Note 4: Products and services

Eco-premium solutions

We have a clear ambition to continue to lead in our markets. We also understand that because we live in a world of finite resources, our Planet Possible agenda has to focus on resource efficiency and creating more value from fewer resources. We need to find resource alternatives where there don’t appear to be any. So we are committed to minimizing the environmental and social impact of the products we sell and the processes we use to manufacture them.

One of our focus areas is the development of eco-premium solutions – those solutions where we invest to lead in the market. These are products that are clearly more sustainable than the most common alternatives on the market. They are assessed in seven different categories: energy efficiency; use of natural resources/raw materials; land use; emissions and waste; risks (e.g. accidents); toxicity; health and well-being.

When assessed across the whole lifecycle and against currently available solutions on the market, the eco-premium solution we offer must be significantly better in at least one of the above criteria, and not significantly worse in any. Eco-premium solutions are an important driver for innovation.

The progress we are able to make each year will not only be impacted by our own improvements, but also by competitor activity and legislation changes. It’s therefore a moving target leading to continuous improvement. An increasing number of our products and services provide sustainability benefits, but they are only classified as eco-premium when they outperform the mainstream product on the market.

We’ve been focusing on eco-premium solutions with downstream benefits since 2012. This is a measure of our eco-premium solutions that deliver sustainability benefits in the downstream value chain – directly to customer operations or end-user – be that as a semi-finished product, as a final product, or as a reusable/recyclable material in the end-of-life phase.

In 2016 revenue from eco-premium products and services with downstream benefits totaled €2.9 billion, or 20 percent of total revenue. This means that we have reached our 2020 target for eco-premium solutions with downstream benefits ahead of schedule. This is a level that we plan to maintain as we continue to proactively drive the development of innovative sustainable solutions ahead of the mainstream in the market. In total, 11 percent relates to eco-premium solutions with social benefits: health and well-being, risks and toxicity. Revenue from all eco-premium solutions totaled €3.4 billion, or 24 percent of total revenue.

Companies can consider products with sustainability benefits at a number of levels. Eco-premium solutions represent the most challenging definition – those products and services with benefits clearly ahead of the competition. Secondly, an increasing number of solutions provide a distinct sustainability benefit to our customers, but are not market leading and therefore do not qualify as an eco-premium solution. For example, we have estimated that about half our sales – including eco-premium solutions – are covered by the main drivers for carbon footprint reduction (see Customer product solutions in Note 8). Finally, our product development processes will drive continuous sustainability improvement in the overall portfolio as products are updated or replaced, for example though improvements in our processes, formulations or raw materials used.

Listed below are some recent examples of eco-premium solutions with downstream benefits.

Decorative Paints

• Coralar: A low VOC wall paint compared with other options available in the Brazilian market. It has an improved spreading rate and opacity in relation to previous versions, while providing the largest color offer compared with main competitors
• Dulux Wood Charm Woodcare: A water-based indoor woodcare paint with significantly lower VOCs than solvent-based equivalents (in China). It has improved flexibility and a balanced performance in chemical resistance and hardness. It also contains Polyurethane Modified Acrylate (PUMA) latex technology, which is helping to drive conversion from solvent-based to water-based paints
• Weathershield Express: A two-coat exterior wall paint system which delivers a sealer and topcoat in one product, replacing the conventional three-coat system while keeping the same benefits. With one less coat, productivity increases by 30 percent, while resources (labor) are saved, along with a reduction in waste. Weathershield is available in India, Vietnam, Indonesia, Malaysia and Singapore

Performance Coatings

• Interpon A5550: A powder coating with superior flow and high durability for the truck industry in China. It is a suitable replacement for liquid coatings on load bed, while offering all the performance attributes of liquid coatings. At the same time, Interpon A5550 has improved abrasion resistance, improved application efficiency resulting in less overspray, zero VOCs, reduced waste water and a smaller physical footprint
• Basic Primer Intergard 2511 and Standard Primer Intergard 251 HS: A 250 g/ltr VOC range which leads to lower emission fees, with a lower applied cost, and reduces paint complexity via an ability to do more with one product. The product has faster application and overcoating at ambient temperatures, with no need for thinning down. Less energy is used for the same throughput at the customer
• Intergard 5555: A single coat epoxy coating for engine rooms, accommodation internals and store areas. It’s predominantly a replacement for the alkyd schemes (primer and topcoat) market and shows a significant productivity increase (less coats, faster drying) and better color retention (less yellowing)

Specialty Chemicals

• Berol DR-B1: An essential ingredient for outdoor cleaning products which successfully meets stringent US Environmental Protection Agency standards, without compromising on performance. It’s suitable for a wide range of outdoor applications where very low environmental impact is a priority. Degreasers prepared with Berol DR exhibit quick break behavior, meaning that the oil removed during washing separates rapidly from the used cleaning solution and can be removed, allowing the remaining water to be disposed of safely
• Dissolvine M-40/MGDA: A chelating agent with a readily biodegradable active ingredient (known as MGDA), which is more sustainable than some current alternatives. It enables the detergent industry to meet stringent rules requiring the removal of phosphate builders in their formulations, without compromising on cleaning performance
• Levasil SP1039: A tailored product for substrate polishing in the electronics industry. It is a critical component for producing flat and uniform surfaces. Because of efficient polishing of substrates, there is less need for other surface preparation in the process, leading to improved cost efficiency. This is a new product that is preferred by our customers because it improves quality and reduces process steps and associated costs

VOC in products

The introduction of new and reformulated products with significantly reduced (preferably virtually zero) volatile organic compounds (VOC) continues in our businesses. As a result of this ongoing commitment, our product portfolio is undergoing a transformation towards a range of products that are lower in VOC content. Since 2009, this is established as an important part of our target to minimize the potential social and environmental impact from the materials in our products.

Both our Decorative Paints and Performance Coatings businesses are contributing to this continued reduction of VOC content. The company’s overall paints and coatings product portfolio showed a decrease of 9 percent in average VOC content in 2015¹, compared with the baseline position of 2009. Due to divestments of businesses with very low VOC products, the like-for-like reduction for AkzoNobel over this period was 22 percent.

A combination of technological improvements and changing customer and market demands – particularly with respect to the use of water-based products – is driving this change towards reduced VOC content. This is not an easy journey, due to the economic and technological expansion in low-cost markets. However, we are now in a position to capitalize on VOC tax regulation changes in countries such as China, helping the industrial wood coatings market to move to our new water-based technology.

Within our Decorative Paints business, this transition from solvent-based to water-based products falls under a strategic program called Waterway. The business has made a significant contribution to VOC reduction through the continuous introduction of high quality, low VOC solutions. Sales of water-based and zero-emission paints are also steadily increasing, something which we expect to continue in the coming years. Due to a change in product mix resulting from divestments in 2014, the average VOC content in our decorative paints has actually remained at the same level compared with 2012. However, when taking into account the impact of the divestments of the low VOC businesses in North America in 2013, and the Building Adhesives business in 2014, the average VOC content in 2015¹ reduced by 17 percent compared with 2012.

Our Performance Coatings business is also continuing to achieve a reduction of VOC content in its product portfolio. Examples include growing sales of powder coatings in automotive, water-based basecoats and high solid products in marine and protective coatings markets. As a result, the average VOC content in Performance Coatings reduced by 6 percent in 2015¹, compared with 2012.

For 2016, we forecast a continuation of these trends, with a further reduction in average VOC content for our Performance Coatings and Decorative Paints portfolio.