2017 sustainability performance*

Eco-premium solutions

During 2017, sales of eco-premium solutions with customer benefits totaled 20% of our revenue. We aim to maintain eco-premium solutions at a sustainable 20% of revenue through 2020 by constantly innovating.

The eco-premium portfolio is dynamic, as some solutions have stopped being classified as eco-premium due to competitive offerings having caught up. At the same time, new solutions have been introduced to the portfolio.

Another 21% of our products met the eco-performer criteria in 2017, having clear sustainability features and being at least as good as mainstream alternatives.

Cradle-to-grave carbon footprint

In 2017, cradle-to-grave per ton of sales further reduced to 7% below the 2012 baseline.

Climate change risks and opportunities are assessed via our risk management process, aligned with recommendations of the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD). We manage potential business risk of a regulated price on carbon, leading to higher raw material costs, by working with suppliers to manage their carbon footprint, embedding carbon information at raw material level in formulating systems and adopting an internal carbon price in investment proposals (see Notes 5 and 6 of the Sustainability statements).

We also set a value chain carbon reduction target and committed to carbon neutrality by 2050. We are capitalizing on increased demand for low carbon solutions and shifting our portfolio to low water-based paint.

Resource Efficiency Index (REI)

The measures gross margin over carbon footprint, charting our long-term drive for margin growth decoupled from resource constraints.

In 2017, our volume grew in all areas. We also integrated an industrial coatings business acquired from BASF. As a result, our carbon footprint increased slightly, even though our emissions per ton of product went down. Combined with a lower gross margin, the Resource Efficiency Index equaled 106, compared with the 2012 baseline of 100.

*Including discontinued operations.
For more details on our sustainability performance, please refer to the Sustainability statements.

Carbon footprint

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

VOC

Volatile organic compounds.

REI

Resource Efficiency Index is gross margin divided by cradle-to-grave carbon footprint. The index measures value created from use of raw materials and energy.