Assurance report of the independent auditor

To: Supervisory Board and Board of Management of Akzo Nobel N.V.
Assurance report on the sustainability information included in the Annual Report 2018

Our conclusion

Based on our review, nothing has come to our attention that causes us to believe the sustainability information included in the Report 2018 of Akzo Nobel N.V. does not present, in all material respects, a reliable and adequate view of:

  • The policy and business operations with regard to corporate social responsibility
  • The thereto related events and achievements for the year ended December 31, 2018, in accordance with the Reporting Principles 2018, developed by the company as included in the section “Reporting criteria” below.

Our opinion

In our opinion, the paragraphs “Monitoring progress” and “Management accountability” in the section “Managing sustainability” are prepared, in all material respects, in accordance with the applied reporting criteria developed by AkzoNobel.

What we are assuring

We have reviewed the sustainability information included in the annual report for the year ended 2018, as included in the following sections in the Report 2018 (hereafter: “the sustainability information”):

This review is aimed at obtaining a limited level of assurance. Additionally, we have audited the paragraphs “Monitoring progress” and “Management accountability” in the section “Managing sustainability”. The sustainability information comprises a representation of the policy and business operations of Akzo Nobel N.V. Amsterdam (hereafter: “AkzoNobel”) with regard to corporate social responsibility and the thereto related business operations, events and achievements for the year ended December 31, 2018.

The basis for our conclusion and opinion

We conducted our assurance engagement in accordance with Dutch law, which includes the Dutch Standard 3810N “Assurance-opdrachten inzake maatschappelijke verslagen” (Assurance engagements on corporate social responsibility reports), which is a specified Dutch Standard based on the International Standard on Assurance Engagements (ISAE) 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information. This assurance engagement is aimed at providing a combination of limited assurance on the sustainability information and reasonable assurance on the “Monitoring progress” and “Management accountability” paragraphs in the “Managing sustainability” section. Our responsibilities under this standard are further described in the section “Our responsibilities for the review of the sustainability information” of this assurance report. We believe that the assurance information we have obtained is sufficient and appropriate to provide a basis for our conclusion and opinion.

Independence and quality control

We are independent of AkzoNobel in accordance with the ‘‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten” (ViO – Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence requirements in the Netherlands. Furthermore, we have complied with the (“Verordening gedrags- en beroepsregels accountants”(VGBA – Code of Ethics for Professional Accountants, a regulation with respect to rules of professional conduct).

We apply the “Nadere voorschriften kwaliteitsystemen” (NVKS – Detailed rules for quality systems) and accordingly maintain a comprehensive system of quality control, including documented policies and procedures regarding compliance with ethical requirements, professional standards and other applicable legal and regulatory requirements.

Reporting criteria

The sustainability information in scope needs to be read and understood in conjunction with the reporting criteria. The Board of Management of AkzoNobel is responsible for selecting and applying these reporting criteria, taking into account applicable laws and regulations related to reporting. The reporting criteria used for the preparation of the sustainability information are the applied reporting criteria developed by the company, as disclosed in the Reporting Principles 2018. The absence of a significant body of established practice on which to draw, to evaluate and measure non-financial information allows for different, but acceptable, measurement techniques and can affect comparability between entities and over time.

Inherent limitations

The sustainability information includes prospective information such as expectations on ambitions, strategy, plans and estimates and risk assessments. Inherently, the actual results are likely to differ from these expectations, due to changes in assumptions. These differences may be material. We do not provide any assurance on the assumptions and achievability of prospective information in the sustainability information. The links to external sources or websites in the sustainability information are not part of the sustainability information reviewed by us. We do not provide assurance over information outside of this Report 2018.

Responsibilities for the sustainability information and the assurance engagement

Responsibilities of the Board of Management and Supervisory Board

The Board of Management of AkzoNobel is responsible for the preparation of the sustainability information in accordance with the reporting criteria as included in the section “Reporting criteria”, including the identification of stakeholders and the definition of material matters. The choices made by the Board of Management regarding the scope of the sustainability information and the reporting policy are summarized in the section “Managing sustainability”. The Board of Directors is responsible for determining that the applicable reporting criteria are acceptable in the circumstances. The Board of Management is also responsible for such internal control as the Board of Management determines is necessary to enable the preparation of the sustainability information that is is free from material misstatement, whether due to fraud or errors.

Our responsibilities for the review of the sustainability information

Our responsibility is to plan and perform the review engagement in a manner that allows us to obtain sufficient and appropriate assurance information to provide a basis for our conclusion and opinion.

Procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of information and vary in nature and timing from, and are less in extent, than for a reasonable assurance engagement. The level of assurance obtained in review engagements is therefore substantially less than the assurance obtained in audit engagements. The procedures to support our opinion on the “Monitoring progress” and “Management account-ability” paragraphs in the “Managing sustainability” section of the sustainability information have been performed with a high, but not absolute level, of assurance. This means we may not have detected all material misstatements.

Misstatements can arise from fraud or errors and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of the sustainability information. The materiality affects the nature, timing and extent of our review procedures and the evaluation of the effect of identified misstatements on our conclusion and opinion.

Procedures performed

We have exercised professional judgement and have maintained professional scepticism throughout the review, in accordance with the Dutch Standard 3810N, ethical requirements and independence requirements.

Our procedures included among others:

  • Performing an analysis of the external environment and obtaining insight into relevant social themes and issues and the characteristics of the company
  • Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures in the sustainability information. This includes the evaluation of the results of the stakeholders’ dialog and the reasonableness of estimates made by the Board of Management
  • Obtaining and understanding of the reporting processes for the sustainability information, including obtaining a general understanding of internal control relevant to our review
  • Obtaining an understanding of the procedures performed by the Internal Audit department
  • Identifying areas of the sustainability information with a higher risk of misleading or unbalanced information or material misstatement, whether due to fraud or error. Designing and performing further assurance procedures aimed at determining the plausibility of the sustainability information responsive to this risk analysis. These procedures consisted, among others, of:
    • Interviewing management (and/or relevant staff) at corporate (and business/division/cluster/local) level responsible for the sustainability strategy, policy and results
    • Interviewing relevant staff responsible for providing the information for, carrying out internal control procedures on, and consolidating the data in, the sustainability information
    • Determining the nature and extent of the review procedures for the group components and locations. For this, the nature, extent and/or risk profile of these components are decisive. Based thereon we selected the components and locations to visit. The visit to sites is aimed at, on a local level, validating source data and evaluating the design and implementation of internal controls and validation procedures
    • Obtaining assurance information that the sustainability information reconciles with underlying records of the company
    • Reviewing, on a limited test basis, relevant internal and external documentation
    • Performing an analytical review of the data and trends in the information submitted for consolidation at corporate level
  • Reconciling the relevant financial information with the financial statements
  • Evaluating the consistency of the sustainability information with the information in the annual report, which is not included in the scope of our review
  • Evaluating the presentation, structure and content of the sustainability information
  • To consider whether the sustainability information as a whole, including the disclosures, reflects the purpose of the reporting criteria used
  • Joining internal audit of Health, Safety and Environment management at the production site in Stowmarket, UK
  • Reviewing relevant work of the Internal Audit function

In addition to the above, we performed the following assurance procedures on the paragraphs “Monitoring progress” and “Management accountability in the section “Managing sustainability” of the sustainability information:

  • Corroborating information disclosed in this note through multiple interviews with selected staff from the company
  • Testing operating effectiveness of key controls related to how AkzoNobel manages its sustainability agenda
  • Corroborating supporting documentation to determine whether the information in this note is substantiated adequately, such as management meeting agendas and minutes and internal management information

Amsterdam, February 12, 2019

PricewaterhouseCoopers Accountants N.V.
Original has been signed by R. Dekkers RA