Note 5: Climate change and the circular economy

As a focused paints and coatings company, the priorities of our sustainability agenda have shifted to reflect the strategic direction of AkzoNobel and focus on those areas where we can have the biggest impact.

Following the separation of Specialty Chemicals, carbon emissions from our operations dropped 90% to 300 kilotons worldwide. We continue to set targets on emissions under our resource productivity agenda (see Note 3).

More than 98% of our carbon footprint stems from our suppliers (upstream) and our customers (downstream). In 2018, our value chain emissions were 5% lower than in 2017.

Upstream, our biggest impact is from emissions of the raw materials we buy, such as pigments, resins and solvents. In our raw material sourcing, we need to join forces with our suppliers to greatly increase the share of bio-based materials, recycled content or raw materials produced with renewable energy. In addition, we must learn to make better use of raw materials (see Note 6).

Downstream, the applications we provide to consumers also generate emissions when used, for example from solvents and curing temperatures. We continue to offer our customers technologies and solutions that enable them to reduce their own emissions and material use, for example through lower curing temperatures, low or zero solvents, water-based solutions and using fewer layers of paint.

Following the principles of the circular economy – the use of bio-based and recycled raw materials combined with improved solutions for our customers – has the potential to be our biggest contributor to the Paris agreement. Building on our track record of renewable energy, we will now also focus on reducing carbon emissions through renewable raw materials. Currently, approximately 5% of organic raw materials are from renewable sources.

The paints and coatings industry is at an early stage, but as a leading company we are at the forefront and working with partners, big suppliers and universities to develop more innovative products. Examples include high quality coatings with 25% recycled content, creating pigments from the carbon black harvested from used tires in a collaboration with Black Bear, and joint research with Dutch universities as part of the Chemical Building Block Consortium, which aims to develop bio-based resins from crustaceans and wood. We have gone through trials and pilot testing and are now at the stage where we will accelerate our pathway to resource productivity and circular economy. One of our Paint the Future startup challenge areas (see Case studies) focuses on identifying circular solutions, allowing us to benefit from technologies and innovations to further our ambitions towards a circular economy.

We continue to support the recommendations of the Financial Stability Board (FSB) Task Force on Climate related Financial Disclosures (TCFD). Risks and opportunities related to climate change and the transition towards a circular economy are assessed via our risk management process. We manage those risks and opportunities by working with suppliers and customers. Governance is integrated into our management cycle as described later in this section under Managing sustainability. We are partnering with industry peers and the World Business Council for Sustainable Development (WBCSD) to further implement the TCFD recommendations as they apply to our company.