Value chain management

Our sustainability objective is to create more value from fewer resources – right across the value chain – by making more effective in our own operations and through our products, and by engaging employees, suppliers and customers in developing solutions. We have maintained our performance on and are now seeing an improvement in our cradle-to-grave performance – leading to an increase in our Resource Efficiency Index.

The programs summarized in the following sections are designed to create value, right across the chain:

  • Value for our customers by providing products with excellent functionality that generate resource/energy benefits ahead of competitive products
  • Value for the environment through more effective use of natural resources and a significant reduction in specific greenhouse gas emissions across the value chain
  • Value for society through the positive impact of our products in our end-user segments
  • Value for our business by focusing on our end-user segments – delivering growth and profitability
  • There are three aspects for the delivery of this value chain strategy, which are summarized over the following pages:
  • Sustainable business
  • Resource efficiency
  • Capable, engaged people

Lifecycle assessment

Lifecycle thinking is the basis for all our sustainability work. Our standard assessment method is analysis (EEA), based on a combination of lifecycle assessments and lifecycle costing. Assessment work is carried out by business and company level specialists and is based on ISO 14040-44 and a company database.

has been included in a range of processes for many years. As part of the current strategy, the company has developed a number of common processes – either at company or Business Area level – which include lifecycle thinking.

Key performance indicators – value chain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

 

2013

 

2014

 

2015

 

Ambition 2015

 

Ambition 2020

1

Product related (raw materials and packaging).

2

Non-product related.

Sustainable business

 

 

 

 

 

 

 

 

 

 

 

 

Resource Efficiency Index (2012 baseline)

 

100

 

98

 

96

 

113

 

 

with downstream benefit (% of revenue)

 

17

 

18

 

19

 

19

 

 

20

Eco-premium solutions total (% of revenue)

 

22

 

24

 

24

 

24

 

30

 

in product (% reduction from 2009)

 

10

 

7

 

5

 

n/a

 

 

Resource efficiency

 

 

 

 

 

 

 

 

 

 

 

 

cradle-to-grave per ton of product sales (% reduction from 2012)

 

0

 

2

 

-4

 

3

 

 

25-30

Carbon footprint cradle-to-gate per ton of product sales (% reduction from 2009)

 

1

 

4

 

0

 

8

 

10

 

Carbon footprint own operations (million tons of CO2(e))

 

4.7

 

3.9

 

3.9

 

3.8

 

<4.6

 

<4.6

Renewable energy own operations (%)

 

33

 

31

 

34

 

38

 

 

45

Renewable raw materials (% of organic)

 

13

 

13

 

13

 

11

 

 

Supplier management

 

 

 

 

 

 

 

 

 

 

 

 

Critical PR 1 spend covered by supplier management framework (% of spend)

 

69

 

80

 

83

 

87

 

88

 

PR 1 suppliers signed (% of spend)

 

97

 

96

 

98

 

98

 

98

 

NPR 2 suppliers signed Business Partner (% of spend)

 

80

 

83

 

80

 

81

 

80

 

Suppliers on SSV program since 2007

 

373

 

392

 

432

 

455

 

 

Innovation process

The new Innovation process for product and process developments covers an assessment of market segments and strategic alignment, including sustainability. AkzoNobel’s concept requires the assessment of sustainability aspects along the value chain. It encourages the development of more innovative, sustainable products. We continuously aim to reduce the environmental footprint of our product value chains.

Carbon footprint assessment

We measure the carbon footprint of all our (472 in 2015) using a full cradle-to-grave, or screening, lifecycle assessment. This is the basis of our carbon footprint key performance indicator.

Commercial excellence processes

Including sustainability in marketing propositions is an essential aspect of our Planet Possible agenda. We are developing environmental product declarations (EPDs) for some products as part of our marketing activity.

Investment decisions

All our major investment proposals (more than €5 million) require a sustainability evaluation alongside the financial case. This includes assessments at different stages in the project development. At the point of application for capital, the requirements include an eco-efficiency assessment, as well as a full review of health and safety, process and product safety, natural resource/raw material requirements and environmental impacts. The proposals are reviewed by subject matter experts, who give input to the Executive Committee, to provide a strong basis for the investment decision.

Other value chain aspects

While we focus on carbon footprint as a proxy for raw material and energy efficiency, our lifecycle assessment considers a range of impacts. In 2015, this included:

Four-dimensional profit and loss (4D P&L)

We have applied methodologies for assessment of profit and loss accounting along the value chain, taking environmental, financial, human and social aspects into account. The covers the full value chain, consistent with our Planet Possible agenda. The 4D P&L method has been applied to some of our chlorate value chains in Brazil, the US and Sweden (see case study).

Bio-diversity

As a part of the accounting project, we are including a biodiversity assessment by analyzing hot spots, based on methods used in three recognized assessment processes: Environmental Priority Strategies, the WBCSD global water tool and the Product Environmental Footprint (PEF) pilots. This was done for a number of AkzoNobel Pulp and Performance Chemicals value chains in three countries including their respective suppliers and customers. We have concluded that a number of sites operate in broad regions that are considered biodiversity hotspots. For these product lines, specific recommendations have been made in order to manage the related possible biodiversity risks.

Natural resource use

We do not report specific natural resource use, except water. We do report our use of energy and waste from our operations, and indicate the main raw materials used in our products.

Eco-premium solutions (EPS)

A measure of the eco-efficiency of our products. An eco-premium solution is significantly better than competing offers in the market in at least one eco-efficiency criterion (toxicity, energy use, use of natural resources/raw materials, emissions and waste, land use, risks, health and well-being), and not significantly worse in any other criteria.

Carbon footprint

The carbon footprint of a product or organization is the total amount of greenhouse gas (GHG) emissions caused during a defined period, or across the total or part of a product lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted.

Eco-efficiency

Eco-efficiency means doing more with less; creating goods and services while using fewer resources and creating less waste and pollution.

LCA

Lifecycle assessments are the basis of our value chain sustainability programs. Eco-efficiency analysis (EEA) is our standard assessment method.

LCA

Lifecycle assessments are the basis of our value chain sustainability programs. Eco-efficiency analysis (EEA) is our standard assessment method.

Eco-premium solutions (EPS)

A measure of the eco-efficiency of our products. An eco-premium solution is significantly better than competing offers in the market in at least one eco-efficiency criterion (toxicity, energy use, use of natural resources/raw materials, emissions and waste, land use, risks, health and well-being), and not significantly worse in any other criteria.

VOC

Volatile organic compounds.

Carbon footprint

The carbon footprint of a product or organization is the total amount of greenhouse gas (GHG) emissions caused during a defined period, or across the total or part of a product lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted.

Business Partner Code of Conduct

Explains what we stand for as a company, what we value and how we run our business. It brings our core principles of Safety, Integrity and Sustainability to life and shows what they mean in practice.

Code of Conduct

Our Code of Conduct defines our core principles and how we work. It incorporates fundamental principles on issues such as business integrity, labor relations, health, safety, environment and security and community involvement.

Eco-premium solutions (EPS)

A measure of the eco-efficiency of our products. An eco-premium solution is significantly better than competing offers in the market in at least one eco-efficiency criterion (toxicity, energy use, use of natural resources/raw materials, emissions and waste, land use, risks, health and well-being), and not significantly worse in any other criteria.

Key value chain (KVC)

Used to map the carbon footprint of our businesses. Key value chains are product groupings with similar footprint characteristics, which are representative of the majority of total business revenue/production.

Four-dimensional profit and loss (4D P&L)

The four-dimensional profit and loss (4D P&L) methodology represents value creation in multiple dimensions. This is a totally new way of looking at an economy, where the impact of a company on society at large can be assessed.

Four-dimensional profit and loss (4D P&L)

The four-dimensional profit and loss (4D P&L) methodology represents value creation in multiple dimensions. This is a totally new way of looking at an economy, where the impact of a company on society at large can be assessed.