Endless possibilities

7th April 2016


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Karl Evans

Paul Suff reports on how imagination and ambition are helping paint and chemicals firm AkzoNobel to do more by using less

Planet Possible is the name of AkzoNobel’s approach to sustainability and is about doing more with less. André Veneman, corporate director for sustainability, health, safety and environment, says the strategy is based on identifying opportunities where others see only challenges. ‘Limited resources don’t have to limit our vision or ambition,’ he says.

The sustainability targets of the Dutch-owned paint, coatings and chemicals company reflect its determination to increasingly operate within the planet’s boundaries. ‘We look at how global trends will impact our businesses and our customers,’ Veneman says. ‘There will be nine billion people sharing the planet by 2050. Some 70% will live in cities and many of them will be middle class. There will be an enormous strain on natural resources, so we have reviewed our business risks and opportunities against these trends and have started making products that create more value with less. That focus will strengthen over time.’

In the short-term, AkzoNobel is aiming for 20% of its revenue by 2020 to be generated from products – known as eco-premium solutions – that are more sustainable for its customers than those of its competitors. ‘It requires us to work together with our customers and suppliers to develop solutions that create more value from fewer resources,’ Veneman says. He explains that better value for customers involves providing products that have excellent functionality and generate resource or energy benefits. The value for the environment is making more effective use of natural resources, he says.

Achieving its sustainability ambitions also requires AkzoNobel to make more efficient use of resources and energy across the entire value chain. The firm has set a 2020 target to reduce its ‘cradle-to-grave’ carbon footprint by between 25% and 30%. Veneman explains that this is key to achieving the company’s 2020 goal: ‘As well as a measure of our climate impact, we are using it as a proxy for how efficiently we are using raw materials and energy in our products.’

Resource efficiency

AkzoNobel’s resource efficiency index (REI), which was introduced in 2013, measures progress on the organisation’s aim to generate more added value from each unit of raw materials and energy used across the value chain. The index is defined as gross profit divided by the company’s cradle-to-grave carbon footprint. Gross profit was selected as the main metric for added value because it is comparatively stable and captures the effects of efficiency improvements. The company expects the index to become a long-term performance indicator in an increasingly resource-constrained world.

‘It will vary from year to year, but the trend must be upwards,’ Veneman says. In 2014, the REI was 96 compared with the 2012 baseline figure of 100 and 98 in 2013, he says. The most recent fall was due to tighter margins, greater demand for higher footprint products and changes in regional energy mixes. These changes triggered a 4% increase in carbon per tonne of sales between 2012 and 2014 even though the absolute footprint of the firm’s own operations declined by 17%.

The cradle-to-grave footprint reveals that around 40% of carbon emissions in 2014 were from raw materials extraction and processing (scope 3 upstream), 15% from AkzoNobel’s direct and indirect energy consumption (scope 1 and 2), and 45% from use and end-of-life (scope 3 downstream).

Recent initiatives to reduce the footprint include a renewable energy supply strategy focusing on three areas: maintaining the firm’s existing share; participating in cost-effective, large-scale projects; and testing the feasibility of onsite generation. The proportion of energy from renewable sources consumed by the company in 2014 was 34%, which it aims to raise to 45% in 2020. After altering the energy mix at its Moses Lake plant in the US, part of its Eka pulp and performance chemicals division, renewable energy now provides 92% of the site’s electricity and heat, saving about 30,000 tonnes of CO2. Two relatively new production facilities in Brazil, Jupiá and Imperatriz, each use 100% renewable energy sources. The Imperatriz plant processes sustainable eucalyptus pulp and the waste material generates electricity through biomass. AkzoNobel is also a member of the VindIn consortium, a group of nine electricity-intensive companies that invests in wind power across Sweden. The target is to generate 1,000 GWh a year.

In terms of material efficiency, the company is developing ‘slates’ of raw materials in key areas, consisting of a list of core materials, vetted for health and sustainability aspects. Eventually all materials and suppliers will migrate to the slates, which, Veneman believes, will make the company’s value chain less complex and more sustainable. AkzoNobel works with others to design products and use materials that can more easily be reused and recycled. ‘This circular thinking can’t just be restricted to a company’s own operations,’ says Veneman. ‘Due to the complex nature of global value chains it needs to run across to customers, suppliers, business partners and communities.’

AkzoNobel is also increasingly switching to bio-based or renewable raw materials, which tend to exhibit lower footprints. These include algae-derived oils, bio-based epichlorohydrin and cellulose-based acetic acid. It is also exploring, mainly with partners, the development of chemicals derived from sunlight and CO2, waste and sugar beet. In 2014, 13% of organic raw materials came from bio-based sources.

AkzoNobel is a member of Together for Sustainability, an industry initiative involving 12 leading European chemical companies. It aims to improve practices in supply chains by encouraging suppliers to adopt the principles in UN Global Compact and the Responsible Care Global Charter. Veneman reports that AkzoNobel is rolling out standard global corporate social responsibility assessments and onsite audits to monitor and improve sustainability practices in its supply chain.

In house

The resource efficiency index centres on AkzoNobel working in partnership with suppliers and customers to become more sustainable. But the company is also working to improve its own operations and has introduced an operational eco-efficiency (OEE) programme, which determines how it manages its own processes and focuses on increasing raw material efficiency, reducing energy consumption, and cutting emissions and the production of waste.

AkzoNobel’s eco-efficiency footprint, which combines energy, water, waste and air emissions, as well as cost elements, is measured quarterly. Weighting factors for each of the four elements are used to calculate the overall footprint. This number – combined with production volume – is then used to calculate the relative footprint improvement. Between 2009 and 2014, there was a 24% improvement, and the 2017 target is a 40% smaller footprint than in 2009.

Veneman says AkzoNobel has made some notable improvements in operational efficiency. At its innovation centre at Felling, Gateshead, a metering system to optimise the compressors, which cost €50,000 to install, is saving the firm more than €150,000 a year. Switching from gas to a district heating system at its metal coatings facility in Malmö, Sweden, has reduced annual energy costs by 10%.

Material efficiency, which is seen as more than simply reducing waste, is improving through initiatives such as reusing packaging in China and, in the US, reconditioning and reusing drums for transporting chemicals. Meanwhile, total waste per tonne of production declined 5% in 2014 compared with 2013, and total waste volume fell 7%.

Consumption of freshwater is also lower. The company’s new £100m decorative paints plant in Ashington, Northumberland, has a sustainable freshwater management system, which includes rainwater harvesting and the reuse of wash water in the production process. A site is classed by AkzoNobel as having a sustainable freshwater management system when it scores low in all categories of the firm’s assessment tool comprising water sources, supply reliability, efficiency, quality of discharges, compliance and social competitive factors.

The plant, which can produce 100 million litres of paint a year, has been designed to minimise its OEE footprint. Its emissions of volatile organic compounds (VOC) are 75% less than older plants of a similar size, while it reuses 90% of solvents. Ten per cent of its energy is generated onsite, in part from a biomass plant and a rooftop solar photovoltaic array. Increases in efficiency have helped to reduce the energy required to produce one litre of paint by 60% compared with a conventional factory.

Innovative products

The eco-premium solutions must be more sustainable for AkzoNobel customers than those produced by competitors, and the company is on track to generate 20% of its revenue from them by 2020, achieving 19% in 2014.

Despite this strong performance, Veneman concedes that achieving the target in four years depends on staying one-step ahead of competitors: ‘We’re in competition. It’s a fight. If we stand still our competitors will catch up, so we have to keep innovating.’

More than that at least two-thirds of AkzoNobel’s annual research and development budget is spent on developing environmental innovations, including on products that have a cleaner or lower footprint process and on customer applications with less environmental impact. One of these is an exterior paint, Weathershield KeepCool, that can reflect up to 85% more infrared radiation than comparable exterior paints. This reduces the heat transferred to the interior of a building, which in turn cuts the energy needed to keep it cool.

AkzoNobel reports that, independent tests in Singapore found energy savings were up to 10% for a typical 15-storey building and 15% for the average house. Veneman says the paint underlines how the company is developing solutions that can help the world’s cities cope with higher temperatures and the need to reduce energy consumption.

Another eco-premium solution is a biocide-free, anti-slime coating developed by the firm’s marine coatings business, which helps ship operators to save fuel and cut emissions. AkzoNobel says Intersleek 1100SR is the first foul release coating to prevent the build-up of slime, thereby reducing drag. In addition, it enables owners that switch from biocidal antifouling products to earn carbon credits.

The firm has also developed a more sustainable barrier coating, EvCote, for beverage and food paper packaging, including cups and sleeves for French fries. The coatings use recycled PET bottles and plant-based oils components in the base, and the zero VOC waterborne coating can be repulped, recycled or composted after use.

Lifecycle assessment [LCA] applies to all sustainability work at AkzoNobel, including its eco-premium solutions, which require assessment of sustainability along the entire value chain. The company’s standard method is called eco-efficiency analysis, a combination of LCA and lifecycle costing. Specialists who follow the principles and framework set out in ISO 14040 and 14044 perform the assessments.

Veneman says the eco-premium concept promotes top line and bottom line growth opportunities. ‘It can generate improvements in the use of raw materials and reduce the energy use and waste in the manufacturing process. It can also help to stimulate the production of environmentally beneficial alternatives to existing solutions and improve product performance.’ He adds that innovation in products and processes is the key: ‘It is crucial to our current and future success.’

Measuring impacts in 4D

In its 2014 sustainability report, AkzoNobel stated that economic growth could not be sustained if the underlying natural and social capital upon which wealth creation depended was depleted. The company has piloted an approach in its pulp and performance chemicals operations in Brazil that focused on four impacts – environmental, human, social and financial capital – to ascertain a more detailed insight into how profit and loss is generated and how the business affects the environment, people and society.

The impacts of the process, titled 4D, were measured across the whole value chain, from raw materials to the production of sodium chlorate production and its use in pulp production by customers. Where possible, AkzoNobel attached an economic value to the positive and negative aspects of each dimension.

The results of the pilot were published in 2014 and revealed that the impact on financial capital was positive and substantially higher than the conventional profit calculation. However, the impact on natural capital was largely negative, caused partly by use of oil and natural gas and emissions to air of carbon, sulphur and nitrogen dioxides.

Employee training programmes and career opportunities generated a positive human impact, while that on social capital was limited, due mainly to the nature of the operations in the pilot, which had larger production volumes but involved fewer people compared with other industries.

Use of 4D in AkzoNobel is being scaled up to help the company make better business decisions by reducing the negatives and building on the positives. It also reports that the findings from the pilot have been used to improve the six plants in Brazil where it was conducted.

AkzoNobel chief executive Ton Büchner said of the findings: ‘We wanted to push the boundaries of our impact assessment and develop a deeper understanding of our influence across the whole value chain.

‘By attaching an economic value to the positive and negative aspects of each dimension, we can gain valuable insights into how we can drive longer-term value, not only for our shareholders but also for the environment, people and society at large.’

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