Note 10: Human rights

As a major global manufacturer, AkzoNobel can potentially impact the lives of millions of people directly or indirectly. We therefore aim to make a positive impact through our products and programs.

We are committed to respecting human rights in our operations and value chains and expect the same from our business partners, supporting them where needed.

Governance

Our commitment is led from the top. The Executive Committee is responsible for ensuring that the company operates in line with our core principles of safety, integrity and sustainability. Since 2016, a cross-functional Human Rights Committee (reporting to the Executive Committee) has been in place, with responsibility for implementing and maintaining the company’s human rights framework. The Compliance function oversees day-to-day human rights compliance.

Initial salient issues

During 2017, we studied possible impacts on the human rights of people across our value chain, building on the salient issues initially identified in 2016 (health and safety; working conditions; discrimination and harassment; under-age labor).

To obtain stakeholder input, the following actions have been taken:

• Stakeholders:
  We validated and strengthened our human rights program through meetings with external and internal stakeholders (other than shareholders), including:
  – Meetings with NGOs, human rights experts, sustainable investors, peer companies, government bodies and other organizations to learn from their perspectives, knowledge and experiences
  – Human rights expert meeting, which was attended by almost 20 experts from the academic world, trade unions, government, industry associations, investors, NGOs and peer companies
  – Numerous randomly selected employees from different roles, seniority levels, regions, businesses and departments were asked to share their views on what they view as potential impacts on human rights by AkzoNobel, or by others across our value chain
  – Two human rights workshops were held with colleagues in China and India to identify potential impacts on human rights at regional level
• Supply chains
  We conducted due diligence research into several raw material supply chains that are considered high risk in terms of impacting human rights, particularly with regard to health and safety, working conditions and under-age labor. The current raw materials in scope are barite, cobalt dryers, copper, cotton linters, mica pigments, palm oil, talc and tin. For example, we are engaging with our first-tier suppliers of pearlescent pigments that contain mica to partner on mapping the supply chain back to the mine of origin, and to make sure that sufficient due diligence is done on potential human rights abuses in the supply chain
• Sanitary working conditions
  We have included a sanitary review in our HSE&S audits process using the WASH pledge questionnaire. In total, 37 locations have been assessed, of which 90% scored satisfactory, with no residual high risks to the health and safety and sanitary working conditions of our employees
• Working hours
  We have identified opportunities for improvement on overtime management in Germany and Brazil, where local teams have worked on the assessment and mitigation of overtime issues. Overtime incidents have decreased by 50% in Germany, and by 60% in Brazil
  
• Discrimination and harassment
  An extensive analysis (using internal SpeakUp! and Wellness Checkpoint data) was carried out on discrimination and harassment to identify the potential size of the issue, trends and root causes. New company rules on discrimination and harassment and bite-size trainings have been introduced to create further awareness

Salient issues - review

Based on the information and insights gathered in 2017, the Human Rights Committee re-evaluated the salient issues which were initially identified. Potential human rights impacts were prioritized by their severity and likelihood. Our salient issues were adjusted as reflected below, with the following actions:

• Health and safety in our value chain and connected communities:
  – Business partners: We expect from our business partners the same level of care for the health and safety of their employees working for us. We will continue the study into our high risk raw material supply chains and continue to improve our supplier assessment and evaluation framework
  – Sale of products: Because of the nature of our products, we acknowledge there is an inherent risk of impacting the human rights of the end-users of our products. In 2018, we will continue with our proactive approach to the review and management of hazardous substances in our products (see Note 9)
  – Communities: In 2018, we will conduct a study into the impact we have on communities surrounding our locations
• Working conditions for employees and our business partners:
  – Business partners: We will continue to assess and monitor working conditions at our business partners using our supplier assessment and evaluation framework and the new business partner compliance framework
  – Own operations: In 2018, the focus of due diligence actions will be on decent working hours and living wages
• Discrimination and harassment in our operations:
  – We will continue with the implementation of the mitigating actions (rules, training, coaching) and measure effectiveness (develop track mechanism)
• Modern slavery in our supply chain:
  – We will continue due diligence on high risk raw material supply chains

Grievance mechanism

We promote a feedback culture through communication and training. An open atmosphere helps to identify issues, including concerns relating to respect for human rights.

The SpeakUp! grievance mechanism offers our employees, business partners and the general public a confidential environment in which they can raise concerns relating to breaches of our Code of Conduct, including the human rights reflected therein. The results are reported annually (see Compliance and integrity management).

For full details and progress information on our human rights framework, please visit: www.akzonobel.com/humanrights