnership solutions

 

Eco-premium solutions with downstream benefits, Eco-premium solutions
VOC in product

 

Report 2014: How we create value, Strategic performance, Business performance, Sustainability statements Notes 4 and 5

7

 

Product stewardship

 

High

 

Priority substance management Regulatory affairs

 

Priority substances with management plan, REACH compliance

 

Report 2014: Strategic performance, Sustainability statements Note 10

10

 

Sustainability in the supply chain

 

Medium

 

Supplier sustainability framework program

 

Third party audits, Supplier Support Visits, Vendor Policy compliance, Environmental supply chain aspects

 

Report 2014: Sustainability statements Note 7

12

 

Climate change

 

Medium

 

Climate change risk management, mitigation and adaption policies

 

Cradle-to-grave footprint, Greenhouse gas emissions per ton of production

 

Report 2014: How we create value, Strategic performance, Business performance, Sustainability statements Notes 4 and 5

15

 

Operational eco-efficiency

 

Medium

 

Operational eco-efficiency program and management

 

Operational eco-efficiency footprint measure

 

Report 2014: How we create value, Strategic performance, Business performance, Sustainability statements Notes 15–20

18

 

Biodiversity

 

Low

 

Climate change, Pollution control

 

 

Report 2014: Sustainability statements Notes 3, 5 15–20

 

 

Social

 

 

 

 

 

 

 

 

2

 

People and process safety

 

High

 

Insight on policies and procedures

 

Reportable injury rate, Behavior-based safety program, Life-Saving Rules, Regulatory actions, Loss of containment

 

Report 2014: How we create value, Strategic performance, Business performance, Sustainability statements Notes 8 and 9

6

 

Employee engagement

 

High

 

Insight on policies and procedures

 

Employee engagement survey

 

Report 2014: How we create value, Strategic performance, Business performance, Sustainability statements Note 12

8

 

Talent management

 

High

 

Insight on policies and procedures

 

Cross-BU moves of leadership talents, Internal promotion into executive level, Retention of leadership talent, ViewPoint score on learning and growth, Female executives, Female executive potentials, High growth market executives, High growth market executive potentials

 

Report 2014: How we create value, Strategic performance, Business performance, Sustainability statements Note 12

10

 

Sustainability in the supply chain

 

Medium

 

Supplier sustainability framework programs, Human rights commitment program

 

Third party audits, Supplier Support Visits, Vendor Policy compliance, Social supply chain aspects

 

Report 2014: Integrity and compliance, Sustainability statements Note 7

14

 

Stakeholder engagement

 

Medium

 

Framework activities

 

Sustainability ratings, Agency rankings

 

Report 2014: Sustainability statements Note 3, website

16

 

Community involvement

 

Medium

 

Human Cities initiative, Community program, Business activities

 

Projects involved, Volunteers, Donations

 

Report 2014: Human Cities, Case studies, Strategic performance, Sustainability statements Note 14, website