Note 1: Sustainable solutions
We take great pride in ensuring that our innovation creates value for our customers and society and will result in more effective and sustainable solutions. That’s why we’re always looking for ways to develop more sustainable products that deliver clear benefits in terms of economic, environmental and social performance. It’s an approach which keeps us competitive and at the forefront of our industry amid a changing world of legislation and societal concern. Our sustainable solutions add value for our customers, often show faster growth rates and command higher margins than more traditional products.
Our portfolio approach promotes the use of safer and more sustainable products in all stages of the value chain. We take action to manage the use of harmful substances in advance of legislation, future-proofing our products against changes in regulations and public concerns. We also constantly review our existing offer in close alignment with our strategic focus and our customers’ needs. This helps to ensure the delivery of sustainable products and solutions that are fit-for-purpose in our key markets.
Sustainable Product Portfolio Assessment
We have measured the eco-premium part of our product portfolio for seven years. These are solutions with clear sustainability benefits that outperform the market and are best-in-class.
Eco-premium solutions present a moving target, since we measure our performance against the market reference, which is continuously evolving. Since 2016, revenues from eco-premium products have been in excess of 20%. In 2019, sales for this segment totaled 22% of our revenue. By constantly innovating, our aim is to maintain eco-premium solutions at a sustainable 20% of revenue, which underlines our sustainability leadership position.
Another significant portion of our portfolio fits into the Eco-performer category. These solutions also offer clear sustainability benefits, similar to others available on the market. Our initial assessment indicates eco-performers represent approximately 20% of sales, making our total sales of sustainable solutions more than 40%.
Having become the first paints and coatings company to launch a full Sustainable Product Portfolio Assessment (SPPA), we continue our studies and intend to complete our company-wide analysis in 2020. SPPA takes a holistic view on the sustainability of our product portfolio, dividing products into one of five categories, depending on their attributes (as shown above). The priority substance program (see Note 6) plays a key role in helping us to categorize products as Priority or Transitioner, depending on the priority substance status of their ingredients. By painting such a comprehensive picture of our portfolio, we’ll be able to further increase our share of sustainable solutions and proactively manage those products in the Priority and Transitioner categories.
VOC in products
Reducing VOC (volatile organic compound) emissions helps us to improve air quality and human health, while lessening the impact our products have on the environment. It also enables us to stay ahead of legislation. Our ambition to move towards zero VOCs in our products remains unchanged, and while this is currently not possible for all products, we continue to focus on developing solutions with significantly reduced VOC content.
One example of the progress we’re making is “Waterway”, a multi-year strategic program designed to lead the decorative paints market towards using more water-based trim and woodcare product ranges. These two segments were selected as they represent more than half of the VOC emissions in our decorative paints portfolio. In 2019, the initiative gained further momentum. The distinctive benefits of water-based products have been successfully included in several marketing campaigns. We also have innovation plans in place that provide a solid foundation for us to lower our VOC emissions year-on-year.
The indicators that fall within the scope of limited assurance of our external auditor are marked with this symbol
A measure of the sustainability performance of our products. An eco-premium solution is significantly better than the offer in the market in at least one mainstream criteria (toxicity, energy use, use of natural resources/raw materials, emissions and waste, land use, risks, health and well-being), and not significantly worse in any other criteria. Downstream benefits include a tangible sustainability benefit for our customers.
An eco-performer is a solution offering clear sustainability benefits, but which is overall on a par with the mainstream offer in the market.
Volatile organic compounds.
Volatile organic compounds.