Accelerating sustainable trade: there is no alternative!

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By André Veneman, Sustainability Director, Akzo Nobel Systems division

Today businesses face a market transition to a more inclusive and resource efficient economy. It’s a game change with winners and losers. Responsible business leaders act on their challenges and opportunities to improve the living standards of the world’s population while preserving the environment. Leading companies deeply embed sustainability into their company strategy – as a way to strenghthen their value and values. Sustainability has emerged as a key driver for industrial innovation: it requires new ways of cooperation across all segments of the supply chain

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Accelerating sustainable trade: there is no alternative!

  1. 1. Innovation and Sustainability in the midst of the economic crisis Sustainability across supply chains: there is no alternative André Veneman Sustainability Gala 2010 Noordwijk June 2, 2010
  2. 2. Sustainability Gala 2010 2 Global recession
  3. 3. Sustainability Gala 2010 3 Nikolai Dmyitriyevich Kondratieff (1892 - 1938) • Cycles of 50 – 60 years • Divided in 4 periods - Spring: stage of expansion and growth - Summer: stagflation - Fall: deflationary growth - Winter: severe depression
  4. 4. Sustainability Gala 2010 4 Source: Oxford Economics; World Bank; IMF; EIU Global GDP Growth Global GDP Forecast Note: GDP figures are based on % real change y/y Back to business as usual? Year 2.7% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014
  5. 5. Sustainability Gala 2010 5 Growth in emerging markets
  6. 6. Sustainability Gala 2010 6 6 From…
  7. 7. Sustainability Gala 2010 7 7 To…
  8. 8. Sustainability Gala 2010 8How sustainability is shaping our business 8 From…
  9. 9. Sustainability Gala 2010 9How sustainability is shaping our business 9 To…
  10. 10. Sustainability Gala 2010 10How sustainability is shaping our business 10 2008: 900 million cars worldwide
  11. 11. Sustainability Gala 2010 11How sustainability is shaping our business 11 2050: 2 billion cars worldwide
  12. 12. Sustainability Gala 2010 12 Experiencing major shift in geo-economic power Source: Economist Intelligence Unit China China India India United States United States Germany Germany 0 5.000 10.000 15.000 20.000 25.000 30.000 2030 2007 Year Real GDP (PPP US$ bln at 2005 prices)
  13. 13. Sustainability Gala 2010 13 Result is a rapidly emerging middle class of the BRICs Number of people with income over $3,000 in the BRICs (in billions) Source: Goldman Sachs Report, UN Global Compact 2010 2020 2030 2040 2050 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0
  14. 14. Sustainability Gala 2010 14 Sustainability – there is no alternative
  15. 15. Sustainability Gala 2010 15 Three ecological footprint scenarios Source: Living Planet Report, WWF 2006 Number of planet Earths
  16. 16. Sustainability Gala 2010 16 Increasing Global Energy Consumption
  17. 17. Sustainability Gala 2010 17 Sustainability is the essential element in the period of new growth Dematerialization Recycling Global emission rights Renewable energy Demographics/ globalization Scarcity of natural resources Climate change Quality of life Requires paradigm shifts in technology and our institutions
  18. 18. Sustainability Gala 2010 18 From macro world to company strategy
  19. 19. Sustainability Gala 2010 19 AkzoNobel 2009 • Revenue €13.0 billion • 54,738 employees • EBITDA: €1.7 billion* • 37% of our revenue in emerging markets * Before incidentals. All data after reclassification of National Starch Revenue by business area EBITDA* by business area Performance Coatings Decorative Paints Specialty Chemicals 32% 35% 33% 32% 27% 41% The largest paints and coatings company and a major producer of specialty chemicals
  20. 20. Sustainability Gala 2010 20 In 2015, 50 percent of our business could be in emerging markets 1995 2015 88% 12% Eur-NA Other 50%50% Eur-NA Emerging
  21. 21. Sustainability Gala 2010 21 AkzoNobel strategic ambitions Today – what we are The world’s largest Coatings and Specialty Chemicals company Tomorrow – what we want to be The world’s leading Coatings and Specialty Chemicals company • Most value creating (4-year targets) Outgrow our markets (weighted avg) Best 5 EBITDA margin Best 3 OWC percentage to sales Year-on-year EVA growth • Most sustainable (4-year targets) Best 3 DJ sustainability index Step change in people development Full compliance with the Code of Conduct Best 5 in recordable injury rate
  22. 22. 22 Sustainability is part of everything we do We have set ambitious sustainability targets: • Remain in the top three in the Dow Jones Sustainability Indexes • Reduce our total recordable injury rate • Deliver a step change in people development We focus on long-term performance. Our ambition is: • That Eco-premium* products will make up 30 percent of sales (2015) • To reduce our cradle-to-gate carbon footprint with 25 percent (2020) • To achieve sustainable fresh water use on all our sites (2015) We have linked remuneration to these targets and ambitions: • 50% of our long-term incentive program is linked to performance in the leading sustainability index (DJSI) * Higher eco-efficiency than main competitive product
  23. 23. Sustainability Gala 2010 232323 The sustainability framework Invent (tomorrow) Manage (today) Improve (yesterday) Manu- facturing SourcingR&D Sales and marketing Market research Investment decisions Level of development Environmental Economic Social Carbon and water policies Eco-premium Code of Conduct Stretched safety targets Aspect of sustainability (linked to DJSI) Examples Leadership training Product Stewardship
  24. 24. Sustainability Gala 2010 24 Sustainability & procurement Vendor policy Supportive supplier visits Carbon reduction Open innovation
  25. 25. Sustainability Gala 2010 2525 Estimate of total CO2 emissions per business area 0 2 4 6 8 10 12 Supply Operations Use/ end of life mlntonsCO2_eq Decorative Paints Performance Coatings Specialty Chemicals
  26. 26. Sustainability Gala 2010 26 UV LED spray gun for Autoclear® UV •Automotive spray gun introduced in May which paints and cures at the same time. No warm up time, up to 25 percent less energy used during total repair. Dissolvine® GL •Leading the next generation of products in cosmetics and personal care. It’s free from genetically modified raw materials, not irritating to skin or eyes and readily biodegradable. Rediset™ asphalt additive •Significantly reduces the mixing and paving temperatures, creating fuel savings and reducing operational costs. Results in lower asphalt fumes, providing better working conditions for the paving crew. Freashaire - Colors that take your breath away. Paint that won’tTM. •The Freshaire Choice™ Paint contains no volatile organic compounds — commonly known as VOCs — harmful chemicals that contribute to poor air quality Intersleek 900 •Our very latest innovation in foul release coatings. Its exceptionally smooth, slippery, low friction surface prevents organisms attaching, saving you time and money at sea. Developing innovative, eco-premium products – target 2015 being 30%
  27. 27. Sustainability Gala 2010 27How sustainability is shaping our business 27 People Development Unleash the talent, creativity and motivation to drive sustainable success.
  28. 28. Sustainability Gala 2010 28 Sustainability and shareholder value go hand in hand Source: SAM (Sustainability Asset Management)
  29. 29. Sustainability Gala 2010 29 A new promise to all our stakeholders

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