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In the face of increased consumer, regulatory and legislative accountability, and because of economic realities, companies must change. It is no longer a choice.
For some, heavy industry – a loosely-defined term that groups together organizations from manufacturing and resource extraction to energy production and utilities – has been an obstacle to achieving a more sustainable global economy. Heavy industry relies on natural resources, and generates major emissions and waste, yet resists change to become more sustainable and tries to thwart efforts to require them to do more with less. So the thinking goes. In fact, nothing is further from the truth.
First and foremost, to stay competitive industrial companies must have a “license to operate” in locations throughout the world. This intangible/theoretical license requires more than simple regulatory compliance. In our Information Age, the license is harder to obtain and easier to lose. Safety, social and environmental protections and progress are critical for companies to ensure that financial returns are long-lived. As such, the “license” continues to be a major driver for sustainability advancement.
Industry’s progress goes far beyond regulatory compliance. Players of all sizes in the industrial space are taking sustainability seriously, recognizing its impact on their bottom lines and integrating sustainability into their everyday operations. More project teams than ever are now charged with business driven sustainability projects – from corporate to individual site level – that must deliver revenue to the company while reducing emissions and energy consumption. To achieve this, these companies employ more and more professionals dedicated to helping streamline manufacturing processes, creating and managing facilities with the environment in mind, and reducing the impact of logistics and distribution (the supply chain).
From Sustainability to Sustained Profits
There are also more executives than ever committed to translating sustainability into sustained profits and for whom the adherence to a company’s sustainability targets is a critical measure of performance.
Particularly exciting and meaningful are the enhanced relationships and efforts of companies and their suppliers to help move the needle on sustainability together.
As many companies have recognized: it’s not enough today for a supplier to simply deliver raw materials that go into our supply chain. We can no longer stand at an arm’s length away from our supplier’s operations impact and measurement practices. Instead, we have to look at our whole value chain – from basic raw material extraction to end-user benefits (or cradle-to-grave in sustainability speak). This is no easy feat, however. Even those in the business of assessing how companies measure up in all aspects of sustainability admit tackling value chain environmental impacts can be nearly impossible. For example, in Newsweek’s 2014 Green Rankings, a list that recognized such businesses as Schneider Electric, EcoLab, Baker Hughes and Volvo among its Top 50 greenest global companies, explains in its methodology that only a small part of the scoring considers a company’s value chain as most do not disclose value chain impacts. This lack of sharing is typically not due to an intention to conceal one’s value chain footprint, but the major hurdle of accurately capturing it.
Addressing this challenge is just one of the reasons why AkzoNobel recently entered into a partnership with Ernst & Young to jointly develop a monitoring system that tracks and quantifies the use of renewable raw materials in paints, coatings and other applications. Along with Belgian chemical group Solvay, AkzoNobel will work with EY to ensure that even in situations where no physical segregation of petro and bio-based materials is practiced, volumes may still be assigned and reported. The move will not only help our tracking and move to renewables, but can be applied more broadly in chemical value chains and serve as an important enabler for establishing a stronger position for bio-based chemicals in the chemical business.
We must be active partners helping both suppliers and customers become more sustainable and we’re always looking for new specialty chemicals and coatings built with sustainability in mind and more sustainable ways for our customers to use them. If we are truly committed to the greening of the value chain, it is critical to constantly look for what and where we can improve and assess our total environmental impact, which includes accounting for the impact that our partners have in the broader equation.
We have put sustainability at the heart of everything we do. To call it a priority at AkzoNobel is an understatement; it’s how we do business. Sustainability is at the top of the corporate strategy to grow the company that we announced last year. We are working and exploring every avenue possible to generate 20 percent of our revenue from sales of eco-premium products by 2020.
Partnerships Accelerate Impact
Partners are key to this. We are expanding the use of renewable raw materials in our own products, as evidenced by two recent deals. Solvay will help us to make our epoxy resins more renewable while Solazyme, an American producer of renewable oils, will help us make paints, coatings and other products increasingly greener. Deals like this can only work if we are open to collaboration and are part of networks that allow us to tap into the emerging developments in science and technology around the world.
In addition, AkzoNobel is advancing the “Chemical Island” concept to create efficiencies in major manufacturing centers that will greatly reduce their environmental footprint. For example, modern pulp mills normally generate excess steam and water from the pulping process that can be used to fuel operations. To maximize use of these resources, we have developed a concept whereby we install our sodium chlorate and chlorine dioxide plants inside or adjacent to a pulp mill. This helps customers manage their supply and handling of chemicals, while making use of the excess energy generated during paper and pulp production.
In the energy sector, our protective coatings are playing a major role in wind power’s growth, having protected more than 40,000 wind turbines worldwide. These include the 175 turbines in Phase 1 of the London Array offshore wind farm. It’s capable of generating 630 megawatts of electricity – enough to power 475,000 British households. The turbines are located 12 miles off the Kent and Essex coasts in water up to 80 feet deep. Despite the challenging environment, the turbine foundations are protected from corrosion by AkzoNobel products, helping the Array produce more power, longer.
Major Leaps Forward on the Horizon
There is no shortage of examples illustrating how industrial companies around the world are revisiting conventional wisdom and taking their sustainability commitments seriously. The industry expects this to accelerate between now and 2050. The World Business Council for Sustainability Development surveyed more than 200 companies in 14 industries and said the consensus was a four- to 10-fold improvement in the eco-efficiency of resources and materials; landfills obsolete thanks to closed loop processes; continued replacement of fossil fuel-based raw materials; and more transitioning to the use of renewable energy.
From where we stand, the industrial sector is playing a major role in driving sustainability forward. Suppliers like AkzoNobel can and do play a key role in helping other industrial companies meet these challenges — by delivering big and bold innovations that will yield significant change.
AkzoNobel is ready and eager for what the future holds for us and our customers. We know that the world is changing and that our business has to change with it. We have adopted a strategy of radical efficiency which involves us working with our customers and suppliers to open up infinite possibilities in a finite world.
André Veneman is the corporate director for sustainability & HSE at AkzoNobel. Dr. Veneman earned his medical degree in 1983. From 1983-1988, he worked with UNHCR as a medical coordinator in emergency and refugee situations. In 1989 he joined the HSE department at Shell International. In January 1999, he joined AkzoNobel HSE, and in October 2003 he was appointed the corporate director for sustainability and health, safety and environment.