Filed under: Best Practices in The Netherlands | Tags: Akzo Nobel, Bonus, Chemical Sector, Eco Premium Solutions, Eco-Efficiency Assessments, Powder Paint, Supply Chain, Vessels
Few companies have embedded their Sustainable Strategies to such an extend as AkzoNobel does. Top Management Bonuses are related to sustainable KPI’s. Major Business Decisions are made on the basis of both economical as well as environmental impact analyses. My interview with André Veneman, Corporate Director Sustainability, has been very inspiring. Find hereby ‘Best Practices’ at AkzoNobel.
AkzoNobel is a worldwide operating chemical company, employing 58,300 people generating an annual turnover of 15,4 million euros (2008). AkzoNobel has three business units: (1) Decorative Paints, (2) Performance Coatings (industrial, car refinishes, marine and packaging coatings) and (3) Specialty Chemicals.
Product examples : Flexa (Decorative Paint), Fluorex (Car Refinishing – Paint Film on PVC of Volvo ) Resicoat (Industrial Application – Valves)
Hans Wijers, CEO as of 2003 was convinced that Akzo Nobel could only survive if it increased its economical value by reducing its ecological footprint.
Andre Veneman, AkzoNobel Corporate Director Sustainability
André Veneman was sked to lead Sustainable business development together with the management of Health, Safety and Environment.. Veneman accepted, under the condition that the Board of Directors would support him to ‘Go All The Way’ : Implement all processes necessary to embed Sustainability in the organisation. After a career at ‘Doctors Without Borders’ he became determined to organise sustainable processes. He knew this could only be done by throughout analyses, sincere communication and strong interventions.
Veneman started first to create a proper CSR foundation. Veneman and his team analysed all AkzoNobel processes, risks and prepared the company to be ready to match all new standards and legislation. Examples are REACH for Chemical Products, Business Principles embedding, a Vendor Policy to make sure the suppliers actively support AkzoNobel Business Principles and Global HSE standards. A Sustainability Council was installed. NGO’s like Amnesty and WWF were invited to exchange and advise on societal and environmental challenges and the role and responsibility of Akzo Nobel.
An explorative research among suppliers opened they eyes of many. The results of this study, about social and environmental operations of suppliers, showed that some out of 200 suppliers were top class, many of them needed to improve but 8 needed to be removed immediately from the suppliers list. Moreover : The board decided to accompany its key suppliers to improve sustainable circumstances. Nothing to do with philanthropy but business logic : AkzoNobel wants to build partnerships with key suppliers and could not afford that they would be closed down one day or the other. AkzoNobel Sourcing Department now uses Sustainable Supplier Visits to ensure suppliers meet AkzoNobel sustainability standards.
AkzoNobel calculated its ecological footprint in 2007 in six fold, highly structured way: CO2 emissions, water, materials, waste, risk and toxicity. The company generates itself 3 million tons green house gas emissions, but suppliers add 15 million and in the utilisation phase customers are responsible for another 10 million. It makes an overall footprint of 28 million tons C02/year. It is AkzoNobel goal to have reduced its CO2 emissions by 10% in 2015 and by 25% in 2020.
1. What are Corporate Responsibility Objectives of AkzoNobel ?
AkzoNobel has defined three CSR goals (1),defined by the Board in 2008.
1. Remain in the top three of Down Jones Sustainability Indexes. (as of 2007).
2. Reduce total recordable injury rate
3. Deliver step change in people development, partly through substantially improving diversity in the company.
An Eco-Efficiency Analyses for every important Investment Decision (over 5 million euros). For every investment, an ecological summary accompanies the usual financial business case. Veneman explains that it has happens more than once that investment scenario’s with a smaller financial gain for lower ecological are being prevailed above others scenarios that would result in higher revenues but a substantial larger ecological footprint.
Simplified and fictive example of combining financial and ecological summaries as input for the companies investment decisions
2 How does CSR contribute to Innovation ?
AkzoNobel is continuously innovating in its three main key industries : Construction (responsible for 35% of the companies revenues), Transport, (20%) and Energy (40%). Subjects of improvement are functional performance (solvability, drying time and scratch resistance) and eco indicators (toxicity, energy efficiency, natural resources, emissions of waste, land use and risks).
18% of the product portfolio consists of Eco-Premium Solutions. The Eco-Premium Products all have a clear ecological advantages with a normal or better functional performance. By 2015, AkzoNobel wants to have the proportion increased to 30%.
An Eco-Premium example is ‘Dissolvine GL’, a chelating agent. Chelators serve inactivate (metal) ions in liquids. Among other application areas are shampoos and food products. Dissolvine GL is based on 86% non-fossil and sustainable resources. Ammonia is produced as a side-product but can be collected and re-used.
Molecules Model of a chelating agent that is used to inactivate metal ions. Dissolvine GL is one of the ‘chelating agent’ products of Akzo Nobel, an Eco-Premium product representing a high economical value with a low environmental impact.
50% of Managers Bonus is now related to Sustainable Development. Half of the yearly variable bonus of the Top 1000 executives is now directly related to sustainable performance, which consists of Eco-Premium Innovations, carbon reduction, safety, operational efficiency talent development and the companies position in the DJSI index.
Exchanges with NGO lead to new product ideas. An NGO explained AkzoNobel 12 years ago that classical biocidal antifoulings had to be phased out because of their toxicity to marine life. It motivated AkzoNobel to develop non stick, smooth polymer antifoulings. Scallops and see weed will not attach. Due to the very smooth hull, large container sea ships now could save more than 6% petrol use : An economical and ecological gain. global shipping is responsible for 2,7% of the worlds green house gas emissions (2009 numbers). The use of this very smooth Intersleek antifouling alone could potentially reduce global carbon-emissions of containerships with 80 million tons compared to classical antifoulings.
New polymer ship coating (Intersleek 900) that enables an energy consumption of over 6% of vessels
Customer exchanges that launch new product innovations. Akzo Nobel has set up various customer exchanges. Discussions are moving towards a more extensive needs analyses. Questions are ‘What challenges do you face with respect to Sustainability’ ? ‘What would you expect from us in terms of products and services?
An example of a product developed by intensive involvement with stakeholders is ‘Redicet’, launched in 2007. Redicet is an asphalt product (or butimen). Redicet is stronger and more resistant than the other asphalts on the market. It enables a more efficient transport which means energy savings for car drivers. The road workers working circumstances have improved substantial : The asphalt does not to be heated at a very high temperature and pollution has been reduced. Lastly, an overall cost reduction of 20 to 40% is possible.
Redicet, a new asphalt with higher performance, lower pollution and better working circumstances
Painting powder that can be melted at lower temperature. Office furniture makers asked AkzoNobel to develop lower paint powder temperature (now 230 degrees) that enables to lower the producers energy spend and environmental footprint. It has been the start of new developments.
Office furniture (Arféo) coloured with powder paint.
3.What are outlooks ?
Sustainability has been embedded and can only accelerate, Veneman concludes. At AkzoNobel, after having created the foundations, and embedding sustainable decisions into the companies strategy, Veneman foresees further cooperation between departments.
One of the next steps will be a structured and common approach for co-creation with customers, NGO and industry partners. In order to create new innovations stakeholders will be increasingly implicated in the process. Among other implications, it will bring new definitions of intellectual property and responsibilities between AkzoNobel and its partners.
Sources : 1. Delivering Tomorrows Answers today, Akzo Nobel 2008 Report ; 2. The Carbon Footprint of Shipping, 2009 by Joint NGO’s (Seas at Risk, Milieudefensie, Noordzee Foundation),
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