Sustainable value creation
in our businesses
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Leveraging sustainable value drivers
The necessity to create sustainable value has been explained in the first part of this report:
- Accelerated growth in emerging markets
- Increasing scarcity of natural resources
- Customers looking for eco-efficient solutions.
Sustainable value creation is defined as “increasing economic value added (EVA®)1 per unit ecological footprint”. EVA is driven by top line growth, capital efficiency and operational efficiency.
“Ecological footprint” is an overall term for the impact of our business in terms of raw material and energy use, emissions to air, water and land, toxic and hazardous risk, land use and biodiversity.
In this section of the report, we provide an overview of how our businesses are implementing sustainability programs in their day-to-day business. In addition, we will describe how this contributes to top line growth, capital efficiency and operational efficiency. The table illustrates how these value levers and our sustainability programs align.
EVA CREATING VALUE
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Value levers |
Programs to increase EVA/Ecological Footprint |
Cases |
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Top-line growth |
Eco-efficiency for marketeers Sustainability in R&D World class supplier base |
Marine & Protective Coatings: Powerfull partners Functional Chemicals: Dissolvine® GL Car Refinishes: Sikkens Autoclear® Decorative Coatings: Sikkens Rubbol® XD Polymer Chemicals: Customer efficiency Marine & Protective Coatings: Intersleek® 900 |
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Capital efficiency |
Integrating sustainability in investment decisions |
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Operational efficiency |
Energy efficiency and sustainable manufacturing programs |
Base Chemicals: Sustainable value chain Pulp & Paper Chemicals: Sustainable solutions in manufacturing |
In addition, reference is made to specific business cases that substantiate this relation. The cases can be found in this section and in the rest of this report and show that we have identified options to:
- Enhance the market position, sales and margins of our businesses
- Purchase competitively priced sustainable products from world class suppliers
- Build a capital base that is fit for a sustainable future
- Run our assets efficiently in order to anticipate a carbon constrained world.
Top line growth: strengthening our position in mature and emerging markets
Akzo Nobel has strong market positions and great brands across its business portfolio. Our Chemicals portfolio has been streamlined, is now focused on selected markets and is highly profitable. Our businesses are organized into five growth platforms. We have a number one position in the global market for industrial coatings. Our Decorative Paints business already has strong positions in Europe and a medium position in the U.S. and Canada. In Asia, we are gradually increasing our market share. With the acquisition of ICI, however, we have created the world’s largest decorative paints company. As indicated earlier, Akzo Nobel and ICI are a perfect fit.
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Global leader in coatings Our Performance Coatings businesses have a global presence and with the acquisition of ICI we have worldwide leading positions in Decorative Coatings. This new, global coatings company will have a market share of 14 percent and annual revenue of approximately EUR 10 billion. |
Market driven approach
Our business units work hard to identify ecologically driven market changes at an early stage. We want to outperform competition on product performance and ecological footprint reduction.
In this report, we have highlighted a number of business cases which illustrate our market driven approach to eco-efficiency.
In 2007, we created a dedicated team of senior marketing and business development managers to further leverage our market driven approach to eco-efficiency. To do so, best practices on
eco-efficiency and marketing have been assessed and the lessons learned have been integrated into a support kit for marketing managers in our Coatings and Chemicals businesses.
This approach, which will be made available in 2008, facilitates our marketing community in:
- Conducting eco-efficiency assessment in cooperation with our Sustainable Development Group
- Assessing sustainability related business drivers in market segments
- Initiating joint eco-innovation projects with key customers
- Integrating results of eco-efficiency assessment in marketing.
- EVA® is a registered trademark of Stern Stuart & Co. EVA® is calculated by deducting from net operating profit after taxes (NOPAT) a capital charge representing the cost of capital calculated on the basis of an average return investors expect.
- Decorative Paints: Akzo Nobel Decorative Coatings + ICI Decorative Paints - Performance Coatings: Akzo Nobel Car Refinishes, Marine & Protective Coatings, Powder Coatings Industrial Finishes + ICI Packaging Coatings
