Early in 2009, the Board of Management approved the company’s Carbon Policy, including 2015 and 2020 improvement targets and ambition levels. This was the culmination of work initiated in 2008, which showed that the impact of carbon on our business extends well beyond emissions from our own production processes. Our energy-intensive businesses have a track record of improving energy efficiency and adapting fuel mix to reduce greenhouse gas emissions and potential carbon costs. However, we recognized that managing carbon along the supply chain and during product application by our customers would provide even greater opportunities across the total business.
Ambitions and targets
- Reduce our cradle-to-gate (Scope 1, 2 and 3 upstream) carbon footprint per ton of product by 10 percent by 2015 (2009 baseline)
- Reduce cradle-to-gate carbon footprint per ton of product between 20 and 25 percent by 2020 (2009 baseline)
- Control absolute Scope 1 and 2 greenhouse gas emissions below 2008 levels
- Our existing objective to increase eco-premium solutions to 30 percent of sales will track the provision of carbon-efficient solutions to customers, reducing our downstream footprint.
These will be achieved though a mix of innovation, energy efficiency and fuel mix improvements.
In addition to internal activity to reduce energy use and greenhouse gas emissions, we support transparent disclosure and business initiatives calling for urgent inter-governmental action. Our CEO, Hans Wijers, was asked to join the CNBC Carbon Council in November 2009. We are also signatories of the UN Global Compact’s Caring for Climate platform, and communiqués from the Prince of Wales’ Corporate Leaders Group on Climate, which urged action towards an international UN Climate Change treaty at the 2009 Copenhagen conference. We advocate the implementation of global cap-and-trade mechanisms on carbon emissions as a requirement to accelerate transition towards a low carbon economy. We will continue to press for this outcome.
Our carbon management and performance is reported through the Carbon Disclosure Project. We have taken part in developing the GHG Protocol Accounting and Reporting Guidelines for product lifecycles and corporate value chains (Scope 3) and will road test the drafts in 2010. At country level, we are involved in various local initiatives. In the UK, for example, our Decorative Paints business worked with a large customer to pilot a new carbon footprinting standard.
Our framework for measuring the carbon footprint of products and facilities is based on the international Greenhouse Gas Protocol and lifecycle assessment. It was tested with the World Resources Institute and several Dutch NGOs. During 2009, our businesses identified and assessed the cradle-to-gate carbon footprint of key value chains representing between 68 and 100 percent of the production/sales of the business – 158 across AkzoNobel. The objective of this work was to understand the high carbon areas where improvements will deliver financial and environmental benefits. Customer use is a significant element of footprint for many of our coatings businesses. We have not yet set CO2 reduction targets on the end-user application of our products, but we do measure key applications with customers to identify joint reduction opportunities.
We have assessed Scope 1 and 2 emissions for several years. However, the Scope 3 assessment is new. We have used current best practice methods – but there is more uncertainty in these figures.
This preliminary view of the company cradle-to-gate footprint indicates:
- More than 70 percent of the footprint is from raw materials extraction, processing and transport (Scope 3 upstream)
- The remaining 25 to 30 percent is from our own direct emissions and indirect emissions from energy use (Scope 1 and Scope 2).
The total cradle-to-gate footprint amounts to about 13.5 million tons CO2 equivalent. The assessment will be further refined in 2010.
This confirms that the reduction of carbon footprint of our key raw materials is fundamental to achieving our objectives – an issue already reflected in our sourcing programs. Energy sourcing and related emissions are of particular importance for our Specialty Chemicals businesses.
in million tons of CO2 (e)
The assessment uses boundaries in line with financial reporting and definitions in line with the Greenhouse Gas Protocol. It is carried out using recognized tools and staff experienced in lifecycle assessment.
Scope 3 (upstream) includes GHG emissions from the extraction, production and transport of raw materials. Where possible, raw material data has been obtained from raw material suppliers, otherwise we have used recognized data sources and identified the best-fit proxy. The focus for 2010 will be to work with suppliers to refine the data for significant raw materials, and seek footprint improvements.
Scope 1 includes direct GHG emissions from our production and owned transport. Emissions from our sites are assessed from measured fuel use and process emissions. Transport is assessed from fuel use and/or estimated distance traveled.
Scope 2 includes the indirect GHG emissions from purchased electricity and heat. Energy use is collected from site measurements, with emissions assessed using supplier or country grid factors and fuel mix. We have included upstream emissions from fuel extraction in Scope 2 rather than Scope 3.
The individual business footprint was calculated by extrapolating from these value chains, or from assessing the total raw material footprint from the main materials purchased, and total production and transport energy use.