Note 5: Resource efficiency

Carbon footprint cradle-to-grave

In our 2020 sustainability objectives, carbon footprint has a very important role – not only for its measure of climate impact and protection, but also because we are using it as a proxy for how efficiently we are using raw materials and energy in our products.

Our target is to reduce our cradle-to-grave carbon footprint by 25 to 30 percent per ton of sales between 2012 and 2020. Impact from VOC emissions is also included. We will achieve this through innovative products/solutions, technology and energy management and by creating more value from fewer resources.

Our assessment this year indicates a total footprint of around 27 million tons of CO2(e) and a CO2(e) per ton of sold product nearly 4 percent higher than the 2012 level. The cradle-to-grave assessment shows that around 40 percent is from raw materials extraction and processing (Scope 3 upstream), 15 percent from our own direct and indirect emissions from energy consumption (Scope 1 and 2), and 45 percent from the use and end-of-life phase (Scope 3 downstream).

We have made some good improvements. New power contracts in, for example, Moses Lake and Columbus, and increased production in our Chemical Islands (using renewable power) have reduced the footprint significantly. Energy efficiency has been improved at several production sites, such as Ningbo in China and Columbus in the US. However, these improvements have been outweighed by changes in product mix, a deterioration of power mix in Germany and lower utilization of our CHP unit in the Netherlands, leading to the use of more power from the Dutch grid. The absolute carbon footprint of our own operations has reduced by 17 percent since 2012.

Cradle-to-grave carbon footprint
in million tons of CO2(e) and % reduction per ton of sales

Cradle-to-grave carbon footprint, in million tons of CO2(e) and % reduction per ton of sales (bar chart)Cradle-to-grave carbon footprint, in million tons of CO2(e) and % reduction per ton of sales (bar chart)

The carbon footprint of the six main greenhouse gases is measured from cradle-to-grave based on the international Greenhouse Gas (GHG) Protocol and Lifecycle Assessment ISO 14040-44. See Assessment method on our website.

Cradle-to-grave carbon footprint

Total in million tons CO2(e) and reduction per ton of sales

 

 

 

 

 

 

 

 

 

2012

 

2013

 

2014

*

Scope 1 and 2 includes emissions from our facilities and our own transport, including VOCs.

Decorative Paints

 

 

 

 

 

 

Total

 

5.0

 

4.2

 

3.9

% reduction per ton of sales

 

0

 

3

 

0

Performance Coatings

 

 

 

 

 

 

Total

 

13.0

 

12.9

 

13.6

% reduction per ton of sales

 

0

 

0

 

-2

Specialty Chemicals

 

 

 

 

 

 

Total

 

9.5

 

9.4

 

9.4

% reduction per ton of sales

 

0

 

2

 

-2

AkzoNobel

 

 

 

 

 

 

Scope 3 upstream

 

11.0

 

10.5

 

10.7

Scope 1 & 2* (see note below)

 

4.4

 

4.1

 

4.0

Scope 3 downstream

 

12.1

 

11.9

 

12.2

Total

 

27.5

 

26.5

 

26.9

% reduction per ton of sales

 

0

 

2

 

-4

We have assessed all Scope 3 categories according to the GHG Protocol Scope 3 standard. (See Scope 3 emissions on our website).

More information on our assessment method for carbon footprint cradle-to-grave can be found in Note 2.

Management plans

We have initiated a detailed review of our plans to achieve this 2020 target.

Our businesses have developed quantified carbon management plans that identify specific improvement opportunities and programs. These plans are summarized at Business Area and company level to manage and follow up carbon footprint reduction targets.

The illustration on the next page highlights the impact of our main initiatives in different areas of our value chain:

  • Raw materials which are more energy and material efficient for our customers
  • Improved energy efficiency and fuel mix for our energy intensive operations
  • Improvements in formulation to reduce product footprint

The following sections discuss improvement activities for raw materials, our operations and in the product solutions we deliver to customers.

AkzoNobel carbon footprint
in million tons CO2(e)

AkzoNobel carbon footprint, in million tons CO2(e) (graphic)AkzoNobel carbon footprint, in million tons CO2(e) (graphic)

Raw materials

Raw materials contribute around 40 percent to our cradle-to-grave carbon footprint and 63 percent to our cost of sales.

Raw material strategies

The procurement strategy for the next few years is to move further beyond availability-price-synergy towards cross-functional sourcing, integration and value chain orientation. Buying on price will move towards total cost of ownership, while selected supplier relationships will move towards cooperation and partnering. We see this as a way to leverage the size and scope of our global business, our position with suppliers and to drive competitive advantage.

A cross-functional approach with our key suppliers is now set as the standard in our updated key supplier management process. This enables us to structure the cooperation regarding joint sustainability and innovation topics with our key suppliers.

During the year, we continued the development and implementation of our raw material strategies. These included elements such as material resource planning, capacity and supply cover, supplier selection and sourcing plans per region, “make” versus “buy” and renewable materials. They are also an instrumental tool in reducing the footprint of our global value chains. We continuously review these strategies in an integrated cross-functional Project Management Office, run monthly, to embed the overall process and strategy. This process also ensures that we have taken into account interdependencies with a forward-looking perspective, including sustainability.

Complexity reduction

So-called slates of raw materials in key areas of spend are being developed. These slates define a core list of preferred materials/suppliers. Health and sustainability aspects, such as product safety and environmental concerns, are key criteria applied. The objective is to migrate our materials/suppliers over time on to these core materials, making our value chain less complex and more sustainable. The slate approach gives clear information on potential business opportunities to improve our value chains – lower cost, improved sustainability and reduced risk.

Supplier improvement plans

We are also working with key suppliers to develop specific carbon footprint improvement plans, through operational improvements, material substitution and/or specification optimization. In 2014, this cross-functional supplier engagement has resulted in carbon footprint reductions in the areas of titanium dioxide and packaging.

Bio-based raw materials

Bio-based raw materials are an important contributor to our sustainability agenda; a considerable share of AkzoNobel’s environmental footprint is embodied in the raw materials we buy, and most bio-based materials exhibit lower footprints. While many of our materials are already bio-based, we are also seeing the construction and commissioning of the first commercial scale production facilities for several new additional bio-based raw materials. In order to lead the deployment of these materials in our markets, we have been setting up partnerships across our supply chain. This supports the emergence of a new bio-based industry, and at the same time enables AkzoNobel to tap into alternative feedstock sources, to be able to offer more sustainable products, and to reduce the cradle-to-grave carbon footprints.

In 2014, we progressed our existing partnerships and announced additional partnerships for several of our key raw materials:

  • Algae-derived oils: The previous joint development agreement with biotech company Solazyme has been expanded to provide for funded development leading towards a multi-year supply agreement targeting annual supply of up to 10,000 tons of renewable Tailored™ algal oils. The target product is designed to have improved functional and environmental performance, as well as a lower overall cost to AkzoNobel
  • Biobased epichlorohydrin: In partnership with Solvay and epoxy resin producers, we plan to increase the use of bio-based epichlorohydrin to 20 percent of AkzoNobel’s global indirect use by 2016
  • Cellulosic-based acetic acid: We are exploring options for acetic acid as a by-product of wood processing industries and, together with biorefinery developer ZeaChem, we are exploring the potential for a large-scale facility in Europe producing acetic acid (and derivatives) from cellulosic sugars (e.g. forestry waste)
  • Bio-based solvents in Latin America: This partnership with Solvay-Rhodia targets volumes of up to 10 kilotons per year of bio-based solvents by 2017
  • Chemicals derived from sunlight and CO2: With cleantech company Photanol, we have agreed to work on “green” chemical building blocks that will eventually replace raw materials AkzoNobel currently obtains from fossil-based production. The collaboration is focused on Photanol’s existing proprietary technology, which uses light to directly convert CO2 from the air into predetermined raw materials such as acetic acid and butanol. The only by-product is oxygen
  • Waste-derived chemicals: An agreement with Canada’s Enerkem has been signed to develop a project partnership to explore the development of waste-to-chemicals facilities in Europe. This is part of a major Dutch partnership to explore the use of waste streams as a feedstock for chemical production, hence closing the loop by converting waste back into useful products
  • Sugar beet-derived chemicals: AkzoNobel has joined forces with SuikerUnie, Rabobank, Deloitte, the Investment and Development Agency for the Northern Netherlands (NOM), Groningen Seaports, and the Province of Groningen, to investigate the possibility of producing chemicals from beet-derived sugar feedstock. The study aims to identify one or more successful business cases for commercial production in Delfzijl

The announced partnerships have the potential to make a major impact in improving the sustainability of our supply chain in the long term. In 2014, 13 percent of all our organic raw materials came from bio-based (renewable) sources (2013: 13 percent). This is 7 percent (2013: 5 percent) of the total volume of raw materials purchased, i.e. including other raw materials such as salt, minerals and clays.

Total volume of raw materials
in % per source

Total volume of raw materials, in % per source (pie chart)Total volume of raw materials, in % per source (pie chart)

* 13 percent of organic raw materials are from renewable sources.

The relative increase in renewable raw materials and the decrease in inorganic raw materials were mainly the result of changes in product mix.

Own operations

Renewable energy

The energy we use on our sites contributes about 15 percent to our cradle-to-grave carbon footprint and about 8 percent of our cost of sales. Renewable energy is therefore an important aspect of the improvements required to achieve our 2020 strategic carbon footprint target.

Our Renewable Energy Supply Strategy has three focus areas: protecting our current renewable share, participating in cost effective, large energy ventures and exploring commercially feasible on-site renewable energy generation.

Total energy
in % by source

Total energy, in % by source (pie chart)Total energy, in % by source (pie chart)

Renewable energy

 

 

 

 

 

 

 

 

 

In % of total electricity, heat and energy use

 

2012

 

2013

 

2014

 

Target
2020

Renewable electricity (%)

 

39

 

36

 

39

 

Renewable heat (%)

 

10

 

12

 

14

 

Renewable energy (%)

 

33

 

31

 

34

 

45

The diagram above details our energy mix and renewable energy use. Specific projects implemented or in progress include:

  • Nordic wind consortium VindIn started up its first Finnish park, being the third park in total, in Svalskulla, Närpes on October 1. Five more parks are under development, with the next one to be decided in early 2015
  • Conversion of biomass facilities from electricity to steam production, which will double energy output and reduce environmental impact
  • Explored various consortia on biomass and wind to get access to cost effective renewable energy
  • At Moses Lake in the US, the energy mix was changed from 73 to 92 percent renewable energy, resulting in a reduction of 30,000 tons of indirect CO2
  • Our Pulp and Performance Chemicals business started two new production locations in 2014 (Jupia and Imperatriz), using 100 percent renewable energy

Due to these initiatives, the proportion of renewable energy in our operations increased to 34 percent (2013: 31 percent).

Operations management

AkzoNobel has a strong drive to embed continuous improvement in supply chain management and manufacturing. A company-wide approach has been defined named ALPS (AkzoNobel Leading Performance System). Standardized processes, metrics and training programs are part of ALPS. Deployment in all three Business Areas to all manufacturing sites in AkzoNobel will continue in the next few years.

The program is supported by the AkzoNobel Academy, offering a continuous improvement curriculum, as well as functional training programs. Safety, customer service, eco-efficiency and cost productivity continue to improve as a result of the program.

Full details of our operational eco-efficiency program are included in Notes 15-20.

Logistics, distribution and car lease

As part of our performance improvement program, we have started to manage warehousing and logistics at a regional AkzoNobel level. This will result in a reduction of warehouses and combined transport solutions. It will also have a positive effect on our footprint.

We are involved with Smartway in the US and Green Freight Europe in the EU, focusing on CO2 reduction.

The carbon emission ambition for our own passenger car fleet was 130 g/km, which has now been reached. We have set a new ambition to reach 115 g/km by the end of 2016. In Europe, we reduced from 143 g/km in 2011 to 128 g/km in 2014.

Customer product solutions

Our sustainability agenda emphasizes resource effectiveness and solutions for our customers, which in turn help them to be more energy and resource effective. We aim to continue developing more sustainable solutions and stay ahead of the competition. The headline metric we have used since 2009, eco-premium solutions, measures products or solutions which have a significant benefit ahead of the mainstream products in the market in defined sustainability aspects (e.g. GHG emissions) when assessed across the total value chain (see Eco-premium solutions). This metric is challenging and is used as a driver for more sustainable innovations. A comparison with mainstream is now being recognized as good practice at many companies and organizations (ref. WBCSD Addressing the Avoided Emissions Challenge).

In total, 12 percent of our 2014 revenue was from eco-premium solutions that avoid GHG emissions for our customers, compared with the mainstream solution. Some examples of solutions are UV radiation cured coatings, more fuel efficient antifoulings for ships and warm mix additives in asphalt. Other products which are helping to reduce global GHG emissions are not captured by this leading measure. For example, more than 80 percent of our decorative paints are water based or low/zero VOC (as opposed to solvent based) and our powder coatings reduce VOC emissions in use (compared with solvent based alternative solutions). These products are only counted as an eco-premium solution where the standard in the market is still solvent based. Another example is surfactants manufactured using renewable raw materials (rather than petroleum based).