Change

Managing our values


Strategic focus

The importance of sustainability to running our business is firmly integrated into AkzoNobel’s strategy. We have set 2015 targets for sustainable value creation in order to support our overall goals. Members of the Board of Management will monitor the company’s financial and non-financial performance – using the strategic dashboard – on a quarterly basis.

Our specific sustainability objectives are:

  • Remain in the top three of the Dow Jones Sustainability Index
  • Achieve top quartile safety performance (against peer group)
  • Deliver a step change in people development, in part through substantively improving the diversity of the company.

The dashboard specifies indicators, both leading and lagging, against each objective. Most key performance indicators have corporate improvement targets for 2015; other short and long-term targets are set at business level. Performance against the corporate targets is described in the following pages.

Sustainability framework

The way we manage sustainability continues to evolve. The focus has shifted away from an emphasis on risks – working on integrity, governance and compliance – towards creating opportunities for value creation through process excellence, innovation and talent development. We have developed a framework which demonstrates the essential relationship between all these elements (see Sustainability framework). It has three levels – each one including environmental, economic and social aspects – which together map out our sustainability journey.

  1. Improve: continue to comply and ensure a license to operate – the foundations of how we operate as a company.
  2. Manage: include sustainability in all aspects of the value chain.
  3. Invent: integrate sustainable value propositions, providing long-term strategic value.

Objective

Metric

2015 target

 

 

 

Top three on DJSI

Position on DJSI

Top three

 

Eco-premium solutions (percent of sales)

30%

 

Cradle-to-gate carbon footprint
(per ton of product)

Reduce 10% from 2009
Reduce 20 – 25% by 2020

 

Sustainable fresh water (percent of sites)

100%

Top quartile safety performance

Total reportable injury rate

2.0

Step change in people development

Employee engagement

Improvement in employee survey index

Management structure

We have established a Sustainability Council, which advises the Board of Management on strategy developments, monitors the integration of sustainability into management processes and oversees the company’s sustainability targets and overall performance. The Council includes representatives from the Board of Management, Managing Directors from our businesses and Corporate Directors. The Corporate Director of Sustainability (including Health, Safety, Environment and Security) reports directly to the CEO and has a small central team.

The Managing Director of each business defines their respective non-financial targets and reports on progress every quarter. All businesses have also appointed a Sustainability Focal Point to support the embedding of sustainability throughout their operations. They bring together an appropriate team to develop and implement the sustainability agenda for the business. Focal Points from across the company have regular meetings to exchange best practices and identify opportunities for further development.

A Compliance Committee also exists to foster awareness of, and monitor compliance with, the Code of Conduct. Members include the General Counsel and Corporate Directors of Internal Audit, Control, Compliance and Human Resources. Each business has appointed a member of the management team to act as the Compliance Focal Point, to manage the roll-out of compliance projects and to monitor compliance with the Code of Conduct.

Meanwhile, each element of the value chain has identified focus areas for sustainability, with targets where appropriate. Functional councils – such as HR, Sourcing and RD&I – comprising corporate and business representatives, are in place to support the implementation of functional strategy, including the sustainability elements.

Management processes

We include key sustainability issues in our corporate and business planning processes, as well as in our risk management and compliance processes. Where there are specific “sustainability” risks or issues of concern to stakeholders, we develop position papers and an improvement plan owned by a corporate staff member.

Implementation is monitored using:

  • Non-financial Letter of Representation. At the end of the year, the Managing Director of each business signs the non-financial Letter of Representation to confirm compliance with the Code of Conduct and other corporate non-financial requirements, as well as indicating any material non-compliance. The outcome is reviewed with the responsible Board member and General Counsel and the results are reported to the Board of Management and the Audit Committee.
  • Corporate audits. These include sustainability and compliance issues. The outcomes are shared with the Compliance Committee and Sustainability Council.

We strive to empower all employees to contribute and be accountable for the company’s sustainability performance. This responsibility is increasingly anchored in the personal targets and remuneration packages of managers and employees. From 2009, half of the conditional grant of shares for Board members and all executives is based on AkzoNobel’s performance on the Dow Jones Sustainability Index over a three-year period (see Remuneration report).

Our processes for managing sustainability were again reviewed as part of our 2009 external assurance activity.

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