At AkzoNobel, we’re aware that climate change could affect our operations, our supply chain and our customers. So in 2017, we committed to becoming a carbon neutral company by 2050. Now we’re turning this ambition into reality by setting aspirational, science-based targets. As well as aligning with the 1.5°C pathway, this means we’ll increasingly deliver sustainable solutions to our customers. Overall responsibility for sustainability, including climate change, sits with our CEO.

Ambitious mitigation plans in place

Reducing carbon emissions by 50% throughout our whole value chain

Climate change mitigation is an integral part of our approach to sustainable business and plays an important role in our company strategy. It brings risks, but also creates opportunities. In 2021, we announced an ambitious target of reducing carbon emissions across our full value chain by 50% (absolute) by 2030, taking 2018 as our baseline.

Our ambitions are aligned with the Paris Agreement, which aims to limit climate change and ensure the global temperature doesn’t rise more than 1.5˚C above pre-industrial levels. Approved by the Science Based Targets initiative (SBTi), this will help to drive our innovation and collaboration with our value chain partners, including customers and suppliers.

The commitment includes our own operations (Scope 1 and 2), as well as Scope 3 upstream and downstream. Scope 3 covers purchased goods and services, application and use of our products, and end-of-life. Together, this covers around ~95% of our total emissions.

We’re already looking for innovative ways to tackle the issue and have a clear plan to reach our Scope 1 and 2 commitment by transitioning to 100% renewable electricity and reducing our energy by 30% (relative) compared with 2018. From an absolute reduction perspective, our combined Scope 1 and 2 reduced by 28% versus our 2018 baseline.

Our ambition on renewable electricity is progressing well, with our operations in Europe having fully switched in 2022. Our renewable electricity use is 50% globally, already achieving our 2025 interim target of 50%. In total, 53 of our locations now use 100% renewable electricity, with 26 sites using solar panels as a supplementary source of energy. We plan to increase this number in the near future.

To drive this continuous improvement, 20% of our Board of Management’s long-term incentive is linked to environmental, social and governmental (ESG) goals, including energy use and renewable electricity. In addition, climate change is included in our risk assessment.

Collaboration for the future

Tackling climate change requires strong collaborative innovation across our value chain

Our efforts to mitigate climate change stretch beyond our own operations as we work towards reducing our carbon emissions by 50% throughout our whole value chain by 2030.

As most of our carbon footprint comes from our Scope 3 emissions, our ambitions are a key driver for innovation and collaboration with our value chain partners, especially suppliers and customers. In setting these ambitious targets, we’ve taken responsibility for the decarbonization of our operations and made the commitment to help our value chain partners decarbonize theirs. This is also the most challenging target as it sits outside the scope of our direct control.

The innovation and development of our sustainable solutions plays a key role. We’re able to offer our customers – and their customers in turn – sustainable solutions that enable them to reduce their own emissions and use products with a lower carbon footprint. Developing these sustainable solutions and services involves the vast majority of our 3,000 people in RD&I teams and of our €258 million innovation investments.

During 2022, we further analyzed the breakdown of our Scope 3 emissions. We identified key levers for reduction which can be grouped into four categories: energy transition; process efficiency; solvent emissions; circular solutions.

Sustainable solutions – how we’re helping our customers

We’re directly engaging with our key customers to align on potential carbon reduction in their processes, for example, during coating application. An example is approaching customers using gas to cure our coatings and offering them products that require lower curing temperatures – which can help lower their carbon footprint and save energy costs. With this approach, we aim to become the partner of choice for carbon-conscious customers.

Helping buildings fight the heat island effect

As an industry leader developing products and technologies that help create more green buildings, our product innovations play a vital role in making cities and communities more sustainable.

Overall, building and construction are responsible for around 39% of global energy-related carbon emissions. If no action is taken to improve energy efficiency in the building sector, demand is expected to rise by 50% by 2050. We supply this industry with our “Cool Chemistry” technology. As well as providing the ultimate protection outside, it can also cut inside temperatures by up to 5°C, reducing energy consumption and lowering the carbon footprint.

Carbon savings in the production process

Our RUBBOL 100% UV cured exterior range of Sikkens wood coatings can cut drying time by up to 16 hours. This system helps save on production time and energy costs, while providing outstanding performance. In addition, because the range produces zero emissions and needs no mixing, the production process is more sustainable – another important factor for many of our customers.

Low-E energy efficient range: lower costs, lower carbon footprint

The Low-E collection from Powder Coatings is designed to reduce the curing temperature or curing time without sacrificing quality or performance. By using this range, our customers can cut their energy consumption and/or increase application productivity. This contributes to lowering costs, as well as improving their carbon footprint.

In addition, we provide customers with environmental footprint information (including carbon emission data) which they can use for their own climate action plans. This is achieved by using lifecycle assessment (LCA) methodology and providing environmental product declarations (EPDs).

Climate change adaptation

As recommended by the Task Force on Climate-related Financial Disclosures (TCFD), we continue to monitor our risks and opportunities related to climate change. As a company, we’re exposed to physical risks – such as those associated with water scarcity, flooding and weather events. We also consider transitional risks that can lead to changes in technology, market dynamics and regulations.

We’re also exposed to other transitional risks, such as market and technology shifts, reputational risks and policy and legal changes. Identifying and addressing risks, including transitional risks related to climate change, is part of our regular risk management process.

Transition risks: Carbon pricing

For the last seven years, we’ve implemented an internal carbon price for investment decisions, anticipating the impact of any future carbon pricing. We have sustainability assessments in place for all material investment projects, including water risk assessment for new locations. Annually, we also quantify the potential transitional risk impact of any global carbon taxation by multiplying our carbon footprint with the internal carbon price. The financial impact is well below 1% of revenues.

Physical risks: Natural catastrophes

As climate change will most likely increase the frequency of natural hazards, during 2022 we’ve further analyzed the natural hazards our operations are exposed to.

As part of our risk and insurance process, we collect information about our sites by conducting risk engineering site surveys. Risk engineering is a methodology for mapping hazard risks – to evaluate the frequency and the consequences of potential hazards related to the production process – and natural hazards.

Annually, around 20% of sites are assessed following a materiality-based approach. The scope and frequency are based on the replacement value of the site, in a cycle of three to five years.

Natural hazards taken into account during this process are: earthquakes, floods, drought, hailstorms, lightning, wind, tornados, subsidence, landslides and active volcanos.

Based on these assessments, several sites are in scope with increased risk, due mainly to the potential for natural catastrophes. Based on the individual risk assessments, we put measures in place to mitigate the risks to an acceptable level.

We’re currently studying what additional temperature changes (climate scenarios) would mean for our current risk profile. 

Physical risks: Water

Climate change has rapidly impacted the earth’s most precious resource: water. Many regions have no access to clean water, so we’ve committed to sustainable water stewardship; we endorse the United Nations CEO Water Mandate and set clear goals on water consumption and reuse.

We use the Aqueduct water risk atlas developed by the World Resources Institute to assess the level of risk at our production locations – an exercise run every three years (see Report 2021). 

Physical risks: Suppliers

We continued to assess our suppliers in 2022 and take steps to better understand and manage risks around the globe from a supply perspective. We implemented a new early warning process using the “riskmethods” tool, which immediately informs us if one of our critical supply chains is potentially under risk. We also proactively map supplier locations against natural catastrophes and work with suppliers on risk mitigation plans.