20
Delivered
on our
Winning
together:
15 by 20
ambition
Grow & Deliver
strategy marks
next phase of
our journey
We’re
pioneering
a world of
possibilities
to bring
surfaces
to life
Leading
the way in
sustainability
with People.
Planet. Paint.
Pioneering a world
of possibilities to bring
surfaces to life
WHO WE ARE
Look around you. Chances are you’re surrounded by surfaces.
Flat ones, curved ones. Rough ones, smooth ones. They may
look different, but they have something in common – they all need
coating.
We’ve been inventing the future of coatings since 1792. As
pioneers in bringing surfaces to life, there’s a good chance
you’re only ever a few meters away from one of our products.
In fact, our world class portfolio of brands is trusted by
customers around the globe.
Our visionary approach means we constantly embrace new
ideas to keep us at the forefront of the industry. It’s what
you’d expect from the most sustainable coatings
company (see page 29).
WHAT WE DO
since
1792
We’re experts in making coatings, although
that hardly begins to tell the whole story.
We use our passion for paint to make a
difference – both big and small. So the
things our products can do may surprise you,
whether they’re applied to boats, buildings,
cars, planes, phones, walls or wood.
Our coatings can give a surface a personality – or
even a superpower – like the ability to purify indoor
air, harness solar energy and transform spaces
with color. So we never stand still. Because there
are industries to reinvent, environments to protect
and boundaries to push. As global pioneers, it’s in our
nature to keep learning, keep discovering and keep
innovating (see page 15).
Grow
Grow
& Deliver
& Deliver
OUR JOURNEY CONTINUES
We’re on an exciting journey to become the frontrunner in our industry.
Having delivered on our Winning together: 15 by 20 ambition (see page 6),
we’ve now entered the next phase – Grow & Deliver – which is all about
building on the strong foundation we’ve established (see page 13).
We’ll be guided by the values and behaviors that underpin
everything we do as we continue to accelerate towards truly
becoming the reference in paints and coatings.
www.akzonobel.com
AkzoNobel Report 2020
1
2020 RESULTS AT A GLANCE
Revenue by destination
North America
12%
Mature Europe*
Emerging Europe**
37%
10%
Financial summary
€8.53 bln revenue
€963 mln operating income
€1,099 mln adjusted operating income
€3.29 earnings per share
32,200 employees
TARGETS (SET IN 2017)
South America
8%
Return on sales (ROS)1
2020 progress
Return on investment (ROI)2
2020 progress
15%
15.0%
>20%3
20.6%
Achieve return on sales
(adjusted operating income/
revenue) of 15% by 2020.
1 Excluding unallocated corporate center cost;
assumes no signifi cant market disruption.
Achieve return on investment
(adjusted operating income/
average invested capital) of
more than 20% by 2020.
2 Excluding unallocated corporate center cost
and invested capital; assumes no signifi cant
market disruption.
3 Our original 25% ambition was adjusted
to 20% in 2020 as a result of lower growth
assumptions and the implementation of IFRS
16 on leases.
Return on sales development
Adjusted operating income as % of revenue
Return on investment development
Adjusted operating income/average invested capital in %
10.6
12.0
15.0
16.6
17.2
20.6
2018
2019
2020
2018
2019
2020
2
AkzoNobel Report 2020
2020 RESULTS AT A GLANCE
Revenue by destination
North America
12%
Mature Europe*
Emerging Europe**
37%
10%
Asia Pacific
29%
CONTENTS
About AkzoNobel
2020 results at a glance
CEO statement
How we delivered on 15 by 20
How we created value
Strategy and operations
Sustainability statements
Leadership and governance
Financial information
Glossary
Index
Appendix
Financial summary
€8.53 bln revenue
€963 mln operating income
€1,099 mln adjusted operating income
€3.29 earnings per share
32,200 employees
TARGETS (SET IN 2017)
South America
8%
Case studies:
Business as unusual
Collaboration fuels our robotic revolution
PRISM shines light on single ERP platform
Making our sites more sustainable
Bright future for solar capture
Biomass breakthrough unlocks world
of possibilities
Art Foundation marks silver jubilee
Other regions
4%
* Mature Europe: Western Europe
and Southern Europe, including
Austria.
** Emerging Europe: Central and
Eastern Europe (excluding Austria),
the Baltic States and Turkey.
Inside cover
2
4
6
7
12
29
55
86
144
146
147
10
19
28
40
45
49
54
Return on sales (ROS)1
2020 progress
Return on investment (ROI)2
2020 progress
Eco-premium solutions
2020 progress
15%
15.0%
>20%3
20.6%
20%
21%
Achieve return on sales
(adjusted operating income/
revenue) of 15% by 2020.
1 Excluding unallocated corporate center cost;
assumes no signifi cant market disruption.
Achieve return on investment
(adjusted operating income/
average invested capital) of
more than 20% by 2020.
2 Excluding unallocated corporate center cost
and invested capital; assumes no signifi cant
market disruption.
3 Our original 25% ambition was adjusted
to 20% in 2020 as a result of lower growth
assumptions and the implementation of IFRS
16 on leases.
Maintain at least 20% of
revenue from eco-premium
solutions by 2020
Return on sales development
Adjusted operating income as % of revenue
Return on investment development
Adjusted operating income/average invested capital in %
Eco-premium solutions development
in % of revenue
10.6
12.0
15.0
2
AkzoNobel Report 2020
2018
2019
2020
2018
2019
2020
22
22
21
2018
2019
2020
16.6
17.2
20.6
Case study videos
This Report 2020 includes case studies that highlight
some of our activities during the year. The videos are
not covered by any procedures performed by the
independent auditor and are not considered part of the
management report.
Alternative performance measures (APM)
AkzoNobel uses APM adjustments to the IFRS
measures to provide supplementary information on
the reporting of the underlying developments of the
business. APM include, but are not limited to, adjusted
operating income, (adjusted) EBITDA, adjusted
earnings per share, ROS and ROI. A reconciliation of
the alternative performance measures to the most
directly comparable IFRS measures can be found in
the Glossary and Note 4 of the Consolidated
financial statements.
AkzoNobel Report 2020
3
“Despite the odds being stacked
against us, I’m proud to say we
reached a signifi cant milestone as a
company and achieved our Winning
together: 15 by 20 ambition.”
4
CEO statement | AkzoNobel Report 2020
CEO STATEMENT
As 2020 began, we were all set for accelerating
towards our Winning together: 15 by 20
ambition. However, like everybody else, it wasn’t
long before we encountered unprecedented
challenges due to the COVID-19 pandemic. The
massive economic and social impacts were felt by
everyone as the world came to a virtual standstill.
Despite the odds being stacked against us, I’m
proud to say we reacted fast and reached a significant
milestone as a company.
Our people and customers came first. That was always
our priority. At the same time, as the global pandemic
raged on, we mobilized the whole organization in
response. We became more agile, changed our ways
of working and focused on a handful of priorities to
ensure we kept the company intact and continued to
serve our customers – eventually deciding to pause key
parts of our transformation and suspend our 2020
financial ambition.
Over the last three years, we’ve made a series of
targeted acquisitions. In 2020, we added Stahl’s
powder coatings activities and New Nautical Coatings’
yacht business in North America, while a deal was
also agreed for Titan decorative paints in Spain (to be
completed in 2021) and we finalized the acquisition of
Mauvilac Industries Limited in Mauritius. At the same
time, we’ve clearly claimed the innovation space with
our industry-first Paint the Future ecosystem.
We’re now moving forward with our new Grow &
Deliver strategy – the next stage of our transformation
– building on what we’ve achieved to truly become
the reference in our industry. It’s about outperforming
our markets on growth and continuing to deliver to the
bottom line – which we were already doing during the
second half of 2020. By remaining customer focused
and keeping our discipline on margins and costs, during
the next three years, we aim to deliver an average 50
basis points improvement in return on sales each year.
We saved costs, closely managed cash and leveraged
the solid processes and systems we’ve been putting
in place to set the company up for success. The fact
that we weathered the storm so well demonstrates
our new-found resilience and I’m extremely proud of
how we continued to look after our customers and
performed together as an organization.
As we enter the newest phase of our journey in 2021,
we continue to evolve, led by a new company purpose
which demonstrates our passion for pioneering a
world of possibilities to bring surfaces to life. And
we continue to build on our leading track record when
it comes to sustainability, through our “People. Planet.
Paint.” approach and related ambitions.
As the year came to an end, we almost overlooked the
fact that all our hard work during the last three years
paid off – we reached our Winning together: 15 by 20
ambition, despite the unparalleled headwinds. After this
extraordinary phase of our ongoing journey, we’re
now a significantly leaner paints and coatings
company, with clear and short communication lines,
and systems and processes in place that enable us
to continue delivering value for all our stakeholders.
We also continue to streamline our manufacturing and
warehouse footprint.
Of course, by far the real driving force is our people,
who deserve all the credit. It’s been a tough journey at
times, but everyone persevered and I’m really proud of
what we’ve shown the world this year. Our improved
organizational health score suggests that engagement
is strong and there’s a good feeling within the company.
So a huge thank you to the whole organization. For
myself and the whole Executive Committee, it continues
to be a privilege to be on this journey to become the
frontrunner in our industry.
Achieving this significant 15 by 20 milestone is very
much the culmination of a determined push to get
back to the forefront of our industry and we continue
to see encouraging momentum in our business
performance.
Thierry Vanlancker, CEO and Chairman
of the Board of Management and Executive Committee
AkzoNobel Report 2020 | CEO statement
5
“Despite the odds being stacked
against us, I’m proud to say we
reached a signifi cant milestone as a
company and achieved our Winning
together: 15 by 20 ambition.”
4
CEO statement | AkzoNobel Report 2020
2020 HIGHLIGHT
2020 PROGRESS
ROI2
20.6%
ROS1
15.0%
Return on sales (ROS)1 in %
15.0
15.5
14.5
10.6
10.6
12.0
2017
2018
2019
2020
2020
ambition
Return on investment (ROI)2 in %
18.0
16.6
17.2
20.6
>203
2017
2018
2019
2020
2020
ambition
1 Excluding unallocated corporate center cost; assumes no signifi cant market
disruption.
2 Excluding unallocated corporate center cost and invested capital; assumes no
signifi cant market disruption.
3 Our original 25% ambition was adjusted to 20% in 2020 as a result of lower
growth assumptions and the implementation of IFRS 16 on leases.
6
AkzoNobel Report 2020
How we delivered
on 15 by 20
Since 2017, we’ve been keeping a laser-
sharp focus on our Winning together:
15 by 20 ambition and the promises we
made during what can only be described
as turbulent times for the company. We
had bold aspirations and few people
believed it was possible to achieve them.
Before looking at how the milestone was
achieved, it’s worth refl ecting on where
Winning together: 15 by 20 came from.
Prior to 2015, AkzoNobel was at the
bottom of the pack when benchmarking
profi tability versus peers. And while we
managed to make our way up into
the middle, some players were still
ahead of us by a signifi cant distance.
Our 15 by 20 fi nancial ambition was
all about closing that gap.
Creating two focused companies
was clearly the most logical step. We
therefore separated our Specialty
Chemicals business within 12 months,
as planned, and returned €6.5 billion
proceeds to shareholders before the
end of 2019, as promised. Which saw
us become a truly focused paints and
coatings company.
We took a conscious decision to scale
down revenue growth aspirations
and focus solely on return on sales
(ROS). This would improve the quality
of the business – shedding some
structurally unprofi table volumes – while
recognizing the relatively slow growth
rate in end markets.
Our single-minded focus on profi tability
created a clear and simple message for
the whole organization, which meant
decisions became much simpler to
make – do whatever action results in the
largest increase in ROS, while respecting
our core values of safety, integrity and
sustainability. It became a mantra.
Winning together: 15 by 20 relied on a
signifi cant amount of self-help, improving
systems and processes to create a
stronger foundation for the future, with
no support from end markets.
So we were well prepared for the fi nal
phase of the 15 by 20 journey, when
COVID-19 forced us to pause key parts
of our transformation and suspend our
2020 fi nancial ambition. We focused
on taking care of our employees while
protecting our business, minimizing
all discretionary costs and carefully
managing cash and working capital.
The signifi cant market disruption
meant we occasionally had challenges
in keeping up with rapid changes
in demand. We took all reasonable
steps to maintain business operations
and continue serving customers. The
actions taken, together with our strong
balance sheet, provided a solid platform
for us to resume key parts of the
transformation during the second half
of 2020.
Our strict focus has paid off, delivering
a step-change in performance in just
a few short years. ROS (excluding
unallocated cost) increased from 10.6%
in 2017 to 15.0% in 2020. At the same
time, we continued to advance in other
areas, such as our industry-leading Paint
the Future innovation ecosystem and
our People. Planet. Paint. approach to
sustainable business.
By the end of 2020, we'd reached a
signifi cant milestone. We’ve reignited
our passion for paint, caught up with
the leading paints and coatings players
and are well on our way to becoming the
frontrunner in the industry – and we're
just half-way through our transformation.
Beyond 2020, our focus will now shift
to growth and profi tability improvement,
guided by our Grow & Deliver strategy.
Ultimately, our goal is to be an industry
leader in both size and performance.
2020 HIGHLIGHT
2020 PROGRESS
ROS1
15.0%
ROI2
20.6%
How we delivered
on 15 by 20
Since 2017, we’ve been keeping a laser-
systems and processes to create a
sharp focus on our Winning together:
stronger foundation for the future, with
made during what can only be described
as turbulent times for the company. We
So we were well prepared for the fi nal
had bold aspirations and few people
phase of the 15 by 20 journey, when
believed it was possible to achieve them.
COVID-19 forced us to pause key parts
Before looking at how the milestone was
2020 fi nancial ambition. We focused
achieved, it’s worth refl ecting on where
on taking care of our employees while
Winning together: 15 by 20 came from.
protecting our business, minimizing
Prior to 2015, AkzoNobel was at the
all discretionary costs and carefully
bottom of the pack when benchmarking
managing cash and working capital.
profi tability versus peers. And while we
The signifi cant market disruption
managed to make our way up into
meant we occasionally had challenges
the middle, some players were still
in keeping up with rapid changes
ahead of us by a signifi cant distance.
in demand. We took all reasonable
Our 15 by 20 fi nancial ambition was
steps to maintain business operations
all about closing that gap.
and continue serving customers. The
Creating two focused companies
balance sheet, provided a solid platform
was clearly the most logical step. We
for us to resume key parts of the
therefore separated our Specialty
transformation during the second half
actions taken, together with our strong
Chemicals business within 12 months,
of 2020.
as planned, and returned €6.5 billion
proceeds to shareholders before the
Our strict focus has paid off, delivering
Return on sales (ROS)1 in %
end of 2019, as promised. Which saw
a step-change in performance in just
10.6
10.6
12.0
15.0
15.5
14.5
coatings company.
us become a truly focused paints and
a few short years. ROS (excluding
unallocated cost) increased from 10.6%
in 2017 to 15.0% in 2020. At the same
We took a conscious decision to scale
time, we continued to advance in other
Return on investment (ROI)2 in %
recognizing the relatively slow growth
By the end of 2020, we'd reached a
2017
2018
2019
2020
2020
ambition
18.0
16.6
17.2
20.6
>203
and focus solely on return on sales
the Future innovation ecosystem and
(ROS). This would improve the quality
our People. Planet. Paint. approach to
of the business – shedding some
sustainable business.
structurally unprofi table volumes – while
rate in end markets.
signifi cant milestone. We’ve reignited
our passion for paint, caught up with
Our single-minded focus on profi tability
the leading paints and coatings players
created a clear and simple message for
and are well on our way to becoming the
the whole organization, which meant
frontrunner in the industry – and we're
decisions became much simpler to
just half-way through our transformation.
largest increase in ROS, while respecting
Beyond 2020, our focus will now shift
our core values of safety, integrity and
to growth and profi tability improvement,
sustainability. It became a mantra.
guided by our Grow & Deliver strategy.
Winning together: 15 by 20 relied on a
Ultimately, our goal is to be an industry
signifi cant amount of self-help, improving
leader in both size and performance.
2017
2018
2019
2020
make – do whatever action results in the
2020
ambition
1 Excluding unallocated corporate center cost; assumes no signifi cant market
2 Excluding unallocated corporate center cost and invested capital; assumes no
disruption.
signifi cant market disruption.
3 Our original 25% ambition was adjusted to 20% in 2020 as a result of lower
growth assumptions and the implementation of IFRS 16 on leases.
6
AkzoNobel Report 2020
By delivering more value to our customers,
shareholders, employees and society in general, we
can better accelerate profi tability while positioning
ourselves for growth.
15 by 20 ambition and the promises we
no support from end markets.
Summary of fi nancial outcomes
of our transformation and suspend our
Adjusted operating income*
In € millions
Revenue
Adjusted EBITDA*
EBITDA*
Identifi ed items*
Operating income
ROS*
OPI margin*
Average invested capital*
ROI*
ROS excl. unallocated cost*
ROI excl. unallocated cost*
Capital expenditures
Net debt
Leverage ratio (net debt/EBITDA)*
Number of employees
Net cash from operating activities
Net income from continuing operations
Net income from discontinued operations
Net income attributable to shareholders
Weighted average number of shares
Adjusted earnings per share from continuing opera-
tions (in €)*
Earnings per share from total operations (in €)
2019
9,276
1,341
1,201
991
(150)
841
10.7
9.1
7,026
14.1
12.0
17.2
214
802
0.7
33,800
33
517
22
539
213.1
3.10
2.53
2020*
8,530
1,442
1,324
1,099
(136)
963
12.9
11.3
6,834
16.1
15.0
20.6
258
1,034
0.8
32,200
1,220
637
(7)
630
191.4
3.88
3.29
∆%
(8%)
8%
10%
11%
15%
21%
23%
17%
25%
30%
down revenue growth aspirations
areas, such as our industry-leading Paint
Revenue by destination in %
* Alternative performance measures: Please refer to reconciliation to the most directly comparable IFRS measure in Note 4
of the Consolidated fi nancial statements, and refer to the Glossary for ROS excluding unallocated cost and ROI excluding
unallocated cost.
A Mature Europe
B Asia Pacifi c
C North America
D Emerging Europe
E South America
F Other regions
Capital expenditures 2020:
total €258m
A Decorative Paints
B Performance Coatings
C Corporate and other
Capital expenditures are expected to be around
€250 million per year 2021-23.
37
29
12
10
8
4
77
146
35
A
A
D
C
F
E
B
C
B
HOW WE CREATED VALUE
Financial overview
Revenue was 8% lower, and 4% lower in constant
currencies. Price/mix was up 1% overall. Volumes were
4% lower, mainly due to the impact of COVID-19 on
end market demand. Adjusted operating income was
up 11% at €1,099 million (2019: €991 million); driven
by margin management and cost-saving programs.
Continuous improvement initiatives successfully offset
infl ation. ROS increased to 12.9% (2019: 10.7%).
Operating income was up 15% at €963 million (2019:
€841 million) and included negative identifi ed items of
€136 million.
Business revenue
• Decorative Paints revenue was 3% lower and up
3% in constant currencies, with volumes up 2% and
positive price/mix of 1%, more than offset by 6%
adverse currency impact
• Performance Coatings revenue was 11% lower
and 8% lower in constant currencies. Revenue was
positively impacted by 1% price/mix, while volumes
were 9% lower, mainly due to the impact of COVID-
19 on end market demand, especially in the fi rst half
of the year
Revenue from third parties
in € millions
Decorative Paints
Performance Coatings
5,563
5,549
4,957
4,957
3,667
3,670
3,670
3,558
2018
2019
2020
Innovation investment
research and development expenses
in € millions
271
262
238
2018
2019
2020
Research and development expenses expected to remain
similar as % of revenue 2021-23.
AkzoNobel Report 2020
7
HOW WE CREATED VALUE
ECONOMIC VALUE
Eco-premium solutions in %
22
22
21
≥20
2018
2019
2020
2020
ambition
5
consecutive years of out-
performing our 2020 ambition.
ENVIRONMENTAL VALUE
Total waste in kg/ton
21
21
≤21.5
20
2018
2019
2020
2020
ambition
% lower waste than our
2020 ambition.
7
VOC in kg/ton
0.49
0.49
≤0.45
0.37
0.31
2018
2019
2020
2020
ambition
31
% lower VOC level than our
2020 ambition.
Energy use in GJ/ton
1.91
1.88
1.83
≤1.81
2018
2019
2020
2020
ambition
% reduction in energy use
3
in 2020.
8
AkzoNobel Report 2020
Acquisitions
The acquisition of Mauvilac Industries,
announced on December 12, 2019, was
closed on April 1, 2020. On September
2, 2020, the acquisition of Stahl's
per-formance powder coatings activities
was completed. On October 19, 2020,
the acquisition of Titan Paints in Spain
was announced, with completion
expected in 2021. The acquisition of
New Nautical Coatings in the US was
completed in Q4 of 2020.
Raw material price development
Raw material and other variable costs
were €135 million lower in 2020,
compared with 2019.
Adjusted operating income
Adjusted operating income was up
11% at €1,099 million (2019: €991
million); driven by margin management
and cost-saving programs. Continuous
improvement initiatives successfully
offset infl ation. ROS increased to 12.9%
(2019: 10.7%).
• Decorative Paints adjusted operating
income increased 37% as a result of
volume growth, supported by margin
management and cost savings. ROS
was up at 16.1% (2019: 11.4%)
• Performance Coatings adjusted
operating income increased by
2%, with positive price/mix, margin
management and cost savings more
than compensating for lower volumes
due to the COVID-19 impact on end
user demand. ROS increased to
14.1% (2019: 12.4%)
• Other activities were negative
€174 million (2019: negative
€115 million); other activities in 2019
included higher royalty income and
one-off gains on disposals
For more about our Paints and Coatings
businesses in 2020, see pages 16 to 27.
Additional details about the performance
of AkzoNobel and each business
segment in 2020 can be found in the
quarterly publications on our website.
Operating income
Operating income was up at €963
million (2019: €841 million) and included
negative identifi ed items of €136 million
(€22 million in Decorative Paints, €35
million in Performance Coatings and
€79 million in Other activities), mainly
related to transformation costs. In 2019,
identifi ed items were negative €150
million, mainly related to transformation
costs and non-cash impairments,
partly offset by a gain on disposal of
€54 million following asset network
optimization. OPI margin increased to
11.3% (2019: 9.1%).
Net fi nancing income and
expenses
Net fi nancing expenses decreased by
€7 million, mainly due to lower interest
on loans.
Income tax
The effective tax rate was 26.2% (2019:
29.3%). The decrease is mainy related
to impairments of deferred tax assets
in 2019. Excluding identifi ed items, the
effective tax rate in 2020 was 25.6%
(2019: 25.3%).
Cash fl ows and net debt
Operating activities in 2020 resulted in
an infl ow of €1,220 million (2019: €33
million). This was mainly due to higher
profi tability and changes in working
capital, while 2019 was impacted by
higher pension related payments.
At December 31, 2020, net debt was
€1,034 million versus €802 million at
year-end 2019. The net debt/EBITDA
leverage ratio at December 31, 2020,
was 0.8x (December 31, 2019: 0.7x).
Invested capital
Invested capital at December 31, 2020,
totaled €6.4 billion, €0.6 billion lower
compared with year-end 2019, mainly
due to a reduction in working capital and
other non-current assets.
Dividend
Our dividend policy is to pay a stable
to rising dividend. In 2020, an interim
For more details
about our
environmental
performance, see
the Sustainability
statements.
HOW WE CREATED VALUE
ECONOMIC VALUE
Eco-premium solutions in %
22
22
21
≥20
2018
2019
2020
2020
ambition
5
consecutive years of out-
performing our 2020 ambition.
ENVIRONMENTAL VALUE
Total waste in kg/ton
21
21
≤21.5
20
2018
2019
2020
2020
ambition
% lower waste than our
2020 ambition.
7
VOC in kg/ton
0.49
0.49
0.37
0.31
2018
2019
2020
2020
ambition
31
% lower VOC level than our
2020 ambition.
Energy use in GJ/ton
1.91
1.88
1.83
≤1.81
2018
2019
2020
2020
ambition
% reduction in energy use
3
in 2020.
For more details
about our
environmental
performance, see
the Sustainability
statements.
8
AkzoNobel Report 2020
per-formance powder coatings activities
million in Performance Coatings and
was completed. On October 19, 2020,
€79 million in Other activities), mainly
the acquisition of Titan Paints in Spain
related to transformation costs. In 2019,
was announced, with completion
identifi ed items were negative €150
expected in 2021. The acquisition of
million, mainly related to transformation
New Nautical Coatings in the US was
costs and non-cash impairments,
completed in Q4 of 2020.
partly offset by a gain on disposal of
€54 million following asset network
Raw material price development
optimization. OPI margin increased to
Raw material and other variable costs
11.3% (2019: 9.1%).
were €135 million lower in 2020,
compared with 2019.
Net fi nancing income and
expenses
Adjusted operating income
Net fi nancing expenses decreased by
Adjusted operating income was up
€7 million, mainly due to lower interest
11% at €1,099 million (2019: €991
on loans.
million); driven by margin management
and cost-saving programs. Continuous
Income tax
improvement initiatives successfully
The effective tax rate was 26.2% (2019:
offset infl ation. ROS increased to 12.9%
29.3%). The decrease is mainy related
(2019: 10.7%).
to impairments of deferred tax assets
• Decorative Paints adjusted operating
in 2019. Excluding identifi ed items, the
income increased 37% as a result of
effective tax rate in 2020 was 25.6%
volume growth, supported by margin
(2019: 25.3%).
management and cost savings. ROS
was up at 16.1% (2019: 11.4%)
Cash fl ows and net debt
operating income increased by
an infl ow of €1,220 million (2019: €33
2%, with positive price/mix, margin
million). This was mainly due to higher
management and cost savings more
profi tability and changes in working
than compensating for lower volumes
capital, while 2019 was impacted by
due to the COVID-19 impact on end
higher pension related payments.
user demand. ROS increased to
14.1% (2019: 12.4%)
At December 31, 2020, net debt was
• Other activities were negative
€1,034 million versus €802 million at
€174 million (2019: negative
year-end 2019. The net debt/EBITDA
€115 million); other activities in 2019
leverage ratio at December 31, 2020,
included higher royalty income and
was 0.8x (December 31, 2019: 0.7x).
one-off gains on disposals
Invested capital
For more about our Paints and Coatings
Invested capital at December 31, 2020,
businesses in 2020, see pages 16 to 27.
totaled €6.4 billion, €0.6 billion lower
Additional details about the performance
compared with year-end 2019, mainly
of AkzoNobel and each business
due to a reduction in working capital and
segment in 2020 can be found in the
other non-current assets.
quarterly publications on our website.
≤0.45
• Performance Coatings adjusted
Operating activities in 2020 resulted in
Acquisitions
Operating income
The acquisition of Mauvilac Industries,
Operating income was up at €963
announced on December 12, 2019, was
million (2019: €841 million) and included
closed on April 1, 2020. On September
negative identifi ed items of €136 million
Dividend in €
2018
1.80
2019
1.90
2020
1.951
were €1.6 billion and fi nancial leverage
(net debt/EBITDA) was 0.8x. AkzoNobel
is committed to retain a strong
investment grade credit rating.
2, 2020, the acquisition of Stahl's
(€22 million in Decorative Paints, €35
1 Proposed
SOCIAL VALUE
Total reportable injury rate (TRR)
0.20
0.20
0.24
0.23
≤0.20
Earnings per share total operations
in €
2018
26.19
2019
2.53
2020
3.29
Adjusted earnings per share from
continuing operations in €
2018
1.91
2019
3.10
2020
3.88
dividend of €0.43 per common share
(2019: €0.41) was paid. We propose a
2020 fi nal dividend of €1.52 (2019:
€1.49) per common share, which would
equal a total 2020 dividend of €1.95
(2019: €1.90). In 2020, a total share
buyback of €545 million was completed.
Employees
At December 31, 2020, the number of
employees was 32,200 (December 31,
2019: 33,800). Acquisitions in 2020
added around 250 people. For details
on our approach to developing our
workforce, see pages 32 to 34.
COVID-19
The pandemic situation is being closely
monitored and appropriate measures
are being taken to continue serving
customers and save costs, while keeping
the organization intact and able to
respond quickly to changes in end market
demand. Although demand trends differ
per region and segment, the overall im-
pact on AkzoNobel for the full-year 2020
was limited. An overall positive impact
was noted for the Decorative Paints seg-
ment, while there was an overall adverse
impact in the Performance Coatings
segment. The pandemic has not im-
pacted our going concern assumption.
In 2020, a detailed assessment was
performed of potential valuation
adjustments to the overall asset
base, either due to the direct impact
of COVID-19, or its impact on future
profi tability. Goodwill and intangible
asset impairment tests have been
performed based on most recently
updated forecasts; this has not
revealed impairments. Recoverability
of deferred tax assets has also been
reassessed based on these forecasts,
leading to immaterial adjustments only.
Furthermore, while the allowance for
impairment of trade receivables initially
increased as a direct result of the
additional risk associated with COVID-
19, impairment of trade receivables
returned to normal levels at year-end.
In 2020, a compensation of €33 million
related to government support measures
for COVID-19 was recognized as a
reduction of employee benefi t costs,
mainly in Q2 and Q3. No application
was made for the "Noodmaatregel
Overbrugging voor Werkgelegenheid
(NOW)" in the Netherlands. In our 2020
fi gures, all COVID-19 related impacts
have been treated as normal operations;
none of these impacts have been
included in identifi ed items.
Outlook 2021
AkzoNobel targets to grow at least in
line with its relevant markets. Although
trends differ per region and segment
with raw material infl ation expected,
margin management and cost-
saving programs are in place to deliver
50 basis points increase in return on
sales. The company targets a leverage
ratio of 1-2 times net debt/EBITDA and
commits to retain a strong investment
grade credit rating.
2018
2019
2020
2020
ambition
Numbers include
AkzoNobel
employees and
temporary workers
3
consecutive years of closing in
on our ambition.
Fatalities
2
0
0
0
2018
2019
2020
2020
ambition
fatalities in 2020.
0
Female executives in %
20
18
21
≥25
2018
2019
2020
2020
ambition
3
% point increase in 2020. Now
have new program to further boost
senior female leadership pipeline.
Organizational health score (OHI)
58
61
69
≥74
2018
2019
2020
2020
ambition
11
point increase since 2018.
We’re striving to keep impro-
ving by following up attention areas.
AkzoNobel Report 2020
9
Dividend
Our dividend policy is to pay a stable
to rising dividend. In 2020, an interim
AkzoNobel has a strong balance sheet
and solid cash position. At December
31, 2020, cash and cash equivalents
See Note 28 of the Consolidated
fi nancial statements with regard to
subsequent events.
For more details
about our social
performance, see
the Sustainability
statements.
CASE STUDY
Business as unusual
By any standards, 2020 was an extraordinary year. It therefore required an
extraordinary response. As COVID-19 continued to tighten its grip on the world,
our priority was to keep our employees, their families and our partners safe. At
the same time, we did everything possible to continue supplying our customers,
while giving whatever support we could to local communities.
Here’s a brief round-up of some of the
projects we were involved with, many of
which resulted from the amazing efforts
of our colleagues around the world. They
also highlight the strong social aspect of
our “People. Planet. Paint.” approach to
sustainable business.
Rapid response in China
When Chinese authorities announced
they were about to rapidly construct
a hospital in Yinchuan – capital city of
the Ningxia Hui Autonomous Region –
the local AkzoNobel organization sprang
into action.
The facility was being built as an
expansion project at the existing Fourth
People’s Hospital of Ningxia. However,
as the work was taking place during the
Spring Festival in February, paint was in
short supply.
On hearing the news, we acted quickly
to donate our Dulux Pro interior emulsion
during the early days of the project. It
helped to ensure that the new buildings
could be completed on time (in just 15
days) as part of an urgent local response
to the COVID-19 outbreak.
The new buildings continued to be
operational once the outbreak subsided.
Keeping industry going
As the pandemic raged, our customers
con tinued to rely on us to supply products
across a whole range of critical industries.
So we had to prioritize our resources
in certain areas to ensure production of
essential items could continue.
For example, our coatings are used
on hospital beds and other metal
equipment (including oxygen bottles and
ventilators), which were in high demand
during the fi rst half of the year. We
also supply coatings used in food and
beverage cans, and the industry was
working fl at out at one point to keep up
with increased demand.
Many of our coatings products –
including our decorative paints – are also
a key part of the construction sector.
So we were pulling out all the stops to
ensure that crucial work could continue,
such as building new hospitals. You
can read about some of those projects
elsewhere on these pages.
Coping with challenges in India
During a nationwide lockdown in India,
the local AkzoNobel organization
launched several initiatives to help
communities cope with the food and
healthcare challenges.
Many of these were adaptations of
existing projects launched as part of
the company’s People. Planet. Paint.
initiative. The focus was simply changed
in response to the virus.
For example, in several villages near
Bangalore, an existing e-health program
which we helped to set up was used
to provide initial screening for COVID-
19. Around 1,000 people had received
symptomatic screening within the
fi rst month.
We also provided essential food items to
6,000 people (mostly daily wage earners)
in Gurgaon, Gwalior and Navi Mumbai,
including underprivileged children
studying at AkzoNobel supported
education centers.
Beating the isolation blues in
Brazil
One of the most heart-warming
initiatives was organized in Brazil, where
our colleagues made a big effort
to help residents at a care home for
elderly women, located in the southern
state of Rio Grande do Sul.
Known as Grandma’s House, it looks
after nearly 200 elderly residents.
However, due to the pandemic, visitors
weren’t allowed for many months. So
our Brazilian colleagues decided to give
the residents a boost and cheer them up
by arranging video chat sessions to help
them feel less isolated and alone.
Dozens of employees volunteered to
take part during the initiative, when they
could choose from a series of 30-minute
time slots. “The conversation I had
was such an important moment for the
lady I spoke to that she even dressed
up specially for the occasion,” said
AkzoNobel Administrative Coordinator,
Roseli Franchi. “It was very touching and
made me realize that we can make a
difference to people’s lives by doing the
simplest of things.”
As well as talking to the residents,
employees were also given the
opportunity to have donations sent from
10
CASE STUDY
Business as unusual
By any standards, 2020 was an extraordinary year. It therefore required an
extraordinary response. As COVID-19 continued to tighten its grip on the world,
our priority was to keep our employees, their families and our partners safe. At
the same time, we did everything possible to continue supplying our customers,
while giving whatever support we could to local communities.
Here’s a brief round-up of some of the
For example, our coatings are used
We also provided essential food items to
projects we were involved with, many of
on hospital beds and other metal
6,000 people (mostly daily wage earners)
which resulted from the amazing efforts
equipment (including oxygen bottles and
in Gurgaon, Gwalior and Navi Mumbai,
of our colleagues around the world. They
ventilators), which were in high demand
including underprivileged children
also highlight the strong social aspect of
during the fi rst half of the year. We
studying at AkzoNobel supported
our “People. Planet. Paint.” approach to
also supply coatings used in food and
education centers.
sustainable business.
beverage cans, and the industry was
working fl at out at one point to keep up
Beating the isolation blues in
Rapid response in China
with increased demand.
Brazil
When Chinese authorities announced
One of the most heart-warming
they were about to rapidly construct
Many of our coatings products –
initiatives was organized in Brazil, where
a hospital in Yinchuan – capital city of
including our decorative paints – are also
our colleagues made a big effort
the Ningxia Hui Autonomous Region –
a key part of the construction sector.
to help residents at a care home for
the local AkzoNobel organization sprang
So we were pulling out all the stops to
elderly women, located in the southern
into action.
ensure that crucial work could continue,
state of Rio Grande do Sul.
such as building new hospitals. You
The facility was being built as an
can read about some of those projects
Known as Grandma’s House, it looks
expansion project at the existing Fourth
elsewhere on these pages.
after nearly 200 elderly residents.
People’s Hospital of Ningxia. However,
However, due to the pandemic, visitors
as the work was taking place during the
Coping with challenges in India
weren’t allowed for many months. So
Spring Festival in February, paint was in
During a nationwide lockdown in India,
our Brazilian colleagues decided to give
short supply.
the local AkzoNobel organization
the residents a boost and cheer them up
launched several initiatives to help
by arranging video chat sessions to help
On hearing the news, we acted quickly
communities cope with the food and
them feel less isolated and alone.
to donate our Dulux Pro interior emulsion
healthcare challenges.
during the early days of the project. It
Dozens of employees volunteered to
helped to ensure that the new buildings
Many of these were adaptations of
take part during the initiative, when they
could be completed on time (in just 15
existing projects launched as part of
could choose from a series of 30-minute
days) as part of an urgent local response
the company’s People. Planet. Paint.
time slots. “The conversation I had
to the COVID-19 outbreak.
initiative. The focus was simply changed
was such an important moment for the
The new buildings continued to be
in response to the virus.
lady I spoke to that she even dressed
up specially for the occasion,” said
operational once the outbreak subsided.
For example, in several villages near
AkzoNobel Administrative Coordinator,
Keeping industry going
which we helped to set up was used
made me realize that we can make a
As the pandemic raged, our customers
to provide initial screening for COVID-
difference to people’s lives by doing the
con tinued to rely on us to supply products
19. Around 1,000 people had received
simplest of things.”
Bangalore, an existing e-health program
Roseli Franchi. “It was very touching and
across a whole range of critical industries.
symptomatic screening within the
So we had to prioritize our resources
fi rst month.
in certain areas to ensure production of
essential items could continue.
As well as talking to the residents,
employees were also given the
opportunity to have donations sent from
one of several local supermarkets that make
deliveries to the home. More than 1,000
items were sent, including cleaning and
personal care products and food.
Supporting communities in
Indonesia
Many of the communities around our
Cikarang site in Indonesia experienced
the economic challenges that came with
the large-scale social restrictions that
resulted from the pandemic.
Having noticed the hardships
many people were facing,
colleagues from our local Marine
and Protective Coatings
and Decorative Paints sites
responded quickly to
help out.
In order to support the
livelihoods of people in
seven communities
around Cikarang,
several activities were
organized under
our AkzoNobel
Cares umbrella,
which included
distributing
basic food
essentials to
around 500
families in
need.
Caring with
color in
Switzerland
With children
often fi nding
hospitals a bit scary,
we worked with the
Anouk Foundation in
Switzerland to brighten
things up and make one
hospital in particular feel
more comforting
and colorful.
The Anouk Foundation is
a non-profi t organization
dedicated to bringing color to the
walls of all kinds of buildings. Our
Sikkens paint business has been
donating paint to them for many
years, helping to create designs and
murals that calm the fears and worries
of residents and patients of all ages.
One of their bigger projects in 2020
involved working on 22 treatment rooms
and eight patient rooms at the Kinder Klinik
Kantonsspital in the Swiss town of Aarau.
Painting soft colors on the walls and introducing
gentle humor helped create a comforting
atmosphere, which proved especially important at
a time of such global uncertainty.
In fact, the therapeutic value of the murals has been
so benefi cial, there are plans to create more murals
in other parts of the hospital, including the pediatric
emergency unit.
10
11
STRATEGY AND
OPERATIONS
An overview of our strategy, approach to
innovation and the performance of our Paints
and Coatings businesses during the year.
Strategy
Innovation
Decorative Paints*
13
15
16-18
Our activities are reported in three regions:
Asia; Europe, Middle East and Africa;
South America
Performance Coatings*
20-27
Our activities are organized into four main
businesses: Automotive and Specialty
Coatings, Industrial Coatings, Marine and
Protective Coatings, Powder Coatings
* The 2018 and 2019 fi gures are restated to represent revenue from
third parties instead of group revenue.
Rafaël Rozendaal | Into Time 13 09 12, 2013 | 2013 |
lenticular print | 120 x 90 cm | photo credits Gert-Jan
van Rooij | Collection AkzoNobel Art Foundation
THE NEXT PHASE OF OUR TRANSFORMATION
Grow
Deliver
& Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
OUR STRATEGY
Ambitions for 2021-2023
Revenue growth at
least in line with our
relevant markets
Deliver an average
50 basis points ROS*
(return on sales)
improvement each year
AkzoNobel is a truly global, high-
performing paints and coatings
company with a proud heritage which
can be traced back to 1792. Our world
class portfolio of established brands
is trusted by customers around the
globe and we continue to be guided
by a strong set of core values – safety,
integrity and sustainability.
Since 2017, our strategic focus has
been on delivering our Winning together:
15 by 20 ambition, which has positioned
us among other leading players in the
industry. Ultimately, our goal is to take
our rightful place as a frontrunner, both
in terms of size and performance.
This ambition is refl ected in our new
company purpose – Pioneering a world
of possibilities to bring surfaces to life
– which was developed with input from
a broad range of employees and other
stakeholders. As we look to accelerate
on the next phase of our journey, our
new Grow & Deliver strategy is all about
building on the strong foundation we’ve
now established.
From 2021 onwards, we will pivot
towards growth, while delivering further
profi tability improvement. To help us
deliver what we want to achieve, we’ve
updated our behaviors framework
to guide a new way of working. The
fundamentals remain the same – passion
for paint, precise processes, powerful
performance and proud people. Our key
behaviors have now been more clearly
defi ned to help drive further success
(see visual below).
With sustainability as one of our core
values, we strive to be the leader in
our industry by empowering people,
reducing our impact on the planet
and consistently innovating to deliver
the most sustainable solutions for our
customers. That’s why we call our
approach to sustainable business
“People. Planet. Paint.”
Growth drivers
We're well placed in the €130 billion
paints and coatings industry, with a
balanced geographic presence and a
strong portfolio of brands, with leading
positions in most segments. This offers
multiple opportunities for growth.
For example, we have a signifi cant
presence in Asia Pacifi c – where we
currently generate around 29% of
revenue – and all market segments.
We’re the leader in the fast-growing
powder coatings segment, which
currently contributes around 13% of
revenue. Other segments also offer
exciting growth opportunities, such as
our decorative paints in South America
and – driven by a shift away from single
use plastics – packaging coatings.
Strategic mandates – assigned per
segment and region – are used to
provide clear direction for each of our
businesses, including relative priorities
for growth and profi tability improvement.
These strategic mandates, which helped
to drive a step-change in performance
over the last three years, have been
updated for 2021 onwards.
* ROS is calculated as adjusted operating income
(operating income excluding identifi ed items) as a
percentage of revenue from third parties.
Rafaël Rozendaal | Into Time 13 09 12, 2013 | 2013 |
lenticular print | 120 x 90 cm | photo credits Gert-Jan
van Rooij | Collection AkzoNobel Art Foundation
Passion for paint
Precise processes
Powerful performance
Be customer
focused
Execute with
discipline
Deliver on
commitments
Proud people
Take ownership
AkzoNobel Report 2020 | Strategy and operations
13
STRATEGY AND
OPERATIONS
An overview of our strategy, approach to
innovation and the performance of our Paints
and Coatings businesses during the year.
Strategy
Innovation
Decorative Paints*
13
15
16-18
Our activities are reported in three regions:
Asia; Europe, Middle East and Africa;
South America
Performance Coatings*
20-27
Our activities are organized into four main
businesses: Automotive and Specialty
Coatings, Industrial Coatings, Marine and
Protective Coatings, Powder Coatings
* The 2018 and 2019 fi gures are restated to represent revenue from
third parties instead of group revenue.
OUR STRATEGY
INNOVATION
We’re passionate about customer
needs and have a customer service
mindset. Commercial excellence is all
about putting in place more customer
focused, data-driven, commercial
processes. This will help to fuel
our growth.
Innovation is also fundamental to our
success (see page 15). Having
been pioneers since 1792, we know
what it means to go beyond
when it comes to providing custo-
mers with quality solutions – how to
understand and anticipate their
needs. Our industry-leading Paint
the Future innovation ecosystem is a
great example of how our pioneering
spirit is helping us to continue
pushing boundaries.
We have a solid platform for adding
to organic growth through targeted
acquisitions. Clear capital allocation
priorities, and a strong balance sheet,
underpin a disciplined approach to
conducting value creating acquisitions,
aligned with our strategic mandates.
Delivering performance
improvement
Several initiatives started during the
Winning together: 15 by 20 phase of
our journey will also continue in the
future, including ERP and application
integration, as well as improving end-to-
end processes. These initiatives provide
the strong foundation on which our
Grow & Deliver strategy is built.
The next phase of our strategy requires
an evolution of our operating model,
moving from functional excellence
in silos to driving cross-functional
collaboration and becoming even more
customer focused.
Margin management demands strong
profi tability analysis, combined with
predictive margin management and
pricing excellence. This will ensure we
maintain variable margins throughout
the cycle.
Creating a world class supply
chain requires more effi ciency and
effectiveness – also in planning
Our CEO, Thierry Vanlancker (pictured center), joined a
cross-industry collaboration to fi ght climate change and
build economic resilience. The 12-strong European CEO
Alliance believes a zero carbon future is possible – if we
work together – and the fi rst step was to give their full
support to the EU Green Deal.
processes – to meet customer needs
with superior service levels.
Product management is necessary to
deliver the right products to customers
and win in the market, at the most
competitive cost for the company,
with less complexity and increased
collaboration with our suppliers.
Optimizing our manufacturing network
will be organized around three models
to serve customer needs – simple and
effi cient; managed complexity; agile and
adaptive.
Seamless business processes will be
effective and cost competitive, allowing
greater focus on what matters most.
It’s now time for AkzoNobel to become
the frontrunner. Our strategy is to
Grow & Deliver, as a high-performing
organization, pioneering a world of
possibilities to bring surfaces to life.
Welcome to our future!
Market growth
Strategic mandates
Strategic mandates
World class
supply chain
oduct
Product
management
management
cial excellence
Commercial excellence
Margin management
Innovation
Acquisitions
Strong foundation
G ro w
Network
optimization
Seamless
Seamless
business
business
ocesses
processes
D eliver
Accelerating
our innovation
We’ve been innovating for more than 200
years. Our pioneering spirit and our passion
for pushing the boundaries of our industry
represent our past, present and future.
For us, innovation means going beyond conventional
expectations, going beyond the imagination of our
customers and going beyond generations. So it
represents both a challenge and a promise.
Our innovation portfolio is influenced by four main
drivers: productivity, surface enhancement, asset
protection and environmental protection. They guide us
on our journey to making a significant and long-lasting
Our latest Paint the Future regional startup challenge is scheduled to
take place in China in early 2021. It was officially announced by Mark
Kwok, AkzoNobel’s President of China/North Asia.
“Science and
innovation
drive our
future and
I’m proud
this year’s
solutions
went
beyond
expectation
to delive r
value to
us and our
customers.”
difference to our customers and the planet.
To help build on its success, we welcomed several new
Innovation in 2020
collaborations in 2020. This included launching our first
regional startup challenge in Brazil, which resulted in
During the year, we continued to introduce a range
business proposals being awarded in four categories:
of ground-breaking products to the market, while
Sustainable lifecycle; Smart supply chain and logistics;
expanding our digital capabilities. This included adding
New functionalities; and Customer experience. A new
antimicrobial properties to our Interpon D1000 and
regional startup challenge will be staged in China
2000 range of architectural powder coatings, enabling
in 2021.
building interiors to be given increased protection
against microbes such as bacteria and mold. Our
Throughout the year, we also made good progress on
Powder Coatings business also introduced a new 3D
joint developments in the area of robotic application, to
color tool to help architects and specifiers find exactly
help painters work more safely and efficiently. Two of
the right product for their needs. Meanwhile, Decorative
these projects involve Qlayers and Apellix, both winners
Paints introduced Dulux EasyCare+, which contains
in our 2019 global startup challenge (see page 19). A
Scuff Resist technology to help protect interior walls,
third project is ongoing with French early stage startup
and also launched Hammerite Ultima, a rust-busting
Les Companions. This project is focused on developing
water-based exterior paint which can be applied directly
a paint robot for interior use on walls and ceilings.
onto any metal surface, without the need for a primer.
Collaborative innovation
In addition, we advanced the work we’re doing with
two other 2019 winners. Alucha’s circular filler is in
We know great innovations happen when different
the scale-up phase, while we’re continuing to design
people work together in a win-win model. A great
new polymers for low-bake applications with Interface
example is our Operation Night Watch partnership with
Polymers. Meanwhile, through our related Paint the
Klaas Kruithof,
the Rijksmuseum in Amsterdam, the Netherlands. We’re
Future supplier program, we also selected five new
Chief Technology
using our color expertise to work together on three key
projects in 2020 for further acceleration. At the end
Officer
projects which demonstrate that understanding history
of the year, a fully virtual supplier event was staged,
is essential to building our future.
featuring 100 specially invited participants.
Following its 2019 launch, we also made excellent
Another successful project also emerged from a Paint
progress with expanding our global Paint the Future
the Future employee challenge. Two of the teams that
collaborative innovation ecosystem – which is all about
submitted promising proposals joined forces to develop
connecting what we know with what we don’t yet know,
a company-wide global standard for using augmented
so we can bring new solutions to the market faster.
reality in manufacturing.
14
Strategy and operations | AkzoNobel Report 2020
AkzoNobel Report 2020 | Strategy and operations
15
OUR STRATEGY
INNOVATION
Our CEO, Thierry Vanlancker (pictured center), joined a
cross-industry collaboration to fi ght climate change and
build economic resilience. The 12-strong European CEO
Alliance believes a zero carbon future is possible – if we
work together – and the fi rst step was to give their full
support to the EU Green Deal.
We’re passionate about customer
Delivering performance
processes – to meet customer needs
needs and have a customer service
improvement
with superior service levels.
mindset. Commercial excellence is all
Several initiatives started during the
about putting in place more customer
Winning together: 15 by 20 phase of
Product management is necessary to
focused, data-driven, commercial
our journey will also continue in the
deliver the right products to customers
processes. This will help to fuel
future, including ERP and application
and win in the market, at the most
our growth.
integration, as well as improving end-to-
competitive cost for the company,
end processes. These initiatives provide
with less complexity and increased
Innovation is also fundamental to our
the strong foundation on which our
collaboration with our suppliers.
success (see page 15). Having
Grow & Deliver strategy is built.
been pioneers since 1792, we know
Optimizing our manufacturing network
what it means to go beyond
The next phase of our strategy requires
will be organized around three models
when it comes to providing custo-
an evolution of our operating model,
to serve customer needs – simple and
mers with quality solutions – how to
moving from functional excellence
effi cient; managed complexity; agile and
understand and anticipate their
in silos to driving cross-functional
adaptive.
needs. Our industry-leading Paint
collaboration and becoming even more
the Future innovation ecosystem is a
customer focused.
great example of how our pioneering
Seamless business processes will be
effective and cost competitive, allowing
spirit is helping us to continue
Margin management demands strong
greater focus on what matters most.
pushing boundaries.
profi tability analysis, combined with
predictive margin management and
It’s now time for AkzoNobel to become
We have a solid platform for adding
pricing excellence. This will ensure we
the frontrunner. Our strategy is to
to organic growth through targeted
maintain variable margins throughout
Grow & Deliver, as a high-performing
acquisitions. Clear capital allocation
the cycle.
priorities, and a strong balance sheet,
underpin a disciplined approach to
Creating a world class supply
organization, pioneering a world of
possibilities to bring surfaces to life.
conducting value creating acquisitions,
chain requires more effi ciency and
Welcome to our future!
aligned with our strategic mandates.
effectiveness – also in planning
World class
supply chain
Product
oduct
management
management
Commercial excellence
cial excellence
Margin management
G ro w
Network
optimization
Seamless
Seamless
business
business
processes
ocesses
D eliver
Market growth
Strategic mandates
Strategic mandates
Innovation
Acquisitions
Strong foundation
Accelerating
our innovation
We’ve been innovating for more than 200
years. Our pioneering spirit and our passion
for pushing the boundaries of our industry
represent our past, present and future.
For us, innovation means going beyond conventional
expectations, going beyond the imagination of our
customers and going beyond generations. So it
represents both a challenge and a promise.
Our innovation portfolio is influenced by four main
drivers: productivity, surface enhancement, asset
protection and environmental protection. They guide us
on our journey to making a significant and long-lasting
difference to our customers and the planet.
Innovation in 2020
During the year, we continued to introduce a range
of ground-breaking products to the market, while
expanding our digital capabilities. This included adding
antimicrobial properties to our Interpon D1000 and
2000 range of architectural powder coatings, enabling
building interiors to be given increased protection
against microbes such as bacteria and mold. Our
Powder Coatings business also introduced a new 3D
color tool to help architects and specifiers find exactly
the right product for their needs. Meanwhile, Decorative
Paints introduced Dulux EasyCare+, which contains
Scuff Resist technology to help protect interior walls,
and also launched Hammerite Ultima, a rust-busting
water-based exterior paint which can be applied directly
onto any metal surface, without the need for a primer.
Collaborative innovation
We know great innovations happen when different
people work together in a win-win model. A great
example is our Operation Night Watch partnership with
the Rijksmuseum in Amsterdam, the Netherlands. We’re
using our color expertise to work together on three key
projects which demonstrate that understanding history
is essential to building our future.
Our latest Paint the Future regional startup challenge is scheduled to
take place in China in early 2021. It was officially announced by Mark
Kwok, AkzoNobel’s President of China/North Asia.
To help build on its success, we welcomed several new
collaborations in 2020. This included launching our first
regional startup challenge in Brazil, which resulted in
business proposals being awarded in four categories:
Sustainable lifecycle; Smart supply chain and logistics;
New functionalities; and Customer experience. A new
regional startup challenge will be staged in China
in 2021.
Throughout the year, we also made good progress on
joint developments in the area of robotic application, to
help painters work more safely and efficiently. Two of
these projects involve Qlayers and Apellix, both winners
in our 2019 global startup challenge (see page 19). A
third project is ongoing with French early stage startup
Les Companions. This project is focused on developing
a paint robot for interior use on walls and ceilings.
In addition, we advanced the work we’re doing with
two other 2019 winners. Alucha’s circular filler is in
the scale-up phase, while we’re continuing to design
new polymers for low-bake applications with Interface
Polymers. Meanwhile, through our related Paint the
Future supplier program, we also selected five new
projects in 2020 for further acceleration. At the end
of the year, a fully virtual supplier event was staged,
featuring 100 specially invited participants.
Following its 2019 launch, we also made excellent
progress with expanding our global Paint the Future
collaborative innovation ecosystem – which is all about
connecting what we know with what we don’t yet know,
so we can bring new solutions to the market faster.
Another successful project also emerged from a Paint
the Future employee challenge. Two of the teams that
submitted promising proposals joined forces to develop
a company-wide global standard for using augmented
reality in manufacturing.
“Science and
innovation
drive our
future and
I’m proud
this year’s
solutions
went
beyond
expectation
to delive r
value to
us and our
customers.”
Klaas Kruithof,
Chief Technology
Officer
14
Strategy and operations | AkzoNobel Report 2020
AkzoNobel Report 2020 | Strategy and operations
15
DECORATIVE PAINTS ASIA
2020 SUMMARY
2020 HIGHLIGHT
It was a challenging year, but we quickly
stabilized and saw a strong recovery
throughout the region in Q3 and Q4.
We adopted an agile approach in
responding to changes in product mix,
while focusing on operational costs,
complexity reduction and margin
management. South East and South
Asia experienced headwinds most of
the year due to COVID-19 related
channel closures, but despite that, we
achieved signifi cant improvement in
return on sales.
Revenue in € millions
1,144
1,084
916
2018
2019
2020
Key brands
“The proac-
tive support
we offered
was the
basis for
the strong
recovery in
results in
the second
half of
the year.”
Oscar Wezenbeek,
Director of Decorative
Paints South East and
South Asia
“Agile leader-
ship and
strong
stakeholder
partnerships
were key to
restoring our
profi table
business
growth in Q3
and Q4.”
Mark Kwok, Director
of Decorative Paints
North Asia
Decorative Paints revenue
by destination in %
C
B
A
A EMEA
B Asia Pacifi c
C South America
63
26
11
16
Strategy and operations | AkzoNobel Report 2020
We supplied an extensive range of products for the construction of
Indonesia’s new Yogyakarta International Airport. Our decorative paints
were used on the walls, pillar and ceilings, while the company also
provided protective coatings and passive fi re protection.
We supplied 130,000 liters of decorative
paint from our Dulux Professional
range for the interior walls, pillars and
ceilings of Indonesia’s new Yogyakarta
International Airport (pictured below).
Offi cially inaugurated in August, the
airport is equipped with a passenger
terminal spanning 219,000m2 and has a
total capacity of 20 million passengers
a year. The company also provided over
300,000 liters of performance coatings
for the structural steel.
OTHER KEY DEVELOPMENTS
• Strengthened our distribution network
in Mainland China by expanding into
40 new cities and 1,000 additional
stores. Also supplied products for
more than 250 renovation projects in
80 cities
• Dulux launched a fi rst-of-its-kind,
bio-based interior paint in Vietnam
which helps to improve indoor air
quality
• In India, we launched Dulux
SuperClean, an interior water-based
emulsion which makes walls easier to
keep clean
• Launched a digital platform for
painters in China and signed up over
165,000 professionals in 344 cities
• Supplied Dulux Professional range
products for The Exchange 106
skyscraper in Malaysia. It’s currently
South East Asia’s tallest building
• In China, Dulux Forest Breath Biocare
was upgraded with solvent-free
technology
• As part of our partnership with SOS
Children’s Villages, we launched
projects in Indonesia, Vietnam,
Pakistan and Sri Lanka
• Our premium Dulux Forest Breath
emulsion was used to coat the Hong
Kong Palace Museum
• Supplied products for the interior
and exterior walls of Taipei Arena
in Taiwan
DECORATIVE PAINTS ASIA
DECORATIVE PAINTS EMEA
2020 SUMMARY
2020 HIGHLIGHT
2020 SUMMARY
Revenue in € millions
Financial performance was very strong
across the region and we delivered
signifi cant growth in revenue compared
with the previous year. This was driven
mainly by positive price/mix effects,
complexity reduction and cost-saving
programs. The business also benefi ted
from share gains in key markets and the
DIY (do-it-yourself) boom which resulted
from the introduction of COVID-19
lockdown measures.
2020 HIGHLIGHT
We announced two deals as we
moved to boost our presence in the
region. In October, we signed a deal to
acquire the decorative paints business
of Spain’s Industrias Titan S.A.U. (to
be completed in 2021). Titan – also
present in Portugal – is one of Spain’s
best-known brands. The business
shares our commitment to sustainable
product innovation, with much of its
portfolio recognized for its environmental
performance. We also completed the
acquisition of Mauvilac Industries Limited
in Mauritius, strengthening our footprint
in Sub-Saharan Africa and boosting our
position in the African market.
Key brands
“This was a
very strong
year in
which
we achieved
signifi cant
growth in
revenue.”
Jan-Piet van Kesteren,
Director of Decorative
Paints Europe, Middle
East and Africa
2,061
2,129
2,246
2018
2019
2020
OTHER KEY DEVELOPMENTS
• Successfully launched Brave Ground, our 2021 Color
of the Year, securing signifi cant media attention and driving
brand awareness and sales across the region
• Supported artist Sacha Jafri’s world record attempt to create
the largest ever painting on canvas. His Humanity Inspired
project aimed to raise $30 million for charitable causes
around the world (pictured below)
• Launched Dulux EasyCare+, a precision-engineered interior
paint which uses Scuff Resist technology to protect walls and
keep them looking better for longer
• Hammerite Ultima was introduced in several markets. It’s a
water-based exterior paint which can be applied directly to
any metal surface without the need for a primer
• Our Ashington plant in the UK won the Coatings Care
Overall Best Performer Award. The site had zero waste sent
to landfi ll, with the waste recycling rate above the sector
average, while the remainder was incinerated for energy
recovery. Solvent emissions per ton of production were also
among the lowest in the industry
• Simplifi ed and harmonized our business model to reduce the
number of different packs and unique formulations
• Accelerated our digital marketing and sales, which included
the launch of a new web platform and fast scale up of our
eCommerce activity, particularly in Western Europe
We supplied an extensive range of products for the construction of
Indonesia’s new Yogyakarta International Airport. Our decorative paints
were used on the walls, pillar and ceilings, while the company also
provided protective coatings and passive fi re protection.
16
Strategy and operations | AkzoNobel Report 2020
AkzoNobel Report 2020 | Strategy and operations
17
Oscar Wezenbeek,
Mark Kwok, Director
Key brands
quality
2018
2019
2020
It was a challenging year, but we quickly
We supplied 130,000 liters of decorative
stabilized and saw a strong recovery
paint from our Dulux Professional
throughout the region in Q3 and Q4.
range for the interior walls, pillars and
We adopted an agile approach in
ceilings of Indonesia’s new Yogyakarta
responding to changes in product mix,
International Airport (pictured below).
while focusing on operational costs,
Offi cially inaugurated in August, the
complexity reduction and margin
airport is equipped with a passenger
management. South East and South
terminal spanning 219,000m2 and has a
Asia experienced headwinds most of
total capacity of 20 million passengers
the year due to COVID-19 related
a year. The company also provided over
channel closures, but despite that, we
300,000 liters of performance coatings
achieved signifi cant improvement in
for the structural steel.
return on sales.
OTHER KEY DEVELOPMENTS
Revenue in € millions
• Strengthened our distribution network
1,144
1,084
in Mainland China by expanding into
40 new cities and 1,000 additional
916
stores. Also supplied products for
more than 250 renovation projects in
80 cities
• Dulux launched a fi rst-of-its-kind,
bio-based interior paint in Vietnam
which helps to improve indoor air
• In India, we launched Dulux
SuperClean, an interior water-based
emulsion which makes walls easier to
keep clean
• Launched a digital platform for
painters in China and signed up over
165,000 professionals in 344 cities
• Supplied Dulux Professional range
products for The Exchange 106
skyscraper in Malaysia. It’s currently
South East Asia’s tallest building
• In China, Dulux Forest Breath Biocare
was upgraded with solvent-free
technology
• As part of our partnership with SOS
Children’s Villages, we launched
projects in Indonesia, Vietnam,
Pakistan and Sri Lanka
• Our premium Dulux Forest Breath
emulsion was used to coat the Hong
Kong Palace Museum
• Supplied products for the interior
and exterior walls of Taipei Arena
in Taiwan
“The proac-
tive support
we offered
was the
basis for
the strong
recovery in
results in
the second
half of
the year.”
“Agile leader-
ship and
strong
stakeholder
partnerships
were key to
restoring our
profi table
business
growth in Q3
and Q4.”
Director of Decorative
of Decorative Paints
Paints South East and
North Asia
South Asia
Decorative Paints revenue
by destination in %
C
B
A
A EMEA
B Asia Pacifi c
C South America
63
26
11
DECORATIVE PAINTS SOUTH AMERICA
2020 SUMMARY
OTHER KEY DEVELOPMENTS
We delivered signifi cant organic
growth and achieved a very strong
performance, despite the pandemic and
exchange rate volatility. Results were
driven by disciplined pricing, innovation
focused on premium offerings, better
and broader store execution (including
digital store launches) and cost-saving
programs. We also experienced a steep
increase in demand as consumers
chose to renovate their homes during
lockdown, with the help of our wide-
ranging DIY (do-it-yourself) solutions.
• Introduced the Holding Hands
program to support painters and
consumers during COVID-19. It
included partnerships with customers
to help painters via training and
food distribution
• Launched our Coral and Pinturerias
del Centro online stores
• New Sparlack Cetol product lines for
woodcare introduced in Brazil
• Achieved our goal of 100% water
reuse in Mauá, Brazil, where we
installed a water treatment plant
in 2017
Revenue in € millions
462
457
396
2018
2019
2020
“2020 was
nothing
like we had
expected,
and yet we
accom-
plished
much more
than we
expected.”
Daniel Campos, Director
of Decorative Paints
South America
Key brands
Spectacular aircraft takes fl ight
Putting our Coral decorative paints logo on a plane
might seem strange, but it was a creative way for us
to highlight the fact that our products feature more
technology than people may realize. It also helped us
to stand out by letting customers know that as well
as providing advanced solutions for planes, we also
help to color and protect their homes.
The project in question involved creating South
America’s most colorful airplane. Our Coral brand
partnered with Aerospace Coatings colleagues to
work with Azul Airlines and Embraer to pay tribute
to the Spix’s macaw, a national symbol in Brazil.
The design features 58 colors, half of which were
custom made. The Embraer paint team in São José
dos Campos then applied our Aerodur 3001/3002
basecoat clearcoat system.
Decorative Paints supported the project with a “Let’s
Colour” initiative to restore a local church and theater
in Curaçá city. More than 3,000 liters of Coral paint
were used.
2020 HIGHLIGHT
Four startups are collaborating with
AkzoNobel after winning our Paint
the Future Brazil startup challenge.
We received 135 submissions, with 16
of the country’s best startups being
selected to participate in the challenge’s
fi nale held in São Paulo in early
October. Awards were given to Aterra
(Belo Horizonte); Getter (Curitiba)
pictured left; nChemi (São Carlos);
and Standout (São Paulo). Letters of
intent have been signed, demon stra-
ting our commitment to co-developing
sustainable business opportunities.
18
Strategy and operations | AkzoNobel Report 2020
DECORATIVE PAINTS SOUTH AMERICA
CASE STUDY
watch video
Collaboration fuels
our robotic revolution
When it comes to paint application,
we’re waking up to the dawn
of the robots. There’s been a
surge in startups and scale-ups
interested in deploying robotics
to improve how coatings are
currently applied.
18
Strategy and operations | AkzoNobel Report 2020
19
In 2020, we strengthened our strategic partnerships
with Les Companions, Apellix and Qlayers. These
startup collaborations are not only cool, but also
represent leaps in effi ciency, data-driven quality, worker
safety and sustainability.
We fi rst established a connection with Qlayers when
they submitted a winning solution to our Paint the
Future 2019 global startup challenge in the “Smart
application” category – a focus area which refl ects our
belief in syncing our innovative products with innovative
ways to apply them.
Qlayers’ fully automated coating processes will help
our customers coat large industrial surfaces in any
weather, without overspray. We’re now supporting the
development of robust solutions for storage tanks and
wind turbine blades. The customers we’ve already
introduced to Qlayers are really excited for what’s
ahead.
These collaborations are just a few examples of what
we call “going beyond imagination and generations”.
We see working together on new solutions as a way to
push the boundaries of our industry faster and further
towards a more sustainable future.
Aligned with SDG
12 and 17
(see page 30).
2020 SUMMARY
OTHER KEY DEVELOPMENTS
We delivered signifi cant organic
• Introduced the Holding Hands
growth and achieved a very strong
program to support painters and
performance, despite the pandemic and
consumers during COVID-19. It
exchange rate volatility. Results were
included partnerships with customers
driven by disciplined pricing, innovation
to help painters via training and
focused on premium offerings, better
food distribution
and broader store execution (including
• Launched our Coral and Pinturerias
digital store launches) and cost-saving
del Centro online stores
programs. We also experienced a steep
• New Sparlack Cetol product lines for
increase in demand as consumers
woodcare introduced in Brazil
chose to renovate their homes during
• Achieved our goal of 100% water
lockdown, with the help of our wide-
reuse in Mauá, Brazil, where we
ranging DIY (do-it-yourself) solutions.
installed a water treatment plant
in 2017
Revenue in € millions
462
457
396
2018
2019
2020
“2020 was
nothing
like we had
expected,
and yet we
accom-
plished
much more
than we
expected.”
Daniel Campos, Director
of Decorative Paints
South America
Key brands
Spectacular aircraft takes fl ight
Putting our Coral decorative paints logo on a plane
might seem strange, but it was a creative way for us
to highlight the fact that our products feature more
technology than people may realize. It also helped us
to stand out by letting customers know that as well
as providing advanced solutions for planes, we also
help to color and protect their homes.
2020 HIGHLIGHT
Four startups are collaborating with
The project in question involved creating South
AkzoNobel after winning our Paint
America’s most colorful airplane. Our Coral brand
the Future Brazil startup challenge.
partnered with Aerospace Coatings colleagues to
We received 135 submissions, with 16
work with Azul Airlines and Embraer to pay tribute
of the country’s best startups being
to the Spix’s macaw, a national symbol in Brazil.
selected to participate in the challenge’s
The design features 58 colors, half of which were
fi nale held in São Paulo in early
custom made. The Embraer paint team in São José
October. Awards were given to Aterra
dos Campos then applied our Aerodur 3001/3002
(Belo Horizonte); Getter (Curitiba)
basecoat clearcoat system.
pictured left; nChemi (São Carlos);
and Standout (São Paulo). Letters of
Decorative Paints supported the project with a “Let’s
intent have been signed, demon stra-
Colour” initiative to restore a local church and theater
ting our commitment to co-developing
in Curaçá city. More than 3,000 liters of Coral paint
sustainable business opportunities.
were used.
AUTOMOTIVE AND SPECIALTY COATINGS
Revenue in € millions
2020 SUMMARY
OTHER KEY DEVELOPMENTS
1,338
1,318
1,127
2018
2019
2020
Key brands
Revenue by destination in %
A
C
B
A EMEA
B Americas
C Asia Pacifi c
42
31
27
20
Strategy and operations | AkzoNobel Report 2020
It was a challenging year for most of our
markets due to the global pandemic.
It had a signifi cant impact on the
automotive and vehicle refi nish (VR)
sectors, with national lockdowns, limited
vehicles on the road and OEM (original
equipment manufacturing) being put
on hold. The recovery started in the
second half of the year – fi rstly in VR –
and then accelerated towards year-end.
Aerospace was heavily impacted due to
an almost complete stop in air traffi c.
2020 HIGHLIGHT
Our facility in Pruszków, Poland (pictured
left), was expanded to double its
size and is now the company’s most
advanced automotive training center
in Europe. Featuring state-of-the-art
equipment, it will serve as a hub of
learning and collaboration, hosting more
than 1,000 people a year.
Customers will deepen their knowledge
of coatings and application techniques
through a variety of classes, while our
experts will also work closely with them
in the research and development of
potential new products and services.
• Secured a long-term agreement with
American Airlines and won back
business from Korean Airlines
• Launched a new range of low VOC
compliant clearcoats in China to meet
new VOC regulations. Also introduced
a new VOC compliant topcoat for the
commercial vehicles and commercial
trucks markets
• Introduced a radar transparent bright
fi lm for use on vehicles, which will
enhance road safety systems
• Chosen by BMW Group to be a
trusted supplier of vehicle refi nish
products and services to a large
part of its distribution network around
the world
• Made major progress in the digital
transformation of our VR color tools,
with more than 2,000 new MIXIT
licenses
• Received Advanced Auto Parts’
award for New Vendor of the Year –
North America
• Mapaero integration progressed
well, with product rebranding activities
now complete
We secured a supply deal with BMW Group which means our Sikkens and
Lesonal vehicle refi nish brands are now approved for paint repairs of BMW and
MINI passenger cars in 44 countries around the world.
AUTOMOTIVE AND SPECIALTY COATINGS
Revenue in € millions
2020 SUMMARY
OTHER KEY DEVELOPMENTS
1,338
1,318
1,127
2018
2019
2020
vehicles on the road and OEM (original
new VOC regulations. Also introduced
Key brands
second half of the year – fi rstly in VR –
trucks markets
It was a challenging year for most of our
• Secured a long-term agreement with
markets due to the global pandemic.
American Airlines and won back
It had a signifi cant impact on the
business from Korean Airlines
automotive and vehicle refi nish (VR)
• Launched a new range of low VOC
sectors, with national lockdowns, limited
compliant clearcoats in China to meet
equipment manufacturing) being put
a new VOC compliant topcoat for the
on hold. The recovery started in the
commercial vehicles and commercial
and then accelerated towards year-end.
• Introduced a radar transparent bright
Aerospace was heavily impacted due to
fi lm for use on vehicles, which will
an almost complete stop in air traffi c.
enhance road safety systems
2020 HIGHLIGHT
• Chosen by BMW Group to be a
trusted supplier of vehicle refi nish
products and services to a large
part of its distribution network around
Our facility in Pruszków, Poland (pictured
the world
left), was expanded to double its
• Made major progress in the digital
size and is now the company’s most
transformation of our VR color tools,
advanced automotive training center
with more than 2,000 new MIXIT
in Europe. Featuring state-of-the-art
licenses
equipment, it will serve as a hub of
• Received Advanced Auto Parts’
learning and collaboration, hosting more
award for New Vendor of the Year –
than 1,000 people a year.
North America
• Mapaero integration progressed
Customers will deepen their knowledge
well, with product rebranding activities
of coatings and application techniques
now complete
through a variety of classes, while our
experts will also work closely with them
in the research and development of
potential new products and services.
Revenue by destination in %
A
C
B
A EMEA
B Americas
C Asia Pacifi c
42
31
27
20
Strategy and operations | AkzoNobel Report 2020
We secured a supply deal with BMW Group which means our Sikkens and
Lesonal vehicle refi nish brands are now approved for paint repairs of BMW and
MINI passenger cars in 44 countries around the world.
“It was a
diffi cult year,
but with cost
measures,
new busi-
ness op-
portunities
and fast
recovery, we
achieved a
more than
acceptable
year-end
result.”
Patrick Bourguignon,
Director of Automotive
and Specialty Coatings
We supplied coatings for several unique liveries during the year, including a turtle design for All Nippon Airways and panda
artwork for China Southern Airlines. Our products were used on a trio of All Nippon A380s, with 3,300 liters of Aerobase and
Aviox CC UVR paint being used to apply the eye-catching turtle design. The panda was added to an A330-300 using 30
different shades, with more than 20 of them being new colors developed by experts at our lab in Bangalore, India.
Boeing approval for color blending in China
Our aerospace coatings facility in Dongguan, China, has been
qualifi ed by aircraft manufacturer Boeing to color blend the
company’s Aerodur 3001 basecoat.
The certifi cation means the site has been certifi ed by Boeing
to blend our industry-leading basecoat/clearcoat system,
Aerodur 3001/3002, locally in China with OEM (original equipment
manufacturer) approval. The Dongguan facility is now also
listed on Boeing’s offi cial qualifi ed products list (QPL) for
BMS10-72 specifi cation.
QPL approval status is an important milestone for the facility,
which opened in 2017 to specifi cally serve the North and South
Asian aviation market and deliver cutting-edge technologies faster
and more reliably.
AkzoNobel Report 2020 | Strategy and operations
21
2020 SUMMARY
Revenue in € millions
Our customer markets experienced a
varied impact from COVID-19 in the fi rst
half of 2020, with Asia being affected fi rst
and Europe and the Americas somewhat
later. We then saw steady market
recovery in the second half of the year.
Despite the COVID-19 impact, full-year
revenue for Packaging Coatings and Coil
and Extrusion Coatings increased, while
Wood Finishes and Wood Adhesives
were only slightly lower. Underlying
demand for packaging coatings
continued its strong momentum in all
regions. Construction and infrastructure
initiatives designed to reignite economic
growth also strengthened demand for
Coil Coatings. Meanwhile, breakthroughs
in technology, channel management and
market positions set the scene for 2021.
2020 HIGHLIGHT
We launched a fi rst-of-its-kind 100%
UV cured exterior range of coatings
for windows. The system consists of
a putty, primer and topcoat for wood
window frames and a topcoat for
PVC window applications. By cutting
out up to 16 hours of drying time, the
RUBBOL range can signifi cantly save on
production time and energy costs, while
providing leading performance. It also
produces zero emissions and requires
no mixing, making the production
process more sustainable.
1,726
1,707
1,634
2018
2019
2020
Key brands
Revenue by destination in %
A
C
B
A EMEA
B Americas
C Asia Pacifi c
43
31
26
INDUSTRIAL COATINGS
“In an un -
precedented
year, we
focused on
delivering
exceptional
value and
quality to
our global
customer
base, while
completing
a business
transfor-
mation and
delivering
strong per-
formance.”
Simon Parker,
Director of Industrial
Coatings
22
Strategy and operations | AkzoNobel Report 2020
INDUSTRIAL COATINGS
“In an un -
precedented
year, we
focused on
delivering
exceptional
value and
quality to
our global
customer
base, while
completing
a business
transfor-
mation and
delivering
strong per-
formance.”
Simon Parker,
Director of Industrial
Coatings
2020 SUMMARY
Revenue in € millions
1,726
1,707
1,634
2018
2019
2020
and Extrusion Coatings increased, while
Key brands
Our customer markets experienced a
varied impact from COVID-19 in the fi rst
half of 2020, with Asia being affected fi rst
and Europe and the Americas somewhat
later. We then saw steady market
recovery in the second half of the year.
Despite the COVID-19 impact, full-year
revenue for Packaging Coatings and Coil
Wood Finishes and Wood Adhesives
were only slightly lower. Underlying
demand for packaging coatings
continued its strong momentum in all
regions. Construction and infrastructure
initiatives designed to reignite economic
growth also strengthened demand for
Coil Coatings. Meanwhile, breakthroughs
in technology, channel management and
2020 HIGHLIGHT
We launched a fi rst-of-its-kind 100%
UV cured exterior range of coatings
for windows. The system consists of
a putty, primer and topcoat for wood
window frames and a topcoat for
PVC window applications. By cutting
out up to 16 hours of drying time, the
A
C
B
market positions set the scene for 2021.
Revenue by destination in %
RUBBOL range can signifi cantly save on
A EMEA
production time and energy costs, while
B Americas
providing leading performance. It also
C Asia Pacifi c
produces zero emissions and requires
no mixing, making the production
process more sustainable.
43
31
26
OTHER KEY DEVELOPMENTS
• As the market leader in wood finishes
in North America, we continued
to make excellent progress on
transforming the manufacturing
capability at our facility in High Point,
North Carolina. The €50 million
investment will help drive quality
and performance improvement for
our customers
• Strong year for Packaging Coatings,
with the societal shift away from
single-use plastic to cans – a more
sustainable solution compared with
plastic bottles
• Launched TRINAR A-CLAD, a new
coil coating system for aluminum
composite panels (see picture
below). It’s a high-performance, 70%
polyvinylidene fluoride system for
commercial projects which enables
coaters and specifiers to source
consistent, high-performing coatings
for entire building exteriors
• Architects and designers can now
instantly access our TRINAR color
libraries and use them in design
software to create new projects
and specify AkzoNobel products
as they become available on
leading building information modeling
(BIM) platforms
• Introduced augmented reality in
collaboration with our Integrated
Supply Chain team for remote testing
and line management in response to
restricted travel
• Successfully launched new LinkedIn
and Facebook platforms for our
North American Chemcraft brand
and Coil and Extrusion Coatings
business to help increase our
online presence
Color of the Year brings surfaces to life
We introduced four on-trend palettes across all
wood markets as part of the company’s 2021 Color
of the Year launch. The Expressive, Trust, Time and
Earth palettes each feature the Color of the Year –
Brave Ground.
“Homeowners and designers want to try new things
and combine the old with the new, both in color and
style,” explains Rob Haley, Color Trends Manager
for our Wood Coatings business.
“We want to inspire and empower our customers
and help them to achieve a contemporary and
personal aesthetic as they transform living spaces
and working environments.”
Our wood coatings color experts worked closely
with AkzoNobel’s global color and design team to
develop on-trend palettes for a variety of paints and
coatings customers.
22
Strategy and operations | AkzoNobel Report 2020
AkzoNobel Report 2020 | Strategy and operations
23
TRINAR A-CLAD offers a smooth,
uniform finish during application and
comes in a broad range of color and
aesthetic options.
MARINE AND PROTECTIVE COATINGS
2020 SUMMARY
Revenue in € millions
It was a challenging year, due to the
impact of COVID-19 and a very diffi cult
oil and gas market. However, the
fundamentals of the marine, protective
and yacht industries are robust and
we’re confi dent they’ll emerge from
this crisis as an essential driver for the
global recovery.
We adapted quickly and effectively
to keep facilities open and maintain
the excellent levels of support that
our customers expect globally. As
the situation evolved, we remained
proactive in supporting marine fl eet
owners through their dry dock cycles;
our technical and engineering service
teams maintained their on-site presence
with customers at ship and fabrication
yards; and we helped oil and gas majors
maintain service continuity on projects
already underway.
We’ll continue working closely with
customers to avoid service disruption
and deliver on the commercialization of
our product innovation.
1,279
1,290
1,068
2018
2019
2020
2020 HIGHLIGHT
We took great pride in supporting
health authorities with their emergency
response to COVID-19 in China,
where early on in the year we
contributed to the construction of
emergency quarantine facilities (pictured
below). We were able to make our
advanced anti-corrosion coating
systems available in real time for six
two-story buildings in Hong Kong, which
provided 120 single rooms. Made of
steel as ready-to-use modules, they
featured our trusted Interzinc/Interseal/
Interthane anti-corrosion coating system
to help protect the steel structure.
Although Mainland China was still in partial lockdown at the time, we reacted swiftly to supply essential products and services,
enabling the Pak Heung emergency quarantine facility in Hong Kong to be completed as quickly as possible.
24
Strategy and operations | AkzoNobel Report 2020
“We adapted
quickly and
effectively
to maintain
the excellent
levels of
support our
customers
expect
globally.”
Jean Michel Gauthier,
Director of Marine and
Protective Coatings
Key brands
Revenue by destination in %
C
A
B
A EMEA
B Americas
C Asia Pacifi c
34
23
43
MARINE AND PROTECTIVE COATINGS
2020 SUMMARY
Revenue in € millions
It was a challenging year, due to the
impact of COVID-19 and a very diffi cult
1,279
1,290
1,068
oil and gas market. However, the
fundamentals of the marine, protective
and yacht industries are robust and
we’re confi dent they’ll emerge from
this crisis as an essential driver for the
global recovery.
We adapted quickly and effectively
2018
2019
2020
2020 HIGHLIGHT
to keep facilities open and maintain
We took great pride in supporting
the excellent levels of support that
health authorities with their emergency
our customers expect globally. As
response to COVID-19 in China,
the situation evolved, we remained
where early on in the year we
proactive in supporting marine fl eet
contributed to the construction of
owners through their dry dock cycles;
emergency quarantine facilities (pictured
our technical and engineering service
below). We were able to make our
teams maintained their on-site presence
advanced anti-corrosion coating
with customers at ship and fabrication
systems available in real time for six
yards; and we helped oil and gas majors
two-story buildings in Hong Kong, which
maintain service continuity on projects
provided 120 single rooms. Made of
already underway.
steel as ready-to-use modules, they
featured our trusted Interzinc/Interseal/
We’ll continue working closely with
Interthane anti-corrosion coating system
customers to avoid service disruption
to help protect the steel structure.
and deliver on the commercialization of
our product innovation.
Although Mainland China was still in partial lockdown at the time, we reacted swiftly to supply essential products and services,
enabling the Pak Heung emergency quarantine facility in Hong Kong to be completed as quickly as possible.
24
Strategy and operations | AkzoNobel Report 2020
“We adapted
quickly and
effectively
to maintain
the excellent
levels of
support our
customers
expect
globally.”
Jean Michel Gauthier,
Director of Marine and
Protective Coatings
Key brands
Revenue by destination in %
C
A
B
A EMEA
B Americas
C Asia Pacifi c
34
23
43
We’ve got the power!
Early in the year, we supplied our trusted solutions for
the largest operational offshore wind farm in Asia.
Located just off the coast of Rudong county in
Jiangsu province, China, the Huaneng Rudong wind
farm is made up of 70 turbines, capable of producing
in excess of 900 million kWh of electricity a year.
Many of the wind farm assets are protected with
advanced anti-corrosion coatings from our
International range, which are specially designed
for offshore performance. The offshore wind farm’s
booster stations (pictured below) are also protected
with our coatings, including the use of our renowned
Chartek passive fire protection. These stations
collect, maximize and transmit power generated by
the turbines to the onshore grid.
AkzoNobel Report 2020 | Strategy and operations
25
Built in 1901, the Ester was a maritime marvel and won dozens of competitions before an onboard fire unfortunately sank
her in 1939. Decades later she was found on the seabed outside Örnsköldsvik in Sweden. We supplied our world renowned
yacht coatings for the painstaking restoration, which has enabled her to start winning silverware again. The yacht took part
in the Monaco Yacht Classic and won the 2019 Restoration Prize. Not bad for a vessel which spent nearly 75 years at the
bottom of the sea.
OTHER KEY DEVELOPMENTS
• Acquired New Nautical Coatings,
owner of the premium Sea Hawk
brand, to increase our presence in the
North American yacht coatings market
• Continued to grow in the wind energy
market, where we provide a one-
stop solution for onshore and offshore
wind projects, from foundations
to blades
• We maintained our leading position
on key global LNG new construction
projects and remain the supplier of
choice with unique value propositions
for assets operating in Arctic climates
• We continued to expand our
sustainability credentials by
introducing lower VOC and
solvent-free product technologies
for protective and marine coating
applications (Interzinc 52E, Interthane
990E and Intergard 9700)
• Commercialization of new technology
for our customers in the yacht industry
continued. Our Awlfair SF spray fillers
deliver best-in-class productivity and
continue to be broadly adopted in the
superyacht market
• Made further investments in obtaining
Environmental Product Declarations
(EPDs) for green building applications,
helping customers to achieve better
sustainability rankings for their
buildings
• Continued to respond to shipyard
needs for low VOC, high solids
coating schemes with the launch
of Intersmooth 7200, a new high-
performance silyl methacrylate
technology
• Scaled up our digital marketing
deployment, reaching out to more
customers and more industry experts
to overcome COVID-19 travel
restrictions. We published more than
40 learning programs and professional
courses, reaching nearly four million
people
• Expanded our brand presence
through social media globally and
introduced specific channels in China
to support local market growth in
marine and protective coatings
POWDER COATINGS
2020 SUMMARY
Revenue by destination in %
We started the year in a strong position,
but were soon impacted by COVID-19.
The automotive segment was the most
affected. However, we repositioned
our efforts and made gains in the
architectural and industrial segments
to compensate.
We then recovered strongly in the
second half of the year and delivered
excellent results, driven by robust sales.
We showed extreme resilience and an
ability to adapt, turning adversity into
opportunity while taking good care of
all our people.
Revenue in € millions
1,214
1,229
1,128
2018
2019
2020
Key brands
“I’m really
proud we
showed
resilience
in a year
of extremes
and were
able to
deliver
excellent
results.”
Daniela Vlad, Director of
Powder Coatings
C
A
B
A EMEA
B Americas
C Asia Pacifi c
45
20
35
2020 HIGHLIGHT
We completed the acquisition of Stahl
Performance Powder Coatings and
its range of products for heat sensitive
substrates, which has opened up
exciting new market opportunities.
The commercially ready technology we
acquired is the only one of its kind in the
powder coatings industry. It includes
both UV and thermally curing powders
and will enable us to penetrate the ultra-
low cure (80-100°C) domain, opening
up new markets based on applying
powder to temperature sensitive
substrates such as MDF, plywood,
thermoplastics and composites.
Powder on wood is a rapidly
growing area within the coatings
industry as customers look to
embrace the sustainability benefi ts
that powder has to offer.
The technology we’ve acquired
from Stahl (which uses less energy)
is mainly focused on the furniture,
architectural and industrial markets.
26
Strategy and operations | AkzoNobel Report 2020
POWDER COATINGS
2020 SUMMARY
Revenue by destination in %
We started the year in a strong position,
but were soon impacted by COVID-19.
The automotive segment was the most
affected. However, we repositioned
our efforts and made gains in the
architectural and industrial segments
to compensate.
We then recovered strongly in the
second half of the year and delivered
excellent results, driven by robust sales.
We showed extreme resilience and an
ability to adapt, turning adversity into
opportunity while taking good care of
all our people.
Revenue in € millions
1,214
1,229
1,128
2018
2019
2020
Key brands
“I’m really
proud we
showed
resilience
in a year
of extremes
and were
able to
deliver
excellent
results.”
C
A
B
A EMEA
B Americas
C Asia Pacifi c
45
20
35
2020 HIGHLIGHT
We completed the acquisition of Stahl
Performance Powder Coatings and
its range of products for heat sensitive
substrates, which has opened up
exciting new market opportunities.
both UV and thermally curing powders
and will enable us to penetrate the ultra-
low cure (80-100°C) domain, opening
up new markets based on applying
powder to temperature sensitive
substrates such as MDF, plywood,
thermoplastics and composites.
The commercially ready technology we
Daniela Vlad, Director of
acquired is the only one of its kind in the
Powder Coatings
powder coatings industry. It includes
Powder on wood is a rapidly
growing area within the coatings
industry as customers look to
embrace the sustainability benefi ts
that powder has to offer.
The technology we’ve acquired
from Stahl (which uses less energy)
is mainly focused on the furniture,
architectural and industrial markets.
OTHER KEY DEVELOPMENTS
• Achieved a signifi cant recovery
overall for the business, particularly in
China in the second half of the year,
following the COVID-19 outbreak
• Added antimicrobial properties to
our Interpon D1000 and 2000 range
of architectural powder coatings. It
means building interiors can now be
given increased protection against
microbes such as bacteria and mold
• Launched a unique 3D color tool to
help architects and specifi ers fi nd
exactly the right product for their
needs. By allowing people to rotate
samples digitally and view them in the
context of different environments, we
can deliver a truly realistic impression
of what the powder fi nish would look
like in real life
• Through our strong Resicoat brand
and technology, we’re opening up
new markets in electric vehicles,
renewable energy and drinking water,
which will help us capture future
trends and opportunities
• Introduced additions to our Interpon
D2525 Flex line of products, the
fi rst and only powder coatings
range to combine the weatherability
of superdurable powder coatings
with the fl exibility or mechanical
performance advantages of standard
durable systems
• Strengthened all our digital channels,
including e-commerce. For example,
we partnered with Prismatic Powders
to enable customers to place orders
for less than a single box of selected
Interpon Ready-to-Ship (RTS)
powders and have them shipped
within three business days
• Continued to invest in our factory
footprint to keep up with increasing
global demand for powder coatings
• Started building a €20 million facility at
our multi-site in Chungli, Taiwan. The
fully automated plant will help us meet
growing demand in many markets
Expansion brings sustainable new life to
historic building
In September, we announced a €20 million investment at our Como
site in Italy. The facility – our biggest plant in Europe for producing
powder coatings – will house a major capacity expansion for the
production of automotive products. It will additionally provide
strategic back-up for our Arnsberg site in Germany (where a new
line is also being added), helping to secure customer supply.
The extra capacity in Como is being installed in a renovated
building, ensuring a sustainable reuse of an historic part of the site.
As well as introducing advanced equipment and technology to
deliver higher productivity rates and effi ciency gains, the
new operation in Como will also use heat recovery to reduce
energy consumption.
26
Strategy and operations | AkzoNobel Report 2020
AkzoNobel Report 2020 | Strategy and operations
27
CASE STUDY
PRISM program shines light
on single ERP platform
When we introduced our
new paints and coatings
organizational structure
back in 2017, it set
the requirement for
a new IT architecture
within AkzoNobel.
This heralded the start of a multi-
year program (called PRISM) to
redesign and implement standard
processes and a single platform
to support them.
PRISM is regarded as an important enabler of the
company’s vision and strategy, because it’s
helping to eradicate unnecessary complexity while
introducing consistent and precise processes across
the company. It aims to reduce costs, enhance
effi ciency and transform the way of working across
the organization.
Phase 1 was completed in 2020 and, following its
success, Phase 2 started in 2021 and will continue
through to 2023.
Effective roll-out
During the program’s initiation, all the processes across
our business units (BUs) and functions were reviewed
and harmonized, while a level of standardization and
centralization was also defi ned. To help ensure an
effective roll-out, we appointed Global Process Owners
(GPOs) for the specifi c process areas to oversee
standardization and optimization.
The PRISM program formally started being introduced
in 2018. It replaced the fragmented and BU-oriented
application landscape with a single business
platform. It’s set up on a multi-region basis, which
involves projects being rolled out and implemented
in parallel. The virtual program operates in several
regions with a 200-strong team.
The methodology from previous ERP implementations
and acquisitions is further enhanced and industrialized
and is a key asset in rolling out the process
standardization. In light of the COVID-19 pandemic,
the roll-outs have continued in a remote way.
Following the completion of Phase 1, more than
85% of total revenue runs on SAP driven platforms,
and 65% of revenue is covered by one single SAP
platform, powered by HANA technology. The further
consolidation of platforms into one single SAP platform
enables us to standardize, integrate and harmonize
processes and deliver additional digital initiatives,
consistent customer interactions and a truly integrated
supply chain.
Phase 2 started in China, with further roll-outs planned
in Asia, Europe, Africa and the Americas. This will
add another 12% of total revenue on one single
SAP platform with integrated solutions for formula
management and product data sheets.
28
“PRISM is an
important
enabler
for precise
processes
and un-
locking
value in the
company.”
Pabus Vos, PRISM
Program Director
PRISM program shines light
on single ERP platform
CASE STUDY
When we introduced our
new paints and coatings
organizational structure
back in 2017, it set
the requirement for
a new IT architecture
within AkzoNobel.
This heralded the start of a multi-
year program (called PRISM) to
redesign and implement standard
processes and a single platform
to support them.
PRISM is regarded as an important enabler of the
involves projects being rolled out and implemented
company’s vision and strategy, because it’s
in parallel. The virtual program operates in several
helping to eradicate unnecessary complexity while
regions with a 200-strong team.
introducing consistent and precise processes across
the company. It aims to reduce costs, enhance
The methodology from previous ERP implementations
effi ciency and transform the way of working across
and acquisitions is further enhanced and industrialized
Phase 1 was completed in 2020 and, following its
the roll-outs have continued in a remote way.
success, Phase 2 started in 2021 and will continue
and is a key asset in rolling out the process
standardization. In light of the COVID-19 pandemic,
Following the completion of Phase 1, more than
85% of total revenue runs on SAP driven platforms,
and 65% of revenue is covered by one single SAP
the organization.
through to 2023.
Effective roll-out
During the program’s initiation, all the processes across
platform, powered by HANA technology. The further
our business units (BUs) and functions were reviewed
consolidation of platforms into one single SAP platform
and harmonized, while a level of standardization and
enables us to standardize, integrate and harmonize
centralization was also defi ned. To help ensure an
processes and deliver additional digital initiatives,
effective roll-out, we appointed Global Process Owners
consistent customer interactions and a truly integrated
(GPOs) for the specifi c process areas to oversee
supply chain.
standardization and optimization.
The PRISM program formally started being introduced
in Asia, Europe, Africa and the Americas. This will
in 2018. It replaced the fragmented and BU-oriented
add another 12% of total revenue on one single
application landscape with a single business
SAP platform with integrated solutions for formula
platform. It’s set up on a multi-region basis, which
management and product data sheets.
Phase 2 started in China, with further roll-outs planned
“PRISM is an
important
enabler
for precise
processes
and un-
locking
value in the
company.”
Pabus Vos, PRISM
Program Director
SUSTAINABILITY
STATEMENTS
This section explains our sustainability
performance in more detail. It explains our
ambitions, outlines our approach to creating
shared value and shows our performance
on key economic, environmental and social
indicators.
Our approach to sustainable business
People
Note 1: Employees
Note 2: Health and safety
Note 3: AkzoNobel Cares
Note 4: Human rights
Planet
Note 5: Reducing carbon emissions
Note 6: Towards a zero waste company
Note 7: Responsible procurement
Paint
Note 8: Sustainable solutions and
customer value
Managing sustainability
Sustainability performance summary
30
32
33
34
36
37
39
41
42
44
46
47
50
52
For additional information, visit: https://www.
akzonobel.com/en/about-us/sustainability-
The indicators that fall within the scope of
limited assurance of our external auditor are
marked with the following symbol:
See page 138 for the Assurance report of the
independent auditor, which includes details on
scoping and outcomes.
28
29
Herbert Brandl | Untitled | 2000 | oil paint on canvas |
120 x 100 cm | Collection AkzoNobel Art Foundation
SUSTAINABILITY
Our approach
to sustainable
business
PEOPLE
Ambitions
PLANET
Ambitions
PAINT
Ambitions
Moving
towards
zero waste
Sustainability is one of our core values and is integrated
in everything we do. We strive to lead our industry by
pioneering a world of possibilities to empower people
and reduce our impact on the planet, while consistently
innovating to deliver the most sustainable solutions
for our customers. That’s why we call our approach to
sustainable business “People. Planet. Paint.”
People: We act with integrity and respect human rights
across our operations and value chain, embracing
diversity and inclusion, to transform the communities in
which we operate.
Planet: We minimize our environmental footprint,
reducing carbon emissions and moving towards zero
waste by pioneering increasingly sustainable solutions
and processes.
Paint: We constantly innovate to bring surfaces to
life by offering our customers the most sustainable
solutions that go beyond generations.
Our approach to sustainable business
is also designed to contribute to the
global agenda represented by the United
Nations Sustainable Development Goals.
We believe our products and ongoing
innovation can have the biggest impact
on the following goals:
Top
quartile
in organizational
health score
>1,000 projects to help
revitalize communities
by 2025
>35,000 members of local
communities trained by 2025
Zero injuries through
operational excellence
>30%
Female
executives
by 2025
2020 performance
2020 performance
2020 performance
Organizational
health score
69
21%
Female executives
+ Safety (TRR)*
0.23
+ Community projects 170
+ Community
members trained
2,669
www.akzonobel.com/
en/about-us/sustainability-
* Number includes AkzoNobel employees and
temporary workers
30
Sustainability statements | AkzoNobel Report 2020
50%
less carbon
emissions
by 2030*
100% renewable
electricity by 2030
>30% energy reduction
by 2030
100% reusable waste by 2030
100% of our most water
intensive sites reusing water
by 2030
++
Carbon reduction*
19%
++
Renewable electricity
40%
+
Energy reduction*
++
Waste reuse
4%
58%
* Reduction compared with
2018 baseline
++ Ahead of schedule
+ On schedule
50% recycled content to be
used in its plastic packaging
by Deco Europe by 2025
+ Sustainable
solutions 40%
SUSTAINABILITY
Our approach
to sustainable
business
PEOPLE
PEOPLE
PEOPLE
Ambitions
Ambitions
Ambitions
Sustainability is one of our core values and is integrated
in everything we do. We strive to lead our industry by
pioneering a world of possibilities to empower people
and reduce our impact on the planet, while consistently
innovating to deliver the most sustainable solutions
for our customers. That’s why we call our approach to
sustainable business “People. Planet. Paint.”
People: We act with integrity and respect human rights
across our operations and value chain, embracing
diversity and inclusion, to transform the communities in
which we operate.
Planet: We minimize our environmental footprint,
reducing carbon emissions and moving towards zero
waste by pioneering increasingly sustainable solutions
and processes.
Paint: We constantly innovate to bring surfaces to
life by offering our customers the most sustainable
solutions that go beyond generations.
Our approach to sustainable business
is also designed to contribute to the
global agenda represented by the United
Nations Sustainable Development Goals.
We believe our products and ongoing
innovation can have the biggest impact
on the following goals:
Top
Top
Top
quartile
quartile
quartile
in organizational
in organizational
in organizational
health score
health score
health score
>30%
>30%
>30%
Female
Female
Female
executives
executives
executives
by 2025
by 2025
by 2025
>1,000 projects to help
>1,000 projects to help
>1,000 projects to help
revitalize communities
revitalize communities
revitalize communities
by 2025
by 2025
by 2025
>35,000 members of local
>35,000 members of local
>35,000 members of local
communities trained by 2025
communities trained by 2025
communities trained by 2025
Zero injuries through
Zero injuries through
Zero injuries through
operational excellence
operational excellence
operational excellence
Organizational
Organizational
Organizational
health score
health score
health score
69
69
69
Female executives
Female executives
Female executives
21%
21%
21%
+ Safety (TRR)*
+ Safety (TRR)*
+ Safety (TRR)*
0.23
0.23
0.23
+ Community projects 170
+ Community projects 170
+ Community projects 170
+ Community
+ Community
+ Community
members trained
members trained
members trained
2,669
2,669
2,669
PLANET
PLANET
PLANET
Ambitions
Ambitions
Ambitions
Moving
Moving
Moving
towards
towards
towards
zero waste
zero waste
zero waste
PAINT
PAINT
PAINT
Ambitions
Ambitions
Ambitions
>50%
of revenue from
sustainable
solutions by 2030
50%
50%
50%
less carbon
less carbon
less carbon
emissions
emissions
emissions
by 2030*
by 2030*
by 2030*
100% renewable
100% renewable
100% renewable
electricity by 2030
electricity by 2030
electricity by 2030
>30% energy reduction
>30% energy reduction
>30% energy reduction
by 2030
by 2030
by 2030
100% reusable waste by 2030
100% reusable waste by 2030
100% reusable waste by 2030
100% of our most water
100% of our most water
100% of our most water
intensive sites reusing water
intensive sites reusing water
intensive sites reusing water
by 2030
by 2030
by 2030
50% recycled content to be
50% recycled content to be
50% recycled content to be
used in its plastic packaging
used in its plastic packaging
used in its plastic packaging
by Deco Europe by 2025
by Deco Europe by 2025
by Deco Europe by 2025
2020 performance
2020 performance
2020 performance
2020 performance
2020 performance
2020 performance
2020 performance
2020 performance
2020 performance
++
++
++
Carbon reduction*
Carbon reduction*
Carbon reduction*
19%
19%
19%
+ Sustainable
+ Sustainable
+ Sustainable
solutions 40%
solutions 40%
solutions 40%
+
+
+
Energy reduction*
Energy reduction*
Energy reduction*
4%
4%
4%
Renewable electricity
Renewable electricity
Renewable electricity
Waste reuse
Waste reuse
Waste reuse
40%
40%
40%
58%
58%
58%
++
++
++
++
++
++
www.akzonobel.com/
en/about-us/sustainability-
* Number includes AkzoNobel employees and
* Number includes AkzoNobel employees and
* Number includes AkzoNobel employees and
temporary workers
temporary workers
temporary workers
* Reduction compared with
* Reduction compared with
2018 baseline
2018 baseline
* Reduction compared with
2018 baseline
++ Ahead of schedule
++ Ahead of schedule
++ Ahead of schedule
+ On schedule
+ On schedule
+ On schedule
30
Sustainability statements | AkzoNobel Report 2020
AkzoNobel Report 2020 | Sustainability statements
31
PEOPLE
Our approach to
“People” covers many
different aspects. It’s
about ensuring a safe
work environment,
developing our talented
workforce, embracing
our values and our
approach to human
rights and diversity.
It also includes the
numerous local projects
we carry out through our
AkzoNobel Cares societal
program, which offer
signifi cant benefi ts to
people and communities
around the world.
The external recognition we continue to
receive indicates that we’re on the right track.
We’ve been actively participating in several
assessments for many years, with some of
our main achievements and rankings outlined
below:
Rating agency Key achievement
Sustainalytics
We’re considered a “low risk” company, which is the best performance level in the chemical industry
MSCI
We’ve received the highest possible rating (AAA) for fi ve consecutive years
FTSE4Good
We’ve maintained our score and have been well above the industry average for fi ve consecutive years
EcoVadis
ISS Oekom
ChemScore
We were awarded a Platinum rating in the latest review, placing us in the top 1% in the industry
We received a score of B- as of April 2020, which makes us part of the top 10% in the industry
We’re the highest ranked paints and coatings company – and in third place overall. AkzoNobel was
also one of only four companies to receive a special mention for being “ahead of the rest” when it
comes to green chemistry and the development of safer chemicals
Collaborations
We’re aware that we can’t
drive the sustainability agenda
by ourselves. So we seek out
collaborations, for example
by being an active member
of various associations and
organizations.
Mandate. As a member of
the UN Global Alliance to
Eliminate Lead in Paint, we
were the fi rst major paint
company to eliminate lead
pigments and driers in all our
paint products and continue
to do so when we acquire
new companies.
Climate Group initiative), which
aims to move towards 100%
renewable energy. We report
the progress on our RE100
target annually, which in turn
is published in their annual
report as part of an overview
of progress by all members.
World Green Building
Council
On a global level, we’re a
member of the WGBC’s
Corporate Advisory Board
(CAB). We’re also a member
of various local Green Building
Councils (GBCs), for example
in South East Asia and the
Middle East.
United
Nations
Global
Compact
We’ve been
a signatory of the UN Global
Compact since 2004 and
communicate about our
progress on an annual basis.
We’re also a signatory to the
Responsible Care® Global
Charter and the CEO Water
Together for Sustainability
As a Together for Sustainability
(TfS) member, we contribute
to its development, growth
and success, for example
by actively participating in
workstreams and decision-
making bodies. We’ve been
part of the third party audit
workstream for many years
and now contribute to the
new greenhouse gas Scope
3 workstream, where we use
the leverage of the industry
initiative to create awareness
and reach suppliers on a
larger scale.
RE100
Since 2017, we’ve been a
member of the RE100 (a
Dutch
Sustainable
Growth
Coalition
We’re part of a broad
coalition of Dutch companies
to continue focusing on
sustainability while using
the UN SDGs as a guiding
compass to defi ne and
measure our efforts. This will
not only help us to mitigate
climate risks, but will also
enable us to create a more
resilient economy and a
more inclusive society. We
endorse a strong focus on
sustainability – such as the
EU Green Deal – as one of the
cornerstones of the COVID-19
recovery plan, while continuing
to provide long-term certainty
regarding the Dutch climate
agreement and measurable
commitments.
32
Sustainability statements | AkzoNobel Report 2020
Our approach to
“People” covers many
different aspects. It’s
about ensuring a safe
work environment,
developing our talented
workforce, embracing
our values and our
approach to human
rights and diversity.
It also includes the
numerous local projects
we carry out through our
AkzoNobel Cares societal
program, which offer
signifi cant benefi ts to
people and communities
around the world.
The external recognition we continue to
assessments for many years, with some of
receive indicates that we’re on the right track.
our main achievements and rankings outlined
PEOPLE
We’ve been actively participating in several
below:
Rating agency Key achievement
Sustainalytics
We’re considered a “low risk” company, which is the best performance level in the chemical industry
MSCI
We’ve received the highest possible rating (AAA) for fi ve consecutive years
FTSE4Good
We’ve maintained our score and have been well above the industry average for fi ve consecutive years
EcoVadis
ISS Oekom
ChemScore
We were awarded a Platinum rating in the latest review, placing us in the top 1% in the industry
We received a score of B- as of April 2020, which makes us part of the top 10% in the industry
We’re the highest ranked paints and coatings company – and in third place overall. AkzoNobel was
also one of only four companies to receive a special mention for being “ahead of the rest” when it
comes to green chemistry and the development of safer chemicals
Collaborations
Mandate. As a member of
Climate Group initiative), which
We’re aware that we can’t
the UN Global Alliance to
aims to move towards 100%
drive the sustainability agenda
Eliminate Lead in Paint, we
renewable energy. We report
by ourselves. So we seek out
were the fi rst major paint
the progress on our RE100
collaborations, for example
company to eliminate lead
target annually, which in turn
by being an active member
pigments and driers in all our
is published in their annual
of various associations and
paint products and continue
report as part of an overview
organizations.
to do so when we acquire
of progress by all members.
new companies.
Dutch
Sustainable
Growth
Coalition
World Green Building
Together for Sustainability
Council
As a Together for Sustainability
On a global level, we’re a
(TfS) member, we contribute
We’re part of a broad
member of the WGBC’s
to its development, growth
coalition of Dutch companies
Corporate Advisory Board
and success, for example
to continue focusing on
(CAB). We’re also a member
by actively participating in
sustainability while using
of various local Green Building
workstreams and decision-
the UN SDGs as a guiding
Councils (GBCs), for example
making bodies. We’ve been
compass to defi ne and
in South East Asia and the
part of the third party audit
measure our efforts. This will
Middle East.
workstream for many years
not only help us to mitigate
United
Nations
Global
Compact
and now contribute to the
climate risks, but will also
new greenhouse gas Scope
enable us to create a more
3 workstream, where we use
resilient economy and a
the leverage of the industry
more inclusive society. We
initiative to create awareness
endorse a strong focus on
We’ve been
and reach suppliers on a
sustainability – such as the
a signatory of the UN Global
larger scale.
Compact since 2004 and
communicate about our
progress on an annual basis.
We’re also a signatory to the
RE100
EU Green Deal – as one of the
cornerstones of the COVID-19
recovery plan, while continuing
to provide long-term certainty
regarding the Dutch climate
Responsible Care® Global
Since 2017, we’ve been a
agreement and measurable
Charter and the CEO Water
member of the RE100 (a
commitments.
Note 1
Employees
As part of our 2025
ambitions, we want
to be top quartile
in our organizational
health score (OHI)
and have at least 30%
female executives in
the company.
Attracting, developing and
retaining talent
In 2020, we continued to receive
recognition as a leading employer in
many of our key countries, including
Brazil, China, France, the Netherlands,
Poland, Sweden, the UK and the US.
As part of our ongoing journey to build
a sustainable and diverse leadership
pipeline, we focused on identifying and
planning development actions for our
top talent. This included agile talent
redeployment across businesses, roll-
out of our “Grow to lead” talent program
and succession planning at top levels of
the company. Overall employee turnover
in 2020 was 13% (2019: 14%); voluntary
turnover was 5% (2019: 7%). As we
continued our transformation journey,
we also saw the impact of uncertainty
caused by COVID-19, especially in lower
voluntary turnover.
Capability building to drive
our 2020 ambitions
To support our employees during
the COVID-19 pandemic, we offered
several educational resources around
mental health, resilience and social
and emotional skills. We also
accelerated our ambition to future-
proof all learning solutions by
redesigning our classroom-based
learning to include digital versions, as
well as ensuring our internal trainers
are skilled in virtual delivery.
We continue to deploy our Leadership
Essentials program across the company
to provide people managers with the
right tools to build a high-performing
culture within their teams.
Organizational health score (OHI)
2019
2020
Ambition 2025
Strong progress on diversity
and inclusion
We’re developing an increasingly
engaged, diverse and capable
workforce, with a focus on ensuring
management teams refl ect the diversity
of our employees. We made signifi cant
progress in 2020 on our key diversity
and inclusion (D&I) commitments. We
completed the roll-out of our online
D&I training curriculum – designed to
increase awareness around unconscious
bias in the workplace – and launched
the “I Belong” inclusive leadership
guide to help people managers lead in
an inclusive way. We also introduced
monthly D&I broadcasts covering gender
diversity, race and ethnicity, people with
diverse abilities and LGBTI+ inclusion.
We don’t tolerate discrimination in
any form, including racism. In 2020,
events in the US and around the world
stimulated even more self-refl ection
from our side. We have held – and will
continue to hold – people accountable.
Taking a stand is a beginning, but we
know it will require ongoing attention
and dedication.
Our global Women Inspired Network
has grown signifi cantly since its
launch in early 2020, with various local
chapters being established. Meanwhile,
our True Colors network – focused
on leading inclusion for lesbian, gay,
bisexual, transgender and intersex
colleagues – continued to grow. We
signed the Declaration of Amsterdam
and also participated in the Workplace
Pride Benchmark – in which we were
recognized for notable performance in
awareness and engagement.
The launch of our program to strengthen
the senior female leadership pipeline
– an area where we’re still facing
challenges to deliver meaningful
improvements – was a substantial part
of our commitment to increase the
percentage of female leaders to 30% by
61
74
69
Female executives in %
2019
2020
Ambition 2025
18
21
30
2025. We introduced a D&I scorecard
and action plan for all our business units
and functional management teams,
and launched different development
options for women with leadership
potential. We also collaborated with
the European Round Table (ERT),
having submitted a case study around
Increasing Female Representation at
Senior Executive levels. This was part of
their #EmbraceDifference pledge, signed
by our Chairman of the Supervisory
Board, Nils Smedegaard Andersen.
Our close link with the ERT opened up
discussions around race and ethnicity in
the workplace and we proactively took
a stand, incorporating it in our D&I focus
for 2021.
Change management key to a
healthy organization
Our ambitious Winning together: 15 by 20
transformation was successfully realized
by the end of the year, with some projects
set to continue during 2021. We’re now
preparing to embark on a new journey to
support our Grow & Deliver strategy. The
right balance between performance and
organizational health will be an
instrumental part of that journey to ensure
that our transformation has a lasting
impact. A more detailed account of how
we achieved our Winning together: 15 by
20 ambition can be found on page 6.
32
Sustainability statements | AkzoNobel Report 2020
AkzoNobel Report 2020 | Sustainability statements
33
Note 2 Health and safety
Our vision is to achieve
zero injuries and harm
through operational
excellence.
As one of our core values, health and
safety underpins our tireless commitment
to creating a safe workplace and
delivering leading safety performance.
We do this by consistently applying
leading programs and processes in the
areas of people, product and process
safety. We report, analyze and learn
from all our health and safety incidents
to continuously improve our safety
performance.
In order to deliver leading and
sustainable performance and strengthen
our commitment-based safety culture,
we also invest in visible safety leadership
and employee engagement initiatives.
Our strategic Health, Safety, Environment
and Security (HSE&S) priorities are
focused on driving:
• Continuous improvement of
standardized HSE&S processes to
achieve leading maturity levels
• The implementation of an integrated
HSE&S management system
• A commitment-based HSE&S culture
embedding operational excellence to
achieve our vision of zero injuries
and harm
Our leading HSE&S management
system drives continuous improvement
through operational excellence in
all aspects of HSE&S. This includes
company-wide standards, regular
performance reviews, systematic
data analysis, root cause analyses
of incidents, training, self-assess-
ments, annual improvement planning,
independent internal audit and
on-time action closure. It also
incorporates promoting learning a
cross the organization, including
best practice sharing. Our corporate
HSE&S management system is
globally certifi ed to ISO 14001 and
OHSAS 18001 standards, with ongoing
transfer to ISO 45001.
Compliance assurance is one of our key
HSE&S priorities. It’s particularly relevant
to ensuring our license to operate and
our business continuity, considering the
fast-changing regulatory environment
we operate in. We take a proactive
approach to implementing any necessary
changes, from both a risk mitigation and
advocacy perspective.
In 2020, we confi gured and implemented
a company-wide digital compliance
assurance process. It includes a
regulatory monitoring and alert system,
along with a self-assessment tool which
ensures we’re compliant with existing
regulatory frameworks and up-to-
date with the latest changes, as well
as enabling proactive response to
new requirements.
Responding to COVID-19
When COVID-19 fi rst surfaced in China,
we activated our North Asia regional crisis
management, supported by the global
organization, Integrated Supply Chain and the
functional teams. As the pandemic began
to spread worldwide, we set up a global
crisis management team, as well as regional
crisis teams.
COVID-19 guidance and requirements regarding
employee health and safety – including emergency
escalation and response plans – were developed
and deployed globally. Strong cross-functional
and global/regional collaboration and alignment
enabled successful management of our response
to the pandemic. Our global COVID-19 health and
safety guidelines included:
• Workplace guidelines
• Guidelines for commercial teams, including
customer visits
• Safe work from home
• SAQ (self-assessment questionnaire)
• Behavior-based safety (BBS) “adapted” to
COVID-19
• Travel guidance
Our organizational health continued to
be surveyed in 2020, with all employees
asked for their input. This resulted in
an organizational health score (OHI)
of 69 (2019: 61), taking the overall
company score to the second quartile.
In total, 87% of employees indicated
they really care about the company,
with 86% willing to go beyond what’s
normally expected to help AkzoNobel
be successful. Based on insights from
2019’s survey, we developed a program
During the year, our CEO, Thierry Vanlancker, signed the
Declaration of Amsterdam. Organized by Workplace Pride,
signing the declaration is a visible and very positive way to
show our support for LGBTI+ inclusion.
for leadership teams to support their
transformation journey in making us a
high-performing organization. Due to
COVID-19, we made a signifi cant part of
this program virtual to make it easier to
manage teams at a distance. Along with
various initiatives, this led to an overall
top decile OHI score for the executive
group. The OHI scores for our middle
management, individual contributors
and frontline personnel also improved
signifi cantly. However, the gap between
these groups and the very high scoring
executive population increased. We’ll
address this in our future planning.
As our journey continues, we’ve updated
our behaviors to better refl ect and
support our Grow & Deliver strategy and
company purpose. An implementation
plan is in place, providing a toolkit for
managers. We’ll evaluate the adoption
rate and progress at the end of 2021.
34
Sustainability statements | AkzoNobel Report 2020
Note 2 Health and safety
Our organizational health continued to
be surveyed in 2020, with all employees
asked for their input. This resulted in
an organizational health score (OHI)
of 69 (2019: 61), taking the overall
company score to the second quartile.
In total, 87% of employees indicated
Our vision is to achieve
zero injuries and harm
through operational
excellence.
globally certifi ed to ISO 14001 and
OHSAS 18001 standards, with ongoing
transfer to ISO 45001.
Compliance assurance is one of our key
HSE&S priorities. It’s particularly relevant
to ensuring our license to operate and
they really care about the company,
As one of our core values, health and
our business continuity, considering the
with 86% willing to go beyond what’s
safety underpins our tireless commitment
fast-changing regulatory environment
normally expected to help AkzoNobel
to creating a safe workplace and
we operate in. We take a proactive
be successful. Based on insights from
delivering leading safety performance.
approach to implementing any necessary
2019’s survey, we developed a program
changes, from both a risk mitigation and
We do this by consistently applying
advocacy perspective.
leading programs and processes in the
areas of people, product and process
In 2020, we confi gured and implemented
safety. We report, analyze and learn
a company-wide digital compliance
from all our health and safety incidents
assurance process. It includes a
to continuously improve our safety
regulatory monitoring and alert system,
performance.
along with a self-assessment tool which
ensures we’re compliant with existing
In order to deliver leading and
regulatory frameworks and up-to-
sustainable performance and strengthen
date with the latest changes, as well
our commitment-based safety culture,
as enabling proactive response to
we also invest in visible safety leadership
new requirements.
and employee engagement initiatives.
During the year, our CEO, Thierry Vanlancker, signed the
Declaration of Amsterdam. Organized by Workplace Pride,
signing the declaration is a visible and very positive way to
show our support for LGBTI+ inclusion.
Our strategic Health, Safety, Environment
and Security (HSE&S) priorities are
Responding to COVID-19
focused on driving:
When COVID-19 fi rst surfaced in China,
• Continuous improvement of
we activated our North Asia regional crisis
standardized HSE&S processes to
management, supported by the global
for leadership teams to support their
achieve leading maturity levels
organization, Integrated Supply Chain and the
transformation journey in making us a
• The implementation of an integrated
functional teams. As the pandemic began
high-performing organization. Due to
HSE&S management system
to spread worldwide, we set up a global
COVID-19, we made a signifi cant part of
• A commitment-based HSE&S culture
crisis management team, as well as regional
this program virtual to make it easier to
embedding operational excellence to
crisis teams.
manage teams at a distance. Along with
achieve our vision of zero injuries
various initiatives, this led to an overall
and harm
top decile OHI score for the executive
COVID-19 guidance and requirements regarding
employee health and safety – including emergency
group. The OHI scores for our middle
Our leading HSE&S management
escalation and response plans – were developed
management, individual contributors
system drives continuous improvement
and deployed globally. Strong cross-functional
and frontline personnel also improved
through operational excellence in
and global/regional collaboration and alignment
signifi cantly. However, the gap between
all aspects of HSE&S. This includes
enabled successful management of our response
these groups and the very high scoring
company-wide standards, regular
to the pandemic. Our global COVID-19 health and
executive population increased. We’ll
performance reviews, systematic
safety guidelines included:
address this in our future planning.
data analysis, root cause analyses
• Workplace guidelines
of incidents, training, self-assess-
• Guidelines for commercial teams, including
As our journey continues, we’ve updated
ments, annual improvement planning,
customer visits
our behaviors to better refl ect and
independent internal audit and
• Safe work from home
support our Grow & Deliver strategy and
on-time action closure. It also
• SAQ (self-assessment questionnaire)
company purpose. An implementation
incorporates promoting learning a
• Behavior-based safety (BBS) “adapted” to
plan is in place, providing a toolkit for
cross the organization, including
COVID-19
managers. We’ll evaluate the adoption
best practice sharing. Our corporate
• Travel guidance
rate and progress at the end of 2021.
HSE&S management system is
34
Sustainability statements | AkzoNobel Report 2020
SUSTAINABILITY
HSE&S audits are performed in three-
year (high hazard sites) to fi ve-year
(other sites) cycles. Despite COVID-19,
the complete 2020 audit plan was
performed, with most of the 28 audits
being carried out remotely due to
travel restrictions.
People safety
In 2020, the total reportable rate (TRR)
improved to 0.23 (2019: 0.24), slightly
above the target level set for 2020 (0.20).
In total, 81% of our locations and 72%
of our manufacturing sites have been
reportable injury-free for over a year.
The most frequent causes of reportable
injuries are “slips, trips and falls”, “struck
by or caught in-between objects” and
“manual handling”. The most frequent
injuries are strains/sprains, cuts/
lacerations and fractures.
Although the TRR decreased, the
severity of injuries increased slightly.
This is refl ected in the lost time injury
rate for employees including temporary
workers (LTIR), which was 0.09 (2019:
0.08). Although safety is paramount
within our company, a signifi cant
safety incident occurred in Felling,
UK, which triggered actions to further
drive continuous improvement towards
operational excellence.
To help us achieve year-on-year
improvement in safety performance,
we’ve introduced a number of focused
programs, in addition to our yearly
HSE&S Common Platform program:
• Top three injuries safety program,
which has driven a 30% and 45%
injury reduction
• HSE&S dedicated country networks
in the four countries that contributed
44% of the total reportable injuries
(TRI) – achieved a 47% reduction in
TRI compared with 2019
• Implementation of global and
site specifi c leading performance
indicators, moving the focus from
lagging to leading KPIs. This has
been critical in further driving visible
leadership and employee involvement,
leading to proactive injury prevention
and a stronger commitment-based
safety culture
Total reportable injury rate employees/
temporary workers
• Reinforcement of our “Learning from
incidents” program to include early
warning alerts
• Tracking on-time action closure for
critical HSE&S actions (as part of
leading KPIs)
• Safe driver program, with a focus on
those using two and four wheels
• Redesign of the self-assessment
questionnaire (SAQ) – which
assesses the maturity of HSE&S
program implementation and specifi c
requirements at sites – and a review
of the framework for our global audit
program. We’ve also invested in
developing visible safety leadership
and employee engagement initiatives
The number of contractor reportable
injuries was slightly lower in 2020,
resulting in a reportable injury rate of
0.17 (2019: 0.19). The contractors lost
time injury rate increased to 0.11
(2019: 0.09).
Analysis revealed that inadequate/poor
adherence to procedures were the main
cause of contractor incidents. To help
counter this trend, a contractor safety
procedure and self-assessment process
were introduced to target the quality
of (and adherence to) key procedures,
with benefi ts for our own employees,
as well as contractors.
Process safety
The number of losses of primary
containment (LOPC incidents) decreased
in 2020. However, based on an analysis
of the 2020 process safety events, and
considering the nature of the processes
and materials we use, we initiated a
dedicated Process Safety Management
(PSM) improvement project, designed
to strengthen our PSM program and
processes to achieve leading standards
in process safety.
Health
We continue to actively manage
occupational illness-related absente-
eism, as part of our commitment to
0.20
0.20
0.24
0.23
2017
2018
2019
2020
The total reportable injury rate (TRR) is the number of injuries resulting in a
medical treatment case, restricted work case, lost time case or fatality, per
200,000 hours worked. In line with OSHA guidelines, temporary workers are
reported with employees, since day-to-day management is by AkzoNobel.
Lost time injury rate employees/
temporary workers
0.09
0.08
0.09
0.06
2017
2018
2019
2020
The lost time injury rate (LTlR) is the number of injuries resulting in a lost time
injury per 200,000 hours worked. Temporary workers are reported together with
employees, since day-to-day management is by AkzoNobel.
Total reportable injury rate contractors
0.18
0.19
0.17
0.12
2017
2018
2019
2020
The total reportable injury rate contractors is the number of contractor injuries
resulting in medical treatment cases, restricted work cases, lost time injuries or
fatalities, per 200,000 hours worked.
Lost time injury rate contractors
0.11
0.09
0.06
0.07
2017
2018
2019
2020
The contractors lost time injury rate (LTlR) is the number of contractor injuries
resulting in a lost time case, per 200,000 hours worked.
Process safety events
Loss of primary containment – Level 1
Loss of primary containment – Level 2
Process safety event – Level 3
2019
2020
3
64
970
6
52
1,250
A loss of primary containment is an unplanned release of material, product, raw
material or energy to the environment (including those resulting from human
error). Loss of primary containment incidents are divided into three categories,
dependent on severity, from small, on-site spill/near misses up to Level 1 – a
signifi cant escape.
AkzoNobel Report 2020 | Sustainability statements
35
Note 3
AkzoNobel Cares
We aim to have more
than 1,000 projects
across our AkzoNobel
Cares program and train
more than 35,000 people
in the community
by 2025.
For many years, our social programs
have shown the world that AkzoNobel
cares. As well as simply being the right
thing to do, supporting people and
communities and building employee
pride also strengthens our reputation.
It’s delivering shared value for everyone.
Due to the global pandemic, during
2020 we shifted our attention to support
local communities with their urgent
needs (see Business as unusual on
page 10).
Our biggest community projects took
place in India, Brazil and the UK. We
distributed critical items such as food,
hygiene kits and personal protective
equipment (PPE) to various communities
in need. For example, during lockdown
in India, our employees distributed dry
food kits to daily wage laborers and PPE
to health workers and the frontline police
force. Meanwhile, colleagues in the UK
focused in particular on supporting the
needs of the elderly and vulnerable,
providing help for homeless shelters,
foodbanks, hospices and children’s well-
being groups.
It’s ten years since we fi rst launched our
global “Let’s Colour” program and we
continue to transform lives by revitalizing
communities and making spaces more
liveable and inspiring. Projects that
took place during 2020 saw us use
more than 260,000 liters of paint to
color communities in 27 countries –
including Recife in Brazil and Bandung in
Indonesia – while we also renovated an
SOS Children’s Villages kindergarten in
Ho Chi Minh City, Vietnam.
To strengthen our focus on training
future generations, we extended our
partnership with SOS Children’s Villages
for another three years. As a member
of the global YouthCan! initiative,
we have so far worked together in
18 countries to advance the employa-
bility of young people without parental
SUSTAINABILITY
Process safety events (PSE) pyramid
Levels
1
2
3
4
PSE
PSE
PSE
PSE below threshold
PSE below th
(of Level 2) and
(of Level 2) and
near misses
Operational discipline
Operational discipline
Process safety performance indicators are aligned with international best
practice. Loss of primary containment (LoPC) is the main process safety indicator
at manufacturing sites, distinguishing between two levels of severity. As a leading
indicator, sites also measure process safety events (PSEs), which are minor leaks
or occurrences that could lead to more severe events.
providing a safe working environment
and healthy work conditions for all
our employees.
Based on the analysis of the Industrial
Hygiene (IH) baseline survey launched
in 2019, a harmonized, company-wide
carcinogenic, mutagenic and reprotoxic
(CMR) chemical management guideline
has been developed, to be launched
in 2021. In order to continue building
the IH competencies of our HSE&S
professionals at local and regional level,
a second edition of our IH awareness
online training program was introduced.
We also launched a global physical
and mental well-being health campaign
for managers and employees to
help prevent the risk of increased
occupational illness due to COVID-19.
Employee health occupational illness rate
0.06
0.06
0.05
0.03
2017
2018
2019
2020
Occupational illness frequency rate (OIFR) is the total number of reportable
occupational illness cases for the reporting period, per 1,000,000 hours worked.
This parameter is reportable for employees.
During the year, we extended our global partnership with SOS Children’s Villages for another three years. Part of our “Let’s
Colour” initiative, the collaboration has already benefi ted more than 20,000 children and young people all over the world. It
will now continue to offer more practical skills training and the renewal of living spaces to give vulnerable young people and
families at risk greater hope for a brighter future.
36
Sustainability statements | AkzoNobel Report 2020
SUSTAINABILITY
Process safety events (PSE) pyramid
Levels
1
2
3
4
PSE
PSE
PSE
PSE below threshold
PSE below th
(of Level 2) and
(of Level 2) and
near misses
Process safety performance indicators are aligned with international best
practice. Loss of primary containment (LoPC) is the main process safety indicator
at manufacturing sites, distinguishing between two levels of severity. As a leading
indicator, sites also measure process safety events (PSEs), which are minor leaks
or occurrences that could lead to more severe events.
We aim to have more
than 1,000 projects
across our AkzoNobel
Cares program and train
more than 35,000 people
in the community
by 2025.
in India, our employees distributed dry
food kits to daily wage laborers and PPE
to health workers and the frontline police
force. Meanwhile, colleagues in the UK
focused in particular on supporting the
needs of the elderly and vulnerable,
providing help for homeless shelters,
foodbanks, hospices and children’s well-
being groups.
It’s ten years since we fi rst launched our
For many years, our social programs
global “Let’s Colour” program and we
have shown the world that AkzoNobel
continue to transform lives by revitalizing
thing to do, supporting people and
liveable and inspiring. Projects that
communities and building employee
took place during 2020 saw us use
pride also strengthens our reputation.
more than 260,000 liters of paint to
It’s delivering shared value for everyone.
color communities in 27 countries –
Due to the global pandemic, during
Indonesia – while we also renovated an
2020 we shifted our attention to support
SOS Children’s Villages kindergarten in
including Recife in Brazil and Bandung in
Operational discipline
Operational discipline
cares. As well as simply being the right
communities and making spaces more
providing a safe working environment
local communities with their urgent
Ho Chi Minh City, Vietnam.
and healthy work conditions for all
needs (see Business as unusual on
our employees.
page 10).
To strengthen our focus on training
future generations, we extended our
Based on the analysis of the Industrial
Our biggest community projects took
partnership with SOS Children’s Villages
Hygiene (IH) baseline survey launched
place in India, Brazil and the UK. We
for another three years. As a member
in 2019, a harmonized, company-wide
distributed critical items such as food,
of the global YouthCan! initiative,
carcinogenic, mutagenic and reprotoxic
hygiene kits and personal protective
we have so far worked together in
(CMR) chemical management guideline
equipment (PPE) to various communities
18 countries to advance the employa-
has been developed, to be launched
in need. For example, during lockdown
bility of young people without parental
in 2021. In order to continue building
the IH competencies of our HSE&S
professionals at local and regional level,
a second edition of our IH awareness
online training program was introduced.
We also launched a global physical
and mental well-being health campaign
for managers and employees to
help prevent the risk of increased
occupational illness due to COVID-19.
Employee health occupational illness rate
0.06
0.06
0.05
0.03
2017
2018
2019
2020
Occupational illness frequency rate (OIFR) is the total number of reportable
Colour” initiative, the collaboration has already benefi ted more than 20,000 children and young people all over the world. It
occupational illness cases for the reporting period, per 1,000,000 hours worked.
will now continue to offer more practical skills training and the renewal of living spaces to give vulnerable young people and
This parameter is reportable for employees.
families at risk greater hope for a brighter future.
During the year, we extended our global partnership with SOS Children’s Villages for another three years. Part of our “Let’s
Note 3
AkzoNobel Cares
Note 4 Human rights
We understand that
through our roles as
employer, manufacturer,
business partner and
member of many
communities, we can
potentially both directly
and indirectly impact
the lives of millions
of people.
While we’re committed to making a
positive impact through our products
and programs, we’re also aware of the
potential negative impact we may cause,
contribute to, or be linked to.
We recognize the responsibility we
have to respect the human rights of
people in our value chain and the
infl uence we can have on bringing
about improvements. As part of our
core values of safety, integrity and
sustainability, we’re committed to
respecting human rights as set out in
the International Bill of Human Rights,
the International Labour Organization’s
Declaration on Fundamental
Principles and Rights at Work
and the Organization for
Economic Cooperation and
Development (OECD) Guidelines
for Multinational Enterprises.
At the same time, we expect
all our business partners to
respect human rights and apply
equivalent principles, seeking
to support them actively in their
implementation where needed.
Salient human rights
issues
While we respect and treat all
human rights equally, we’ve
prioritized certain activities based
on risk. These priorities were
established following internal and
external stakeholder engagement.
They are:
1 Health and safety in
our value chain
The health and safety of our people
and those we work with, or offer
our products to, is our fi rst priority.
We have a robust health and safety
program, which is explained in
Note 2. Through our priority
substance program (see Note 8), we
screen thousands of raw materials.
We’ve also initiated due diligence
on the impact we have on the
communities around our sites.
2 Working conditions for our
employees
We’re committed to providing good
working conditions for our employees
and those working at, or visiting,
our sites. We’ve conducted due
diligence and issued company-wide
standards for working hours, which
are being implemented throughout the
organization. We’ve also conducted
due diligence on the compensation
we offer our employees versus
international living wage standards
for the ten high risk countries. The
initial results show that while we
comply with legal requirements,
there are certain gaps between our
compensation and international living
wage standards that merit further due
diligence. This work is ongoing.
EcoVadis recognition
We’re proud to have been awarded the
EcoVadis Platinum Medal in recognition of our
commitment to acting responsibly by integra-
ting social and environmental concerns into
our business operations. The comprehensive
methodology considers four key pillars that
align with our People. Planet. Paint. approach
to sustainable business: Environment; Labor
and Human Rights; Ethics; and Sustainable
Procurement. We further improved in Labor
and Human Rights and scored highly in the
other pillars. We also continue
to demonstrate our leading
position in other industry
rankings, such as Sustainalytics
and MSCI (see page 32).
care, or those who are at risk of losing
it. In 2020, we used online mentoring
and training as a way to empower them
with the employability skills they need for
self-reliance. One example took place
in Indonesia, where virtual mentoring
sessions themed around dealing with
life after COVID-19 reached hundreds
of young people across nine SOS
Children’s Villages.
Through our Education Fund, we
continued to support STEM (Science,
Technology, Engineering and
Mathematics) training in China and
youth economic empowerment and
entrepreneurship training in India. During
the year, some activities were put on
hold as schools were closed due to
COVID-19. However, regular contact
was maintained with the students
through mobile and online sessions. We
also conducted the fi rst online employee
engagement program as part of the
STEM project.
Although we faced a number of
challenges and limitations due to the
pandemic, we carried out a total of
170 projects and trained 2,669 people
in countries where we operate.
AkzoNobel Cares
Number of community people trained
Number of projects
224
2,863
126
>97k
4,276
225
4,078
170
2,669
2017
2018
2019
2020
36
Sustainability statements | AkzoNobel Report 2020
AkzoNobel Report 2020 | Sustainability statements
37
3 Discrimination and harassment
We’re committed to offering a working
environment in which people feel
treated with dignity and respect,
and where we foster diversity and
inclusion (see Note 1). We have clear
rules and apply strict consequence
management in case of violation of
these rules. In 2019, we launched
a global training program for all
our employees on diversity and
unconscious bias. In 2020, this roll-out
continued. The e-learnings that are
part of this program had a completion
rate of 78% of all online employees
(including contractors) in 2020. For
offline employees, the roll-out of face-
to-face workshops was unfortunately
paused due to the pandemic.
4 Modern slavery
We have zero tolerance for modern
slavery, such as child labor or forced
labor, and conduct relevant due
diligence into our supply chain.
We identified cobalt, mica minerals
and tin as raw materials possibly
impacting human rights in our supply
chain – in particular regarding health
and safety, working conditions and
modern slavery. These materials are
used in the manufacture of some
additives, pigments, resins and
tin packaging material we source.
In the case of mica minerals, we
continued to collaborate with
suppliers to track their entire supply
chain back to the mines of origin
and monitored their value chain to
ensure a responsible and sustainable
mica supply chain. For cobalt and
tin, we surveyed all 120 identified
suppliers, using templates from the
Responsible Minerals Initiative. Of
those suppliers who confirmed using
high risk materials necessary to the
functionality of the product, 81%
disclosed their smelters. In total, 57%
of these smelters are either listed
as active or conformant smelters in
the Responsible Minerals Assurance
Process (RMAP). Suppliers with a
“conflict free statement”, but who
didn’t disclose the smelters in their
supply chain, have not been included
in this percentage, since our due
diligence is based on the Organization
for Economic Cooperation and
Development (OECD) Guidance for
Responsible Mineral Supply Chains.
See our website for more on conflict
minerals: akzonobel.com/en/about-us/
position-statements/conflict-minerals
Reprioritizing salient human
rights issues
COVID-19 had a major social impact
across the globe. See page 10 for
an overview of how our efforts
to address the social effects of the
pandemic were carried out in a
responsible manner.
The virus has introduced a new reality
and potentially additional human rights
risks that we need to address across our
value chain. As a result, and in line with
the United Nations Guiding Principles
to continuously assess a company’s
salient human rights issues, we have
reassessed our current internal salient
human rights issues this year. Multiple
interviews, workshops and data analysis
have been carried out to understand
the current human rights risks from an
internal perspective. We concluded that
our salient human rights issues have
remained the same, but we gained
insight into which part(s) of the value
chain the highest risks occur and should
have our first focus. In the first quarter
of 2021, we’ll validate our findings with
external stakeholders and finalize our
assessment of salient human rights
issues from 2021 onwards.
We’re proud to have extended our
partnership with Plan International
Nederland for another year. With our
support, young people growing up in
challenging circumstances can bridge
the gap between overcoming the
daily struggles they face and being
able to realize their dreams.
38
Sustainability statements | AkzoNobel Report 2020
3 Discrimination and harassment
additives, pigments, resins and
Reprioritizing salient human
We’re committed to offering a working
tin packaging material we source.
rights issues
environment in which people feel
In the case of mica minerals, we
COVID-19 had a major social impact
treated with dignity and respect,
continued to collaborate with
across the globe. See page 10 for
and where we foster diversity and
suppliers to track their entire supply
an overview of how our efforts
inclusion (see Note 1). We have clear
chain back to the mines of origin
to address the social effects of the
rules and apply strict consequence
and monitored their value chain to
pandemic were carried out in a
management in case of violation of
ensure a responsible and sustainable
responsible manner.
these rules. In 2019, we launched
mica supply chain. For cobalt and
a global training program for all
tin, we surveyed all 120 identified
The virus has introduced a new reality
our employees on diversity and
suppliers, using templates from the
and potentially additional human rights
unconscious bias. In 2020, this roll-out
Responsible Minerals Initiative. Of
risks that we need to address across our
continued. The e-learnings that are
those suppliers who confirmed using
value chain. As a result, and in line with
part of this program had a completion
high risk materials necessary to the
the United Nations Guiding Principles
rate of 78% of all online employees
functionality of the product, 81%
to continuously assess a company’s
(including contractors) in 2020. For
disclosed their smelters. In total, 57%
salient human rights issues, we have
offline employees, the roll-out of face-
of these smelters are either listed
reassessed our current internal salient
to-face workshops was unfortunately
as active or conformant smelters in
human rights issues this year. Multiple
paused due to the pandemic.
the Responsible Minerals Assurance
interviews, workshops and data analysis
4 Modern slavery
Process (RMAP). Suppliers with a
have been carried out to understand
We have zero tolerance for modern
“conflict free statement”, but who
the current human rights risks from an
slavery, such as child labor or forced
didn’t disclose the smelters in their
internal perspective. We concluded that
labor, and conduct relevant due
supply chain, have not been included
our salient human rights issues have
diligence into our supply chain.
in this percentage, since our due
remained the same, but we gained
We identified cobalt, mica minerals
diligence is based on the Organization
insight into which part(s) of the value
and tin as raw materials possibly
for Economic Cooperation and
chain the highest risks occur and should
impacting human rights in our supply
Development (OECD) Guidance for
have our first focus. In the first quarter
chain – in particular regarding health
Responsible Mineral Supply Chains.
of 2021, we’ll validate our findings with
and safety, working conditions and
See our website for more on conflict
external stakeholders and finalize our
modern slavery. These materials are
minerals: akzonobel.com/en/about-us/
assessment of salient human rights
used in the manufacture of some
position-statements/conflict-minerals
issues from 2021 onwards.
We’re proud to have extended our
partnership with Plan International
Nederland for another year. With our
support, young people growing up in
challenging circumstances can bridge
the gap between overcoming the
daily struggles they face and being
able to realize their dreams.
38
Sustainability statements | AkzoNobel Report 2020
PLANET
Our 2030 ambitions are to reduce
carbon emissions by 50% and
move towards zero waste as
a company.
We want to achieve a 50% reduction in
carbon emissions by cutting energy use
by 30% and increasing our renewable
electricity use to 100%. As we work
towards zero waste, we aim to reach
zero non-reusable waste and have
100% of our most water intensive sites
reusing water.
For many years, we’ve been working
to operate in a more sustainable
way, and we continue to take steps
to reduce our environmental impact.
We’re focusing in particular on
reducing energy use, carbon and
VOC emissions, waste generation and
water intake, while increasing our
use of renewable electricity and
materials, and water reuse.
Our ambitions are tangible, and will
enable us to continue making an
important contribution to addressing
the sustainability challenges faced
by our company, customers and
broader society.
We have programs in place and have
identified projects that will contribute to
achieving our ambitions. These include
our Resource Productivity program,
SUSTAINABILITY
which is the main contributor to our
current environmental performance
and the key enabler for delivering on
our ambitions.
Currently, we have more than
500 projects underway at both global
and local level which are helping to
reduce carbon emissions, VOC, waste
and water use. Progress is monitored
on a monthly basis, focusing on
environmental impact and financial
benefits. During 2020, we saved more
than €9 million from projects directly
related to waste, energy reduction and
water reuse.
Climate
As recommended by the
Taskforce for Climate-related
Financial Disclosures (TCFD),
we continue to monitor our
risks and opportunities related
to climate change. As a
company, we’re exposed to
physical risks – such as those
associated with water scarcity
and flooding – and transitional
risks. These risks are linked to
society’s response to climate
change and can lead to
changes in technology, market
dynamics and regulations.
For the last five years, we’ve
implemented an internal
carbon price for investment
decisions, making our future
operations climate adapted,
while anticipating the impact
of any future carbon pricing.
Despite the risks, climate
change also presents business
opportunities with potential to
further strengthen our position.
Our sustainable solutions (see
Note 8) can help our customers
to reduce carbon emissions
and open up business
opportunities. For example,
we supply the construction
industry – responsible for
around 39% of global energy-
related carbon emissions – with
Cool chemistry technology,
which combats the urban heat
island effect, meaning less
energy is needed for cooling.
More than 98% of the carbon
emissions in our value chain
come from our suppliers and
the use of our products by
customers. In 2020, we further
improved the methodology
for determining our Scope 3
upstream and downstream
emissions by better incorpo-
rating the formulation
of our raw materials into the
calculations. More about the
methodology can be found
in Managing sustainability
on page 50. Based on the
new methodology, the overall
cradle-to-grave carbon
footprint was 7% lower than
2019, partly the result of
volume and product mix impact
due to COVID-19.
Meanwhile, our “Planet”
ambitions demonstrate our
strong climate mitigation plans.
We also implement circular
principles to prepare our
operations for the future while
reducing costs.
The importance of water
management is recognized
across our supply chain.
We’ve taken a significant step
towards water stewardship
by endorsing the UN’s CEO
Water Mandate and setting
clear goals on water reuse
(see Note 6). In 2020, we
assessed the water-related
risks at our manufacturing
sites by using the Aqueduct
tool and the WWF Water risk
filter, supplied by the World
Resource Institute. The results
will help us develop water risk
management plans accordingly.
We’ve also included a water
risk analysis as part of
our Supplier Sustainability
Balanced Scorecard. In 2020,
we analyzed around 200 of our
suppliers’ locations using the
Aqueduct tool, assessing both
water scarcity and flood risks.
We ask suppliers with high risk
to share their mitigation plans
and, at the same time, are
working with them to look for
solutions to these challenges.
AkzoNobel Report 2020 | Sustainability statements
39
CASE STUDY
watch video
Making our sites more
sustainable
After announcing the fi rst wave of our
People. Planet. Paint. ambitions in early
2020, we continued to sharpen our focus
on sustainability throughout the year.
Particular progress was made in greener
manufacturing, with notable developments
taking place at locations across the world.
Barcelona
Garcia
1,600
solar
panels
1,650
solar
panels
15%
of energy
use
82%
of energy
use
Malaysia + Thailand
7,818
solar
panels
Elsewhere, a total of 7,818 solar panels were
also installed at three industrial coatings
sites in Malaysia and Thailand.
These installations are the latest in a
series of solar projects around the
globe designed to help us move
to 100% renewable electricity and
cut our carbon emissions in half
by 2030.
Aligned with SDG
3, 12 and 13
(see page 30).
In China, we upgraded our Guangzhou
site to switch over completely to water-
based products. Once fully operational, the
decorative paints facility will increase water
reuse by 70% and reduce wastewater by
50% – helping us to achieve our ambition
of water reuse at all our most water intensive
sites by 2030. It also means that all four of
our decorative paints plants in China now
exclusively produce water-based paints.
Over in Vietnam, a major plant expansion
at our Amata Industrial Park facility has
boosted capacity for marine and protective
coatings and wood coatings. A wide range of
sustainability features have been introduced,
including solar power generation, rainwater
harvesting and solvent recovery systems.
Meanwhile, a combined total of more than
3,250 solar panels have been installed at our
sites in Barcelona, Spain, and Garcia, Mexico.
In Barcelona, 1,600 roof panels are now
generating 15% of the site’s overall energy
consumption. The Garcia installation of
1,650 panels is producing 82% of its energy
requirements – making the plant almost self-
suffi cient.
40
CASE STUDY
watch video
Note 5 Reducing carbon emissions
Making our sites more
sustainable
After announcing the fi rst wave of our
People. Planet. Paint. ambitions in early
2020, we continued to sharpen our focus
on sustainability throughout the year.
Particular progress was made in greener
manufacturing, with notable developments
taking place at locations across the world.
Barcelona
Garcia
1,600
1,650
solar
panels
15%
solar
panels
82%
of energy
of energy
use
use
Malaysia + Thailand
7,818
solar
panels
In China, we upgraded our Guangzhou
Elsewhere, a total of 7,818 solar panels were
site to switch over completely to water-
also installed at three industrial coatings
based products. Once fully operational, the
sites in Malaysia and Thailand.
decorative paints facility will increase water
reuse by 70% and reduce wastewater by
These installations are the latest in a
50% – helping us to achieve our ambition
series of solar projects around the
of water reuse at all our most water intensive
globe designed to help us move
sites by 2030. It also means that all four of
to 100% renewable electricity and
our decorative paints plants in China now
cut our carbon emissions in half
exclusively produce water-based paints.
by 2030.
In order to achieve
our ambition of a 50%
reduction in carbon
emissions by 2030, we’re
focusing on cutting our
energy consumption by
30% and using 100%
renewable electricity.
In 2020, we reduced our carbon
emissions by 4% (relative), mainly
through energy reduction, conversion
to renewable electricity and footprint
optimization. Compared with the 2018
baseline, we have achieved a reduction
of 19%.
One of the key contributing factors to
reducing carbon emissions is to lower
energy consumption – we’re aiming to
cut our energy use by 30% by 2030.
As well as improving the energy
effi ciency of equipment and installations
– including LED and compressed air
systems – we’re also putting a strong
focus on behavior, such as monitoring
leading to actions.
Despite the reduction in volumes
resulting from the COVID-19 pandemic,
we’re close to our yearly energy
reduction target (3%), with an overall
reduction in energy consumption of
2.7% (relative) in 2020.
The second contributing factor to halving
our carbon emissions is converting
to 100% renewable electricity. We’re
therefore installing solar panels at a
number of our locations and are actively
looking to source renewable electricity.
Currently, our total share of renewable
electricity use is 40%, with 34 of our
locations and 12 countries already using
100% renewable electricity.
By the end of 2020, 17 sites had solar
panels as their own renewable electricity
source. We’re aiming to increase this
number signifi cantly in the near future as
part of a global program. We’re aware
that the electricity generated by these
solar panels will not be enough to cover
our total electricity consumption needs,
so we’ll also continue to purchase
renewable electricity with certifi cates
of origin.
Greenhouse gas emissions in million tons
Direct CO2(e) (Scope 1)
Indirect CO2(e) (Scope 2)
kg CO2(e) per ton of production
91
89
0.240.24
0.23
0.23
75
72
0.18
0.18
0.17
0.17
0.07
0.07
0.06
0.06
0.06
0.06
0.06
0.06
2017
2018
2019
2020
Total greenhouse gas emissions made up of direct emissions from processes and
combustion at our facilities and indirect emissions from purchased energy.
Energy use in 1000 TJ
Energy use
GJ per ton of production
1.88
6.4
1.91
6.2
1.88
6.0
1.83
5.7
2017
2018
2019
2020
Over in Vietnam, a major plant expansion
at our Amata Industrial Park facility has
boosted capacity for marine and protective
coatings and wood coatings. A wide range of
sustainability features have been introduced,
including solar power generation, rainwater
harvesting and solvent recovery systems.
Meanwhile, a combined total of more than
3,250 solar panels have been installed at our
sites in Barcelona, Spain, and Garcia, Mexico.
In Barcelona, 1,600 roof panels are now
generating 15% of the site’s overall energy
consumption. The Garcia installation of
1,650 panels is producing 82% of its energy
requirements – making the plant almost self-
suffi cient.
40
Aligned with SDG
3, 12 and 13
(see page 30).
Northern Illinois Foodbank was a
recipient of our COVID-19 Matching
Gifts program. It provided more than
$85,000 to 15 non-profi ts in North
America to help offset the impact of
COVID-19 in the communities where
our plants are located. Many of these
organizations have seen a 50% increase
in need for their services during the
pandemic.
AkzoNobel Report 2020 | Sustainability statements
41
Note 6
Towards a zero waste company
Material flow in kilotons
9
By-product
3,103
Product
Customer
operations
32
Reusable
30
Non-reusable
Raw
materials
Own
operations
62
Waste
By 2030, we’re aiming to move
towards zero waste as a company.
We’re committed to taking
proactive steps to reuse all our
waste and reuse water at all our
most water intensive sites.
Waste reduction remains one of our key environmental
performance indicators. We focus on reducing waste
generation in our manufacturing processes as part
of our resource productivity program. We’re also
committed to reusing and recycling obsolete materials
and continue to promote a circular economy.
To help increase our contribution to the circular
economy, new outlets have been identifi ed for materials
that would otherwise have been disposed of as waste.
This has resulted in a waste avoidance of 8,500 tons.
In total, our reusable waste in 2020 was 32 kilotons,
with 58% of our obsolete materials being reused,
enabling us to further contribute to the circular
economy.
During 2020, despite the volumes variation due to
COVID-19, we reduced relative waste (kg/ton material
produced) by 5%, achieving our 2020 goal. Most of
our locations contributed through various programs
introduced worldwide. Examples of some of our waste
reduction projects include the installation of solvent
recovery units; reducing packaging waste by moving
from smaller paper bags or metal drums to bulk
deliveries of raw materials; and reworking obsolete
fi nished goods.
Water
Sustainable water supply is essential to our business.
We rely on water for, among others, raw material
production, product formulation and manufacturing,
cooling, cleaning and transportation.
A signifi cant number of our water intensive sites already
reuse water.By focusing more and introducing the
necessary technology, we’ll not only reduce our overall
water intake and wastewater discharge, we’ll also
be able to recover and reuse materials present in the
process water, resulting in improved material effi ciency
and less waste.
Our most water intensive locations are often water-
based paint production sites, where water is used
42
Sustainability statements | AkzoNobel Report 2020
Note 6
Towards a zero waste company
Material flow in kilotons
9
By-product
Customer
operations
32
Reusable
3,103
Product
Raw
materials
Own
operations
62
Waste
30
Non-reusable
By 2030, we’re aiming to move
towards zero waste as a company.
We’re committed to taking
proactive steps to reuse all our
waste and reuse water at all our
most water intensive sites.
During 2020, despite the volumes variation due to
COVID-19, we reduced relative waste (kg/ton material
produced) by 5%, achieving our 2020 goal. Most of
our locations contributed through various programs
introduced worldwide. Examples of some of our waste
reduction projects include the installation of solvent
recovery units; reducing packaging waste by moving
from smaller paper bags or metal drums to bulk
deliveries of raw materials; and reworking obsolete
fi nished goods.
Waste reduction remains one of our key environmental
performance indicators. We focus on reducing waste
Water
generation in our manufacturing processes as part
Sustainable water supply is essential to our business.
of our resource productivity program. We’re also
We rely on water for, among others, raw material
committed to reusing and recycling obsolete materials
production, product formulation and manufacturing,
and continue to promote a circular economy.
cooling, cleaning and transportation.
To help increase our contribution to the circular
A signifi cant number of our water intensive sites already
economy, new outlets have been identifi ed for materials
reuse water.By focusing more and introducing the
that would otherwise have been disposed of as waste.
necessary technology, we’ll not only reduce our overall
This has resulted in a waste avoidance of 8,500 tons.
water intake and wastewater discharge, we’ll also
In total, our reusable waste in 2020 was 32 kilotons,
process water, resulting in improved material effi ciency
with 58% of our obsolete materials being reused,
and less waste.
be able to recover and reuse materials present in the
enabling us to further contribute to the circular
economy.
Our most water intensive locations are often water-
based paint production sites, where water is used
SUSTAINABILITY
Total waste in kilotons
Total reusable waste reuse
Total non-reusable waste
Total kg per ton of production
Fresh water use
m3 per ton of production
Fresh water use in million m3
22.7
40
37
21.0
21.0
33
34
34
33
20.0
32
30
2.8
10
2.9
9
2.5
8
2.9
9
2017
2018
2019
2020
2017
2018
2019
2020
Waste means any substance or object arising from our routine operations which
we discard or intend to discard, or we are required to discard.
Fresh water use is the sum of the intake of groundwater, surface water
and potable water.
total water intake is used for cooling purposes. In
2020, the cooling water use from surface water
increased substantially, due to an issue at one location.
This was resolved in the second half of the year, but still
resulted in an increase in our total fresh water intake.
Our water use excluding cooling water decreased by
9% in 2020.
as both a raw material and to clean equipment.
Wastewater can be processed at on-site treatment
plants or via third parties. Adapting formulations and
using adequate water treatment enables us to
reuse the water at our plants.
Our focus is mainly on recycling and reusing process
water and driving a continuous reduction in freshwater
intake and wastewater discharge. Currently, 19%
of our water intake is from potable water, while the
rest is mainly from surface water. Around 78% of the
Water flow in million m3
1.7
Potable water
0.9
Groundwater
Own
operations
1.0
Product
0.9
Other
6.5
Surface water
7.2
42
Sustainability statements | AkzoNobel Report 2020
AkzoNobel Report 2020 | Sustainability statements
43
Note 7 Responsible procurement
We continue to support our
suppliers’ pursuit of continuous
improvement and operational
excellence.
We work together closely to identify and
minimize supply chain risks, creating
value through continuous improvement
and collaboration opportunities for a
sustainable supply.
Business Partner Code of
Conduct
Our business partners are expected to
follow our core values of safety, integrity
and sustainability, as specifi ed by our
Business Partner Code of Conduct.
Suppliers sign the code to confi rm
their compliance with environmental,
social, human rights and governance
requirements. Signatories cover 98% of
the product related (PR) spend and 89%
of the non-product related (NPR) spend.
Supplier risk management
We’ve continued to assess and improve
our suppliers’ sustainability practices
using programs provided by Together
for Sustainability (TfS), of which we have
been an active member since 2013.
In 2019, we extended the scope of
our multi-year supplier sustainability
risk program by lowering our spend
Suppliers in sustainability
program in %
In line with our expectations
Under development
22
22
38
18
18
47
24
24
51
Our Coral paint brand was used to create a mural in front of a hospital in Bolivia to honor all the personnel who have been on
the front line in the fi ght against COVID-19. Initiated by Citizens Volunteers in Action, the artwork is called Guardians of Life
and was painted at the Viedma Hospital in Cochabamba.
threshold to €250,000 and including
country and industry risk. In 2020,
we increased the number of suppliers
participating in the program to 75%,
and those meeting our expectation to
51%. These increases were achieved by
performing 166 initial or reassessments.
To meet our expectations, suppliers have
to reach an EcoVadis total assessment
score of 45 and a labor and human
rights sub-scheme score of 50. Together
with EcoVadis, we organized online
trainings to help suppliers improve, with
107 attending across all regions.
Most of our developmental suppliers
are small or medium sized companies
based in risk regions. They typically
require multiple assessments to reach
the target score. Suppliers who are in
line with expectations must also renew
their assessment at least every three
years, which explains why continuous
improvements can only be achieved in
gradual steps.
To complement the EcoVadis online
assessment, we continue to carry out
TfS audits on suppliers located in risk
regions. In 2020, we optimized the TfS
audit program and set up a dedicated
cross-regional team to monitor the
progress of corrective actions. This
enabled us to close more than 60% of
the previous year’s major audit fi ndings
at our suppliers.
storage, and occupational health and
safety. Suppliers have applied simple
and practical steps to help create a
safer work environment for people in
the supply chain, such as installing
additional fi re exit doors, improving the
availability and accessibility of fi refi ghting
equipment and making evacuation signs
more visible.
Supplier performance
management
In 2020, we adjusted and aligned our
existing Supplier Sustainability Balanced
Scorecard (SSBS) with our People.
Planet. Paint. approach. This will help
ensure our suppliers are heading in the
same direction to reduce their carbon
emissions and move towards a circular
economy. We’ve also asked our top 20
suppliers to share their ambitions on
reducing greenhouse gas, waste and
energy, and moving towards renewable
electricity and a circular economy. Every
year, we assess their achievements
against these ambitions and score them
accordingly. The SSBS results are part of
our supplier performance management
process.
Capability building
Building on our internal corporate social
responsibility training for our buyers, we
organized a global training on human
rights with 112 buyers in 2020. The
goal was to explain the United Nations
Guiding Principles on Business and
Human Rights and how to ensure that
our business partners respect human
rights in their value chains.
2018
2019
2020
Baseline of 885 suppliers (2019: 982). Reduction of
baseline due to supplier consolidation and improvement of
our risk criteria.
Main areas for improvement from
the 2019 audits include emergency
preparedness, process safety and
44
Sustainability statements | AkzoNobel Report 2020
Note 7 Responsible procurement
watch video
CASE STUDY
Bright future for
solar capture
Capturing solar heat from
all parts of a building – not just
the roof – is a highly effective
way of making buildings more
sustainable. But it’s not as easy
as it might sound.
During 2020, we worked together with TNO and
Emergo in the Netherlands to develop an innovative
facade system for a sports hall in the city of Almere.
The venue is covered in colorful solar collectors that
capture the thermal energy buildings would normally
absorb. It’s then used to heat and cool the structure.
One of the big challenges was how to avoid having
to use black panels – not always aesthetically pleasing
for a building exterior, even if darker colors do absorb
heat better.
That’s where our expertise came in. We’ve developed
technology which can capture heat using the sort of
lighter and brighter colors that traditionally reflect near-
infrared light (NIR makes up 50% of the total
solar energy).
“It’s a practical and sustainable solution for making
buildings energy positive,” explains senior AkzoNobel
scientist Anthonie Stuiver. “It means we can harness
sustainable energy via a system that looks good, as
well as doing good.”
The collaboration came about as a result of
AkzoNobel’s involvement in the European ENVISION
research project, which is made up of 13 partners.
Aligned with SDG
11, 13 and 17
(see page 30).
We continue to support our
suppliers’ pursuit of continuous
improvement and operational
excellence.
We work together closely to identify and
minimize supply chain risks, creating
value through continuous improvement
Our Coral paint brand was used to create a mural in front of a hospital in Bolivia to honor all the personnel who have been on
the front line in the fi ght against COVID-19. Initiated by Citizens Volunteers in Action, the artwork is called Guardians of Life
and was painted at the Viedma Hospital in Cochabamba.
and collaboration opportunities for a
threshold to €250,000 and including
storage, and occupational health and
sustainable supply.
country and industry risk. In 2020,
safety. Suppliers have applied simple
we increased the number of suppliers
and practical steps to help create a
Business Partner Code of
participating in the program to 75%,
safer work environment for people in
Conduct
and those meeting our expectation to
the supply chain, such as installing
Our business partners are expected to
51%. These increases were achieved by
additional fi re exit doors, improving the
follow our core values of safety, integrity
performing 166 initial or reassessments.
availability and accessibility of fi refi ghting
and sustainability, as specifi ed by our
To meet our expectations, suppliers have
equipment and making evacuation signs
Business Partner Code of Conduct.
to reach an EcoVadis total assessment
more visible.
Suppliers sign the code to confi rm
score of 45 and a labor and human
their compliance with environmental,
rights sub-scheme score of 50. Together
Supplier performance
social, human rights and governance
with EcoVadis, we organized online
management
requirements. Signatories cover 98% of
trainings to help suppliers improve, with
In 2020, we adjusted and aligned our
the product related (PR) spend and 89%
107 attending across all regions.
existing Supplier Sustainability Balanced
of the non-product related (NPR) spend.
Scorecard (SSBS) with our People.
Most of our developmental suppliers
Planet. Paint. approach. This will help
Supplier risk management
are small or medium sized companies
ensure our suppliers are heading in the
We’ve continued to assess and improve
based in risk regions. They typically
same direction to reduce their carbon
our suppliers’ sustainability practices
require multiple assessments to reach
emissions and move towards a circular
using programs provided by Together
the target score. Suppliers who are in
economy. We’ve also asked our top 20
for Sustainability (TfS), of which we have
line with expectations must also renew
suppliers to share their ambitions on
been an active member since 2013.
their assessment at least every three
reducing greenhouse gas, waste and
years, which explains why continuous
energy, and moving towards renewable
In 2019, we extended the scope of
improvements can only be achieved in
electricity and a circular economy. Every
our multi-year supplier sustainability
gradual steps.
risk program by lowering our spend
year, we assess their achievements
against these ambitions and score them
To complement the EcoVadis online
accordingly. The SSBS results are part of
assessment, we continue to carry out
our supplier performance management
Suppliers in sustainability
TfS audits on suppliers located in risk
process.
program in %
regions. In 2020, we optimized the TfS
In line with our expectations
Under development
audit program and set up a dedicated
Capability building
22
22
38
18
18
47
24
24
51
cross-regional team to monitor the
Building on our internal corporate social
progress of corrective actions. This
responsibility training for our buyers, we
enabled us to close more than 60% of
organized a global training on human
the previous year’s major audit fi ndings
rights with 112 buyers in 2020. The
at our suppliers.
goal was to explain the United Nations
Guiding Principles on Business and
2018
2019
2020
Baseline of 885 suppliers (2019: 982). Reduction of
baseline due to supplier consolidation and improvement of
our risk criteria.
Main areas for improvement from
Human Rights and how to ensure that
the 2019 audits include emergency
our business partners respect human
preparedness, process safety and
rights in their value chains.
44
Sustainability statements | AkzoNobel Report 2020
45
Sustainable solutions – Products that provide
sustainability advantages to our customers
Performers – Products that have no immediate
negative or positive sustainability impact
Transitioners – Products that have
known sustainability risks
PAINT
We aim to grow our sustainable
solutions from around 40% of
our revenue in 2020 to over 50%
by 2030. Our sustainable solutions
are comprised of products that
bring sustainable benefi ts to
our customers.
Eco-premium solutions make up a
signifi cant part of our sustainable
solutions. They are considered
signifi cantly better in one or more of our
sustainability criteria and provide the
same or better functionality than the
mainstream product in the market. In
2020, we managed to exceed our target
of 20% of revenue from this category
(2020: 21%).
As a member of the World Green
Building Council, we fully support the
ongoing transformation of the built
environment, which aims to reduce
the carbon footprint of buildings and
make them healthier places to live and
work. Many of our products are used
in the construction industry and we’ve
developed a wide range of products
and solutions that are qualifi ed for green
buildings certifi ed with labels such as
LEED and BREEAM.
In terms of our approach to circular
solutions, we’ve set a 2025 ambition
for all plastic packaging used by
our Decorative Paints Europe business
to contain at least 50% recycled
content.
We cemented our long-term relationship with the Kröller-Müller Museum in the Netherlands by entering into an offi cial
partnership. As well as providing expertise and coatings for the conservation of the well-known and inspirational artwork
Jardin d’émail, we’ll be supplying paint for the museum’s exhibition spaces for the next three years.
46
Sustainability statements | AkzoNobel Report 2020
Sustainable solutions – Products that provide
sustainability advantages to our customers
Performers – Products that have no immediate
negative or positive sustainability impact
Transitioners – Products that have
known sustainability risks
PAINT
We aim to grow our sustainable
solutions from around 40% of
our revenue in 2020 to over 50%
by 2030. Our sustainable solutions
are comprised of products that
bring sustainable benefi ts to
our customers.
Eco-premium solutions make up a
make them healthier places to live and
signifi cant part of our sustainable
work. Many of our products are used
solutions. They are considered
in the construction industry and we’ve
signifi cantly better in one or more of our
developed a wide range of products
sustainability criteria and provide the
and solutions that are qualifi ed for green
same or better functionality than the
buildings certifi ed with labels such as
mainstream product in the market. In
LEED and BREEAM.
2020, we managed to exceed our target
of 20% of revenue from this category
In terms of our approach to circular
(2020: 21%).
solutions, we’ve set a 2025 ambition
for all plastic packaging used by
As a member of the World Green
our Decorative Paints Europe business
Building Council, we fully support the
to contain at least 50% recycled
ongoing transformation of the built
content.
environment, which aims to reduce
the carbon footprint of buildings and
We cemented our long-term relationship with the Kröller-Müller Museum in the Netherlands by entering into an offi cial
partnership. As well as providing expertise and coatings for the conservation of the well-known and inspirational artwork
Jardin d’émail, we’ll be supplying paint for the museum’s exhibition spaces for the next three years.
46
Sustainability statements | AkzoNobel Report 2020
Note 8
Sustainable solutions and
customer value
SUSTAINABLE PRODUCT
PORTFOLIO ASSESSMENT
Our sustainable solutions add value
for our customers. They often show
faster growth rates and command
higher margins than more traditional
products. We identify the value we bring
to customers in terms of sustainability by
using our Sustainable Product Portfolio
Assessment (SPPA) framework in our
portfolio management.
In 2020, we combined our approach
to sustainable solutions and our
priority substance program into
SPPA. This allows us to cover both
the sustainability advantages and the
legislative concerns on substances
in our portfolio management.
We’ve split our portfolio into three
categories, as shown at the top of the
opposite page.
We now have a holistic view of the
sustainability characteristics of our
product portfolio. Together with our
customer-focused product stewardship
process, it enables value-selling
strategies tailored to specifi c customer
needs. It means we can take a
harmonized approach in our portfolio
management and have created a unique
baseline for our future portfolio ambitions.
Product stewardship
Product stewardship is our approach
to ensuring that product safety and its
sustainability aspects are considered
throughout the value chain – from raw
material extraction, R&D, manufacturing,
transport, marketing and application,
all the way through to end-of-life. We
aim to deliver value to ourselves and
our customers by not only ensuring
regulatory compliance in every region
where we operate, but also by
committing to continually develop safer
and more sustainable solutions for the
market, while staying ahead of legislation
through our proactive approach.
SUSTAINABILITY
Positivity was the driving force behind one of our 2020 “Let’s Colour” projects, which helped to spread cheer in homes
across Indonesia. We teamed up with a local arts community in Bandung, West Java, to create a series of colorful murals
as part of the nation’s 75th Independence Day anniversary celebrations. The project was also an opportunity for our Dulux
brand to raise people’s spirits and spread a message of hope.
We use our Product Stewardship
Continuous Improvement Tool (PSCIT) to
drive continuous improvement in product
stewardship. Specifi c improvements
in 2020 are particularly noticeable in
the marketing teams where the SPPA
process has been introduced and
clear actions have been taken for the
management of critical substances.
Priority substance
management
Our industry-leading and multi-award-
winning Priority Substance Program
continues to conduct reviews as
the regulatory status of substances
change. Processes are also in place to
prevent the introduction of hazardous
substances in our businesses. Creating
a direct link between the program
and business processes ensures that
substances are identifi ed and actions
are managed within the business’
product portfolio in a timely and
appropriate manner.
Sustainable solutions and value
for the customer
We work closely with customers to
deliver products and solutions that
help their businesses to become more
sustainable, while delivering economic
value to all parties in the value chain.
By focusing on the benefi ts we can
offer, we continue to have a major
infl uence on the growing acceptance
of more sustainable solutions in our
various markets.
AkzoNobel Report 2020 | Sustainability statements
47
SUSTAINABILITY
We’ve grouped the sustainability benefits for our customers into six People. Planet. Paint.
chapters that we use in our SPPA framework to define our sustainable solutions.
People and
communities
Health and
well-being
We believe in the power of paints
and coatings to transform lives by
uplifting communities, changing
behavior and making living spaces
more fun, liveable and enjoyable.
Through our “Let’s Colour”
community transformation programs
(see Note 3), we add color to
people’s lives and aim to provide
opportunities and environments
for people in need to learn, grow
and flourish.
As a member of the World Green
Building Council, we’re driving
the development of healthier
buildings for people to live and
work in. The products and solutions
we provide offer various health and
well-being advantages, such as
improving indoor air quality and
helping to keep surfaces hygienically
clean. We also aim to reduce both
the use of any harmful substances
ahead of legislation and the health
risks for users and end-users of
our products.
Reduced
carbon and
energy
Because the majority of our carbon
footprint comes from Scope 3 in
our value chain, we’re constantly
developing new solutions to reduce
the carbon in our products. Our
customers are also increasingly
focusing on reducing their own
carbon footprint. We support them
by offering solutions that can help
to improve the energy efficiency
of their manufacturing processes
and end products.
Reduced, reused
and recycled
material use
Long-lasting
performance
As part of our efforts to deal
with resource scarcity, we continue
to develop products that improve
productivity, for example by using
less raw materials. For some of
our coatings customers, we’ve
developed high solids products
that require less packaging and are
easier to transport.
For many years, we’ve been
developing durable paints and
coatings that protect substrates for
longer against external influences
such as the weather and wear
and tear. This enables customers
to reduce costs, save resources,
prolong maintenance cycles and
keep objects, infrastructure
and buildings more colorful.
Less
waste
Having set 2030 ambitions to reduce
waste from our own operations,
we’re also striving to reduce the
waste in our value chain. A key area
of focus is helping customers
reduce waste in their own processes.
One example is our partnership with
Qlayers, set up through our Paint
the Future innovation ecosystem.
It involves developing automated
spray application technology,
which reduces overspray for
industrial coatings.
48
Sustainability statements | AkzoNobel Report 2020
SUSTAINABILITY
CASE STUDY
CASE STUDY
We’ve grouped the sustainability benefits for our customers into six People. Planet. Paint.
chapters that we use in our SPPA framework to define our sustainable solutions.
People and
communities
Health and
well-being
Reduced
carbon and
energy
We believe in the power of paints
As a member of the World Green
and coatings to transform lives by
Building Council, we’re driving
Because the majority of our carbon
uplifting communities, changing
the development of healthier
footprint comes from Scope 3 in
behavior and making living spaces
buildings for people to live and
our value chain, we’re constantly
more fun, liveable and enjoyable.
work in. The products and solutions
developing new solutions to reduce
Through our “Let’s Colour”
we provide offer various health and
the carbon in our products. Our
community transformation programs
well-being advantages, such as
customers are also increasingly
(see Note 3), we add color to
improving indoor air quality and
focusing on reducing their own
people’s lives and aim to provide
helping to keep surfaces hygienically
carbon footprint. We support them
opportunities and environments
clean. We also aim to reduce both
by offering solutions that can help
for people in need to learn, grow
the use of any harmful substances
to improve the energy efficiency
and flourish.
ahead of legislation and the health
of their manufacturing processes
risks for users and end-users of
and end products.
our products.
Less
waste
Reduced, reused
and recycled
material use
Long-lasting
performance
Having set 2030 ambitions to reduce
For many years, we’ve been
waste from our own operations,
As part of our efforts to deal
developing durable paints and
we’re also striving to reduce the
with resource scarcity, we continue
coatings that protect substrates for
waste in our value chain. A key area
to develop products that improve
longer against external influences
of focus is helping customers
productivity, for example by using
such as the weather and wear
reduce waste in their own processes.
less raw materials. For some of
and tear. This enables customers
One example is our partnership with
our coatings customers, we’ve
to reduce costs, save resources,
Qlayers, set up through our Paint
developed high solids products
prolong maintenance cycles and
the Future innovation ecosystem.
that require less packaging and are
keep objects, infrastructure
It involves developing automated
easier to transport.
and buildings more colorful.
spray application technology,
which reduces overspray for
industrial coatings.
48
Sustainability statements | AkzoNobel Report 2020
watch video
Biomass breakthrough
unlocks world of possibilities
More futuristic
functionality could soon
start to appear in our
products thanks to a
breakthrough innovation
which involves a more
sustainable method for
making resins.
It’s all down to research we’ve
been conducting in collaboration
with the Dutch Advanced
Research Center Chemical
Building Blocks Consortium
(ARC CBBC). The new process
uses bio-based monomers
to make resins, which are
traditionally oil-based.
Requiring just UV light, oxygen
and renewable raw materials,
patent applications have already
been fi led for resins and coatings
made with monomers derived
from sugar derivatives isolated
from biomass.
A coating from nature
02
Acid
Alcohol
Polymerization
Biomass
Biomass
Biomass
Biomass
Biomass
Coating
Coating
Coating
Coating
Coating
Coating
Coating
Coating
– where the team is led by professor
in organic chemistry and Nobel Prize
winner, Ben Feringa, and PhD student,
George Hermens. “I’m extremely
pleased with these game-changing
results,” says Feringa (pictured right).
“They show that a material for coatings
can be produced from biomass using a
sustainable chemical process.”
“There’s no doubt we’re on the verge of
progressing to the next level of coatings
technology, thanks to this fantastic
example of collaborative innovation
in action,” explains Klaas Kruithof,
AkzoNobel’s Chief Technology Offi cer.
“We’re opening up a new future for
paints and coatings by using sustainable
building blocks that will enable us to
explore and develop some really exciting
functionalities for our customers.”
Most of the research has been taking
place at the University of Groningen
Having started in 2018, the research
project will now focus on optimizing the
monomers so they can be made in a
more effi cient way and on a larger
scale. “We’ve still got a long way to
go in terms of exploring the scope of
the technology, but it will almost certainly
defi ne the future of our products,”
continues Kruithof. “By 2040 or 2050,
there’s also a good chance we might
only be using bio-based monomers in
our resin production, which will help us
to reduce the overall carbon footprint of
our products.”
Aligned with SDG
12, 13 and 17
(see page 30).
AkzoNobel Report 2020 | Sustainability statements
49
49
SUSTAINABILITY
Managing
sustainability
The Executive Committee is
responsible for incorporating our
sustainability agenda into the
company strategy and monitoring
the performance of each business
through the Operational Control
Cycle. Given our focus on
sustainability, overall ownership
of sustainability is with the CEO.
Materiality assessment
We use the principle of materiality to
review strategic priorities and determine
the most relevant and important
sustainability topics material to our
Materiality matrix
People
Planet
Paint
h
g
H
i
i
m
u
d
e
M
w
o
L
l
s
r
e
d
o
h
e
k
a
t
s
r
o
f
e
c
n
a
t
r
o
p
m
I
M
F J
K
L
B C
A
I
H
D E
G
Low
Medium
High
Importance for AkzoNobel
50
Sustainability statements | AkzoNobel Report 2020
company. We focus on topics with
the biggest impact in terms of
accelerating our strategy and their
importance for stakeholder decision-
making. We review the topics
based on input from internal and
external stakeholders. The materiality
assessment is based on key risks
and opportunities, as they relate to
the acceleration of our business
agenda and approach to sustainable
business. The key topics identified
are validated annually and assessed
on relative importance.
Reporting principles
We use our internally developed
reporting principles to make our repor-
ting more precise and better aligned
with our business and operations.
They are aligned with the Global
Reporting Initiative (GRI) standards.
The complete reporting principles
are on our website, along with an
index of the GRI indicators.
Compared with 2019, the only signi-
ficant change in our reporting
methodology is in Scope 3 upstream
and downstream.
The preparation of our Sustainability
statements requires management
to make judgments, estimates
and assumptions that affect
amounts reported. The estimates
and assumptions are based on
experience and various other factors
believed to be reasonable under the
circumstances. The estimates and
underlying assumptions are reviewed
on an ongoing basis. In general, Scope
3 upstream and downstream and
eco-premium solutions have a higher
degree of judgment and complexity, for
which changes in the assumptions and
estimates could result in different results
than those recorded.
The main and most important elements
of these are highlighted below. More
Topic
Report 2020
A Employee development
Note 1: Employees
B Integrity
C Human rights
Integrity and compliance management
Note 4: Human rights
D Community involvement
Note 3: AkzoNobel Cares
E Fair taxes
Consolidated financial statements (Note 9)
F People/process safety
Note 2: Health and safety
G Circular economy
Note 6: Towards a zero waste company
H Supplier sustainability
Note 7: Responsible procurement
I Climate strategy
Climate
J Resource productivity
Note 5: Reducing carbon emissions
Note 6: Towards a zero waste company
K Customer satisfaction
Note 8: Sustainable solutions and customer value
L Sustainable portfolios
Note 8: Sustainable solutions and customer value
M Product safety
Note 8: Sustainable solutions and customer value
SUSTAINABILITY
Managing
sustainability
The Executive Committee is
responsible for incorporating our
sustainability agenda into the
company strategy and monitoring
the performance of each business
through the Operational Control
Cycle. Given our focus on
sustainability, overall ownership
of sustainability is with the CEO.
Materiality matrix
People
Planet
Paint
company. We focus on topics with
Compared with 2019, the only signi-
the biggest impact in terms of
ficant change in our reporting
accelerating our strategy and their
methodology is in Scope 3 upstream
importance for stakeholder decision-
and downstream.
making. We review the topics
based on input from internal and
The preparation of our Sustainability
external stakeholders. The materiality
statements requires management
assessment is based on key risks
to make judgments, estimates
and opportunities, as they relate to
and assumptions that affect
the acceleration of our business
amounts reported. The estimates
agenda and approach to sustainable
and assumptions are based on
business. The key topics identified
experience and various other factors
are validated annually and assessed
believed to be reasonable under the
on relative importance.
Reporting principles
circumstances. The estimates and
underlying assumptions are reviewed
on an ongoing basis. In general, Scope
We use our internally developed
3 upstream and downstream and
reporting principles to make our repor-
eco-premium solutions have a higher
ting more precise and better aligned
degree of judgment and complexity, for
with our business and operations.
which changes in the assumptions and
Materiality assessment
They are aligned with the Global
estimates could result in different results
We use the principle of materiality to
Reporting Initiative (GRI) standards.
than those recorded.
review strategic priorities and determine
The complete reporting principles
the most relevant and important
are on our website, along with an
The main and most important elements
sustainability topics material to our
index of the GRI indicators.
of these are highlighted below. More
h
g
i
H
m
u
i
d
e
M
w
o
L
s
r
e
d
l
o
h
e
k
a
t
s
r
o
f
e
c
n
a
t
r
o
p
m
I
F J
K
L
B C
A
I
M
H
D E
G
Low
Medium
High
Importance for AkzoNobel
Topic
Report 2020
A Employee development
Note 1: Employees
B Integrity
C Human rights
Integrity and compliance management
Note 4: Human rights
D Community involvement
Note 3: AkzoNobel Cares
E Fair taxes
Consolidated financial statements (Note 9)
F People/process safety
Note 2: Health and safety
G Circular economy
Note 6: Towards a zero waste company
H Supplier sustainability
Note 7: Responsible procurement
I Climate strategy
Climate
J Resource productivity
Note 5: Reducing carbon emissions
Note 6: Towards a zero waste company
K Customer satisfaction
Note 8: Sustainable solutions and customer value
L Sustainable portfolios
Note 8: Sustainable solutions and customer value
M Product safety
Note 8: Sustainable solutions and customer value
A number of blue postboxes appeared
in the UK during the year to say “thank
you” to the NHS – and we’re proud to
have donated our Cromadex products
for the very special paint job. They
were a visible expression of the Royal
Mail’s support for all NHS staff who
worked tirelessly to help those affected
by COVID-19. The postboxes, coated
in “NHS blue”, were located close
to a handful of hospitals in England,
Scotland, Wales and Northern Ireland.
details on the methodology and
significant assumptions can be found
in the reporting principles on our
website: akzonobel.com/en/about-us/
sustainability-/reporting-principles-
Organizational health score
The overall percentile score is used in
external reports. In 2020, two quarterly
surveys were conducted, with results in
Q1 and Q3. For the annual report, the
Q3 score is reported.
Results from the organizational health
score (OHI) are collected in the OHI
database and reported by McKinsey.
Due to anonymity, we have no access
to these data, and the data review,
authorization and audit are the
responsibility of McKinsey.
Cradle-to-grave carbon footprint
(Scope 1, 2 and 3), Scope 3
upstream and downstream
Cradle-to-grave carbon footprint –
including Scope 1, 2 and 3 upstream
and downstream – is calculated annually
in accordance with the Greenhouse
Gas Protocol Corporate Value Chain
Accounting and Reporting standard, and
the WBCSD Chemical Sector Working
Group Guidelines. We include the
climate change impact from VOCs in our
measurements due to their impact within
the paints and coatings industry.
• Upstream: Category 1 – purchased
on amount of power and heat (natural
gas), typical VOC levels and percentage
of VOCs incinerated.
goods and services
• Downstream: Category 10 –
processing of sold products; Category
11 – use of sold products; Category
12 – end-of-life treatment of sold
products and VOC in processing/use
The methodology for calculating
Scope 3 carbon emissions was further
improved in 2020 on the following:
• Impact of Category 12 and VOC are
linked to raw material data where
possible
• Refinement of raw material impact
by integrating the formulation data
(upstream impact)
The reporting period for Scope 3
upstream and downstream is October 1
to September 30. Scope 1 and 2 is
reported for the calendar year.
External data sources: CEPE and
Ecoinvent databases for carbon footprint
data of raw material; International
Energy Association (IEA) world
average electricity grid mix and DEFRA
natural gas conversion factor. Internal
data sources: We conduct lifecycle
assessments which are used as input
for the calculation and includes models
Eco-premium solutions
A measure of the sustainability of our
products compared with competitive
products, which have customer/
con sumer benefits, as a percentage
of our actual revenue over the period
November 1, 2019, to October 31,
2020. For Powder Coatings, segment
growth to previous year revenue
is applied.
An eco-premium solution is significantly
better than competing offers in the
market in at least one eco-efficiency
criterion (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.
In determining the KPI, AkzoNobel
product groups are reviewed against a
mainstream product in the market which
delivers the same function. This can be
an AkzoNobel or competitor offering.
The assessments are performed to the
best of our abilities by internal experts,
based on either quantitative or qualitative
aspects, of which the latter is subject to
inherent subjective considerations.
50
Sustainability statements | AkzoNobel Report 2020
AkzoNobel Report 2020 | Sustainability statements
51
SUSTAINABILITY PERFORMANCE SUMMARY
Economic
Area
Product/service
Eco-premium solutions
Supplier management
Unit
2016
2017
2018
2019
2020
Ambition 2020
% of revenue
21
21
Suppliers participating in CSR program
Suppliers in line with our expectations
% against baseline
% against baseline
Business Partner Code of Conduct product-related % of spend
Business Partner Code of Conduct non product-
related
% of spend
99
86
97
86
22
60
38
98
83
22
65
47
98
84
21
75
51
98
89
20
–
–
Social
Employees
Organizational health score
Female executives1
People, process and product safety
Fatalities employees
score
%
number
Total reportable injury rate employees/
/200,000 hours
temporary workers
Lost time injury rate employees/
/200,000 hours
temporary workers
Occupational illness rate employees
/1,000,000 hours
Fatalities contractors (temporary workers
plus independent)
Total reportable injury rate contractors
Lost time injury rate contractors
Loss of primary containment – Level 1
Regulatory actions – Level 4
number
/200,000 hours
/200,000 hours
number
number
HSE management
Management audits plus reassurance audits
number
2016
2017
2018
2019
2020
Ambition 2020
19
19
0
0.26
0.13
0.07
0
0.29
5
0
34
0
0.20
0.06
0.06
1
0.12
0.06
5
0
32
58
20
0
0.20
0.09
0.06
0
0.18
0.07
6
1
25
61
18
2
0.24
0.08
0.03
0
0.19
0.09
3
0
32
69
21
0
0.23
0.09
0.05
0
0.17
0.11
6
0
28
Top quartile 74
25
0
≤0.20
–
–
0
–
–
0
–
–
–
AkzoNobel Cares
Community people trained
Projects
number
number
2,041
157
2,863
224
4,276
126
4,078
225
2,669
170
The indicators that fall within the scope of limited
assurance of our external auditor are marked with the
following symbol:
1 2016-2017 data includes discontinued operations.
52
Sustainability statements | AkzoNobel Report 2020
Unit
2016
2017
2018
2019
2020
Ambition 2020
SUSTAINABILITY PERFORMANCE SUMMARY
% of revenue
21
21
Suppliers participating in CSR program
Suppliers in line with our expectations
% against baseline
% against baseline
Business Partner Code of Conduct product-related % of spend
Business Partner Code of Conduct non product-
% of spend
99
86
97
86
Economic
Area
Product/service
Eco-premium solutions
Supplier management
related
Social
Employees
Organizational health score
Female executives1
People, process and product safety
Fatalities employees
score
%
number
Total reportable injury rate employees/
/200,000 hours
temporary workers
temporary workers
Lost time injury rate employees/
/200,000 hours
Occupational illness rate employees
/1,000,000 hours
Fatalities contractors (temporary workers
plus independent)
Total reportable injury rate contractors
Lost time injury rate contractors
Loss of primary containment – Level 1
Regulatory actions – Level 4
number
/200,000 hours
/200,000 hours
number
number
HSE management
Management audits plus reassurance audits
number
19
19
0
0.26
0.13
0.07
0
0.29
5
0
34
0
0.20
0.06
0.06
1
0.12
0.06
5
0
32
2016
2017
2018
2019
2020
Ambition 2020
22
60
38
98
83
58
20
0
0.20
0.09
0.06
0
0.18
0.07
6
1
25
22
65
47
98
84
61
18
2
0.24
0.08
0.03
0
0.19
0.09
3
0
32
21
75
51
98
89
69
21
0
0.23
0.09
0.05
0
0.17
0.11
6
0
28
Top quartile 74
25
≤0.20
20
–
–
0
–
–
0
–
–
0
–
–
–
AkzoNobel Cares
Community people trained
Projects
number
number
2,041
157
2,863
224
4,276
126
4,078
225
2,669
170
The indicators that fall within the scope of limited
assurance of our external auditor are marked with the
following symbol:
Environmental
Area
Energy use and emissions
Energy use
per ton of production
Renewable energy (own operations)
Renewable electricity (own operations)
Greenhouse gas emissions –
Direct CO2(e) emissions (Scope 1)
per ton of production
Greenhouse gas emissions –
Indirect CO2(e) emissions (Scope 2)
per ton of production
Volatile organic compounds
per ton of production
Raw material efficiency
Fresh water use
per ton of production
Total waste
per ton of production
Total reusable waste
Total non-reusable waste
per ton of production
Hazardous waste total
per ton of production
Hazardous waste non-reusable
per ton of production
Hazardous waste to landfill
per ton of production
Value chain1
Cradle-to-grave carbon footprint
(Scope 1, 2 and 3)
Scope 3 upstream2
Scope 3 downstream3
Unit
2016
2017
2018
2019
2020
Ambition 2020
1000TJ
GJ/ton
%
%
kiloton
kg/ton
kiloton
kg/ton
kiloton
kg/ton
million m3
m3/ton
kiloton
kg/ton
kiloton
kiloton
kg/ton
kiloton
kg/ton
kiloton
kg/ton
kiloton
kg/ton
million tons
million tons
million tons
6.32
1.91
27
34
72.72
21.96
244.3
73.78
2.00
0.60
9.61
2.90
85
25.65
42
43
12.92
35
10.72
15
4.62
0.7
0.20
6.39
1.88
30
37
69.66
20.53
237.8
70.11
1.71
0.50
9.62
2.84
77
22.77
37
40
6.20
1.91
31
38
62.90
19.42
226.0
69.77
1.57
0.49
9.27
2.86
67
20.97
33
34
6.02
1.88
31
37
58.29
18.18
183.1
57.13
1.19
0.37
8.05
2.51
67
21.00
34
33
11.90
10.63
10.28
33
9.76
16
4.64
0.6
0.17
30
9.13
15
4.59
0.69
0.21
14.3
6.5
7.5
29
9.07
14
4.46
0.45
0.14
13.8
6.3
7.3
5.69
1.83
33
40
57.16
18.42
168.2
54.21
0.95
0.31
9.12
2.94
62
19.96
32
30
9.57
28
8.93
15
4.70
0.23
0.07
12.8
5.9
6.7
–
1.81
–
–
–
–
–
–
0.45
–
–
–
21.50
–
–
–
–
–
–
–
–
–
–
–
1 2016-2017 data includes discontinued operations.
52
Sustainability statements | AkzoNobel Report 2020
1 We have restated 2018-2019 Scope 3 downstream and upstream due to improvement of methodology by better incorporating raw material formulation.
2 Category 1: purchased goods and services.
3 Category 10: processing of sold products; category 11: use of sold products; category 12: end-of-life treatment of sold products; VOC.
AkzoNobel Report 2020 | Sustainability statements
53
CASE STUDY
Art Foundation
marks silver
jubilee
something to be proud of. Art is
about being inclusive and being
ready to be inspired, but also
challenged. Art is pioneering, it’s
about pushing boundaries.”
A jubilee exhibition which was due
to open in 2020 was postponed
due to the COVID-19 pandemic.
It has been rescheduled to
open in September 2021
at the AkzoNobel Art Space
in Amsterdam,
the Netherlands.
It was also a great
honor and privilege to see the Art
Foundation’s unceasing support for
the international art world over the
last 25 years recognized by His
Majesty King Willem-Alexander of
the Netherlands, who appointed
Hester Alberdingk Thijm
(pictured below) – Director of
the AkzoNobel Art Foundation
– as a Knight in the Order
of Oranje-Nassau.
When we established
the AkzoNobel Art
Foundation in 1995,
the plan was to create
an exciting corporate
collection that would
preserve the heritage of
our future.
Thanks to these pioneering efforts and
the company’s continued dedication
to supporting culture and the arts,
the Art Foundation celebrated its 25th
anniversary in 2020.
True to its earliest motto to go beyond
the surface, the Art Foundation had
planned a year full of celebrations,
but global events dictated otherwise.
However, there were still several
highlights, including the launch of the
new AkzoNobel Art Foundation catalog
– We Are the Collection.
The magazine-style publication sheds
light on the identity of the titular “We”
and features contributions by artists,
curators, photographers, art critics,
writers and AkzoNobel colleagues.
Speaking at the launch of the catalog,
AkzoNobel’s Executive Committee
member Isabelle Deschamps (pictured
above) commented: “A corporate
art collection is an act of
commitment towards the societies
and communities in which we
live and operate. A commitment
AkzoNobel has kept for the
past 25 years. Now that is
54
CASE STUDY
Art Foundation
marks silver
jubilee
When we established
the AkzoNobel Art
Foundation in 1995,
the plan was to create
an exciting corporate
collection that would
preserve the heritage of
our future.
something to be proud of. Art is
about being inclusive and being
ready to be inspired, but also
challenged. Art is pioneering, it’s
about pushing boundaries.”
A jubilee exhibition which was due
to open in 2020 was postponed
due to the COVID-19 pandemic.
It has been rescheduled to
open in September 2021
at the AkzoNobel Art Space
in Amsterdam,
Thanks to these pioneering efforts and
the Netherlands.
the company’s continued dedication
to supporting culture and the arts,
It was also a great
the Art Foundation celebrated its 25th
honor and privilege to see the Art
anniversary in 2020.
Foundation’s unceasing support for
the international art world over the
True to its earliest motto to go beyond
last 25 years recognized by His
the surface, the Art Foundation had
Majesty King Willem-Alexander of
planned a year full of celebrations,
the Netherlands, who appointed
but global events dictated otherwise.
Hester Alberdingk Thijm
However, there were still several
(pictured below) – Director of
highlights, including the launch of the
the AkzoNobel Art Foundation
new AkzoNobel Art Foundation catalog
– as a Knight in the Order
– We Are the Collection.
of Oranje-Nassau.
The magazine-style publication sheds
light on the identity of the titular “We”
and features contributions by artists,
curators, photographers, art critics,
writers and AkzoNobel colleagues.
Speaking at the launch of the catalog,
AkzoNobel’s Executive Committee
member Isabelle Deschamps (pictured
above) commented: “A corporate
art collection is an act of
commitment towards the societies
and communities in which we
live and operate. A commitment
AkzoNobel has kept for the
past 25 years. Now that is
54
LEADERSHIP AND
GOVERNANCE
An overview of our leadership and their
activities during the year, along with details
of our corporate governance structure,
risk management, executive remuneration,
compliance and integrity management, and
AkzoNobel and the capital markets.
Our Board of Management and
Executive Committee
Statement of the Board of Management
Supervisory Board Chairman’s statement
Our Supervisory Board
Report of the Supervisory Board
Corporate governance statement
Risk management
Integrity and compliance management
Remuneration report
AkzoNobel and the capital markets
56
57
58
59
60
66
74
76
78
84
Ian Davenport | Puddle Painting: Azo | 2020 |
acrylic paint on aluminum | 77 x 77 cm |
Collection AkzoNobel Art Foundation
55
OUR BOARD OF MANAGEMENT AND
EXECUTIVE COMMITTEE
From left to right:
David Prinselaar, Joëlle Boxus,
Thierry Vanlancker, Isabelle
Deschamps, Maarten de Vries
Thierry Vanlancker CEO
and Chairman of the Board of
Management and Executive
Committee (1964, Belgian)
Thierry joined AkzoNobel in 2016,
bringing more than 28 years
of experience in the chemicals
industry. He led operations in
polymers, performance coatings
and chemicals at DuPont and
was President of Fluoroproducts
at Chemours. He’s also a
non-executive member of the
Board of Directors of Sika AG and
in May 2020 joined the Board of
Directors of Aliaxis S.A./N.V. as a
non-executive director.
Maarten de Vries CFO and
member of the Board of
Management and Executive
Committee (1962, Dutch)
Maarten joined AkzoNobel in
2018. He spent the previous
three years as CFO at Intertrust
Group and TNT Express. He was
a member of the Management
Board of Intertrust Group and the
Executive Board of TNT Express.
Joëlle Boxus Chief Human
Resources Officer and
member of the Executive
Committee (1971, Belgian)
Joëlle rejoined AkzoNobel as
Chief Human Resources Officer
in 2020. She had previously been
global HR leader for AkzoNobel’s
former Specialty Chemicals
business. Joëlle managed
the separation of Specialty
Chemicals before becoming part
of the Executive Committee of
the newly established company.
In 2018, she returned to Belgium
to become Chief Human
Resources Officer at Etex before
rejoining AkzoNobel.
Isabelle Deschamps General
Counsel and member of
the Executive Committee
(1970, Canadian and British)
Isabelle joined AkzoNobel
in 2018. Before joining the
company, she was responsible
for legal and compliance at
Unilever’s European businesses
and its global Food and
Refreshment division. She
previously held various other
positions at Unilever and Nestlé.
Isabelle is admitted to the
England and Wales Law Society
and to the Quebec (Canada) Bar.
David Prinselaar Chief
Supply Chain Officer and
Member of the Executive
Committee (1974, French)
David joined AkzoNobel in 2015
from Reckitt Benckiser, taking
responsibility for the Performance
Coatings operations and then
manufacturing for AkzoNobel as
a whole from January 2018. In
March 2019, David took over the
role of Chief Supply Chain Officer
and became a member of the
Executive Committee.
56
Leadership and governance | AkzoNobel Report 2020
OUR BOARD OF MANAGEMENT AND
EXECUTIVE COMMITTEE
STATEMENT OF THE BOARD OF MANAGEMENT
The Board of Manage
ment’s statement on
the financial statements,
the management report
and internal controls.
We have prepared the Report 2020 in
accordance with International Financial
Reporting Standards (IFRS), as adopted
by the EU, and the financial reporting
requirements included in Part 9 of Book
2 of the Dutch Civil Code.
To the best of our knowledge:
• The financial statements in this Report
2020 give a true and fair view of the
assets and liabilities; financial position
and profit or loss of our company
and the undertakings included in the
consolidation taken as a whole
• The management report in this Report
2020 includes a fair review of the
position at December 31, 2020, the
development and performance during
the financial year 2020 of AkzoNobel,
and the undertakings included in the
consolidation taken as a whole, and
describes our principal risks
The Board of Management is
responsible for the establishment and
adequate functioning of a system of
governance, risk management and
internal controls within our company.
Consequently, a broad range of
processes and procedures has been
implemented, designed to provide
control by the Board of Management
over the company’s operations.
These processes and procedures
include measures regarding the
general control environment, such
as a Code of Conduct, policies and
procedures and authority rules, as
well as specific measures, such as a
risk management system, a system
of controls and a system of letters of
financial representation by responsible
management at various levels within
our company.
All these processes and procedures are
aimed at providing a reasonable level
of assurance that we have identified
and managed the significant risks of
our company, and that we meet our
operational and financial objectives in
compliance with applicable laws and
regulations. For a detailed description
of the company’s internal risk
management, please refer to the Risk
management section.
With respect to supporting and
monitoring of compliance with laws
and regulations – including our
Code of Conduct – an Integrity and
Compliance Committee has been
established. The Compliance function
makes rules available through the
Policy Portal, manages the online
and face-to-face compliance training
program, provides legal expert
support and manages investigations
related to our SpeakUp! corporate
complaints procedure.
The Internal Control function maintains
AkzoNobel’s Internal Control Framework,
monitors the compliance and includes
updates regarding the emergence of
new risks. They support the annual
review of the effectiveness of the system
of governance, risk management
and internal controls of the Board of
Management. Internal Audit provides
comfort to the Board of Management,
as well as the Supervisory Board, that
our system of risk management
and internal controls – as designed
and represented by management – are
adequate and effective.
While we routinely work towards
continuous improvement of our
processes and procedures regarding
financial reporting, the Board of
Management is of the opinion that:
• The report provides sufficient insights
into any failings in the effectiveness
of the internal risk management and
control systems
• These systems provide reasonable
assurance that the financial reporting
does not contain material inaccuracies
• Based on the current state of affairs, it
is justified that the financial reporting is
prepared on a going concern basis
• The report states those material risks
and uncertainties that are relevant
to the expectation of the company’s
continuity for the period of 12 months
after report preparation
For a detailed description of the risk
management system and the principal
risks identified, reference is made to
the Risk management and Integrity and
compliance management chapters in
this section.
We have discussed the above opinion
and conclusions with the Audit
Committee, the Supervisory Board and
the external auditor.
Amsterdam, February 16, 2021
The Board of Management
Thierry Vanlancker, CEO and Chairman
of the Board of Management
Maarten de Vries, CFO and member of
the Board of Management
For further information please visit our website:
www.akzonobel.com/en/about-us/governance-/
board-of-management-and-executive-committee
From left to right:
David Prinselaar, Joëlle Boxus,
Thierry Vanlancker, Isabelle
Deschamps, Maarten de Vries
Thierry Vanlancker CEO
Management and Executive
the separation of Specialty
previously held various other
and Chairman of the Board of
Committee (1962, Dutch)
Chemicals before becoming part
positions at Unilever and Nestlé.
Management and Executive
Maarten joined AkzoNobel in
of the Executive Committee of
Isabelle is admitted to the
Committee (1964, Belgian)
2018. He spent the previous
the newly established company.
England and Wales Law Society
Thierry joined AkzoNobel in 2016,
three years as CFO at Intertrust
In 2018, she returned to Belgium
and to the Quebec (Canada) Bar.
bringing more than 28 years
Group and TNT Express. He was
to become Chief Human
of experience in the chemicals
a member of the Management
Resources Officer at Etex before
industry. He led operations in
Board of Intertrust Group and the
rejoining AkzoNobel.
polymers, performance coatings
Executive Board of TNT Express.
David Prinselaar Chief
Supply Chain Officer and
Member of the Executive
and chemicals at DuPont and
Isabelle Deschamps General
Committee (1974, French)
was President of Fluoroproducts
Joëlle Boxus Chief Human
Counsel and member of
David joined AkzoNobel in 2015
at Chemours. He’s also a
Resources Officer and
the Executive Committee
from Reckitt Benckiser, taking
non-executive member of the
member of the Executive
(1970, Canadian and British)
responsibility for the Performance
Board of Directors of Sika AG and
Committee (1971, Belgian)
Isabelle joined AkzoNobel
Coatings operations and then
in May 2020 joined the Board of
Joëlle rejoined AkzoNobel as
in 2018. Before joining the
manufacturing for AkzoNobel as
Directors of Aliaxis S.A./N.V. as a
Chief Human Resources Officer
company, she was responsible
a whole from January 2018. In
non-executive director.
in 2020. She had previously been
for legal and compliance at
March 2019, David took over the
global HR leader for AkzoNobel’s
Unilever’s European businesses
role of Chief Supply Chain Officer
Maarten de Vries CFO and
former Specialty Chemicals
and its global Food and
and became a member of the
member of the Board of
business. Joëlle managed
Refreshment division. She
Executive Committee.
56
Leadership and governance | AkzoNobel Report 2020
AkzoNobel Report 2020 | Leadership and governance
57
SUPERVISORY BOARD CHAIRMAN’S STATEMENT
2020 was a diffi cult year for the
whole world due to the global
pandemic, although it turned into
a good year for AkzoNobel.
With COVID-19 impacting the company’s revenue,
Decorative Paints delivered a very strong performance,
while Performance Coatings experienced more
headwinds, especially during the fi rst half of the year.
Profi tability increased further as a result of signifi cant
efforts to reduce costs, improve product mix and
margins, as well as strengthen and standardize the
company’s processes and systems.
The Supervisory Board has been impressed by the way
AkzoNobel responded to the unprecedented challenges
posed during the year and how the organization was
able to generate positive momentum and deliver on its
Winning together: 15 by 20 ambition, despite facing
considerable hurdles due to the pandemic. As well as
ensuring the safety and well-being of employees, the
company continued to serve and support its customers
around the world, while at the same time creating a
stronger foundation for the future. It was a clear sign of
AkzoNobel’s resilience and ability to adapt.
Many employees had to change their ways of working
– relying heavily on technology to stay connected –
which worked surprisingly well. The sudden increase in
demand for decorative paints, and declines in several
other segments, put signifi cant pressure on the fl exibility
of the company’s supply chain and employees had to
put in extra effort to cope. So it was encouraging to see
everyone’s pride in the organization as AkzoNobel rose
to the challenge and took signifi cant strides forward.
Through it all, the organization held fi rm on its core
values, focusing on safety, acting with integrity and
further improving sustainability. Extra special efforts
were also made to support local communities in dealing
with the global pandemic. The company’s People.
Planet. Paint. approach to sustainable business will
ensure that AkzoNobel continues to lead the way
when it comes to environmental and social impact. The
success and further expansion of the Paint the Future
innovation ecosystem also caught the eye of many in
the industry and beyond.
Throughout much of 2020, many colleagues
and key stakeholders were involved in
uncovering a new purpose statement. The
successful outcome – Pioneering a world of
possibilities to bring surfaces to life – will
help to further build engagement and drive
the company’s continued transformation.
Everyone at AkzoNobel is rightfully proud
to have delivered on the 15 by 20 ambition
launched in 2017, closing the year with return
on sales – excluding unallocated cost – of 15%,
despite the challenging business environment. The
changes implemented throughout the organization
have been signifi cant and successful. Both the
management team and employees deserve sincere
compliments and thanks.
Having restored competitiveness and strengthened
profi tability, AkzoNobel is now ready for the next
stage of its journey, represented by the Grow &
Deliver strategy. There are still multiple levers – such
as increased commercial excellence and network
optimization – for the company to save costs and
enable increased investments in growth, paving the
way for a future which can excite all stakeholders.
Management has clearly shown they can balance
delivering short-term results with achieving long-term
sustainability. This ability to address today’s challenges
while driving the changes necessary to thrive tomorrow
will prove vital and the Supervisory Board is looking
forward to the next chapter.
I want to thank my Supervisory Board colleagues, the
Board of Management and Executive Committee for all
their efforts during an extraordinary year, when nearly all
our contact took place by video calls. The frequency of
meetings was high throughout the year, which allowed
the Supervisory Board to be closely involved, including
in the development of plans for the future.
Most importantly, I want to thank AkzoNobel’s
employees around the world for their continued
passion and commitment, which helped to deliver an
exceptional result during an unprecedented year.
During a diffi cult year for us all, it was especially
pleasing to see employee engagement improve. This
remains a key focus area, with a clear ambition to
become top quartile.
Amsterdam, February 16, 2021
Nils Smedegaard Andersen
Chairman of the Supervisory Board
58
Leadership and governance | AkzoNobel Report 2020
Nils
Smedegaard Andersen
(1958, DK) Chairman
Initial appointment: 2018
Term of offi ce:
2018-2022
Chairman of the Board of
Directors of Unilever plc.;
Former non-executive
Director of BP plc.; Former
CEO of A.P. Moller-Maersk
A/S; Former CEO and
President of Carlsberg A/S.
SUPERVISORY BOARD CHAIRMAN’S STATEMENT
OUR SUPERVISORY BOARD
2020 was a diffi cult year for the
whole world due to the global
pandemic, although it turned into
a good year for AkzoNobel.
Throughout much of 2020, many colleagues
and key stakeholders were involved in
uncovering a new purpose statement. The
successful outcome – Pioneering a world of
possibilities to bring surfaces to life – will
help to further build engagement and drive
the company’s continued transformation.
With COVID-19 impacting the company’s revenue,
Decorative Paints delivered a very strong performance,
Everyone at AkzoNobel is rightfully proud
while Performance Coatings experienced more
to have delivered on the 15 by 20 ambition
headwinds, especially during the fi rst half of the year.
launched in 2017, closing the year with return
Profi tability increased further as a result of signifi cant
on sales – excluding unallocated cost – of 15%,
efforts to reduce costs, improve product mix and
despite the challenging business environment. The
margins, as well as strengthen and standardize the
changes implemented throughout the organization
company’s processes and systems.
have been signifi cant and successful. Both the
management team and employees deserve sincere
The Supervisory Board has been impressed by the way
compliments and thanks.
AkzoNobel responded to the unprecedented challenges
posed during the year and how the organization was
Having restored competitiveness and strengthened
able to generate positive momentum and deliver on its
profi tability, AkzoNobel is now ready for the next
Winning together: 15 by 20 ambition, despite facing
stage of its journey, represented by the Grow &
considerable hurdles due to the pandemic. As well as
Deliver strategy. There are still multiple levers – such
ensuring the safety and well-being of employees, the
as increased commercial excellence and network
Nils
Smedegaard Andersen
(1958, DK) Chairman
Initial appointment: 2018
Term of offi ce:
2018-2022
company continued to serve and support its customers
optimization – for the company to save costs and
Chairman of the Board of
around the world, while at the same time creating a
enable increased investments in growth, paving the
Directors of Unilever plc.;
stronger foundation for the future. It was a clear sign of
way for a future which can excite all stakeholders.
Former non-executive
AkzoNobel’s resilience and ability to adapt.
Management has clearly shown they can balance
Director of BP plc.; Former
Many employees had to change their ways of working
sustainability. This ability to address today’s challenges
A/S; Former CEO and
– relying heavily on technology to stay connected –
while driving the changes necessary to thrive tomorrow
President of Carlsberg A/S.
which worked surprisingly well. The sudden increase in
will prove vital and the Supervisory Board is looking
delivering short-term results with achieving long-term
CEO of A.P. Moller-Maersk
demand for decorative paints, and declines in several
forward to the next chapter.
other segments, put signifi cant pressure on the fl exibility
of the company’s supply chain and employees had to
I want to thank my Supervisory Board colleagues, the
put in extra effort to cope. So it was encouraging to see
Board of Management and Executive Committee for all
everyone’s pride in the organization as AkzoNobel rose
their efforts during an extraordinary year, when nearly all
to the challenge and took signifi cant strides forward.
our contact took place by video calls. The frequency of
Through it all, the organization held fi rm on its core
the Supervisory Board to be closely involved, including
values, focusing on safety, acting with integrity and
in the development of plans for the future.
meetings was high throughout the year, which allowed
further improving sustainability. Extra special efforts
were also made to support local communities in dealing
Most importantly, I want to thank AkzoNobel’s
with the global pandemic. The company’s People.
employees around the world for their continued
Planet. Paint. approach to sustainable business will
passion and commitment, which helped to deliver an
ensure that AkzoNobel continues to lead the way
exceptional result during an unprecedented year.
when it comes to environmental and social impact. The
success and further expansion of the Paint the Future
innovation ecosystem also caught the eye of many in
the industry and beyond.
During a diffi cult year for us all, it was especially
pleasing to see employee engagement improve. This
Amsterdam, February 16, 2021
remains a key focus area, with a clear ambition to
Nils Smedegaard Andersen
become top quartile.
Chairman of the Supervisory Board
58
Leadership and governance | AkzoNobel Report 2020
Chairman of Johnson
Matthey plc.; Member of
the Supervisory Board of
Covestro A.G.; Former
Chairman and CEO of
Bayer Material Science
A.G.; Former non-executive
Director of BG Group plc and
Aliaxis S.A.; Former President
of Specialties, Huntsman
International LLC; Former
CEO at Polyurethanes
division of ICI plc.
Patrick Thomas
(1957, UK)
Initial appointment: 2017
Term of offi ce:
2017-2021
Chairman of the Supervisory
Boards of UNICA Group
B.V., Faber Halbertsma
Group B.V. and Rhoon,
Pendrecht & Cortgene B.V.;
Former CEO of OFFICEFIRST
Former CEO of OFFICEFIRST
Immobilien A.G. and Grontmij
Immobilien A.G. and Grontmij
N.V.; Former member of the
Executive Board of ARCADIS
Executive Board of ARCADIS
N.V.
Michiel Jaski
(1959, NL)
Initial appointment: 2017
Term of offi ce:
2017-2021
Non-executive Director at
Reckitt Benckiser plc., Hikma
Pharmaceuticals plc. and
DCC plc.; Former Senior
Independent Director at
Victrex plc.; Former CEO of
Quintiles Transnational Corp.;
Former senior executive at
Astra Zeneca plc. and
F. Hoffman-La Roche.
Pamela Kirby
(1953, UK)
Initial appointment: 2016
Term of offi ce:
2020-2024
Jolanda Poots-Bijl
(1969, NL)
Initial appointment: 2019
Term of offi ce:
2019-2023
CFO of Royal van Oord;
CFO of Royal van Oord;
Member of the Supervisory
Board of Pon Holdings
B.V.; Former member of the
Supervisory Boards of
N.V. Nederlandse Gasunie
and Blokker Holding B.V.
Dick Sluimers
(1953, NL)
Initial appointment: 2015
Term of offi ce:
2019-2023
Chairman of the Supervisory
Boards of NIBC Bank N.V.
and Euronext N.V.; Member
of the Board of Directors of
FWD Group Limited; Trustee
of the Erasmus University
Trust; Member of the Board
of Governors of the State
Academy of Finance and
Economics; Former CEO of
APG Group; Former member
of the Supervisory Board of
Atradius N.V.
Byron Grote
(1948, US and UK)
Vice-Chairman
Initial appointment: 2014
Term of offi ce:
2018-2022
Non-executive Director
of Anglo-American plc.,
Standard Chartered plc.
and Tesco plc.; Former
non-executive Director of
Unilever N.V. and Unilever
plc.; Former Board member
of BP plc.
Sue Clark
(1964, UK)
Initial appointment: 2017
Term of offi ce:
2017-2021
Non-executive Director
Non-executive Director
of Britvic plc., Tulchan
Communications LLP and
Imperial Brands plc.; Former
Imperial Brands plc.; Former
Managing Director Europe
SABMiller plc.; Former
Director of Corporate Affairs
Director of Corporate Affairs
Railtrack plc. and Scottish
Power plc.
AkzoNobel Report 2020 | Leadership and governance
59
REPORT OF THE SUPERVISORY BOARD
MEETINGS AND ATTENDANCE
Supervisory Board attendance record
The Supervisory Board values the
attendance of its meetings by all
members. If Supervisory Board
members are unable to attend a
Supervisory Board or committee
meeting, they inform the relevant chair
of their reasons. Supervisory Board
members always receive the materials
for each specific meeting, allowing
them to offer input and discuss any
agenda items with the relevant chair and
provide a proxy to act on their behalf.
In 2020, the Board of Management
attended all regular and all additional
meetings. The Executive Committee
attended the majority of the meetings.
Almost all plenary sessions of the
Supervisory Board were preceded or
succeeded by executive sessions
of the Supervisory Board, with or
without the CEO in attendance. The
Chairman had regular one-on-one calls
with all Supervisory Board members to
discuss individual impressions on the
functioning of the Supervisory Board
and items covered.
The Supervisory Board aims for all
(regular) meetings to be held physically.
However, during 2020, most meetings
were held virtually due to COVID-19
related measures. All virtual meetings
were held with video conference
capabilities, enabling the members of
Nils Smedegaard Andersen
Jolanda Poots-Bijl
Sue Clark1
Byron Grote2
Michiel Jaski
Pamela Kirby
Dick Sluimers3
Patrick Thomas
Ben Verwaayen4
SB
13/13
13/13
13/13
13/13
13/13
13/13
13/13
13/13
4/7
AC
7/7
7/7
7/7
1/1
7/7
RC
13/13
13/13
13/13
13/13
2/4
NC
2/2
1/1
1/1
2/2
1/1
1/1
The table indicates the meeting attendance for the Supervisory Board (SB), the Audit Committee (AC), the Remuneration
Committee (RC) and the Nomination Committee (NC) for regular and additional meetings.
The attendance record shows the eight regular, scheduled meetings and the five additional meetings of the Supervisory
Board. Additional meetings were scheduled ad-hoc when needed to ensure the Supervisory Board was sufficently informed
and could make considered descisions regarding the COVID-19 situation and M&A transactions.
1 Appointed to the Nomination Committee as per February 11, 2020.
2 Stepped down from the Nomination Committee as per February 11, 2020.
3 Resigned from the Audit Committee and appointed to the Nomination Committee as per February 11, 2020.
4 Retired on April 23, 2020, after completing a four-year term.
the Supervisory Board to perform their
role appropriately.
Strategy reviews
During 2020, the Supervisory Board
continued to allocate adequate time to
discuss strategic activities, including
detailed business analyses and portfolio
reviews. In addition, it reviewed and
discussed functional updates including
Finance, Information Management,
Integrated Supply Chain, Procurement,
Human Resources, Innovation and
Health, Safety and Environment.
The Supervisory Board received
comprehensive market updates and
advised on, reviewed and approved
the business continuity and con-
tingency plans.
Strategy beyond 2020
During 2020, the Supervisory Board was
closely involved in the development of
the new Grow & Deliver strategy by the
Board of Management together with
the other members of the Executive
Committee. In light of this new strategy,
in-depth sessions were organized to
discuss and review, among others, deep
dives into the company’s businesses
and topics such as sustainability,
organizational health and culture, as
well as the competitive landscape.
Supervisory Board activities 2020
Q1
Q2
Q3
Q4
• Review of Q4 2019 financials and
performance
• 2019 financial statements and profit
allocation
• Final 2019 dividend
• M&A strategy update
• Transformation Office update
• Risk management: Risk session
outcomes
• HSE full-year report
• 2019 external audit report
• Amendment of the Articles of
Association
• Strategy beyond 2020 update
• COVID-19 update
• Review Q1 2020 financials and
performance
• Investor relations update
• COVID-19 update
• HSE and safety update
• Business updates and deep dives
• M&A strategy update
• Innovation strategy update
• HR strategy update
• Sustainability strategy update
• Review Q2 2020 financials and
performance
• Investor relations update
• Business updates and deep dives
• Transformation Office update
• HR strategy update
• Enterprise risk management update
• Functional and business strategy review
• Operational excellence
• Innovation strategy update
• M&A strategy update
• Integrated Supply Chain strategy
• COVID-19 update
• Review Q3 2020 financials and
performance
• Interim dividend 2020
• Share buyback program
• M&A strategy update
• Information Management update
• Strategy update
• Integrated Supply Chain update
• HR strategy update
• Budget 2021
• COVID-19 update
• Investor relations update
• Business updates and deep dives
The table provides an overview of relevant topics discussed and reviewed in Supervisory Board meetings in 2020.
60
Leadership and governance | AkzoNobel Report 2020
REPORT OF THE SUPERVISORY BOARD
MEETINGS AND ATTENDANCE
Supervisory Board attendance record
The Supervisory Board values the
attendance of its meetings by all
members. If Supervisory Board
members are unable to attend a
Supervisory Board or committee
meeting, they inform the relevant chair
of their reasons. Supervisory Board
members always receive the materials
for each specific meeting, allowing
them to offer input and discuss any
agenda items with the relevant chair and
provide a proxy to act on their behalf.
In 2020, the Board of Management
attended all regular and all additional
meetings. The Executive Committee
attended the majority of the meetings.
Almost all plenary sessions of the
Nils Smedegaard Andersen
Jolanda Poots-Bijl
Sue Clark1
Byron Grote2
Michiel Jaski
Pamela Kirby
Dick Sluimers3
Patrick Thomas
Ben Verwaayen4
SB
13/13
13/13
13/13
13/13
13/13
13/13
13/13
13/13
4/7
AC
7/7
7/7
7/7
1/1
7/7
RC
13/13
13/13
13/13
13/13
2/4
NC
2/2
1/1
1/1
2/2
1/1
1/1
The table indicates the meeting attendance for the Supervisory Board (SB), the Audit Committee (AC), the Remuneration
Committee (RC) and the Nomination Committee (NC) for regular and additional meetings.
The attendance record shows the eight regular, scheduled meetings and the five additional meetings of the Supervisory
Board. Additional meetings were scheduled ad-hoc when needed to ensure the Supervisory Board was sufficently informed
and could make considered descisions regarding the COVID-19 situation and M&A transactions.
1 Appointed to the Nomination Committee as per February 11, 2020.
2 Stepped down from the Nomination Committee as per February 11, 2020.
3 Resigned from the Audit Committee and appointed to the Nomination Committee as per February 11, 2020.
4 Retired on April 23, 2020, after completing a four-year term.
Supervisory Board were preceded or
the Supervisory Board to perform their
advised on, reviewed and approved
succeeded by executive sessions
role appropriately.
the business continuity and con-
of the Supervisory Board, with or
without the CEO in attendance. The
Strategy reviews
tingency plans.
Chairman had regular one-on-one calls
During 2020, the Supervisory Board
Strategy beyond 2020
with all Supervisory Board members to
continued to allocate adequate time to
During 2020, the Supervisory Board was
discuss individual impressions on the
discuss strategic activities, including
closely involved in the development of
functioning of the Supervisory Board
detailed business analyses and portfolio
the new Grow & Deliver strategy by the
and items covered.
reviews. In addition, it reviewed and
Board of Management together with
discussed functional updates including
the other members of the Executive
The Supervisory Board aims for all
Finance, Information Management,
Committee. In light of this new strategy,
(regular) meetings to be held physically.
Integrated Supply Chain, Procurement,
in-depth sessions were organized to
However, during 2020, most meetings
Human Resources, Innovation and
discuss and review, among others, deep
were held virtually due to COVID-19
Health, Safety and Environment.
dives into the company’s businesses
related measures. All virtual meetings
and topics such as sustainability,
were held with video conference
The Supervisory Board received
organizational health and culture, as
capabilities, enabling the members of
comprehensive market updates and
well as the competitive landscape.
Supervisory Board activities 2020
Q1
Q2
Q3
Q4
• Review of Q4 2019 financials and
• Review Q1 2020 financials and
• Review Q2 2020 financials and
• Review Q3 2020 financials and
performance
performance
• 2019 financial statements and profit
• Investor relations update
allocation
• Final 2019 dividend
• M&A strategy update
• COVID-19 update
• HSE and safety update
performance
• Investor relations update
• Business updates and deep dives
• Transformation Office update
performance
• Interim dividend 2020
• Share buyback program
• M&A strategy update
• Transformation Office update
• M&A strategy update
• Enterprise risk management update
• Strategy update
• Risk management: Risk session
• Innovation strategy update
• Functional and business strategy review
• Integrated Supply Chain update
• Business updates and deep dives
• HR strategy update
• Information Management update
• HR strategy update
• Sustainability strategy update
• Operational excellence
• Innovation strategy update
• M&A strategy update
• HR strategy update
• Budget 2021
• COVID-19 update
• Integrated Supply Chain strategy
• Investor relations update
• COVID-19 update
• Business updates and deep dives
outcomes
• HSE full-year report
• 2019 external audit report
• Amendment of the Articles of
Association
• Strategy beyond 2020 update
• COVID-19 update
The table provides an overview of relevant topics discussed and reviewed in Supervisory Board meetings in 2020.
60
Leadership and governance | AkzoNobel Report 2020
The Supervisory Board was also
involved in uncovering the new company
purpose and developing the simplified
leadership behavior framework.
COVID-19
The Supervisory Board held additional
meetings to discuss regular updates
on the COVID-19 situation from a
global pandemic response team. The
team, which was led by the Executive
Committee, consisted of various
workstreams and regional response
teams, with any key risks being
identified. The Supervisory Board was
regularly informed about the health of
AkzoNobel employees and reviewed the
related responses from various parts of
the business, the risks identified and the
measures taken.
Sustainability
The Supervisory Board views
sustainability as an intrinsic value
driver in the work of all businesses and
The Supervisory Board is
confident that by making
sustainability an explicit
differentiator – part of
the company’s identity –
AkzoNobel has enhanced
its value proposition for
stakeholders.
functions. During 2020, the Supervisory
Board continued to assess sustainability
as part of strategy and targets. The
Supervisory Board is confident that
by making sustainability an explicit
differentiator – part of the company’s
identity – AkzoNobel has enhanced
its value proposition for stakeholders,
including employees and business
partners. Further details are included in
the Sustainability statements.
Performance and management
planning
Individual Board of Management and
Executive Committee performance
was addressed in Supervisory Board
meetings, following recommendations
from the Remuneration Committee.
For more details, see the report
of the Remuneration Committee on
page 64.
Discussions on corporate performance
were held at each regular Supervisory
Board meeting and included business
reviews and performance updates
from corporate functions. Forward-
looking targets were also addressed
in light of these reviews, and both the
proposed budget and operating plan
for 2021 were diligently reviewed by
the Supervisory Board in Q4, taking
into account the COVID-19 situation
and other prevailing market conditions.
Following this assessment, the
Supervisory Board has approved the
proposed budget and operating plan
for 2021.
During the year, the Supervisory Board
was pleased to see the company
continuing to benefit from management’s
strategic initiatives, including cost
savings. The nature of this performance,
the company’s capital allocation priorities
– as well as the significant market
disruption resulting from the COVID-19
pandemic – were all considered in the
Supervisory Board’s approval of the
dividend proposal (further details on the
2020 dividend proposal can be found
on page 131, in the Profit allocation
paragraph).
Risk management
The Supervisory Board views risk
management as an essential mechanism
to safeguard the business and assets of
the company, and to secure long-term
performance and value creation. As the
Supervisory Board sought to assure
itself of the robustness of the company’s
risk mitigation and internal controls,
it received multiple risk management
updates during the year.
The Board of Management and
Executive Committee maintain the risk
management framework and system
of internal controls. The Supervisory
Board and the Audit Committee monitor
the implementation of risk mitigating
measures for the key risks, as identified
by the Board of Management and the
Executive Committee during the year
by means of risk updates and reviews.
Further details are included in the Risk
management chapter.
Corporate governance
The Supervisory Board continuously
reviews the company’s corporate
governance and its compliance with the
Dutch Corporate Governance Code.
Talent management and
succession planning
In 2020, the Supervisory Board, after
discussing its own composition and
succession plans, proposed the
reappointment of Dr. Pamela Kirby as
member of the Supervisory Board. The
reappointment was approved at the
AGM held on April 23, 2020. Following
the retirement of Ben Verwaayen as
member of the Supervisory Board in
April 2020, the number of members of
the Supervisory Board was reduced to
eight as of April 23, 2020.
During 2020, the Supervisory Board
also discussed and supported changes
to the composition of the Executive
Committee. With Ruud Joosten stepping
down as Chief Operating Officer, his
responsibilities were taken over by the
CEO ad interim.
Marten Booisma was succeeded as
Chief Human Resources Officer by
Joëlle Boxus as of March 9, 2020. The
requirements of the Dutch Corporate
Governance Code and the skills matrix,
updated further upon recommendation
by the Nomination Committee, were
considered throughout the process.
AkzoNobel Report 2020 | Leadership and governance
61
REPORT OF THE SUPERVISORY BOARD
Independence of the
Supervisory Board
Supervisory Board members are requi-
red to act critically and independently of
one another, the Board of Management,
the Executive Committee and the
company’s stakeholders. Each member
of the Supervisory Board meets the
independence requirements of the Code
and completed the annual independence
questionnaire addressing the relevant
requirements for independence.
Supervisory Board evaluation
To assess its effectiveness, the
Supervisory Board carried out an
independent performance evaluation
– facilitated by a third party – of
itself, its individual members, its
Audit, Remuneration and Nomination
Committees, the Chairman, as well
as the relationship with the Board
of Management and the Executive
Committee. The process consisted of
Supervisory Board members completing
a confidential questionnaire, while the
third party held interviews with each of
the members of the Supervisory Board,
the Board of Management and the other
members of the Executive Committee,
the external auditor and the external
advisor of the Remuneration Committee.
In a separate meeting without the Board
of Management, the Supervisory Board
discussed the results of the evaluation
questionnaires. The Supervisory
Board also discussed the functioning
of the Board of Management and the
performance of its individual members.
The Supervisory Board is pleased to
confirm the evaluation concluded that the
Supervisory Board and its committees
continue to operate proficiently. There
is a dynamic and open atmosphere
between the Supervisory Board and
the Executive Committee and the
Supervisory Board papers reflect this
openness, although it was recommended
that board papers be shared in a more
timely manner in the future. With regard
to Supervisory Board meetings, the
Chairman and CEO will work together
to review the current Supervisory Board
agenda to ensure both the topics and
the time allocation reflect the future
strategic priorities for the company. In
line with AkzoNobel embarking on its
new Grow & Deliver strategy, the key
recommendations included reviewing the
composition of the Supervisory Board
and the Committees to optimize their fit
for the future. In addition, the Nomination
Committee will ensure a strong
executive development and succession
management program is developed
during 2021. AkzoNobel has a strong
track record in ESG and will continue
to focus on this across all countries
in which it operates. The Supervisory
Board will continue to actively support
these initiatives. The impact of COVID-
19 meant that most of the interaction
took place virtually in 2020. As soon
as restrictions allow, spending more
time in person will be prioritized. In
the meantime, the use of virtual
technology to enable the Supervisory
Board to “meet” with AkzoNobel’s
people around the world and deep
dive into different areas of the business
has been very helpful and will continue
in 2021.
Financial statements and profit
allocation
The Board of Management submitted
the report and financial statements,
including the report of the Board of
Management, to the Supervisory Board
for review and approval. The financial
statements of Akzo Nobel N.V. for the
financial year 2020 were audited by
PricewaterhouseCoopers Accountants
N.V. (PwC).
The financial statements and the
report were extensively discussed by
the Audit Committee with the external
auditors, in the presence of the CFO,
and by the full Supervisory Board with
the Board of Management and the
Executive Committee. Based on these
discussions, the Supervisory Board is
of the opinion that the 2020 financial
statements of Akzo Nobel N.\/. form
an adequate basis to account for the
supervision provided (see the financial
statements). The Audit Committee
monitors the follow-up by management
on the recommendations made by the
external auditors. The Supervisory Board
recommends that the AGM adopts the
financial statements as presented in this
Report 2020 and, as proposed by the
Board of Management, the proposed
total dividend for 2020 of €1.95 (2019:
€1.90), including a final dividend of
€1.52 per share. An interim dividend
of €0.43 (2019: €0.41) per share was
paid in November 2020. This reflects
the continued commitment to providing
a stable to rising dividend. The dividend
will be paid in cash.
In addition, it is requested that the AGM
discharges the members of the Board of
Committees of the Supervisory Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Nils Smedgaard Andersen (Chairman)
Byron Grote (Vice-Chairman)
Chairman
Sue Clark
Michiel Jaski
Dr. Pamela Kirby
Jolanda Poots-Bijl
Dick Sluimers
Patrick Thomas
Ben Verwaayen
* Until February 11, 2020.
** From February 11, 2020.
*** Until his retirement in April 2020.
Member
Member
Member*
Member
Member
Member
Member
Chairman
Member*
Member**
Member
Chairman
Member
Member***
Member***
62
Leadership and governance | AkzoNobel Report 2020
REPORT OF THE SUPERVISORY BOARD
Independence of the
Supervisory Board
to review the current Supervisory Board
for review and approval. The financial
agenda to ensure both the topics and
statements of Akzo Nobel N.V. for the
Supervisory Board members are requi-
the time allocation reflect the future
financial year 2020 were audited by
red to act critically and independently of
strategic priorities for the company. In
PricewaterhouseCoopers Accountants
one another, the Board of Management,
line with AkzoNobel embarking on its
N.V. (PwC).
the Executive Committee and the
new Grow & Deliver strategy, the key
company’s stakeholders. Each member
recommendations included reviewing the
The financial statements and the
of the Supervisory Board meets the
composition of the Supervisory Board
report were extensively discussed by
independence requirements of the Code
and the Committees to optimize their fit
the Audit Committee with the external
and completed the annual independence
for the future. In addition, the Nomination
auditors, in the presence of the CFO,
questionnaire addressing the relevant
Committee will ensure a strong
and by the full Supervisory Board with
requirements for independence.
executive development and succession
the Board of Management and the
management program is developed
Executive Committee. Based on these
Supervisory Board evaluation
during 2021. AkzoNobel has a strong
discussions, the Supervisory Board is
To assess its effectiveness, the
track record in ESG and will continue
of the opinion that the 2020 financial
Supervisory Board carried out an
to focus on this across all countries
statements of Akzo Nobel N.\/. form
independent performance evaluation
in which it operates. The Supervisory
an adequate basis to account for the
– facilitated by a third party – of
Board will continue to actively support
supervision provided (see the financial
itself, its individual members, its
these initiatives. The impact of COVID-
statements). The Audit Committee
Audit, Remuneration and Nomination
19 meant that most of the interaction
monitors the follow-up by management
Committees, the Chairman, as well
took place virtually in 2020. As soon
on the recommendations made by the
as the relationship with the Board
as restrictions allow, spending more
external auditors. The Supervisory Board
of Management and the Executive
time in person will be prioritized. In
recommends that the AGM adopts the
Committee. The process consisted of
the meantime, the use of virtual
financial statements as presented in this
Supervisory Board members completing
technology to enable the Supervisory
Report 2020 and, as proposed by the
a confidential questionnaire, while the
Board to “meet” with AkzoNobel’s
Board of Management, the proposed
third party held interviews with each of
people around the world and deep
total dividend for 2020 of €1.95 (2019:
the members of the Supervisory Board,
dive into different areas of the business
€1.90), including a final dividend of
the Board of Management and the other
has been very helpful and will continue
€1.52 per share. An interim dividend
members of the Executive Committee,
in 2021.
the external auditor and the external
of €0.43 (2019: €0.41) per share was
paid in November 2020. This reflects
advisor of the Remuneration Committee.
Financial statements and profit
the continued commitment to providing
allocation
a stable to rising dividend. The dividend
In a separate meeting without the Board
The Board of Management submitted
will be paid in cash.
of Management, the Supervisory Board
the report and financial statements,
discussed the results of the evaluation
including the report of the Board of
In addition, it is requested that the AGM
questionnaires. The Supervisory
Management, to the Supervisory Board
discharges the members of the Board of
Board also discussed the functioning
of the Board of Management and the
performance of its individual members.
The Supervisory Board is pleased to
confirm the evaluation concluded that the
Supervisory Board and its committees
continue to operate proficiently. There
is a dynamic and open atmosphere
between the Supervisory Board and
the Executive Committee and the
Supervisory Board papers reflect this
openness, although it was recommended
Dick Sluimers
that board papers be shared in a more
timely manner in the future. With regard
Patrick Thomas
Ben Verwaayen
to Supervisory Board meetings, the
Chairman and CEO will work together
* Until February 11, 2020.
** From February 11, 2020.
*** Until his retirement in April 2020.
62
Leadership and governance | AkzoNobel Report 2020
Committees of the Supervisory Board
Nils Smedgaard Andersen (Chairman)
Byron Grote (Vice-Chairman)
Chairman
Sue Clark
Michiel Jaski
Dr. Pamela Kirby
Jolanda Poots-Bijl
Member
Member
Member*
Member
Audit
Committee
Remuneration
Committee
Nomination
Committee
Member
Member
Member
Chairman
Member*
Member**
Member
Chairman
Member
Member***
Member***
Audit Committee activities 2020
Q1
Q2
Q3
Q4
• Review Q1 2020 financial
statements
• Review year-to-date audit findings
• Compliance and integrity update
• Review evaluation external auditor
• Review and approval PwC audit plan
• Internal controls framework update
• IT security update
• Review Q2 2020 financial
statements
• Audit fee 2020
• Review Q4 2019 financial
statements and annual results
• Review 2019 annual report and
accounts
• External audit report
• Review risk management and
internal control
• Final dividend 2019
• HSE audit findings
• Review full-year compliance report
• Treasury update
• Pension funds update
• Finance transformation update
• Valuation post-retirement benefits
• Valuation of deferred tax assets and
uncertain tax positions
• Transformation to deliver towards the
15 by 20 ambition
• Valuation post-retirement benefits
• Review Q3 2020 financial statements
• Treasury update
• Recommendation on interim
dividend 2020
• Share buyback program
• Compliance and integrity update
• Tax strategy review
• Review budget 2021 and outlook
• Review audit findings year-to-date
• Hard close audit report
• Internal Audit plan 2021
• Review of legal liability exposure report
• Internal Control framework update
• Update to the PwC audit plan
• Transformation to deliver towards the
15 by 20 ambition
• Valuation of deferred tax assets and
uncertain tax positions
Management from their responsibility for
the conduct of business in 2020 and the
members of the Supervisory Board for
their supervision in 2020.
status of the auditor’s independence.
Further details on the external auditors
can be found in the Corporate
governance statement.
AUDIT COMMITTEE
All members of the Audit Committee
have extensive accounting and financial
management expertise. Issues discussed
in Audit Committee meetings were
reported back to the full Supervisory
Board in subsequent meetings.
External audit
PwC, AkzoNobel’s external auditors,
reported in-depth to the Audit
Committee on the scope and outcome
of the annual audit of the financial
statements, including the consolidated
financial statements and the company
financial statements and report. The
Audit Committee held independent
meetings with the external auditors and
critically reviewed and constructively
challenged their audit approach, fees,
risk assessment and audit plan for the
year ahead.
Risk management and internal
control systems
The Audit Committee reviewed
AkzoNobel’s overall approach to
governance, risk management and
internal controls, its processes,
outcomes, financial reporting and
disclosures. It received regular
updates from auditors and functions
in this regard, and was provided with
comprehensive risk and internal control
reports during the year. In addition,
the Audit Committee reviewed the
annual operating plan (including budget)
and AkzoNobel’s dividend proposals,
as well as specifically reviewing
cybersecurity in light of external COVID-
19 related trends. During 2020, the
Audit Committee received and reviewed
several updates on AkzoNobel’s
Internal Control Framework. The Audit
Committee also met regularly with
senior executives.
The Audit Committee performed an
annual review of the services of
the external auditor, and at each meeting
it considered and assessed the
The Executive Committee is responsible
for ensuring an effective compliance
control framework and has delegated
part of the responsibilities to the Integrity
and Compliance Committee. The
Supervisory Board’s Audit Committee
oversees this responsibility.
Business and function reviews
In fulfilling its oversight responsibilities in
relation to risk management and internal
control systems, the Audit Committee
also received updates from functions
such as Finance, Treasury, Information
Management and Tax throughout the
year. These updates also inform the
Audit Committee’s review of the annual
operational plan, including budget.
Internal Audit
The former Corporate Director of Internal
Audit left AkzoNobel as of January 1,
2020, and was replaced by a new
Corporate Director of Internal Audit, who
started on March 1, 2020. The Internal
Auditor presented all main audit findings
to the Audit Committee and discussed
the progress of the audit plan. During
the year, the Audit Committee approved
Internal Audit’s plan and strategy, and
also agreed on the budget and resource
requirements for the function. The Audit
Committee also met separately with the
Internal Auditor during the year to discuss
the results of the audits performed and
the status of the follow-up on action plans
identified. In 2020, the Audit Committee
was satisfied with the effectiveness of the
Internal Audit function.
AkzoNobel Report 2020 | Leadership and governance
63
REPORT OF THE SUPERVISORY BOARD
Results and financial statements
Before each publication of the quarterly
results and the financial statements,
the Audit Committee reviewed the
financial results. In addition, the Audit
Committee reviewed and commented on
the interim and final dividend proposals
and on reports and press releases to
be published. This was in addition to
the work undertaken by the company’s
Disclosure Committee in reviewing the
company’s disclosure of potentially
price sensitive information. Based on
these discussions, the Audit Committee
advised the Supervisory Board on
the publications and disclosures, and
on the interim and final dividends. All
quarterly or annual releases of financial
results were approved by the full
Supervisory Board prior to publication
and release. To ensure its effectiveness
and expertise, the Audit Committee
was provided with regular updates on
IFRS developments and the anticipated
impact of these developments on the
financial statements. In addition, the
Audit Committee reviewed and assessed
management assertions made in regard
to relevant accounting treatments.
REMUNERATION COMMITTEE
Management performance
review
The work of the Remuneration Committee
during Q1 focused on 2020 performance,
the individual performance reviews of
Board of Management members and of
the Executive Committee. The Remune-
ration Committee also reviewed various
incentive plans in light of COVID-19, the
economic circumstances and the relative
performance compared with top peers.
Remuneration Policy review
In 2020, the Remuneration Committee
and Supervisory Board reviewed the
Remuneration Policies for the Board of
Management and Supervisory Board to
assess if they were still in line with the
company’s strategy and financial targets,
as well as considering the input received
from stakeholders and the requirements
of the Shareholder Rights Directive II and
the Dutch provisions implementing the
Shareholder Rights Directive II.
The Remuneration Committee
recommended the amendment
of the Remuneration Policies
for the Board of Management
and the Supervisory Board for
consideration by the shareholders
at the AGM of April 23, 2020.
During the year, the Remuneration
Committee further evaluated the
Remuneration Policies in line with
AkzoNobel’s new Grow & Deliver strategy
beyond 2020, while also considering the
input received from stakeholders and the
requirements of the Shareholder Rights
Directive II and the Dutch provisions
implementing the Shareholder Rights
Directive II. As a result, new policies
were prepared for consideration by the
shareholders at the AGM in 2021.
Management salary review
The Remuneration Committee reviewed
the base salaries and established relevant
forward-looking target ranges for variable
remuneration of Board of Management
members and other members of
the Executive Committee. The base
salaries will continue to be assessed in
light of market conditions, the reward
structures of peer group companies
and performance. The Remuneration
Committee considered the pay ratios
within the company and how these
compare with peer group companies.
Forward-looking target ranges for
variable remuneration of the Board
of Management were discussed and
proposals for the remuneration of other
Executive Committee members were
reviewed and discussed with the CEO.
Related information
Further details about the remuneration of members of the
Board of Management and Executive Committee can be
found in the Remuneration report and in Note 26 of the
Consolidated financial statements.
NOMINATION COMMITTEE
Board of Management and
executive succession
During 2020, the Nomination Committee
was consulted and gave its advice
regarding the composition of the Exe cu-
tive Committee and the position of COO,
which became vacant during 2020.
Supervisory Board succession
During 2020, the Nomination Com mit tee
continued to discuss the size, structure
and composition of the Supervisory
Remuneration Committee main 2020 activities
Q1
Q2 & Q3
Q4
• Review of management performance 2019
• Approval of 2019 pay-out under Short-term Incentive
Plan and vesting of shares under Long-term
Incentive Plan
• Review of Short-term Incentive Plan, Performance
Incentive Plan and Long-term Incentive Plan
• Review Remuneration Policy for Board of
Management and Supervisory Board
• Review of management base salaries for 2020
• Target setting 2020
• Review of preliminary grant of performance shares under
Long-term Incentive Plan
• 2019 Remuneration report
64
Leadership and governance | AkzoNobel Report 2020
• Review Remuneration Policy for Board of Management
and Supervisory Board
• Shareholder consultation sessions in light of the
Remuneration Policy review
• Review of 2020 (preliminary) performance outlook
REPORT OF THE SUPERVISORY BOARD
Results and financial statements
incentive plans in light of COVID-19, the
members and other members of
Before each publication of the quarterly
economic circumstances and the relative
the Executive Committee. The base
results and the financial statements,
performance compared with top peers.
salaries will continue to be assessed in
the Audit Committee reviewed the
light of market conditions, the reward
financial results. In addition, the Audit
Remuneration Policy review
structures of peer group companies
Committee reviewed and commented on
In 2020, the Remuneration Committee
and performance. The Remuneration
the interim and final dividend proposals
and Supervisory Board reviewed the
Committee considered the pay ratios
and on reports and press releases to
Remuneration Policies for the Board of
within the company and how these
be published. This was in addition to
Management and Supervisory Board to
compare with peer group companies.
the work undertaken by the company’s
assess if they were still in line with the
Forward-looking target ranges for
Disclosure Committee in reviewing the
company’s strategy and financial targets,
variable remuneration of the Board
company’s disclosure of potentially
as well as considering the input received
of Management were discussed and
price sensitive information. Based on
from stakeholders and the requirements
proposals for the remuneration of other
these discussions, the Audit Committee
of the Shareholder Rights Directive II and
Executive Committee members were
advised the Supervisory Board on
the Dutch provisions implementing the
reviewed and discussed with the CEO.
the publications and disclosures, and
Shareholder Rights Directive II.
on the interim and final dividends. All
The Remuneration Committee
quarterly or annual releases of financial
recommended the amendment
results were approved by the full
of the Remuneration Policies
Supervisory Board prior to publication
for the Board of Management
Related information
and release. To ensure its effectiveness
and the Supervisory Board for
Further details about the remuneration of members of the
and expertise, the Audit Committee
consideration by the shareholders
Board of Management and Executive Committee can be
was provided with regular updates on
at the AGM of April 23, 2020.
found in the Remuneration report and in Note 26 of the
IFRS developments and the anticipated
During the year, the Remuneration
Consolidated financial statements.
impact of these developments on the
Committee further evaluated the
financial statements. In addition, the
Remuneration Policies in line with
Audit Committee reviewed and assessed
AkzoNobel’s new Grow & Deliver strategy
management assertions made in regard
beyond 2020, while also considering the
NOMINATION COMMITTEE
to relevant accounting treatments.
input received from stakeholders and the
REMUNERATION COMMITTEE
requirements of the Shareholder Rights
Board of Management and
Directive II and the Dutch provisions
executive succession
implementing the Shareholder Rights
During 2020, the Nomination Committee
Directive II. As a result, new policies
was consulted and gave its advice
Management performance
were prepared for consideration by the
regarding the composition of the Exe cu-
review
shareholders at the AGM in 2021.
tive Committee and the position of COO,
The work of the Remuneration Committee
which became vacant during 2020.
during Q1 focused on 2020 performance,
Management salary review
the individual performance reviews of
The Remuneration Committee reviewed
Supervisory Board succession
Board of Management members and of
the base salaries and established relevant
During 2020, the Nomination Com mit tee
the Executive Committee. The Remune-
forward-looking target ranges for variable
continued to discuss the size, structure
ration Committee also reviewed various
remuneration of Board of Management
and composition of the Supervisory
Remuneration Committee main 2020 activities
Q1
Q2 & Q3
Q4
• Review of management performance 2019
• Review of Short-term Incentive Plan, Performance
• Review Remuneration Policy for Board of Management
• Approval of 2019 pay-out under Short-term Incentive
Incentive Plan and Long-term Incentive Plan
and Supervisory Board
Plan and vesting of shares under Long-term
• Review Remuneration Policy for Board of
• Shareholder consultation sessions in light of the
Incentive Plan
Management and Supervisory Board
Remuneration Policy review
• Review of 2020 (preliminary) performance outlook
• Review of management base salaries for 2020
• Target setting 2020
• Review of preliminary grant of performance shares under
Long-term Incentive Plan
• 2019 Remuneration report
64
Leadership and governance | AkzoNobel Report 2020
Supervisory Board skills and profiles
N.S.
Andersen (m)
J.
Poots-Bijl (f)
S.
Clark (f)
B.
Grote (m)
M.
Jaski (m)
P.
Kirby (f)
D.
Sluimers (m)
P.
Thomas (m)
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Independent
Consumer goods end-user segment
Industrial end-user segment
Buildings and infrastructure
end-user segment
Transportation end-user segment
(International) business, commerce,
finance/economics
Scientific/information technology
experience
Public sector experience
Management experience
Business strategy planning
Investor relations
Manufacturing experience
Supply chain/logistics experience
Social, environmental or sustainability
experience
Finance expert
Four or less external directorships
Dutch/EU national
Non-EU national
Pensions experience
Business-to-business sales experience
R&D experience
Legal experience
Industrial/employment relations
Risk management
Consulting
(f) = female (m) = male
Board. Following thorough consideration,
the Nomination Committee recommen-
ded the reappointment of Pamela
Kirby to the Supervisory Board for
consideration by shareholders at the
AGM of April 23, 2020.
The Supervisory Board has updated
its skills matrix, as shown above. The
skills matrix, full details of the current
Supervisory Board composition,
the schedule of Supervisory Board
succession and the profiles of the
Supervisory Board members can also be
found on our website.
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Nomination Committee main 2020 activities
Q1
Q2, Q3 and Q4
• Supervisory Board succession planning
• Review (re)appointment scheme
• Update skills matrix
• Board of Management and Executive Committee
succession planning
• Supervisory Board succession planning
• Review (re)appointment scheme
• Board of Management and Executive Committee
succession planning
With the second term of Ben Verwaayen
having ended in 2020, the Nomination
Committee concluded that it was
deemed appropriate to reduce the
number of Supervisory Board members
to eight. This was approved by the
Supervisory Board.
ADDITIONAL REMARKS
All Supervisory Board members would
like to express their appreciation to the
Board of Management and Executive
Committee, and to all the company’s
employees around the world, for their
outstanding dedication and hard work
during this exceptional year.
AkzoNobel Report 2020 | Leadership and governance
65
CORPORATE GOVERNANCE STATEMENT
AkzoNobel aspires to the
highest standards of
corporate governance
and seeks to consistently
enhance and improve
corporate governance
performance, emphasizing
transparency and a
sustainable culture of long-
term value creation.
Share-
holders
Supervisory
Board
Commercial
Integrated
Supply Chain
Board of
Management
Executive
Committee
Support
functions
Akzo Nobel N.V. is a public limited
liability company (naamloze
vennootschap) established under the
laws of the Netherlands, with common
shares listed on Euronext Amsterdam.
AkzoNobel has a sponsored level 1
American Depositary Receipt (ADR)
program and ADRs can be traded
on the international OTCQX platform
in the US.
The company’s management and
supervision are organized under Dutch
law in a so-called two-tier system,
comprising a Board of Management
(solely composed of executive directors)
and a Supervisory Board (solely
composed of non-executive directors).
The Supervisory Board supervises and
advises the Board of Management and
ensures a strong external presence in
the governance of the company. The
two Boards are independent of each
other and are accountable to the annual
meeting of shareholders (AGM) for the
performance of their functions.
Our corporate governance framework
is based on the company’s Articles of
Association, the requirements of the
Dutch Civil Code, the Dutch Corporate
Governance Code (the “Code”) and
all applicable laws and regulations,
including securities laws. The Code
contains principles and best practices
for Dutch companies with listed shares.
Deviations from the Code are explained
in accordance with the Code’s “comply
or explain” principle. For the full version
of the Code, visit www.mccg.nl
With the exception of those aspects
of our governance which can only
be amended with the approval of the
AGM, the Board of Management and
the Supervisory Board may make
adjustments to the way the Code is
applied, if this is considered to be in
the best interests of the company.
Where changes are made, these
will be reported and explained in the
annual report for the relevant year and
discussed at the subsequent AGM.
BOARD OF MANAGEMENT AND
EXECUTIVE COMMITTEE
The Board of Management is entrusted
with the management of the company.
When it comes to the management
of our business, it operates in the
context of an Executive Committee.
The Executive Committee comprises
the members of the Board of
Management (currently the Chief
Executive Offi cer (CEO) and the
Chief Financial Offi cer (CFO)), the
Chief Supply Chain Offi cer, the
General Counsel and the Chief Human
Resources Offi cer. The former Chief
Operating Offi cer was also a member
of the Executive Committee, until
stepping down as of May 27, 2020.
66
Leadership and governance | AkzoNobel Report 2020
The composition of the Executive
Committee ensures that functional,
operational and commercial expertise
is entrenched at the highest level
of the organization. Among other
responsibilities, the Board of
Management defi nes the company’s
strategic direction. It establishes
and maintains internal policies
and procedures for effective risk
management and control, manages the
realization of the company’s operational
and fi nancial targets, its sustainability
performance and its pursuit of long-term
value creation. In fulfi lling their duties,
Board of Management members are
assisted by the Executive Committee
and guided by the interests of the
company and its affi liated enterprises,
taking into consideration the relevant
interests of the company’s stakeholders.
The Board of Management and
Executive Committee promote openness
and engagement through a SpeakUp!
grievance mechanism and have
established a Code of Conduct, policies,
rules and procedures incorporated in the
company’s Policy framework, in order
to drive a culture of good governance,
consistency and functional excellence.
The values of good governance,
sustainability and teamwork adopted
by the Board of Management are
incorporated in these documents. The
Board of Management believes these
values contribute to a culture focused
CORPORATE GOVERNANCE STATEMENT
AkzoNobel aspires to the
highest standards of
corporate governance
and seeks to consistently
enhance and improve
corporate governance
performance, emphasizing
transparency and a
sustainable culture of long-
term value creation.
Share-
holders
Supervisory
Board
Commercial
Integrated
Supply Chain
Board of
Management
Executive
Committee
Support
functions
Akzo Nobel N.V. is a public limited
in accordance with the Code’s “comply
The composition of the Executive
liability company (naamloze
or explain” principle. For the full version
Committee ensures that functional,
vennootschap) established under the
of the Code, visit www.mccg.nl
operational and commercial expertise
laws of the Netherlands, with common
is entrenched at the highest level
shares listed on Euronext Amsterdam.
With the exception of those aspects
of the organization. Among other
AkzoNobel has a sponsored level 1
of our governance which can only
responsibilities, the Board of
American Depositary Receipt (ADR)
be amended with the approval of the
Management defi nes the company’s
program and ADRs can be traded
AGM, the Board of Management and
strategic direction. It establishes
on the international OTCQX platform
the Supervisory Board may make
and maintains internal policies
in the US.
adjustments to the way the Code is
and procedures for effective risk
applied, if this is considered to be in
management and control, manages the
The company’s management and
the best interests of the company.
realization of the company’s operational
supervision are organized under Dutch
Where changes are made, these
and fi nancial targets, its sustainability
law in a so-called two-tier system,
will be reported and explained in the
performance and its pursuit of long-term
comprising a Board of Management
annual report for the relevant year and
value creation. In fulfi lling their duties,
(solely composed of executive directors)
discussed at the subsequent AGM.
Board of Management members are
and a Supervisory Board (solely
composed of non-executive directors).
The Supervisory Board supervises and
advises the Board of Management and
ensures a strong external presence in
BOARD OF MANAGEMENT AND
EXECUTIVE COMMITTEE
assisted by the Executive Committee
and guided by the interests of the
company and its affi liated enterprises,
taking into consideration the relevant
interests of the company’s stakeholders.
the governance of the company. The
The Board of Management is entrusted
two Boards are independent of each
with the management of the company.
The Board of Management and
other and are accountable to the annual
When it comes to the management
Executive Committee promote openness
meeting of shareholders (AGM) for the
of our business, it operates in the
and engagement through a SpeakUp!
performance of their functions.
context of an Executive Committee.
grievance mechanism and have
The Executive Committee comprises
established a Code of Conduct, policies,
Our corporate governance framework
the members of the Board of
rules and procedures incorporated in the
is based on the company’s Articles of
Management (currently the Chief
company’s Policy framework, in order
Association, the requirements of the
Executive Offi cer (CEO) and the
to drive a culture of good governance,
Dutch Civil Code, the Dutch Corporate
Chief Financial Offi cer (CFO)), the
consistency and functional excellence.
Governance Code (the “Code”) and
Chief Supply Chain Offi cer, the
The values of good governance,
all applicable laws and regulations,
General Counsel and the Chief Human
sustainability and teamwork adopted
including securities laws. The Code
Resources Offi cer. The former Chief
by the Board of Management are
contains principles and best practices
Operating Offi cer was also a member
incorporated in these documents. The
for Dutch companies with listed shares.
of the Executive Committee, until
Board of Management believes these
Deviations from the Code are explained
stepping down as of May 27, 2020.
values contribute to a culture focused
on long-term value creation and actively
encourages these values through
leading by example.
A strong company culture fostering
a solid and well-embedded balance
between performance and organizational
health is highly valued by the Board of
Management and Supervisory Board,
and is fundamental to AkzoNobel’s
strategy.
To ensure our transformation has
a sustainable impact on the whole
organization, our company culture
forms an important part of discussions
involving internal organizational changes
and Human Resources strategy
updates. Since 2018, Insight surveys
have been performed involving all
employees, focused on our wider
organizational health (see Note 1 of
the Sustainability statements). The
Executive Committee and Supervisory
Board regularly discuss the results of the
survey, the targets and the actions taken
to achieve such targets.
The Board of Management takes
precedence; all Executive Committee
decisions require a majority of the
members of the Board of Management.
The Board of Management can decide to
reserve decisions for itself. The members
of the Board of Management remain
accountable for all decisions made by
the Executive Committee. The Board
of Management is accountable for its
performance to the Supervisory Board
and is accountable to the shareholders of
the company at the AGM. The Executive
Committee members who are not also
members of the Board of Management
report to the CEO.
with the Supervisory Board. The CFO is
responsible for overseeing AkzoNobel’s
finances, its corporate control, investor
relations and information management.
The tasks, responsibilities and
procedures of the Board of Management
and Executive Committee are set out
in their Rules of Procedure. These rules
have been approved by the Supervisory
Board and are available on our website.
Authority to represent the company is
vested in the two members of the Board
of Management, acting jointly. The Board
of Management has also delegated a
level of authority to corporate agents,
including the other members of the
Executive Committee. The list of
authorized signatories is filed with, and
available from, the Dutch Chamber
of Commerce.
The Managing Directors of the
company’s business units and the
Corporate Directors in charge of the
different functions report to individual
Executive Committee members with
specific responsibility for their activities
and performance.
Appointment
Board of Management members are
appointed and removed from office
by the AGM. The current Board of
Management members were appointed
by EGMs (Extraordinary General
Meetings) held in 2017. The other
members of the Executive Committee
are appointed by the CEO, after
consultation with the Supervisory Board.
Board of Management members are
appointed for a term not exceeding
four years, with the possibility of
reappointment.
The Supervisory Board has regular,
direct interaction with all members of the
Executive Committee and all Executive
Committee members attend most
Supervisory Board meetings.
The CEO leads the Executive Committee
in its overall management of the
company. He is the main point of liaison
As described later in this section, the
Meeting of Holders of Priority Shares has
the right to make binding nominations
for the appointment of members of
the Board of Management and the
Supervisory Board. However, as the
company subscribes to the principles
of the Code in general, members of
the Supervisory Board and the Board
Our Chief Supply Chain Officer (and Executive Committee member), David
Prinselaar, climbed an incredible 25 places to be ranked second in the 2020
edition of the Top 28 Supply Chain Executives in Europe. The methodology
for the ranking – compiled from a longlist of 106 – is based on research into
published company data and financial reports. Peer voting and an executive
survey are also used to determine the final placing.
of Management are (with the exception
of those circumstances described
later in this section) appointed on the
basis of non-binding nominations by
the Supervisory Board. In such cases,
resolutions to appoint a member of
the Supervisory Board or the Board of
Management require a simple majority of
the votes cast by shareholders.
Under certain conditions specified in
the Articles of Association, shareholders
may also be entitled to nominate
Supervisory Board or Board of
Management members for appointment.
Such appointments require a two-thirds
majority, representing at least 50% of the
outstanding share capital, in order to be
adopted at an AGM (or EGM).
Diversity
AkzoNobel believes in the strength
of diversity, and in accordance with
the Code, a Diversity Policy has
been adopted for the composition
of the Board of Management and
Executive Committee. The objective
of the Diversity Policy is to enrich the
Board of Management’s perspective,
improve performance, increase member
value and enhance the probability of
achievement of the company’s goals
and objectives. The Diversity Policy
addresses concrete targets relating
to diversity, including nationality,
age, gender, education and work
background. As part of our commitment
66
Leadership and governance | AkzoNobel Report 2020
AkzoNobel Report 2020 | Leadership and governance
67
CORPORATE GOVERNANCE STATEMENT
to fostering an inclusive and respectful
workplace, we introduced training to
increase awareness around unconscious
bias in the workplace.
A consistent and structured approach
is applied to succession planning
for the Board of Management and
Executive Committee, taking into
account the implementation of the
Diversity Policy. AkzoNobel currently
diverges from the gender target of at
least 30% female and at least 30%
male Board of Management members.
which was of material significance to the
company and to the relevant member.
Remuneration
The current Remuneration Policy for
the Board of Management was lastly
amended following approval by the AGM
held on April 23, 2020, to implement
the Shareholder Rights Directive II. The
details of this policy can be found in
the Remuneration report. The service
contracts of the members of the Board
of Management contain change of
control provisions. Further details can be
AkzoNobel has a gender
diversity of 40% female
representatives at
Executive Committee level.
found in the Remuneration
report and Note 26 of the
Consolidated financial
statements. The service
contracts of the Board of
Management are compliant
with the Code. The main
elements of these contracts
are available on our website.
It is believed that due to the size of the
Board of Management (being only two
members), this divergence is justified
and has ensured the best candidates
for the roles were nominated by the
Supervisory Board and appointed by
shareholders. Following the appointment
of Joëlle Boxus as the new Chief Human
Resources Officer (as of March 9, 2020),
and the steppng down of the Chief
Operating Officer (as of May 27, 2020),
AkzoNobel has a gender diversity of
40% female representatives at Executive
Committee level. More information
on AkzoNobel’s overall diversity and
inclusion efforts can be found on
page 33.
Outside directorships
Specific rules on outside board positions
of members of the Executive Committee
– which are more stringent than the
requirements of the Dutch Civil Code –
can be found in the Rules of Procedure.
Conflicts of interest
During 2020, no transactions were
reported under which a member of the
Board of Management or Executive
Committee had a conflict of interest
Operational Control Cycle
The Executive Committee holds regular
meetings to discuss the implementation
of the company’s strategy and functional
agendas. Additional meetings are held
to discuss specific topics as required.
The Board of Management and
Executive Committee have delegated
authorities to individual Executive
Committee members and to certain
committees and councils. To help plan
for success and ensure alignment within
the entire AkzoNobel organization on
the strategic and operational plan, the
Board of Management and Executive
Committee implemented an Integrated
Business Planning (IBP) process across
the company’s global businesses and
functions. IBP provides, on a monthly
basis, visibility on the long-term
integrated business and financial plan,
which covers the product portfolio,
demand and supply. It therefore ensures
early attention and remedial actions,
where appropriate, on any potential
gaps. The monthly IBP cycle ends with
the Corporate Management Business
Review (CMBR), which is chaired by
the CEO. The Executive Committee
attends the CMBR meetings, where
68
Leadership and governance | AkzoNobel Report 2020
it reviews the consolidated long-term
company perspective, including risks
and opportunities, decides on escalation
and possible scenarios and supervises
the key performance indicators with
corrective actions, if applicable.
COMMITTEES
Sustainability Council
The Executive Committee has
established a Sustainability Council to
advise on sustainability developments.
The council monitors the integration
of sustainability into management
processes and oversees the company’s
sustainability targets and sustainability
performance. The council, which meets
quarterly, consists of representative
business and functional directors, as
well as the CEO.
Significant sustainability aspects material
to the company are reviewed annually,
with input from internal and external
We launched a new bio-based wall paint in Vietnam which actively improves
indoor air. Dulux Better Living Air Clean BioBased is enhanced with Pure Air
technology. It contains natural sustainable ingredients, such as bamboo charcoal,
and continuously removes harmful air pollutants such as formaldehyde, benzene
and other volatile organic compounds (VOC) in the home environment.
CORPORATE GOVERNANCE STATEMENT
to fostering an inclusive and respectful
which was of material significance to the
it reviews the consolidated long-term
workplace, we introduced training to
company and to the relevant member.
company perspective, including risks
increase awareness around unconscious
bias in the workplace.
Remuneration
and opportunities, decides on escalation
and possible scenarios and supervises
The current Remuneration Policy for
the key performance indicators with
A consistent and structured approach
the Board of Management was lastly
corrective actions, if applicable.
is applied to succession planning
amended following approval by the AGM
for the Board of Management and
held on April 23, 2020, to implement
Executive Committee, taking into
the Shareholder Rights Directive II. The
account the implementation of the
details of this policy can be found in
COMMITTEES
Diversity Policy. AkzoNobel currently
the Remuneration report. The service
Sustainability Council
diverges from the gender target of at
contracts of the members of the Board
The Executive Committee has
least 30% female and at least 30%
of Management contain change of
established a Sustainability Council to
male Board of Management members.
control provisions. Further details can be
advise on sustainability developments.
AkzoNobel has a gender
diversity of 40% female
representatives at
Executive Committee level.
found in the Remuneration
The council monitors the integration
report and Note 26 of the
of sustainability into management
Consolidated financial
processes and oversees the company’s
statements. The service
sustainability targets and sustainability
contracts of the Board of
performance. The council, which meets
Management are compliant
quarterly, consists of representative
with the Code. The main
business and functional directors, as
elements of these contracts
well as the CEO.
are available on our website.
Significant sustainability aspects material
It is believed that due to the size of the
Operational Control Cycle
to the company are reviewed annually,
Board of Management (being only two
The Executive Committee holds regular
with input from internal and external
members), this divergence is justified
meetings to discuss the implementation
and has ensured the best candidates
of the company’s strategy and functional
for the roles were nominated by the
agendas. Additional meetings are held
Supervisory Board and appointed by
to discuss specific topics as required.
shareholders. Following the appointment
The Board of Management and
of Joëlle Boxus as the new Chief Human
Executive Committee have delegated
Resources Officer (as of March 9, 2020),
authorities to individual Executive
and the steppng down of the Chief
Committee members and to certain
Operating Officer (as of May 27, 2020),
committees and councils. To help plan
AkzoNobel has a gender diversity of
for success and ensure alignment within
40% female representatives at Executive
the entire AkzoNobel organization on
Committee level. More information
the strategic and operational plan, the
on AkzoNobel’s overall diversity and
Board of Management and Executive
inclusion efforts can be found on
Committee implemented an Integrated
page 33.
Outside directorships
Business Planning (IBP) process across
the company’s global businesses and
functions. IBP provides, on a monthly
Specific rules on outside board positions
basis, visibility on the long-term
of members of the Executive Committee
integrated business and financial plan,
– which are more stringent than the
which covers the product portfolio,
requirements of the Dutch Civil Code –
demand and supply. It therefore ensures
can be found in the Rules of Procedure.
early attention and remedial actions,
Conflicts of interest
where appropriate, on any potential
gaps. The monthly IBP cycle ends with
During 2020, no transactions were
the Corporate Management Business
reported under which a member of the
Review (CMBR), which is chaired by
Board of Management or Executive
the CEO. The Executive Committee
Committee had a conflict of interest
attends the CMBR meetings, where
68
Leadership and governance | AkzoNobel Report 2020
We launched a new bio-based wall paint in Vietnam which actively improves
indoor air. Dulux Better Living Air Clean BioBased is enhanced with Pure Air
technology. It contains natural sustainable ingredients, such as bamboo charcoal,
and continuously removes harmful air pollutants such as formaldehyde, benzene
and other volatile organic compounds (VOC) in the home environment.
SUPERVISORY BOARD
62.5%
stakeholders. The Sustainability Council
focuses on topics with the biggest
impact on accelerating AkzoNobel’s
strategy to create shared value, building
on our core values of safety, integrity
and sustainability.
Disclosure Committee is to establish
and maintain disclosure controls and
procedures, and to advise the CEO, CFO
and General Counsel on the accurate
and timely disclosure of material fi nancial
and non-fi nancial information.
37.5%
Progress regarding sustainability
objectives, development, target setting
and implementation is reviewed quarterly
by the Executive Committee, and semi-
annually by the Supervisory Board. The
Audit Committee takes an active role
in assessing the quality and reliability
of sustainable performance reporting
and PwC has been engaged to perform
an assurance engagement on specifi c
indicators included in the Sustainability
statements. Their report can be found
on page 138 of the Financial information.
Integrity and Compliance
Committee
This committee reviews investigations
into material violations of laws,
regulations and internal rules, and
SpeakUp! reports. It also decides on
disciplinary measures and control
improvement actions, as well as
monitoring and responding to any trends
or irregularities. By submitting these
cases through a central Integrity and
Compliance Committee, the company
ensures transparency and consistency of
measures throughout the organization.
More details can be found on page 77.
Executive Pensions Committee
The Executive Pensions Committee
oversees the general pension policies
of AkzoNobel’s various pension plans
and their fi nancial consequences for the
company. The committee is chaired by
the CFO and includes the Chief Human
Resources Offi cer, the General Counsel
and Corporate Directors of Treasury,
Pensions and Rewards.
Disclosure Committee
The Board of Management has
established a Disclosure Committee,
which consists of senior executives with
a background in corporate law, fi nance
and investor relations. The task of the
SUPERVISORY BOARD
This section provides an overview of
the responsibilities and governance
of the Supervisory Board. For an
understanding of the activities of the
Supervisory Board over the past year,
please refer to the Supervisory Board
Chairman’s statement and the Report of
the Supervisory Board. The responsibility
of the Supervisory Board is to supervise
the policies adopted by the Board
of Management and the Executive
Committee and to oversee the general
conduct of the business of the company.
In practice, this means supervising:
• The corporate strategy
• The achievement of the company’s
operational and fi nancial objectives
• The design and effectiveness of
internal risk management and control
systems
• The main fi nancial parameters,
compliance with applicable laws and
regulations and risk factors
The Supervisory Board advises the
Board of Management and Executive
Committee, while taking into account
the interests of the company and
its stakeholders. Major investments,
acquisitions and functional initiatives are
subject to Supervisory Board approval.
The Supervisory Board is governed
by its Rules of Procedure (available on
our website). The Rules of Procedure
include the profi le and the Charters of
the Committees, which set out the tasks
and responsibilities of the Supervisory
Board, as well as its operational
processes.
Composition
In compliance with the Dutch Civil Code,
the Supervisory Board has a balanced
DK
12.5%
UK
37.5%
5-8 Y
0-4 Y
US/UK
12.5%
NL
37.5%
Tenure
in years
composition refl ecting the nature and
variety of the company’s businesses,
their international spread and expertise
in fi elds such as fi nance, economics,
information technology (IT), societal,
environmental and legal aspects
of business, government and public
administration.
The Supervisory Board maintains a skills
matrix, which provides an overview of
the skills and experience of the individual
members. The skills matrix can be found
in the Report of the Supervisory Board.
In addition, in accordance with the
Code, a Diversity Policy has been
adopted for the composition of the
Supervisory Board in its Rules of
Procedures. The objective of this policy
is to ensure a balanced composition,
taking account of nationality,
age, gender, education and work
background. For 2020, there are no
divergences to report.
When nominating and selecting new
candidates for the Supervisory Board,
account is taken of the Supervisory
Board profi le and skills matrix, the
requirements of the Act on Management
AkzoNobel Report 2020 | Leadership and governance
69
CORPORATE GOVERNANCE STATEMENT
and Supervision, and the principles and
provisions of the Code.
Appointment
Members of the Supervisory Board are
nominated, appointed and dismissed in
accordance with procedures identical
to those previously outlined for the
members of the Board of Management.
This includes extensive briefings
about all major business and
functional aspects of the company
and its corporate governance and
compliance requirements. The induction
includes meetings with the CEO,
CFO, all other Executive Committee
members and relevant members of
senior management, as well as site
Residents of four cities in Sweden – Linköping, Motala, Mjölby and Åtvidaberg – had the chance to co-create street art and
brighten up the streets during the winter season as part of the annual Artscape festival. Local people submitted proposals
and then communities had the opportunity to paint the murals with experienced artists, all with the help of our Nordsjö brand.
In accordance with the Code,
Supervisory Board members are eligible
for re-election once for a period not
exceeding four years. Members may be
re-elected a second time for a period of
two years. This period may be extended
by two years at the most. In the event
of a reappointment after an eight-
year period, reasons must be given in
the Report of the Supervisory Board.
Terms of appointment are based on a
reappointment scheme, available on our
website. In 2020, one reappointment to
the Supervisory Board was proposed
to, and approved by, the AGM held on
April 23, 2020.
Induction and training
Following appointment to the
Supervisory Board, new members
receive a comprehensive induction
tailored to their individual needs.
visits. This enables new Supervisory
Board members to quickly build up
an understanding of AkzoNobel’s
businesses and strategy, as well as the
key risks and issues the company faces.
In addition, the Chairman ensures the
Supervisory Board is provided with
regular updates, attends business
unit deep dives and ensures that the
Supervisory Board undertakes training,
for example in the area of compliance
and ethics.
Conflict of interest
Members of the Supervisory Board
shall not participate in the discussions
and decision-making on a subject
or transaction in relation to which
they have a conflict of interest with
the company. Decisions to enter into
transactions under which Supervisory
Board members have conflicts of
70
Leadership and governance | AkzoNobel Report 2020
interest that are of material significance
to the company, and to the relevant
Supervisory Board member, require
the approval of the Supervisory Board.
Any such decisions will be recorded in
the annual report for the relevant year,
with reference to the conflict of interest
and a declaration that the relevant best
practice provisions of the Code have
been complied with. During 2020, no
transactions were reported under which
a member had a conflict of interest
which was of material significance to the
company and to the relevant member.
Remuneration of the
Supervisory Board
Supervisory Board members receive
a fixed annual remuneration and
attendance fee, which is determined
by the AGM. According to the Code,
it is not possible for members to be
remunerated in shares. To implement
the Shareholder Rights Directive II, an
amendment to the Remuneration Policy
for the Supervisory Board was approved
at the AGM held on April 23, 2020.
More information on the remuneration of
the members of the Supervisory Board
and the Remuneration Policy of the
Supervisory Board can be found in the
Remuneration report and Note 26 of the
Consolidated financial statements.
SUPERVISORY BOARD
COMMITTEES
The Supervisory Board has established
three permanent committees – Audit
Committee, Nomination Committee and
Remuneration Committee. Information
on the activities, composition and
attendance of the Supervisory Board
members at the meetings of the
committees during the year is set out in
the Report of the Supervisory Board.
Each committee has a charter
describing its role and responsibilities,
as well as the manner in which it
discharges its duties and reports to the
full Supervisory Board. These charters
are included in the Supervisory Board
CORPORATE GOVERNANCE STATEMENT
and Supervision, and the principles and
This includes extensive briefings
interest that are of material significance
provisions of the Code.
about all major business and
to the company, and to the relevant
Appointment
functional aspects of the company
Supervisory Board member, require
and its corporate governance and
the approval of the Supervisory Board.
Members of the Supervisory Board are
compliance requirements. The induction
Any such decisions will be recorded in
nominated, appointed and dismissed in
includes meetings with the CEO,
the annual report for the relevant year,
accordance with procedures identical
CFO, all other Executive Committee
with reference to the conflict of interest
to those previously outlined for the
members and relevant members of
and a declaration that the relevant best
members of the Board of Management.
senior management, as well as site
practice provisions of the Code have
been complied with. During 2020, no
transactions were reported under which
a member had a conflict of interest
which was of material significance to the
company and to the relevant member.
Remuneration of the
Supervisory Board
Supervisory Board members receive
a fixed annual remuneration and
attendance fee, which is determined
by the AGM. According to the Code,
it is not possible for members to be
remunerated in shares. To implement
the Shareholder Rights Directive II, an
amendment to the Remuneration Policy
for the Supervisory Board was approved
at the AGM held on April 23, 2020.
More information on the remuneration of
the members of the Supervisory Board
and the Remuneration Policy of the
Supervisory Board can be found in the
Remuneration report and Note 26 of the
Residents of four cities in Sweden – Linköping, Motala, Mjölby and Åtvidaberg – had the chance to co-create street art and
brighten up the streets during the winter season as part of the annual Artscape festival. Local people submitted proposals
and then communities had the opportunity to paint the murals with experienced artists, all with the help of our Nordsjö brand.
In accordance with the Code,
visits. This enables new Supervisory
Consolidated financial statements.
Supervisory Board members are eligible
Board members to quickly build up
for re-election once for a period not
an understanding of AkzoNobel’s
exceeding four years. Members may be
businesses and strategy, as well as the
re-elected a second time for a period of
key risks and issues the company faces.
two years. This period may be extended
In addition, the Chairman ensures the
SUPERVISORY BOARD
COMMITTEES
by two years at the most. In the event
Supervisory Board is provided with
The Supervisory Board has established
of a reappointment after an eight-
regular updates, attends business
three permanent committees – Audit
year period, reasons must be given in
unit deep dives and ensures that the
Committee, Nomination Committee and
the Report of the Supervisory Board.
Supervisory Board undertakes training,
Remuneration Committee. Information
Terms of appointment are based on a
for example in the area of compliance
on the activities, composition and
reappointment scheme, available on our
and ethics.
website. In 2020, one reappointment to
the Supervisory Board was proposed
Conflict of interest
attendance of the Supervisory Board
members at the meetings of the
committees during the year is set out in
to, and approved by, the AGM held on
Members of the Supervisory Board
the Report of the Supervisory Board.
April 23, 2020.
shall not participate in the discussions
Induction and training
Following appointment to the
and decision-making on a subject
Each committee has a charter
or transaction in relation to which
describing its role and responsibilities,
they have a conflict of interest with
as well as the manner in which it
Supervisory Board, new members
the company. Decisions to enter into
discharges its duties and reports to the
receive a comprehensive induction
transactions under which Supervisory
full Supervisory Board. These charters
tailored to their individual needs.
Board members have conflicts of
are included in the Supervisory Board
Rules of Procedure. The committees
report on their deliberations and findings
to the full Supervisory Board.
SHAREHOLDERS AND THE
ANNUAL GENERAL MEETING
The AGM is an integral part of the
governance of the company and its
system of checks and balances. The
AGM reviews the annual report and
decides on the adoption of the financial
statements and the dividend proposal,
as well as the discharge of members
of the Supervisory Board and Board of
Management.
The AGM is convened by public notice
and the agenda, notes to the agenda
and the procedure for attendance and
voting at the meeting are published in
advance and posted on our website.
Matters proposed for consideration,
approval or adoption are tabled as
separate agenda items and explained in
writing in advance of the meeting.
These proposals include, where relevant:
• Adoption of the financial statements
• Dividend proposal
• Discharge of members of the
Supervisory Board and Board of
Management
• (Re-)election of members of the Board
of Management and Supervisory
Board
• Remuneration of members of the
Supervisory Board
• Material changes to the Remuneration
Policy of the Board of Management
• Advisory vote on Remuneration report
• Other important matters, such as
major acquisitions or the sale or
demerger of a substantial part of the
company, as required by law
• Authorization of the Board of
Management to issue new shares
• Authorization of the Board of
Management to repurchase shares
• Amendments to the Articles of
Association (for more details see
art. 57 of the Articles of Association
available on our website)
The company provides remote voting
possibilities to its shareholders. Holding
shares in the company on the record
date determines the right to exercise
voting rights and other rights relating to
the AGM. All resolutions are made on
the basis of the “one share, one vote”
principle (assuming an equal par value
for each class of shares). All resolutions
are adopted by absolute majority, unless
the law or the company’s Articles of
Association stipulate otherwise.
Holders of common shares in aggregate
representing at least 1% of the total
issued capital, or, according to the
Official List of Euronext Amsterdam
N.V., representing a value of at least
€50 million, may submit proposals
for the AGM agenda. Such proposals
must be adequately substantiated and
submitted in writing, or electronically, to
the company at least 60 calendar days
in advance of the meeting. Draft minutes
of the AGM are made available on the
company’s website within three months
of the meeting date. The final minutes
are made available online within six
months of the meeting date.
be found in the “Register of substantial
holdings and gross short positions” at
www.afm.nl
The majority of shares in Akzo Nobel N.V.
are included in a global certificate and
held through the system maintained by
the Dutch Central Securities Depository
(Euroclear Nederland). In the past, Akzo
Nobel N.V. also issued (physical) bearer
share certificates (Bearer Certificates).
A limited number of Bearer Certificates
has not yet been surrendered to
Akzo Nobel N.V., although holders of
Bearer Certificates are entitled to a
corresponding number of shares in
Akzo Nobel N.V.. It is noted that, as a
result of Dutch legislation which became
effective as of July 2019, the relevant
shares were registered in the name
of Akzo Nobel N.V. by operation of
law as per January 1, 2021. Pursuant
to this legislation, owners of Bearer
Certificates will continue to be entitled
to a corresponding number of shares in
Akzo Nobel N.V. until January 2, 2026.
On that date, their entitlement will expire
by operation of law.
Share classes
AkzoNobel has three classes
of shares: common shares,
cumulative preferred shares and
priority shares. Common shares
are traded on the Euronext
Amsterdam stock exchange.
Common shares are also traded
over-the-counter on OTCQX in the US
in the form of American Depositary
Receipts (each American Depositary
Receipt representing one-third of a
common share). On December 31,
2020, a total of 190.6 million common
shares and 48 priority shares had been
issued. This includes shares held in
treasury which cannot be voted on
and which are not eligible for dividend.
Shareholders owning 3% or more of the
issued capital and/or voting rights must
report this to the Dutch Authority for
the Financial Markets (AFM) as soon as
the threshold is reached or exceeded.
Relevant reporting by shareholders can
Related information
For more details about AkzoNobel shares and Bearer
Certificates, contact Investor Relations:
investor.relations@akzonobel.com
The priority shares are held by the
Foundation Akzo Nobel (Stichting
Akzo Nobel). The priority shares are
limited in transferability and profit
entitlement (see Note F of the Company
financial statements). The Foundation’s
Board consists of members of
AkzoNobel’s Supervisory Board who are
not members of the Audit Committee.
The Meeting of Holders of Priority
Shares has the nomination right for the
appointment of members of the Board
of Management and the Supervisory
Board, as well as the right to approve
amendments to the Articles
of Association of the company.
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71
CORPORATE GOVERNANCE STATEMENT
No cumulative preferred shares have
been issued to date. Cumulative preferred
shares merely have a financing function,
which means if necessary, and possible,
they will be issued at or near the prevailing
quoted price for common shares.
The AGM held on April 23, 2020,
authorized the Board of Management for
a period of 18 months after that date or,
if earlier, until the date on which the AGM
again extends the authorization – subject
to approval from the Supervisory Board
– to issue shares in the capital of the
company free from preemptive rights,
up to a maximum of 10% of the issued
share capital. The Board of Management
was also given a mandate to acquire,
and to cancel held or acquired, common
shares in the company’s share capital.
The maximum number of shares that
the company will hold in its own share
capital at any time shall not exceed 10%
of its issued share capital.
Anti-takeover provisions
and control
According to the Code, the company
is required to provide an overview of
its actual or potential anti-takeover
measures, and to indicate in what
circumstances it is expected that they
may be used.
The priority shares may be considered
to constitute a form of anti-takeover
measure, in relation to the right of
the Meeting of Holders of Priority
Shares to make binding nominations
for appointments to the Board of
Management and the Supervisory
Board. The Foundation Akzo Nobel has
confirmed that it intends to make use of
such rights in exceptional circumstances
only. These circumstances include
situations where, in the opinion of the
Board of the Foundation, the continuity
of the company’s management and
policies is at stake.
This may be the case if a public bid for
the common shares of the company
has been announced, or has been
made, or the justified expectation
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Leadership and governance | AkzoNobel Report 2020
Our new regional headquarters for South America was opened in Brazil. Known
as the AkzoNobel House, it’s a great showcase for our passion for paint.
exists that such a bid will be made,
without any agreement having been
reached in relation to such a bid with
the company. The same shall apply if
one shareholder, or more shareholders
acting in a concerted way, hold a
substantial percentage of the issued
common shares of the company
without making an offer. Or if, in the
opinion of the Board of the Foundation
Akzo Nobel, the exercise of the voting
rights by one shareholder or more
shareholders, acting in a concerted way,
is materially in conflict with the interests
of the company. In such cases, the
Supervisory Board and the Board of
Management, in accordance with their
statutory responsibility, will evaluate all
available options with a view to serving
the best interests of the company, its
shareholders and other stakeholders.
The Board of the Foundation Akzo
Nobel has reserved the right to make
use of its binding nomination rights for
the appointment of members of the
Supervisory Board and of the Board of
Management in such circumstances.
Although a deviation from provision 4.3.3
of the Code, the Supervisory Board
and the Board of Management are of
the opinion that these provisions will
enhance the continuity of the company’s
management and policies.
In the event of a hostile takeover bid,
or other action which the Board of
Management and Supervisory Board
consider adverse to the company’s
interests, the two Boards reserve
the right to use all available powers
(including the right to invoke a response
time in accordance with provisions 4.1.6
and 4.1.7 of the Code), while taking into
account the relevant interests of the
company and its affiliate enterprises
and stakeholders.
AUDITORS
The external auditor is appointed by the
AGM on proposal of the Supervisory
Board. The appointment is reviewed
every four years and the results of this
review and assessment are reported to
the AGM. The external auditor attends
all regular Audit Committee meetings,
as well as the majority of the additional
meetings, and the meeting of the
CORPORATE GOVERNANCE STATEMENT
No cumulative preferred shares have
been issued to date. Cumulative preferred
shares merely have a financing function,
which means if necessary, and possible,
they will be issued at or near the prevailing
quoted price for common shares.
The AGM held on April 23, 2020,
authorized the Board of Management for
a period of 18 months after that date or,
if earlier, until the date on which the AGM
again extends the authorization – subject
to approval from the Supervisory Board
– to issue shares in the capital of the
company free from preemptive rights,
up to a maximum of 10% of the issued
share capital. The Board of Management
was also given a mandate to acquire,
and to cancel held or acquired, common
shares in the company’s share capital.
The maximum number of shares that
the company will hold in its own share
capital at any time shall not exceed 10%
of its issued share capital.
Our new regional headquarters for South America was opened in Brazil. Known
as the AkzoNobel House, it’s a great showcase for our passion for paint.
Anti-takeover provisions
without any agreement having been
the opinion that these provisions will
and control
reached in relation to such a bid with
enhance the continuity of the company’s
According to the Code, the company
the company. The same shall apply if
management and policies.
exists that such a bid will be made,
and the Board of Management are of
is required to provide an overview of
one shareholder, or more shareholders
its actual or potential anti-takeover
acting in a concerted way, hold a
In the event of a hostile takeover bid,
measures, and to indicate in what
substantial percentage of the issued
or other action which the Board of
circumstances it is expected that they
common shares of the company
Management and Supervisory Board
may be used.
without making an offer. Or if, in the
consider adverse to the company’s
opinion of the Board of the Foundation
interests, the two Boards reserve
The priority shares may be considered
Akzo Nobel, the exercise of the voting
the right to use all available powers
to constitute a form of anti-takeover
rights by one shareholder or more
(including the right to invoke a response
measure, in relation to the right of
shareholders, acting in a concerted way,
time in accordance with provisions 4.1.6
the Meeting of Holders of Priority
is materially in conflict with the interests
and 4.1.7 of the Code), while taking into
Shares to make binding nominations
of the company. In such cases, the
account the relevant interests of the
for appointments to the Board of
Supervisory Board and the Board of
company and its affiliate enterprises
Management and the Supervisory
Management, in accordance with their
and stakeholders.
Board. The Foundation Akzo Nobel has
statutory responsibility, will evaluate all
confirmed that it intends to make use of
available options with a view to serving
such rights in exceptional circumstances
the best interests of the company, its
only. These circumstances include
shareholders and other stakeholders.
AUDITORS
situations where, in the opinion of the
The external auditor is appointed by the
Board of the Foundation, the continuity
The Board of the Foundation Akzo
AGM on proposal of the Supervisory
of the company’s management and
Nobel has reserved the right to make
Board. The appointment is reviewed
policies is at stake.
use of its binding nomination rights for
every four years and the results of this
the appointment of members of the
review and assessment are reported to
This may be the case if a public bid for
Supervisory Board and of the Board of
the AGM. The external auditor attends
the common shares of the company
Management in such circumstances.
all regular Audit Committee meetings,
has been announced, or has been
Although a deviation from provision 4.3.3
as well as the majority of the additional
made, or the justified expectation
of the Code, the Supervisory Board
meetings, and the meeting of the
Supervisory Board at which the fi nancial
statements are approved.
During these meetings, the auditor
discusses the outcome of the audit
procedures and the refl ections thereof
in the auditors’ report. In particular, the
key audit matters are highlighted. The
auditor receives the fi nancial information
and underlying reports of the quarterly
fi gures and can comment on and
respond to this information. The external
auditor is present at the AGM and
shareholders may ask questions with
regard to the audit.
Auditor independence
The Audit Committee and Board of
Management report their dealings with
the external auditor to the Supervisory
Board annually, and also discuss the
auditor’s independence.
Other services
One area of particular focus in corporate
governance is the independence of the
auditors. The Audit Committee has been
delegated direct responsibility for the
compensation and monitoring of the
auditors and the services they provide
to the company. Pursuant to the Audit
Profession Act, the auditors are prohibited
from providing the company with services
in the Netherlands other than “audit
services aimed at providing reliability
concerning the information supplied
by the audited client for the benefi t of
external users of this information and also
for the benefi t of the Supervisory Board as
referred to in the reports mentioned.”
The company has taken the position
that no additional services may be
provided by the external auditor and
its global network that do not meet
these requirements, unless local
statutory requirements so dictate. In
order to anchor this in our procedures,
the Supervisory Board adopted the
AkzoNobel Rules on External Auditor
Independence and Selection and the
related AkzoNobeI Guidelines on Auditor
Independence. These documents are
available on our website.
Internal Audit
The Internal Audit function is mandated
to provide the Board of Management,
Executive Committee and Audit
Committee with independent, objective
assurance on the adequacy of the
design and operating effectiveness of
the internal control framework described
below. The Internal Auditor reports to
the Board of Management and has
direct access to the Audit Committee
and its chair. The function performs its
mandate based on a risk-based audit
plan, which is approved by the Board of
Management and the Audit Committee.
It reports a summary of the audit fi ndings
quarterly to the Board of Management
and Executive Committee, and the Audit
Committee, which culminates in an
annual assessment of the quality and
effectiveness of the company’s internal
control systems.
SHARE DEALING RULES AND
RULES ON DISCLOSURE
CONTROL
In accordance with Dutch Iaw and
regulations (including the European
Market Abuse Regulation), the company
maintains insider lists and exercises
controls around the dissemination and
disclosure of potentially price sensitive
information.
All employees and the members of
the Board of Management, Executive
Committee and Supervisory Board are
subject to the AkzoNobel Share Dealing
Rules, which limit their opportunities
to trade in AkzoNobel securities.
Transactions in AkzoNobeI shares
carried out by Board of Management,
Executive Committee and Supervisory
Board members (including their closely
associated persons) are, as and when
required, notifi ed to the Dutch Authority
for the Financial Markets (AFM).
The Board of Management, Executive
Committee and Supervisory Board
members require authorization from
the General Counsel prior to carrying
out any transactions in respect of
AkzoNobeI securities, even in a so-called
“open period”. In relevant cases, the
General Counsel can prohibit carrying
out transactions in respect of other
companies’ securities. In addition, all
employees are subject to the AkzoNobeI
Rules on Disclosure Control.
INTERNAL CONTROLS AND RISK
MANAGEMENT
Internal controls
The company has strict procedures
for internal controls. The Board of
Management and Executive Committee
have established several Risk, Control
and Compliance Committees, which
are explained on page 68. In 2020,
we invested in enhancing our Internal
Control Framework and Process,
alongside the continued work on
system embedded controls, standard
role design and segregation of duty
monitoring. An integrated Risk and
Internal Control department supports all
businesses and functions in their work.
Risk management
Our risk management system is
explained in more detail later in the
next chapter. Reference is made to the
Statement of the Board of Management
relating to internal risk management and
control systems.
The AkzoNobel internal control
framework
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Monitoring activities
Control activities
Responding to risk
Setting objectives
Control environment
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Leadership and governance | AkzoNobel Report 2020
AkzoNobel Report 2020 | Leadership and governance
73
RISK MANAGEMENT
Doing business inherently involves taking
risks. By seeking to take balanced
risks, we strive to be a successful and
respected company. Risk management
is an essential element of our corporate
governance and strategy development.
We continuously strive to foster a high
awareness of business risks and internal
control to provide transparency in our
processes and operations.
The Board of Management and
Executive Committee are responsible
for managing the risks associated with
our activities and the establishment
and adequate functioning of appropriate
risk management and control systems
(see Statement of the Board of
Management).
RISK MANAGEMENT
FRAMEWORK
Our risk management framework
is based on the Enterprise Risk
Management – Integrated Framework
of COSO and the Dutch Corporate
Governance Code. It provides
reasonable assurance that our business
objectives can be achieved and our
obligations to customers, shareholders,
employees and society can be met.
For more information on our risk
management framework, visit the Risk
management section on our website.
RISK MANAGEMENT IN 2020
Risk management is a company-wide
activity, under the responsibility of the
Board of Management and Executive
Committee, focused on the areas of
major risk exposure.
During 2020, we held a signifi cant
number of enterprise risk workshops
across the organization, including
dedicated workshops on fraud risks
in response to the rapidly changing
environment due to COVID-19. Risk
scenarios identifi ed are prioritized
by responsible management teams
Risk response
per risk profile
Actions
Risk
profiles
Enterprise
Risk
Management
process
Risk identification
and assessment
Risk
profiles
and
risk
responses
Risk
consolidation
Risk
transparency
Executive
Committee Top 10 risks
and risk responses
Enterprise
Risk
Management
reporting
Functions
and
business
units Top 10
risks and risk
responses
Supervisory
Board
Areas of
major risk
exposure (projects)
Top 10 risks and
risk responses
and functional experts, and adequate
mitigating actions are defi ned. We
consider risk assessment and mitigation
to be a continuous process, carried out
against the background of an evolving
risk landscape, which includes short,
medium and longer term challenges.
employee health and well-being and
minimize business disruption.
The symbols alongside the risk
descriptions opposite represent
management’s assessment of risk
development, compared with 2019.
The risk of a global pandemic
materialized in 2020. By acting
adequately and appointing a global
COVID-19 response team, working with
local response teams, we implemented
mitigating actions to safeguard
(For information related to fi nancial
risk, see Note 27 of the Consolidated
fi nancial statements).
Symbols indicate the following:
Risk assessed to increase.
Risk assessed to remain fairly stable.
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Leadership and governance | AkzoNobel Report 2020
RISK MANAGEMENT
Doing business inherently involves taking
risks. By seeking to take balanced
risks, we strive to be a successful and
respected company. Risk management
is an essential element of our corporate
governance and strategy development.
We continuously strive to foster a high
awareness of business risks and internal
control to provide transparency in our
processes and operations.
The Board of Management and
Executive Committee are responsible
for managing the risks associated with
our activities and the establishment
and adequate functioning of appropriate
risk management and control systems
(see Statement of the Board of
Management).
RISK MANAGEMENT
FRAMEWORK
Our risk management framework
is based on the Enterprise Risk
Management – Integrated Framework
of COSO and the Dutch Corporate
Governance Code. It provides
reasonable assurance that our business
objectives can be achieved and our
obligations to customers, shareholders,
employees and society can be met.
For more information on our risk
management framework, visit the Risk
management section on our website.
RISK MANAGEMENT IN 2020
Risk response
per risk profile
Actions
Risk
profiles
Enterprise
Risk
Management
process
Risk identification
and assessment
Risk
profiles
and
risk
responses
consolidation
Risk
Risk
transparency
Executive
Committee Top 10 risks
and risk responses
Enterprise
Risk
Management
reporting
Functions
and
business
Supervisory
Board
units Top 10
risks and risk
responses
Areas of
major risk
exposure (projects)
Top 10 risks and
risk responses
Risk management is a company-wide
and functional experts, and adequate
employee health and well-being and
activity, under the responsibility of the
mitigating actions are defi ned. We
minimize business disruption.
Board of Management and Executive
consider risk assessment and mitigation
Committee, focused on the areas of
to be a continuous process, carried out
The symbols alongside the risk
major risk exposure.
against the background of an evolving
descriptions opposite represent
During 2020, we held a signifi cant
medium and longer term challenges.
development, compared with 2019.
risk landscape, which includes short,
management’s assessment of risk
number of enterprise risk workshops
across the organization, including
The risk of a global pandemic
(For information related to fi nancial
dedicated workshops on fraud risks
materialized in 2020. By acting
risk, see Note 27 of the Consolidated
in response to the rapidly changing
adequately and appointing a global
fi nancial statements).
environment due to COVID-19. Risk
COVID-19 response team, working with
scenarios identifi ed are prioritized
local response teams, we implemented
by responsible management teams
mitigating actions to safeguard
Symbols indicate the following:
Risk assessed to increase.
Risk assessed to remain fairly stable.
External – Strategic
Global economy and the
geopolitical context
The unpredictable world’s
geo-political situation, with
its impact on supply and
demand and the highly
competitive markets in which
we operate, require ongoing
attention to protect our
financial performance.
Mitigating actions
• Continued focus on opera-
tional cost and complexity
reduction
• Deployment of commercial
and procurement excellence
programs
• Geo-political assessment as
part of investment decisions
and medium term operational
planning
External – Strategic
Strategic moves in our
value chain
An accumulation of strategic
moves (horizontally and/or
ver ti cally) could impact our
compe titive position and/
or increase the vulnerability
of operations.
Mitigating actions
• Maintain industry, market
and competitive intelligence
analysis of competitors,
customers and suppliers, and
the ability to respond rapidly
• Identify opportunities for M&A,
based on strong strategic and
financial rationale
• Secure freedom to invest
through strategic alignment
with shareholders and
other stakeholders
•
External – Strategic
Pandemic
The risk of a global pandemic
materialized in 2020. The
company acted to safeguard
employee health and well-
being and minimize business
disruption.
as environmental, human rights
and competition law).
Mitigating actions
• Safety guidelines for our staff,
contractors and/or third-party
suppliers working on our
premises, updated in real time
based on local regulations/
guidance
• Well-being support to our staff
• Agility of supply chain and
distribution channels
• Continuous monitoring of
impact of pandemic, including
updating of forecasts
• Continued focus on opera-
tional cost and complexity
reduction
External – Operational
Information technology
and cybersecurity
Our longer term IT strategy
means we increasingly rely
on fewer consolidated critical
applications. With the number
of digital business transactions
on the increase, the non-
availability of IT systems – or
unauthorized access – could
have a direct impact on our
business processes, competitive
position and reputation.
Mitigating actions
• Continuation of system
(ERP) consolidation to
increase robustness of digital
landscape
• Broaden lifecycle planning for
key applications
• Embedding a cybersecurity
culture (intensified training,
awareness creation)
External – Compliance
Complying with laws
and regulatory develop-
ment
As a global player, we are
exposed to increasingly stringent
laws and regulations covering a
growing range of subjects (such
Mitigating actions
• Fostering open and trans-
parent culture, continuous
education and training
• Continuing implementation
of Integrity and Compliance
governance model
• Operate under state-of-the-
art safety and compliance
requirements for our
manufacturing and R&D sites
Internal – Strategic
Organic growth
Market leadership in parts of the
world where our markets are
growing is a cornerstone of our
strategy. A global presence, in
combination with locally tailored
go-to-market models, is an
essential ingredient for success.
Mitigating actions
• Renewed BU strategic
• Partnering with innovative
startups (Paint the Future)
• IT resources to support new
technology applications
Internal – Operational
Management of change
We recognize the risks
associated with continuous
change, as well as the need to
invest in building an organization
structure which encourages
and embraces change, while
balancing opportunity and
managing risk.
Mitigating actions
• Global Process Owners
continue implementation of
standard solutions across the
company
• Reward system sets desired
behavioral changes in motion
and keeps momentum
• Launch of organizational
health initiatives and periodic
tracking of progress
mandates to underpin strategy
• Range of programs to attract
• Investment in sales capability
and retain talent
and deployment of commercial
excellence programs
• Further leverage digitally driven
marketing
• Driving demand sensing,
product innovation and supply
chain agility through Integrated
Business Planning
Internal – Strategic
Innovation, identification
and successful imple men-
tation of major trans-
forming technologies
Our leadership positions and
future success are underpinned
by investment in research, the
adoption of major transforming
technologies and continuous
development of the talents and
skills of our people.
Mitigating actions
• Improve product management
lifecycle
Internal – Operational
Analytics and big data
In order to utilize data analytics
and “big data” to support even
better decision-making, we
recognize the need to invest
in an appropriate organization
structure and governance
framework with common
standards, methods and tools
to deliver insightful information
across the company.
Mitigating actions
• Risk and mitigation ownership
with an empowered
community of Global Process
Owners
• Define and align master data
definition, quality standards
and priorities
• Extended set of key controls
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Leadership and governance | AkzoNobel Report 2020
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75
INTEGRITY AND COMPLIANCE MANAGEMENT
We’re committed to leading with
integrity in our industry. It’s one of
our three core values. We continue
to further advance and expand our
Integrity and Compliance program
to help ensure compliance with
laws and regulations and guide
our employees to make fair and
honest decisions every day.
Below is a summary of the 2020
priorities and activities, and the
outcomes thereof, as required pursuant
to the Dutch Decree on the publication
of non-financial information.
GOVERNANCE AND
ORGANIZATION
The Executive Committee is responsible
for maintaining a culture of integrity
and ensuring an effective compliance
control framework. The Supervisory
Board’s Audit Committee oversees this
responsibility. The Executive Committee
has delegated certain responsibilities
to the following committees (for more
details visit our website):
Integrity and Compliance
Committee
Reviews investigations into material
violations of laws, regulations and
internal rules, and SpeakUp! reports.
Also decides on disciplinary measures
and control improvement actions, and
monitoring and responding to any trends
or irregularities. By submitting these
cases through a central Integrity and
Compliance Committee, we ensure
transparency and consistency of
measures throughout the organization.
Risk, Control and Compliance
Committees (RCC)
Responsible for supervising the
effectiveness of the control environment
and reviewing weaknesses in this
76
Leadership and governance | AkzoNobel Report 2020
environment, as well as progress on
improvement actions. There are eight
Business Unit RCCs and four Functional
RCCs, in addition to a Group RCC. They
each met quarterly in 2020.
Human Rights Committee
Responsible for supervising our Human
Rights Control Framework and
driving further expansion of the human
rights program. To learn more, including
details of how our approach to human
rights helped our EcoVadis rating
improve, see Note 4 of the Sustainability
statements.
Privacy Committee
Responsible for supervising the com-
pany’s Privacy Control Framework and
driving further expansion of the data
privacy program. In 2020, several critical
projects were delivered. These included
the launch of a new tool for cookie
compliance, which helps to ensure
required consent is given by website
visitors before cookies are used for
analytics and other marketing purposes.
We also introduced automated
workflows for handling data subject
requests to ensure they are handled in
line with applicable privacy laws.
Integrity and Compliance
function
Day-to-day management of our
Integrity and Compliance Framework
is delegated to the Integrity and
Compliance team, led by the Director of
Integrity and Compliance, who reports
to the General Counsel. The team
includes legal experts in competition law;
anti-bribery and anti-corruption; export
control and sanctions; data privacy; and
human rights.
The Integrity and Compliance managers
contribute to further strengthening the
culture of integrity by identifying and ad -
dressing local risks and cooperating with
other functions to monitor controls and
follow up on SpeakUp! cases. In 2020,
the heads of Integrity and Compliance,
Internal Control and Internal Audit met
monthly to discuss findings and actions.
RISK MANAGEMENT
Every year, each business unit (BU)
and major function identifies its key
compliance risks and defines actions to
mitigate these risks. These actions form
part of the BU/function integrity and
compliance plan, which in turn forms
part of a larger BU/function legal plan.
POLICY MANAGEMENT
In 2020, we continued to expand our
Policy Portal, a one-stop-shop for key
policies, rules and procedures relating
to our global processes. By reducing
complexity and increasing transparency,
it’s easier for employees to access and
understand which rules apply to their
job. For example, during the year we
issued rules and procedures on who has
authority to approve certain decisions,
receiving or offering gifts, and hospitality
events. We also distributed business-
friendly do’s and don’ts, for example
regarding parallel imports in Europe and
e-commerce globally. Our policies and
supporting tools increase awareness
and knowledge across the company.
No major risks or issues have been
identified in these compliance fields.
To ensure we maintain and strengthen
our culture of integrity, the Integrity and
Compliance team – together with various
functions and stakeholders – focuses
efforts on three key areas:
• Help leaders to lead by example
• Build capabilities through training
• Build awareness through
communication campaigns
AWARENESS AND EDUCATION
In 2020, we continued to counsel and
educate employees on integrity and
compliance rules and controls through
e-learnings and in-person sessions.
Business-friendly do’s and don’ts were
also issued to designated employees in
specific compliance fields.
INTEGRITY AND COMPLIANCE MANAGEMENT
We’re committed to leading with
integrity in our industry. It’s one of
our three core values. We continue
to further advance and expand our
Integrity and Compliance program
to help ensure compliance with
laws and regulations and guide
our employees to make fair and
honest decisions every day.
Below is a summary of the 2020
priorities and activities, and the
environment, as well as progress on
The Integrity and Compliance managers
improvement actions. There are eight
contribute to further strengthening the
Business Unit RCCs and four Functional
culture of integrity by identifying and ad -
RCCs, in addition to a Group RCC. They
dressing local risks and cooperating with
each met quarterly in 2020.
Human Rights Committee
other functions to monitor controls and
follow up on SpeakUp! cases. In 2020,
the heads of Integrity and Compliance,
Responsible for supervising our Human
Internal Control and Internal Audit met
Rights Control Framework and
monthly to discuss findings and actions.
driving further expansion of the human
rights program. To learn more, including
details of how our approach to human
rights helped our EcoVadis rating
RISK MANAGEMENT
improve, see Note 4 of the Sustainability
Every year, each business unit (BU)
statements.
Privacy Committee
and major function identifies its key
compliance risks and defines actions to
mitigate these risks. These actions form
outcomes thereof, as required pursuant
Responsible for supervising the com-
part of the BU/function integrity and
to the Dutch Decree on the publication
pany’s Privacy Control Framework and
compliance plan, which in turn forms
of non-financial information.
driving further expansion of the data
part of a larger BU/function legal plan.
GOVERNANCE AND
ORGANIZATION
privacy program. In 2020, several critical
projects were delivered. These included
the launch of a new tool for cookie
compliance, which helps to ensure
POLICY MANAGEMENT
required consent is given by website
In 2020, we continued to expand our
The Executive Committee is responsible
visitors before cookies are used for
Policy Portal, a one-stop-shop for key
for maintaining a culture of integrity
analytics and other marketing purposes.
policies, rules and procedures relating
and ensuring an effective compliance
We also introduced automated
to our global processes. By reducing
control framework. The Supervisory
workflows for handling data subject
complexity and increasing transparency,
Board’s Audit Committee oversees this
requests to ensure they are handled in
it’s easier for employees to access and
responsibility. The Executive Committee
line with applicable privacy laws.
understand which rules apply to their
has delegated certain responsibilities
job. For example, during the year we
to the following committees (for more
Integrity and Compliance
issued rules and procedures on who has
details visit our website):
function
authority to approve certain decisions,
Day-to-day management of our
receiving or offering gifts, and hospitality
Integrity and Compliance
Integrity and Compliance Framework
events. We also distributed business-
Committee
is delegated to the Integrity and
friendly do’s and don’ts, for example
Reviews investigations into material
Compliance team, led by the Director of
regarding parallel imports in Europe and
violations of laws, regulations and
Integrity and Compliance, who reports
e-commerce globally. Our policies and
internal rules, and SpeakUp! reports.
to the General Counsel. The team
supporting tools increase awareness
Also decides on disciplinary measures
includes legal experts in competition law;
and knowledge across the company.
and control improvement actions, and
anti-bribery and anti-corruption; export
No major risks or issues have been
monitoring and responding to any trends
control and sanctions; data privacy; and
identified in these compliance fields.
or irregularities. By submitting these
human rights.
cases through a central Integrity and
Compliance Committee, we ensure
To ensure we maintain and strengthen
transparency and consistency of
our culture of integrity, the Integrity and
AWARENESS AND EDUCATION
measures throughout the organization.
Compliance team – together with various
In 2020, we continued to counsel and
functions and stakeholders – focuses
educate employees on integrity and
Risk, Control and Compliance
efforts on three key areas:
compliance rules and controls through
Committees (RCC)
• Help leaders to lead by example
e-learnings and in-person sessions.
Responsible for supervising the
• Build capabilities through training
Business-friendly do’s and don’ts were
effectiveness of the control environment
• Build awareness through
also issued to designated employees in
and reviewing weaknesses in this
communication campaigns
specific compliance fields.
Communication campaigns
Employees are regularly informed about
compliance risks and duties. For example,
in 2020, we ran campaigns to educate
employees about external fraud threats,
hospitality and gifts compliance and our
internal reporting system. We also focus
on a different aspect of integrity every
month to help employees make fair and
honest decisions every day. In November,
a global Integrity Week was held focused
on protecting company data.
E-learning
Employees are required to follow
mandatory e-learnings on various
subjects, including our Code of
Conduct, Life-Saving Rules, operating
a diverse and respectful workplace,
fraud, competition law, export control,
information security and data privacy.
Training sessions
A number of face-to-face and virtual
trainings are provided on integrity and
compliance related topics. Due to the
challenges posed by COVID-19, video
conference trainings (including polls and
Q&As) were offered to help increase
employee engagement.
DUE DILIGENCE
We have processes in place to perform
due diligence screenings on M&A targets
and business partners. During 2020, we
automated the screening of customers,
suppliers and transactions in the area of
export control and sanctions.
MONITORING
We have several processes to monitor
compliance with our rules by employees
and business partners. Managers are
also required to self-assess and confirm
compliance with company rules as part
of the internal control self-assessment.
Supplier performance is monitored
through the EcoVadis self-assessment
and Together for Sustainability audits.
We also periodically screen high risk
business partners registered in the third
party compliance management tool.
During 2020, we launched our annual
Code of Conduct declaration to senior
leadership, with a 100% completion rate
in two weeks. All our employees were
then asked to reconfirm compliance.
Internal Audit performs numerous audits
on our operations. Their audit plan is
risk-based and takes account of prior
compliance and internal control findings.
In 2020, several internal audits were
held to validate compliance with our
rules in certain units; and we advanced
our Gift, Hospitality and Conflict of
Interest Register for more transparency
on gifts received and provided, and on
potential conflicts between the company’s
interests and personal interests.
GRIEVANCE AND INVESTIGATION
Our whistleblowing framework was
named #1 out of all top companies
in the Netherlands by Transparency
International NL. Our SpeakUp! grievance
mechanism enables employees and
third parties to raise concerns about
compliance with our Code of Conduct.
Strict principles of confidentiality, respect
for anonymity, non-retaliation, objectivity
and the right to be heard are applied.
A strict protocol means investigators
must follow certain planning,
investigation and reporting steps to
ensure the right quality and speed.
In 2020, the total number of reports
increased slightly, partly due to COVID-
19 related concerns. We continue to
see higher levels of reporting through
our SpeakUp! hotline and online
(180 SpeakUp! vs 70 direct reporting).
All reports and alerts led to 35 dismissals
and various other disciplinary measures
and control improvements, confirming the
value of our grievance framework.
For more details, visit
https://akzo.no/SpeakUp
REPORTING
During 2020, the Director of Integrity
and Compliance reported twice to the
Executive Committee and the Audit
Committee of the Supervisory Board on
material developments of the Integrity
and Compliance Program. Should
there be any material investigation
matters, these are discussed with our
external auditor on a quarterly basis.
No individual matters or disciplinary
actions have been discussed with the
Integrity and Compliance Committee
that would warrant separate disclosure
in this annual report. Should there be
any material compliance matters or
material internal control weaknesses or
improvements in the future, these will
be addressed through the RCCs and
discussed with the Audit Committee and
external auditor and, where appropriate,
disclosed in accordance with the
applicable legal requirements.
SpeakUp! reports
Total reports and alerts registered
Reports received through SpeakUp!
Integrity
Safety
Sustainability
Dismissals resulting from SpeakUp! reports
Conclusions SpeakUp! reports:
Substantiated
Unsubstantiated
Other (e.g. referred)
2018
238
104
50
6
48
14
42
48
2019
222
164
59
5
100
28
82
54
2020
250
180
61
21
98
6
27
70
46
In 2020, 56 reports and alerts were received outside our SpeakUp! mechanism, 43 of which were unsubstantiated, leading
to 29 dismissals.
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Leadership and governance | AkzoNobel Report 2020
AkzoNobel Report 2020 | Leadership and governance
77
REMUNERATION REPORT
This report describes the imple-
mentation of our Remuneration
Policy in 2020 for members
of the Board of Management and
Supervisory Board.
We have a clear strategic focus to be -
come the reference in paints and coatings
with strong global brands, leading market
positions and a balanced geographic
exposure across all regions. Our strategy
is aimed at long-term value creation.
To realize our strategy and create
the long-term value we aim for, it’s
essential that we can attract and retain
high caliber members to our Board of
Management and Supervisory Board.
This is reflected in the remuneration
policies for each of these boards.
The Remuneration Policy for the Board
of Management (the “Policy”) was first
adopted by shareholders at the Annual
General Meeting (AGM) in 2005. It has
undergone several amendments since
then – most recently in 2018 – and was
adopted by shareholders at the Annual
General Meeting (AGM) in 2020 (with
92% of votes in favor). Details about its
implementation in 2020 can be found
below in chapter 1.
The Remuneration Policy for the
Supervisory Board was adopted by
shareholders at the 2014 AGM, with
some limited changes being approved at
the AGM in 2020 (with 99% of votes in
favor). Details about the implementation
of the current policy in 2020 are in
chapter 2.
The execution of remuneration for
both the Board of Management and
Supervisory Board has been fully
compliant with the applicable policies.
The revised European directive on the
encouragement of long-term shareholder
engagement (SRD II), and its codification
in Dutch law, have been considered in
the disclosure presented in this report.
78
Leadership and governance | AkzoNobel Report 2020
For a full description of the
Remuneration Policy for both the Board
of Management and the Supervisory
Board, please visit our website.
The remuneration for the financial year
2020, as described in this report, is
subject to an advisory vote at the 2021
AGM. Questions raised in the 2020
AGM regarding remuneration items were
addressed in the respective meeting,
resulting in 94% votes in favor of the
2019 Remuneration report.
1. REMUNERATION FOR THE
BOARD OF MANAGEMENT
The Policy is designed to enable the
Board of Management to achieve the
company’s objectives, while balancing
the perspectives of shareholders and
other key stakeholders. The focus on
performance is achieved by including
both short- and long-term incentives, to
ensure that the Board of Management
reaches the annual expected level of
performance, while bearing in mind the
sustainability of the company.
The remuneration principles that
apply for the Board of Management
are aligned with those applied more
broadly in the company. This provides a
shared sense of purpose and direction
at different management levels and
a shared reward when success is
achieved.
When implementing the Policy, the
Remuneration Committee consults with
external remuneration professionals to
obtain appropriate benchmark data,
and on other matters where it requires
independent advice.
Variable remuneration provides an incen-
tive to realize long-term value creation.
For the short term, the Supervisory Board
sets operational targets over a one-year
period that are crucial to the company
and are pre-conditions to value creation.
The biggest portion of the remuneration
packages of Board of Management
members is directly aimed at strategic
priorities that will contribute to building
sustainable long-term value creation, with
targets for the return for shareholders and
the return on invested capital. Following
the separation of Specialty Chemicals,
a one-off long-term incentive to reward
bringing value creation at a higher level
has been added for the performance
period 2018-2020.
Prior to agreeing on incentives, the
Remuneration Committee conducted
scenario analyses of the possible
financial outcomes of meeting different
performance levels, and how they
may affect the structure and value
of the Board of Management’s total
remuneration.
In 2020, the labor market peer group, as
referred to in the Policy, consisted of the
following companies:
• Ahold Delhaize
• Air Liquide
• ASML
• DSM
• Ferro Corporation • Signify
• Henkel
• KPN
• LafargeHolcim
• PPG Industries
• Randstad
• RELX Group
• RPM
International
• Sherwin-Williams
• Sika
• The Linde Group
• Vopak
• Wolters Kluwer
One table on page 79 specifies the
elements of the Remuneration Policy,
describing purpose, design and the
link to our company strategy, as well as
their (potential) value. The other table
on page 79 gives an overview of the
remuneration of the members of the
Board of Management who were in
office in 2020. Although we temporarily
suspended our financial ambition as a
result of COVID-19, no changes were
made to the incentive plans of the Board
of Management.
Base salary
The Remuneration Committee reviewed
the salaries of members of the Board
of Management during the year,
considering market data, inflation data
REMUNERATION REPORT
This report describes the imple-
mentation of our Remuneration
Policy in 2020 for members
of the Board of Management and
Supervisory Board.
For a full description of the
members is directly aimed at strategic
Remuneration Policy for both the Board
priorities that will contribute to building
of Management and the Supervisory
sustainable long-term value creation, with
Board, please visit our website.
targets for the return for shareholders and
the return on invested capital. Following
The remuneration for the financial year
the separation of Specialty Chemicals,
2020, as described in this report, is
a one-off long-term incentive to reward
subject to an advisory vote at the 2021
bringing value creation at a higher level
AGM. Questions raised in the 2020
has been added for the performance
We have a clear strategic focus to be -
AGM regarding remuneration items were
period 2018-2020.
come the reference in paints and coatings
addressed in the respective meeting,
with strong global brands, leading market
resulting in 94% votes in favor of the
Prior to agreeing on incentives, the
positions and a balanced geographic
2019 Remuneration report.
Remuneration Committee conducted
exposure across all regions. Our strategy
is aimed at long-term value creation.
To realize our strategy and create
the long-term value we aim for, it’s
1. REMUNERATION FOR THE
BOARD OF MANAGEMENT
scenario analyses of the possible
financial outcomes of meeting different
performance levels, and how they
may affect the structure and value
of the Board of Management’s total
essential that we can attract and retain
The Policy is designed to enable the
remuneration.
high caliber members to our Board of
Board of Management to achieve the
Management and Supervisory Board.
company’s objectives, while balancing
In 2020, the labor market peer group, as
This is reflected in the remuneration
the perspectives of shareholders and
referred to in the Policy, consisted of the
policies for each of these boards.
other key stakeholders. The focus on
following companies:
performance is achieved by including
The Remuneration Policy for the Board
both short- and long-term incentives, to
• Ahold Delhaize
• RELX Group
of Management (the “Policy”) was first
ensure that the Board of Management
• Air Liquide
• RPM
adopted by shareholders at the Annual
reaches the annual expected level of
General Meeting (AGM) in 2005. It has
performance, while bearing in mind the
undergone several amendments since
sustainability of the company.
• Ferro Corporation • Signify
• ASML
• DSM
• Henkel
• KPN
International
• Sherwin-Williams
• Sika
• The Linde Group
then – most recently in 2018 – and was
adopted by shareholders at the Annual
The remuneration principles that
General Meeting (AGM) in 2020 (with
apply for the Board of Management
• LafargeHolcim
• Vopak
92% of votes in favor). Details about its
are aligned with those applied more
• PPG Industries
• Wolters Kluwer
implementation in 2020 can be found
broadly in the company. This provides a
• Randstad
below in chapter 1.
shared sense of purpose and direction
at different management levels and
One table on page 79 specifies the
The Remuneration Policy for the
a shared reward when success is
elements of the Remuneration Policy,
Supervisory Board was adopted by
achieved.
shareholders at the 2014 AGM, with
describing purpose, design and the
link to our company strategy, as well as
some limited changes being approved at
When implementing the Policy, the
their (potential) value. The other table
the AGM in 2020 (with 99% of votes in
Remuneration Committee consults with
on page 79 gives an overview of the
favor). Details about the implementation
external remuneration professionals to
remuneration of the members of the
of the current policy in 2020 are in
obtain appropriate benchmark data,
Board of Management who were in
The execution of remuneration for
independent advice.
suspended our financial ambition as a
result of COVID-19, no changes were
both the Board of Management and
Variable remuneration provides an incen-
made to the incentive plans of the Board
Supervisory Board has been fully
tive to realize long-term value creation.
of Management.
compliant with the applicable policies.
For the short term, the Supervisory Board
The revised European directive on the
sets operational targets over a one-year
Base salary
encouragement of long-term shareholder
period that are crucial to the company
The Remuneration Committee reviewed
engagement (SRD II), and its codification
and are pre-conditions to value creation.
the salaries of members of the Board
in Dutch law, have been considered in
The biggest portion of the remuneration
of Management during the year,
the disclosure presented in this report.
packages of Board of Management
considering market data, inflation data
The elements of the Remuneration Policy strategy
The goal of our Remuneration Policy for the Board of Management is to offer an on-target total remuneration package
around the median of the labor market peer group.
Purpose
Strategy
Total direct compensation
Is the basis for benchmark efforts, i.e. the reference to
the labor market peer group.
Base salary and variable income. Variable income concerns the performance-related
short-term incentive (STI) and the long-term incentive plan (LTI). In addition, Board of
Management members are entitled to certain benefits.
Value
Value of each respective item is
specified in more detail below.
Base salary
Basic pay for the job.
Aims to provide a fair and competitive basis for the total pay level to attract high
caliber leaders. Annual review based on the market movement in the Netherlands
and peer companies. In-depth benchmark at least every three years.
Base salaries at AkzoNobel target
the median of the labor market
peer group.
Short-term incentive (STI)
Incentive aligning short-term business objectives and
business drivers toward long-term value creation.
Driving pay for performance.
The Supervisory Board sets operational targets for the respective performance year
and determines the extent to which they have been achieved. By ensuring that
long-term value creation is properly reflected in stretched yet achievable targets, the
realization of strategic business objectives is addressed. In total, 70% of the at-target
STI is linked to financial objectives and 30% is related to personal objectives.
Long-term incentive (LTI)
Encourage long-term, sustainable economic and
shareholder value creation – both absolute and relative
to competitors – and to align Board of Management
interests with those of shareholders, as well as ensuring
retention of the members of the Board of Management.
Performance shares are awarded every year, to be converted into shares upon
realization of predefined targets, observing a three-year vesting period. An additional
two-year holding period after vesting applies. Performance targets are based on
company strategy, driving long-term value creation. All LTI targets are linked to
financial goals. Performance is measured over three financial years, starting with the
year of grant.
On-target performance: 100% of
annual base salary for the CEO
and 65% for the CFO. Maximum
opportunity capped at 150%
of on-target. Threshold: No STI
pay-out below threshold level.
The grant equals 150% of base
salary. Maximum vesting oppor-
tunity is 150% of the number of
performance shares vested.
Shareholding requirement
Aligning reward to the interests of stakeholders, and
emphasizing confidence in performance and strategy.
Members of the Board of Management are expected to build up a shareholding
in the company; the minimum shareholding requirement must be accrued in five
years. Considered are shares privately purchased and vested shares granted under
AkzoNobel share-based compensation plans.
The minimum shareholding
requirement is 300% of annual
base salary for the CEO and
150% for the CFO.
Pension and other benefits
Post-retirement remuneration and other benefits,
creates alignment with market practice.
A company-paid contribution to allow participation in a private pension plan, as
applicable to Netherlands-based employees. Other benefits include sick pay (aligned
with Netherlands-based employees) and a company car.
Goal setting
Goal setting is crucial to driving pay for performance
aligned with company strategy and to ensure that
decisions made and results delivered are aligned with
the interests of our stakeholders.
Supervisory Board sets goals, their respective weight and targets (i.e. metric) for the
respective performance year under the STI and LTI scheme, considering:
(1) Company strategy (2) Focus on long-term value creation (3) Historical perfor-
mance, business future outlook, and circumstances and priorities (4) Stakeholder
expectations.
Pension contributions aligned
with plans in place for employees
in the Netherlands. Other benefits
aligned with market practice.
Goals must be stretching yet
achievable.
and the level of increases that were to
be applied for AkzoNobel employees in
the Netherlands, including those who are
covered by a collective labor agreement.
Increases to the value of 2.75% of
base salary were agreed, effective as of
January 1, 2020:
• Thierry Vanlancker, CEO: €1,033,500
• Maarten de Vries, CFO: €695,500
Short-term incentive (STI)
In 2020, the financial objectives of the
short-term incentive were return on
sales (ROS) and operational cash
flow (OCF), with each metric having a
weighting of 35%. The individual and
qualitative objectives reflect progress
towards the achievement of long-term
strategic objectives, with a weighting
of 30%.
The company does not disclose the
exact actual targets, as these are
con sidered commercially sensitive. In
view of transparency, we categorize
our target realization as follows: zero
pay-out, below target, at target, above
target or maximum pay-out. In 2020, the
achievement on ROS was above target
and the achieve ment on OCF was
below target.
chapter 2.
and on other matters where it requires
office in 2020. Although we temporarily
Remuneration Board of Management for the reported financial year
in €
Thierry Vanlancker
Chief Executive Officer
Maarten de Vries
Chief Financial Officer
Fixed
remuneration
Variable
remuneration
Post-contract
compensation3
Total
remuneration
Base
salary
Fringe
benefits1
One-year
variable
Multi-year variable
LTI2
PIP4
Proportion of fixed
and variable
remuneration
1,033,500
9,700
1,139,124
1,109,7655
2,067,000
202,600
5,561,689
0.22/0.78
695,500
33,700
498,256
804,9026
1,391,000
136,300
3,559,658
0.24/0.76
1 Social security contributions and car arrangement.
2 Amounts based on IFRS2 expenses.
3 Compensation intended for build-up of retirement
benefits instead of pension contributions.
4 PIP is the one-off Special Incentive Plan for the
5 At December 31, 2020, these shares had a market
value of 1,583,237. Total remuneration based on
this value amounts to 6,035,161.
performance period 2018-2020.
6 At December 31, 2020, these shares had a market
value of 1,348,124. Total remuneration based on
this value amounts
to 4,102,880.
78
Leadership and governance | AkzoNobel Report 2020
AkzoNobel Report 2020 | Leadership and governance
79
REMUNERATION REPORT
In determining the outcome of the STI
elements, the Remuneration Committee
applied a reasonableness test in which
the actual level of the performance
was critically assessed in light of the
assumptions made at the beginning
of the year, taking into account the
impact of COVID-19. The test also
included an assessment of the progress
made with the strategic objectives under
prevailing market conditions.
The Remuneration Committee
subsequently determined that bonus
payments for the Board of Management
would be:
• Thierry Vanlancker, CEO: €1,139,124
(110.22% of salary)
• Maarten de Vries, CFO: €498,256
(71.64% of salary)
No matching shares were granted
to the CEO or CFO in 2020, as this
arrangement has been suspended for
the period 2018 to 2020. The value
of the share-matching plan for these
three years is invested in the 2020
Performance Incentive Plan.
LONG-TERM INCENTIVES (LTI)
Conditional grant LTI share plan
2020-2022
The Remuneration Committee
determines the grant levels to be made
in respect of members of the Board
of Management, within the limits and
plans that have been approved by
shareholders. In 2020, the CEO and
CFO received a conditional grant of
shares equivalent to the face value of
150% of their annual base salaries.
The grant price was determined based
on the average share price of an
AkzoNobel common share in the two
weeks following publication of the annual
results on February 12, 2020:
• 18,747 shares were conditionally
granted to Thierry Vanlancker, CEO
• 12,616 shares were conditionally
granted to Maarten de Vries, CFO
Vesting of the conditional grant is
linked to two performance metrics:
return on investment (ROI) and relative
total shareholder return (TSR), equally
weighted and independently determining
50% of the LTI vesting. The Supervisory
Board reviews ROI performance
measure and target each year and
ensures that both are directly linked to
the strategic direction.
The performance level determines: (i)
the performance level below which no
shares vest; (ii) the performance level at
which the target number of shares vest;
and (iii) the performance level at which
the maximum number of shares vest.
TSR is measured relative to an industry
peer group, consisting of the following
nine companies:
• Asian Paints
• Axalta
• Kansai Paint
• Masco Corp
• Nippon Paint
• PPG
• RPM
International
• Sherwin-Williams
• Tikkurilla
This industry peer group is reviewed
on a regular basis to ensure that
the companies in the group remain
appropriate peers.
The vesting schedule that will apply
to the relative TSR metric is listed in
the table below. When making the
performance assessment, the TSR result
of AkzoNobel is included within the
ranked peer group.
Relative TSR vesting scheme for the
conditional grants
Rank
1
2
3
4
5
6
7
8-10
Vesting (as % of 50%
of conditional grant)
150
135
120
100
75
50
25
0
Vesting of the LTI Share Plan
2018-2020
Under the LTI Share Plan 2018-2020, a
conditional grant of 20,200 shares was
80
Leadership and governance | AkzoNobel Report 2020
made to the CEO and a conditional grant
of 17,200 shares made to the CFO.
In line with the Remuneration
Policy, vesting of 50% of the shares
conditionally granted is linked to
AkzoNobel’s ROI performance. The
company’s ROI performance at the
end of the performance period was
reviewed by the Supervisory Board.
The Supervisory Board recognized that
the initial ROI target was not fully in line
with the company’s new strategy. They
decided not to adjust the target, but to
apply their discretionary power and to
evaluate performance against the ROI
target as defined and communicated at
the beginning of 2020. This resulted in a
vesting of 106% for this specific part of
the long-term incentive.
For the 2018 conditional grant, 50%
was linked to AkzoNobel’s relative total
shareholder return (TSR) performance
compared with the companies
in a defined industry peer group.
Independent external experts conducted
an analysis to calculate the number
of shares that will vest according to
the TSR ranking. In order to adjust for
changes in exchange rates, all local
currencies were converted into euros.
AkzoNobel’s TSR performance during
the period 2018 to 2020 resulted in the
sixth position within the ranking of the
peer group companies. This ranking
resulted in a vesting of 50% for this part
of the long-term incentive.
Based on the company’s combined ROI
and TSR performance, the final vesting
percentage of the 2018 conditional grant
– after including the dividend yield of
14.37% during the performance period –
equaled 89.21%.
The Remuneration Committee
determined that:
• Thierry Vanlancker would vest 18,020
shares, subject to a further two-year
holding requirement. At December 31,
2020, these shares had a market
value of €1,583,237
REMUNERATION REPORT
In determining the outcome of the STI
return on investment (ROI) and relative
made to the CEO and a conditional grant
elements, the Remuneration Committee
total shareholder return (TSR), equally
of 17,200 shares made to the CFO.
applied a reasonableness test in which
weighted and independently determining
the actual level of the performance
50% of the LTI vesting. The Supervisory
In line with the Remuneration
was critically assessed in light of the
Board reviews ROI performance
Policy, vesting of 50% of the shares
assumptions made at the beginning
measure and target each year and
conditionally granted is linked to
of the year, taking into account the
ensures that both are directly linked to
AkzoNobel’s ROI performance. The
impact of COVID-19. The test also
the strategic direction.
included an assessment of the progress
company’s ROI performance at the
end of the performance period was
made with the strategic objectives under
The performance level determines: (i)
reviewed by the Supervisory Board.
prevailing market conditions.
the performance level below which no
The Supervisory Board recognized that
shares vest; (ii) the performance level at
the initial ROI target was not fully in line
The Remuneration Committee
which the target number of shares vest;
with the company’s new strategy. They
subsequently determined that bonus
and (iii) the performance level at which
decided not to adjust the target, but to
payments for the Board of Management
the maximum number of shares vest.
apply their discretionary power and to
would be:
evaluate performance against the ROI
• Thierry Vanlancker, CEO: €1,139,124
TSR is measured relative to an industry
target as defined and communicated at
(110.22% of salary)
peer group, consisting of the following
the beginning of 2020. This resulted in a
• Maarten de Vries, CFO: €498,256
(71.64% of salary)
nine companies:
• Asian Paints
No matching shares were granted
• Axalta
• PPG
• RPM
vesting of 106% for this specific part of
the long-term incentive.
to the CEO or CFO in 2020, as this
arrangement has been suspended for
• Kansai Paint
• Masco Corp
International
For the 2018 conditional grant, 50%
• Sherwin-Williams
was linked to AkzoNobel’s relative total
the period 2018 to 2020. The value
• Nippon Paint
• Tikkurilla
shareholder return (TSR) performance
of the share-matching plan for these
compared with the companies
three years is invested in the 2020
This industry peer group is reviewed
in a defined industry peer group.
Performance Incentive Plan.
on a regular basis to ensure that
Independent external experts conducted
LONG-TERM INCENTIVES (LTI)
the companies in the group remain
an analysis to calculate the number
appropriate peers.
of shares that will vest according to
the TSR ranking. In order to adjust for
The vesting schedule that will apply
changes in exchange rates, all local
Conditional grant LTI share plan
to the relative TSR metric is listed in
currencies were converted into euros.
2020-2022
the table below. When making the
The Remuneration Committee
performance assessment, the TSR result
AkzoNobel’s TSR performance during
determines the grant levels to be made
of AkzoNobel is included within the
the period 2018 to 2020 resulted in the
in respect of members of the Board
ranked peer group.
of Management, within the limits and
sixth position within the ranking of the
peer group companies. This ranking
plans that have been approved by
Relative TSR vesting scheme for the
resulted in a vesting of 50% for this part
conditional grants
of the long-term incentive.
shareholders. In 2020, the CEO and
CFO received a conditional grant of
shares equivalent to the face value of
Rank
150% of their annual base salaries.
The grant price was determined based
on the average share price of an
AkzoNobel common share in the two
weeks following publication of the annual
results on February 12, 2020:
• 18,747 shares were conditionally
granted to Thierry Vanlancker, CEO
• 12,616 shares were conditionally
1
2
3
4
5
6
7
8-10
Vesting (as % of 50%
of conditional grant)
150
135
120
100
75
50
25
0
Based on the company’s combined ROI
and TSR performance, the final vesting
percentage of the 2018 conditional grant
– after including the dividend yield of
14.37% during the performance period –
equaled 89.21%.
The Remuneration Committee
determined that:
• Thierry Vanlancker would vest 18,020
granted to Maarten de Vries, CFO
Vesting of the LTI Share Plan
shares, subject to a further two-year
2018-2020
holding requirement. At December 31,
Vesting of the conditional grant is
Under the LTI Share Plan 2018-2020, a
2020, these shares had a market
linked to two performance metrics:
conditional grant of 20,200 shares was
value of €1,583,237
2020 remuneration of the Board of Management –
Number of performance-related shares
Performance
Plan
period Award Date
Vesting
Date
End of
holding
period
Balance at
January 1,
2020
Awarded
in 2020
Vested
in 2020
Forfeited
in 2020
Dividend
in 2020
Balance at
December
31, 2020
Thierry
Vanlancker
Chief Executive
Officer
ANS2017
2017-2019
ANS2018
2018-2020
ANS2019
2019-2021
ANS2020
2020-2022
Maarten de Vries
Chief Financial
Officer
ANS2018
2018-2020
ANS2019
2019-2021
ANS2020
2020-2022
January 1
2017
January 1
2018
January 1
2019
January 1
2020
January 1
2018
January 1
2019
January 1
2020
February 12
2020
February 12
2022
February 17
2021
February 17
2023
February
2022
February
2023
February
2024
February
2025
February 17
2021
February 17
2023
February
2022
February
2023
February
2024
February
2025
25,842
–
(25,842)
–
–
–
22,505
23,117
–
–
–
18,747
19,163
15,557
–
–
–
12,616
–
–
–
–
–
–
(5,083)
598
18,020
–
–
616
23,733
499
19,246
(4,328)
509
15,344
–
–
414
15,971
336
12,952
• Maarten de Vries would vest 15,344
shares, subject to a further two-year
holding requirement. At December 31,
2020, these shares had a market
value of €1,348,124
the decision to pause and suspend
the 15 by 20 ambition. The test also
included an assessment of the progress
made with the strategic objectives under
prevailing market conditions.
Actual ROS performance was 15.0%
(excluding unallocated cost). The
Remuneration Committee subsequently
determined that payments for the Board
of Management would be:
• Thierry Vanlancker, CEO: €2,067,000
(200% of salary)
• Maarten de Vries, CFO: €1,391,000
(200% of salary)
Claw back and value adjustment
In 2020, there was no cause for a
claw back or value adjustment by the
Remuneration Committee.
Loans
The company does not grant loans,
advance payments or guarantees to
members of the Supervisory Board,
members of the Executive Committee or
any family member of such persons.
Shareholding requirements and
share matching
As of December 31, 2020, CEO Thierry
Vanlancker held 43,518 shares, of which
1,720 qualified for share-matching under
the Share-Matching Plan on a ratio 1:1.
The matching shares were conditionally
granted in 2018 and will be released
in 2021, subject to the terms of the
Share-Matching Plan. Shares acquired in
2020 by the CEO contribute towards his
required shareholding. On December 31,
2020, he fulfilled this requirement by
holding the equivalent of 370% of his
annual base salary in shares.
As of December 31, 2020, CFO
Maarten de Vries held 5,678 shares.
The shares acquired by the CFO during
2020 contribute towards his required
shareholding. On December 31, 2020,
he did not yet fulfill the shareholding
requirement of 150%, as the shares
represented a value at that date of 72%
of his annual base salary.
Shares obtained by members of the
Board of Management under the
performance-related share plan are
Performance range – 2020 Performance Incentive Plan
2020 ROS target
Award level
Below threshold
Threshold
<14%
0% of
base salary
14%
100% of
base salary
Target
15%
200% of
base salary
Maximum
≥17%
400% of
base salary
An overview of all shares awarded, or
due to, Board of Management members
is shown on this page.
2020 Performance
Incentive Plan
The 2020 Performance Incentive
Plan is an exceptional, one-off plan
to incentivize improvement of the
company’s return on sales (ROS), put
in place and approved by the AGM
following the divestment of Specialty
Chemicals. It supports achievement
of 15% ROS (excluding unallocated
corporate center cost) by the end
of 2020, presented to shareholders
as financial guidance towards upper
quartile industry performance.
The Supervisory Board set the ROS
to be achieved by the end of 2020 as
shown in the table below.
In determining the outcome of the
Performance Incentive Plan, the
Remuneration Committee applied a
reasonableness test in which the actual
level of the performance was critically
assessed in light of the assumptions
made at the beginning of the year and
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Leadership and governance | AkzoNobel Report 2020
AkzoNobel Report 2020 | Leadership and governance
81
REMUNERATION REPORT
Comparative table of remuneration and company performance over last five reported financial years
in €
Remuneration CEO
Fixed compensation
Total direct compensation
% change fixed compensation
% change total compensation
Remuneration CFO
Fixed compensation
Total direct compensation
% change fixed compensation
% change total compensation
Company performance
2016
2017
2018
2019
2020
Divestment Specialty Chemicals
Ton Büchner Thierry Vanlancker
1,339,000
3,518,900
9%
2%
1,135,825
2,825,863
(15%)
(20%)
1,151,900
2,899,883
1,186,500
3,561,212
1.245.800
5,561,689
1%
3%
3%
23%
5%
56%
Maëlys Castella
Maarten de Vries
710,300
1,586,400
4%
20%
715,016
2,169,290
1%
37%
797,600
1,515,816
12%
(30%)
819,800
865,500
1,843,977
3,559,658
3%
22%
6%
93%
Net income attributable to shareholders
970,000,000
832,000,000
6,674,000,000
539,000,000
630,000,000
Net income % change
ROI
ROI % change
(1)
14.4
3%
(14)
13.9
(3%)
702
12.6
(9%)
(92)
14.1
12%
17
16.1
14%
Adjusted operating income (OPI)
928,000,000
905,000,000
798,000,000
991,000,000
1,099,000,000
Adjusted OPI % change
(37%)
(2%)
(12%)
24%
11%
Average remuneration on a full-time equivalent basis of employees
Average salary per employee1
% change average remuneration
58,559
(1%)
53,453
(9%)
56,619
6%
54,825
(3%)
56,061
2%
In years of transition, the compensation for the newly appointed Board of Management member has been annualized.
1 Calculated as employee benefits over average number of employees.
taken into account for share ownership
purposes as soon as they have become
unconditional. This includes vested
shares to be retained during the blocking
period of two years after vesting.
Comparative information
In compliance with point (b), paragraph 1
of Article 9b of the EU Directive on
long-term shareholder engagement, we
present on this page:
• The annual change of remuneration of
each individual member of the Board
of Management
• The performance of the company
• The average remuneration on a full-
time equivalent basis of company
employees over at least the five most
recent financial years
Over the last few years of transition,
the company’s performance fluctuated
significantly as the table above shows.
In 2018, net profit increased sharply,
mainly due to the divestment of
Specialty Chemicals, with a deal result
of €5,811 million after tax. The transition
was also reflected in the development
of remuneration. Restructuring due to
discontinued operations, for example,
resulted in a reduction of the average
salary per employee, followed by
increases when operations stabilized
and profits increased again. In 2018,
the increase in average salary was
also influenced by the inclusion of a
one-off €57 million pension cost for
the UK guaranteed minimum pension
equalizations.
The pay ratio between the total
com pensation of the CEO in 2020 and
the total compensation of an AkzoNobel
employee (calculated as an average
of all employees as of December 31,
2020) is 99.2* (2019: 65.0).
*The increase is mainly due to the 2020 Performance
Incentive Plan payment. Without this one-off special
payment the ratio would have been 62.3.
year and vary de pending on the Board
member’s age.
Board contracts
Agreements for members of the Board
of Management are concluded for a
period not exceeding four years. After
the initial term, re-appointments may
take place for consecutive periods of up
to four years each. The notice period by
the Board member, and by the company,
shall be subject to a six-month term.
Members of the Board of Management
normally retire in the year they reach
legal retirement age.
2. REMUNERATION FOR THE
SUPERVISORY BOARD
Post-contract compensation
Board of Management members
receive contributions towards post-
contract benefits, which are defined as
a percentage of income, as deter mined
by the Supervisory Board. Currently,
they are based on age. Contributions are
paid over the base salary in the current
Members of the Supervisory Board
receive a fixed remuneration based on
roles and responsibilities. Travel expenses
and facilities are borne by the company
and reviewed by the Audit Committee.
Implementation of the Remuneration
Policy for the Supervisory Board in 2020
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Leadership and governance | AkzoNobel Report 2020
REMUNERATION REPORT
Comparative table of remuneration and company performance over last five reported financial years
in €
Remuneration CEO
Fixed compensation
Total direct compensation
% change fixed compensation
% change total compensation
Remuneration CFO
Fixed compensation
Total direct compensation
% change fixed compensation
% change total compensation
Company performance
Net income % change
ROI
ROI % change
Adjusted OPI % change
2016
2017
2018
2019
2020
Divestment Specialty Chemicals
Ton Büchner Thierry Vanlancker
1,151,900
2,899,883
1,186,500
3,561,212
1.245.800
5,561,689
Maëlys Castella
Maarten de Vries
819,800
865,500
1,843,977
3,559,658
1,339,000
3,518,900
9%
2%
710,300
1,586,400
4%
20%
(1)
14.4
3%
(37%)
1,135,825
2,825,863
(15%)
(20%)
715,016
2,169,290
1%
37%
(14)
13.9
(3%)
(2%)
1%
3%
797,600
1,515,816
12%
(30%)
702
12.6
(9%)
(12%)
3%
23%
3%
22%
(92)
14.1
12%
24%
5%
56%
6%
93%
17
16.1
14%
11%
Adjusted operating income (OPI)
928,000,000
905,000,000
798,000,000
991,000,000
1,099,000,000
Average remuneration on a full-time equivalent basis of employees
Average salary per employee1
% change average remuneration
58,559
(1%)
53,453
(9%)
56,619
6%
54,825
(3%)
56,061
2%
In years of transition, the compensation for the newly appointed Board of Management member has been annualized.
1 Calculated as employee benefits over average number of employees.
Net income attributable to shareholders
970,000,000
832,000,000
6,674,000,000
539,000,000
630,000,000
taken into account for share ownership
discontinued operations, for example,
year and vary de pending on the Board
purposes as soon as they have become
resulted in a reduction of the average
member’s age.
unconditional. This includes vested
salary per employee, followed by
shares to be retained during the blocking
increases when operations stabilized
Board contracts
period of two years after vesting.
and profits increased again. In 2018,
Agreements for members of the Board
the increase in average salary was
of Management are concluded for a
Comparative information
also influenced by the inclusion of a
period not exceeding four years. After
In compliance with point (b), paragraph 1
one-off €57 million pension cost for
the initial term, re-appointments may
of Article 9b of the EU Directive on
the UK guaranteed minimum pension
take place for consecutive periods of up
long-term shareholder engagement, we
equalizations.
present on this page:
to four years each. The notice period by
the Board member, and by the company,
each individual member of the Board
com pensation of the CEO in 2020 and
Members of the Board of Management
of Management
the total compensation of an AkzoNobel
normally retire in the year they reach
• The performance of the company
employee (calculated as an average
legal retirement age.
• The average remuneration on a full-
of all employees as of December 31,
time equivalent basis of company
2020) is 99.2* (2019: 65.0).
employees over at least the five most
recent financial years
Over the last few years of transition,
*The increase is mainly due to the 2020 Performance
Incentive Plan payment. Without this one-off special
payment the ratio would have been 62.3.
2. REMUNERATION FOR THE
SUPERVISORY BOARD
the company’s performance fluctuated
Post-contract compensation
Members of the Supervisory Board
significantly as the table above shows.
Board of Management members
receive a fixed remuneration based on
In 2018, net profit increased sharply,
receive contributions towards post-
roles and responsibilities. Travel expenses
mainly due to the divestment of
contract benefits, which are defined as
and facilities are borne by the company
Specialty Chemicals, with a deal result
a percentage of income, as deter mined
and reviewed by the Audit Committee.
of €5,811 million after tax. The transition
by the Supervisory Board. Currently,
was also reflected in the development
they are based on age. Contributions are
Implementation of the Remuneration
of remuneration. Restructuring due to
paid over the base salary in the current
Policy for the Supervisory Board in 2020
resulted in the payout presented in the
table below. According to the Code,
members are not remunerated in shares.
3. REMUNERATION POLICIES FOR
THE NEXT FINANCIAL YEAR
In 2020, the Supervisory Board
evaluated the remuneration policies
for the Board of Management and
Supervisory Board. The Supervisory
Board considered input from
stakeholders, the requirements of the EU
Directive on the encouragement of long-
term shareholder engagement (SRD II),
and the Dutch regulation implementing
this directive. As a result, a new policy
was prepared for the remuneration of the
Board of Management, to be submitted
for approval at the AGM in April 2021.
Remuneration Policy for the
Board of Management
Since 2017, AkzoNobel has been
focused on its Winning together: 15
by 20 strategy to deliver 15% ROS
(excluding unallocated cost) in 2020.
The company’s new Grow & Deliver
strategy, including ambitions for 2021-
23, balances growth (at least in line
with relevant markets) and profitability
improvement (an average 50 basis
points increase in ROS per year). The
As official paint and coatings partner of the McLaren Racing team through our Sikkens brand, we were delighted to see them
finish third in the 2020 F1 constructor standings. As well as supplying products for all painted parts of the race car, we also
provided heat-shielding via our International product range.
Supervisory Board has concluded that
the Remuneration Policy for the Board of
Management should provide adequate
and balanced remuneration in support
of the new company strategy. For that
purpose, a revised Remuneration Policy
will be submitted to the AGM. The
updated Remuneration Policy seeks to:
• Attract and retain high caliber people
to the Board of Management by
offering competitive remuneration
against a European peer group
• Incentivize realization of the
company’s Grow & Deliver strategy
and the short- and long-term
ambitions through aligning metrics
and targets around growth and
delivery in STI and LTI
• Deliver sustainable value creation for
shareholders and other stakeholders,
by setting focused LTI metrics and
simplifying share matching
Remuneration Policy for the
Supervisory Board
The Supervisory Board has concluded
that the Remuneration Policy for the
Supervisory Board – adopted by the
AGM in 2014 and approved with some
limited changes in 2020 – is in line with
the objectives of the company, but a
proposal is made to use a European
peer group going forward to benchmark
the remuneration levels it provides. This
change in the Remuneration Policy will
be submitted to the AGM in April 2021.
• The annual change of remuneration of
The pay ratio between the total
shall be subject to a six-month term.
Comparative table of remuneration of the Supervisory Board over last five reported financial years
in €
Nils Smedegaard Andersen, Chairman5
Anthony Burgmans6
Peggy Bruzelius7
Byron Grote, Deputy Chairman2
Louis Hughes6
Pamela Kirby1
Dick Sluimers
Ben Verwaayen9
Sue Clark4
Patrick Thomas4
Michiel Jaski4
Sari Baldauf3
Jolanda Poots-Bijl8
Total remuneration
% change total remuneration
2016
-
165,000
113,800
105,800
116,200
57,050
87,500
91,200
-
-
-
2017
-
169,400
116,200
134,300
120,000
100,000
95,000
95,000
7,900
10,400
5,400
107,500
100,000
-
844,050
12.68
-
953,600
12.98
2018
111,373
53,215
119,318
135,500
32,322
92,500
107,500
95,000
87,995
90,659
78,159
-
-
1,003,541
5.24
2019
162,500
-
37,710
130,500
-
92,500
107,500
92,500
92,500
97,500
87,500
-
59,166
959,876
(4.35)
2020
157,500
-
-
114,250
-
87,500
90,000
32,775
87,500
92,500
85,000
-
85,000
832,025
(13.32)
1 As of May 1, 2016.
2 Deputy Chairman as
of October 18, 2016.
3 From May 1, 2016, until
December 1, 2017.
4 As of November 30,
2017.
5 As of May 1, 2018.
6 Until April 30, 2018.
7 Until April 30, 2019.
8 As of May 1, 2019.
9 Until April 24, 2020.
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83
CAPITAL MARKETS
AkzoNobel and the
capital markets
AkzoNobel’s common shares are listed
on Euronext Amsterdam. The company
is included in the AEX Index, which
consists of the top 25 listed companies
in the Netherlands, ranked on the basis
of their turnover in the stock market
and free float. During 2020, 203 million
AkzoNobel shares were traded on
Euronext Amsterdam (2019: 229 million).
AkzoNobel has a sponsored level 1
ADR program and ADRs can be traded
on the international OTCQX platform
in the US. Please refer to the table below
for stock codes and ticker symbols.
Euronext ticker symbol AKZA
ISIN common share
NL0013267909
OTC ticker symbol
AKZOY
ISIN ADR
US0101995035
AkzoNobel has 100% free float and a
broad base of international shareholders.
Based on an independent shareholder
analysis, the “Distribution of shares”
chart (see opposite page) shows the
geographical spread of institutional
shareholders.
Key share data1
Year-end (share price in €)
Year-high (share price in €)2
Year-low (share price in €)2
Number of shares outstanding at year-end (in millions)
Market capitalization at year-end (in € billions)
Dividend per share (in €)
Dividend yield (in %)3
2018
70.40
82.70
68.82
256
17.8
1.80
2.6
2019
90.69
91.86
69.12
200
18.1
1.90
2.1
2020
87.86
91.60
48.50
191
16.7
1.95
2.2
1 Based on Bloomberg share data.
2 Based on close value.
3 Based on year-end share price. Excluding special dividend of €4.50 in 2019.
Share price performance 2020 AkzoNobel share price in €
AkzoNobel
AEX index
Bloomberg Europe Chemicals Index
Bloomberg Global Chemicals Index
120
100
80
60
40
9
1
c
e
D
9
2
0
2
n
a
J
0
2
b
e
F
0
2
r
a
M
0
2
r
p
A
0
2
y
a
M
0
2
n
u
J
0
2
l
u
J
0
2
g
u
A
0
2
t
p
e
S
0
2
t
c
O
0
2
v
o
N
0
2
c
e
D
1
3
Around 41% of the
company’s share capital
is held by socially
responsible investing
(SRI) shareholders.
Around 4% of the company’s share
capital is held by private investors,
many of whom are resident in the
Netherlands. Approximately 41% of
the company’s share capital is held
by socially responsible investing (SRI)
shareholders*, compared with 11% in
2019. This increase has mainly been
84
Leadership and governance | AkzoNobel Report 2020
driven by the reclassification of several
major shareholders, according to
Nasdaq’s methodology.
*As calculated by Nasdaq, according to their
methodology, which is to include the sum of:
• Core sustainable and responsible investor firms
where 100% of equity assets are managed
with an environmental, social and governance
(ESG) approach
• Sustainable and responsible investor
themed funds managed by a broad range of
sustainable and responsible investors
Following 2020 reviews, AkzoNobel
was included in a number of leading
sustainability indices and continues to
be the reference in the paints and
coatings industry. Please refer to our
approach to sustainable business in
the Sustainability statements for a
complete overview.
The AkzoNobel share price was 3.1%
lower at year-end 2020, compared
with 2019 year-end.
For further information please visit
our website: akzonobel.com
CAPITAL MARKETS
AkzoNobel and the
capital markets
AkzoNobel’s common shares are listed
Key share data1
Number of shares outstanding at year-end (in millions)
Market capitalization at year-end (in € billions)
Year-end (share price in €)
Year-high (share price in €)2
Year-low (share price in €)2
Dividend per share (in €)
Dividend yield (in %)3
1 Based on Bloomberg share data.
2 Based on close value.
3 Based on year-end share price. Excluding special dividend of €4.50 in 2019.
2018
70.40
82.70
68.82
256
17.8
1.80
2.6
2019
90.69
91.86
69.12
200
18.1
1.90
2.1
2020
87.86
91.60
48.50
191
16.7
1.95
2.2
for stock codes and ticker symbols.
Share price performance 2020 AkzoNobel share price in €
AkzoNobel
AEX index
Bloomberg Europe Chemicals Index
Bloomberg Global Chemicals Index
on Euronext Amsterdam. The company
is included in the AEX Index, which
consists of the top 25 listed companies
in the Netherlands, ranked on the basis
of their turnover in the stock market
and free float. During 2020, 203 million
AkzoNobel shares were traded on
Euronext Amsterdam (2019: 229 million).
AkzoNobel has a sponsored level 1
ADR program and ADRs can be traded
on the international OTCQX platform
in the US. Please refer to the table below
Euronext ticker symbol AKZA
ISIN common share
NL0013267909
OTC ticker symbol
AKZOY
ISIN ADR
US0101995035
AkzoNobel has 100% free float and a
broad base of international shareholders.
Based on an independent shareholder
analysis, the “Distribution of shares”
chart (see opposite page) shows the
geographical spread of institutional
shareholders.
120
100
80
60
40
9
1
c
e
D
9
2
0
2
n
a
J
0
2
b
e
F
0
2
r
a
M
0
2
r
p
A
0
2
y
a
M
0
2
n
u
J
0
2
l
u
J
0
2
g
u
A
0
2
t
p
e
S
0
2
t
c
O
0
2
v
o
N
0
2
c
e
D
1
3
Around 41% of the
company’s share capital
is held by socially
responsible investing
(SRI) shareholders.
driven by the reclassification of several
Following 2020 reviews, AkzoNobel
major shareholders, according to
was included in a number of leading
Nasdaq’s methodology.
sustainability indices and continues to
Around 4% of the company’s share
capital is held by private investors,
many of whom are resident in the
Netherlands. Approximately 41% of
the company’s share capital is held
by socially responsible investing (SRI)
shareholders*, compared with 11% in
2019. This increase has mainly been
*As calculated by Nasdaq, according to their
methodology, which is to include the sum of:
• Core sustainable and responsible investor firms
where 100% of equity assets are managed
with an environmental, social and governance
(ESG) approach
• Sustainable and responsible investor
themed funds managed by a broad range of
sustainable and responsible investors
For further information please visit
our website: akzonobel.com
be the reference in the paints and
coatings industry. Please refer to our
approach to sustainable business in
the Sustainability statements for a
complete overview.
The AkzoNobel share price was 3.1%
lower at year-end 2020, compared
with 2019 year-end.
84
Leadership and governance | AkzoNobel Report 2020
Analyst recommendations
Distribution of shares 2020 in %
C
B
D
C
A
A
B
A Buy
B Hold
C Sell
19
A US
5
2
B UK
C Rest of Europe
D Rest of world
would equal a total 2020 dividend of
€1.95 (2019: €1.90) per share.
The dividend proposed to the 2021
Annual General Meeting of shareholders
(April 22), following adoption, will be
payable as of May 6, 2021. AkzoNobel’s
shares will trade ex-dividend as of
April 26, 2021. In compliance with
the listing requirements of Euronext
Amsterdam, the record date for the fi nal
dividend will be April 27, 2021.
Dividend paid in € per share
Interim dividend
Final dividend
46
19
27
8
Total
1.80
1.90
1.95
1.94
At year-end 2020, AkzoNobel was
covered by 26 equity brokers. An
overview of analyst recommendations is
shown in the graph above.
Credit rating
AkzoNobel is committed to maintaining
a strong investment grade credit
rating. Regular review meetings are
held between rating agencies and
AkzoNobel senior management. See
the table below for the current credit
ratings and outlook.
Bonds
On April 7, 2020, AkzoNobel launched
a €750 million bond, with a ten-year
maturity and a coupon of 1.625%. The
maturity schedule of outstanding bonds
is shown below.
Dividend
The dividend policy is to pay a stable
to rising dividend. In 2020, an interim
dividend of €0.43 per share (2019:
€0.41) was paid. The Board of
Management proposes a 2020 fi nal
dividend of €1.52 per share, which
1.43
0.37
0.37
2018
0.56
2017
* Proposed.
1.49
1.52*
0.41
0.41
2019
0.43
0.43
2020
Rating agency
Moody’s*
Standard & Poor’s*
Long-term rating
Baa1
BBB+
Outlook
Stable
Stable
* Rating affi rmed December 2020.
Debt maturity1 in € millions (nominal amounts)
750
750
500
500
500
2022
2023
2024
2025
2026
2027
2028
2029
2030
1 As of April 2020.
In February 2020, CFO Maarten de Vries (pictured) and CEO Thierry Vanlancker
hosted an investor event in London. Broadcast live by video webcast, it provided
an update on the company’s Winning together: 15 by 20 strategy, including plans
for 2020 and beyond.
AkzoNobel Report 2020 | Leadership and governance
85
FINANCIAL INFORMATION
Financial statements
Consolidated statement of income
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
87
87
88
89
90
Note 26 Remuneration of the Supervisory Board
121
and the Board of Management
Note 27 Financial risk management
Note 28 Subsequent events
Company financial statements
Statement of income
Notes to the Consolidated financial statements
Balance sheet
Note 1 Summary of significant accounting policies 91
Note A General information
Note 2 Scope of consolidation
Note 3 Segment information
Note 4 Alternative performance measures
Note 5 Revenue
Note 6 Operating income
Note 7 Employee benefits
Note 8 Financing income and expenses
Note 9
Income tax
Note 10 Earnings per share
Note 11 Intangible assets
Note 12 Property, plant and equipment
Note 13 Leases
96
97
99
101
102
102
104
104
106
107
108
110
Note B Other results
Note C
Intangible assets
Note D Financial non-current assets
Note E Short-term receivables
Note F Shareholders’ equity
Note G Net debt
Note H Other current liabilities
Note I
Financial instruments
Note J Contingent liabilities
Note K Auditor’s fees
Other information
Note 14 Investments in associates and joint ventures 110
Other information
Note 15 Financial non-current assets
Note 16 Inventories
Note 17 Trade and other receivables
Note 18 Group equity
Note 19 Post-retirement benefit provisions
Note 20 Other provisions and contingent liabilities
Note 21 Net debt
Note 22 Trade and other payables
Note 23 Cash flow
Note 24 Commitments
Note 25 Related party transactions
111
111
111
111
113
117
119
120
120
120
120
Profit allocation and distributions
Independent auditor’s report
Assurance report of the independent auditor
Financial summary
Glossary
Index
Appendix
121
124
125
125
126
126
126
127
127
127
129
129
130
130
130
131
131
132
138
140
144
146
147
AkzoNobel Report 2020 | Financial statements
86
CONSOLIDATED STATEMENT
OF INCOME
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
2019
577
(249)
24
(225)
127
11
138
(87)
490
453
37
490
2020
671
115
(18)
97
(430)
5
(425)
(328)
343
323
20
343
In € millions, for the year ended December 31
Note
2019*
2020
In € millions, for the year ended December 31
Continuing operations
Revenue
Cost of sales
Gross profit
Selling expenses
General and administrative expenses
Research and development expenses
Other results
Operating income
Financing income and expenses
Results from associates and
joint ventures
Profit before tax
Income tax
Profit for the period from continuing
operations
Discontinued operations
Profit/(loss) for the period from
discontinued operations
Profit for the period
Attributable to
Shareholders of the company
Non-controlling interests
Profit for the period
Earnings per share, in €
Continuing operations
Basic
Diluted
Discontinued operations
Basic
Diluted
Total operations
Basic
Diluted
8,530
(4,745)
(1,916)
(663)
(238)
(5)
(69)
25
5
6
6
6
6
6
8
14
9
2
10
10
10
10
10
10
9,276
(5,314)
(2,217)
(637)
(262)
(5)
(76)
20
3,962
(3,121)
841
785
(230)
555
22
577
539
38
577
2.43
2.42
0.10
0.10
2.53
2.52
* Costs by nature 2019 have been reclassified to align to our 2020 cost structure and
allocations. This resulted in reclassifications between cost lines in our statement of income,
which did not impact total operating income.
Profit for the period
Other comprehensive income/(expense)
Items that will not be reclassified to the statement of income:
3,785
Post-retirement benefits
Income tax
Net effect
Items that may be reclassified subsequently to the statement of
income:
Exchange differences arising on translation of foreign operations
Income tax
Net effect
Other comprehensive expense for the period
Comprehensive income for the period
Comprehensive income attributable to
Shareholders of the company
Non-controlling interests
Comprehensive income for the period
(2,822)
963
919
(241)
678
(7)
671
630
41
671
3.33
3.32
(0.04)
(0.04)
3.29
3.28
AkzoNobel Report 2020 | Financial statements
87
CONSOLIDATED BALANCE SHEET, BEFORE
ALLOCATION OF PROFIT
In € millions, at December 31
Note
2019
2020
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Investments in associates and joint ventures
Financial non-current assets
Total non-current assets
Current assets
Inventories
Current tax assets
Trade and other receivables
Short-term investments
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Shareholders’ equity
Non-controlling interests
Group equity
Non-current liabilities
Post-retirement benefit provisions
Other provisions
Deferred tax liabilities
Long-term borrowings
Total non-current liabilities
Current liabilities
Short-term borrowings
Current tax liabilities
Trade and other payables
Current portion of provisions
Total current liabilities
Total equity and liabilities
11
12
13
9
14
15
16
9
17
21
21
18
18
19
20
9
21
21
9
22
19, 20
3,625
1,700
374
529
150
1,862
1,139
63
2,133
138
1,271
6,350
218
701
280
391
2,042
169
196
2,406
231
3,554
1,621
324
497
166
1,951
1,159
55
1,994
250
1,606
5,746
204
664
232
467
2,771
119
162
2,580
232
8,113
5,064
13,177
5,950
4,134
3,093
13,177
8,240
4,744
12,984
6,568
3,414
3,002
12,984
AkzoNobel Report 2020 | Financial statements
88
CONSOLIDATED STATEMENT OF CASH FLOWS
In € millions, for the year ended December 31
Profit for the period from continuing operations
Adjustments to reconcile earnings to net cash generated from operating activities
Amortization and depreciation
Impairment losses
Financing income and expenses
Results from associates and joint ventures
Pre-tax result on acquisitions and divestments
Income tax
Changes in working capital
Pension pre-funding
Changes in post-retirement benefit provisions
Changes in other provisions
Interest paid
Income tax paid
Other changes
Net cash generated from/(used for) operating activities
Capital expenditures*
Interest received
Dividends from associates and joint ventures
Acquisition of consolidated companies
Investments in short-term investments
Repayments of short-term investments
Proceeds from divestments
Other changes
Net cash generated from/(used for) investing activities
Proceeds from borrowings
Borrowings repaid
Capital repayment
Share buyback
Dividends paid
Buy-out of non-controlling interests
Net cash generated from/(used for) financing activities
Net cash generated from/(used for) continuing operations
Net cash generated from/(used for) discontinued operations
Net change in cash and cash equivalents from continued and discontinued operations
Net cash and cash equivalents at January 1
Effect of exchange rate changes on cash and cash equivalents
Net cash and cash equivalents at December 31
Note
2019
2020
555
360
66
76
(20)
(83)
230
(244)
(161)
(509)
(15)
(66)
(184)
28
(214)
13
—
(224)
(2,325)
7,663
104
(5)
10
(623)
(2,000)
(2,520)
(1,446)
—
11, 12, 13
11, 12, 13
8
14
2
9
23
19, 23
19
20, 23
11, 12
2
21
21
21
21
18
18
18
2
2
21
33
5,012
(6,579)
(1,534)
(10)
(1,544)
2,732
22
1,210
678
361
10
69
(25)
(27)
241
184
–
(46)
(22)
(47)
(165)
9
(258)
8
17
(113)
(248)
136
31
–
970
(339)
–
(555)
(385)
(44)
1,220
(427)
(353)
440
(3)
437
1,210
(66)
1,581
* Capital expenditures include investments in intangible assets (refer to Note 11) and investments in property, plant and equipment (refer to Note 12).
AkzoNobel Report 2020 | Financial statements
89
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of the company
In € millions
Balance at January 1, 2019
Profit for the period
Other comprehensive income/(expense)
Tax on other comprehensive income
Comprehensive income for the period
Dividend
Share buyback*
Capital repayment and share consolidation
Equity-settled transactions**
Issue of common shares
Balance at December 31, 2019
Profit for the period
Other comprehensive income/(expense)
Tax on other comprehensive income
Comprehensive income for the period
Dividend
Share buyback*
Equity-settled transactions**
Acquisition of non-controlling interests
Balance at December 31, 2020
* Includes a tax credit of €3 million (2019: €nil).
** Includes a tax charge of €1 million (2019: €4 million tax credit).
Subscribed share
capital
Additional
paid-in capital
Cumulative
translation reserve
Other (legal)
reserves and undis-
tributed profit
Shareholders’
equity
Non-controlling
interests
Group equity
512
—
—
—
—
—
(14)
(399)
—
1
100
—
—
—
—
—
(5)
—
—
95
958
—
—
—
—
—
—
(957)
—
(1)
—
—
—
—
—
—
—
—
—
–
(608)
—
128
11
139
—
—
—
—
—
(469)
—
(409)
5
(404)
—
—
—
—
10,972
539
(249)
24
314
(1,423)
(2,520)
(644)
20
—
6,719
630
115
(18)
727
(366)
(540)
13
(29)
11,834
539
(121)
35
453
(1,423)
(2,534)
(2,000)
20
—
6,350
630
(294)
(13)
323
(366)
(545)
13
(29)
(873)
6,524
5,746
204
38
(1)
—
37
(23)
—
—
—
—
218
41
(21)
—
20
(19)
—
—
(15)
204
12,038
577
(122)
35
490
(1,446)
(2,534)
(2,000)
20
—
6,568
671
(315)
(13)
343
(385)
(545)
13
(44)
5,950
AkzoNobel Report 2020 | Financial statements
90
91AkzoNobel Report 2020 | Financial statementsNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGENERAL INFORMATIONAkzo Nobel N.V. is a company headquartered in the Neth-erlands.The address of our registered office is Christian Neefestraat 2, Amsterdam; the Chamber of Commerce number is 09007809. We have attached a list of subsidiar-ies, associated companies and joint ventures, drawn up in conformity with Articles 379 and 414 of Book 2 of the Dutch Civil Code, as an Appendix to our annual report.We have prepared the Consolidated financial statements of Akzo Nobel N.V. in accordance with International Finan-cial Reporting Standards (IFRS) as adopted by the Euro-pean Union. They also comply with the financial reporting requirements included in Title 9 of Book 2 of the Dutch Civil Code. The Consolidated financial statements have been prepared on a going concern basis. The Manage-ment report within the meaning of Article 391 of Book 2 of the Dutch Civil Code consists of the following parts of the annual report:• 2020 results at a glance• CEO statement• How we delivered on 15 by 20• How we created value• Strategy and operations• Leadership and governance: Our Board of Management and Executive Committee• Leadership and governance: Statement of the Board of Management• Leadership and governance: Corporate governance statement• Leadership and governance: Risk management• Leadership and governance: Integrity and compliance management• Leadership and governance: Remuneration report• Financial information: Note 6 Operating income• Financial information: Note 27 Financial risk managementThe section How we created value provides informa-tion on the developments during 2020 and the results. This section also provides information on cash flow and net debt, capital expenditures, innovation activities and employees.On February 16, 2021, the Board of Management authorized the financial statements for issue. The financial statements as presented in this report are subject to adop-tion by the Annual General Meeting of shareholders on April 22, 2021.CONSOLIDATIONThe Consolidated financial statements include the accounts of Akzo Nobel N.V. and its subsidiaries. Subsid-iaries are companies over which Akzo Nobel N.V. has control, because it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect returns through its power over the subsidiary. Non-controlling interests in equity and in results are presented separately.CHANGE IN ACCOUNTING POLICIES AND FIRST TIME APPLICATIONAccounting pronouncements, which became effective for 2020 (amendments to IFRS 3 “Definition of a Business”, amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform – Phase 1”, amendments to IAS 1 and IAS 8 “Definition of Material”, “Amendments to References to the Conceptual Framework in IFRS Standards” and the amendment to IFRS 16 “COVID-19-Related Rent Conces-sions”) had no material impact on our Consolidated financial statements.DISCONTINUED OPERATIONS (NOTE 2)A discontinued operation is a component of our busi-ness that represents a separate major line of business or geographical area of operations that has been disposed of or is held for sale, or is a subsidiary acquired exclusively with a view to resale. Assets and liabilities are classified as held for sale if it is highly probable that the carrying value will be recovered through a sale transaction within one year rather than through continuing use. When reclassifying assets and liabilities as held for sale, we recognize the assets and liabilities at the lower of their carrying value or fair value less costs to sell. Assets held for sale are not depreciated and amortized but tested for impairment. In case of discontinued operations, the comparative figures in the Consolidated statement of income and Consolidated statement of cash flows are represented. The balance sheet comparative figures are not represented.ALTERNATIVE PERFORMANCE MEASURES (NOTE 4) Our Alternative Performance Measures (APM) are based on IFRS measures and exclude so-called identified items. Identified items are special charges and benefits, results on acquisitions and divestments, major restructuring and impairment charges, and charges and benefits related to major legal, environmental and tax cases.USE OF ESTIMATES The preparation of the financial statements in compliance with IFRS requires management to make judgments, esti-mates and assumptions that affect amounts reported in the financial statements. The estimates and assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances and are used to judge the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. The most critical accounting policies involving a higher degree of judgment and complexity in applying principles of valuation and for which changes in the assumptions and estimates could result in significantly different results than those recorded in the financial state-ments are the following:• Scope of consolidation (Note 2)• Discontinued operations and held for sale (Note 2)• Income tax and deferred tax assets, including uncertain tax positions (Note 9)Note 1 Summary of significant accounting policies • Impairment of intangible assets, property, plant and
equipment and right-of-use assets (Note 11, 12, 13)
• Post-retirement benefit provisions (Note 19)
• Provisions and contingent liabilities (Note 20)
COVID-19 IMPACT ON FINANCIAL
STATEMENTS
• Intangible assets and the annual impairment testing
process (Note 11)
• Valuation of trade receivables (Note 17).
In our 2020 figures, all COVID-19 related impacts have
been treated as normal operations; none of these impacts
have been included in identified items.
The assets and liabilities of entities with other functional
currencies are translated into euros, the functional
currency of the parent entity, using the exchange rates
at the balance sheet date. The income and expenses
of entities with other functional currencies are translated
into the functional currency, using the exchange rates at
transaction date.
The pandemic situation in 2020 has been closely monitored
and appropriate measures have been taken to continue
serving our customers and save costs, while at the same
time keeping the organization intact and able to respond
quickly to changes in end market demand. The overall
impact on AkzoNobel for the full-year 2020 was limited. An
overall positive impact was noted for the Decorative Paints
segment, whereas there was an overall adverse impact in
the Performance Coatings segment. The pandemic has
not impacted our going concern assumption.
STATEMENT OF CASH FLOWS
We have used the indirect method to prepare the state-
ment of cash flows. Cash flows in foreign currencies have
been translated at transaction rates. Acquisitions or
divestments of subsidiaries are presented net of cash and
cash equivalents acquired or disposed of, respectively.
Cash flows from derivatives are recognized in the state-
ment of cash flows in the same category as those of the
hedged items.
AkzoNobel has a strong balance sheet and solid cash
position. At December 31, 2020, cash and cash equiva-
lents were €1.6 billion and financial leverage (net debt/
EBITDA) was 0.8. AkzoNobel is committed to retain a
strong investment grade credit rating.
In 2020, a detailed assessment was performed of potential
valuation adjustments to the overall asset base, either due
to the direct impact of COVID-19 or due to its impact on
future profitability. Goodwill and intangible asset impair-
ment tests have been performed based on most recently
updated forecasts. Recoverability of deferred tax assets
has also been reassessed based on these forecasts.
Furthermore, an assessment was performed with regard
to the allowance for impairment of trade receivables,
also taking into account potential additional risk associated
with COVID-19.
The impact of the pandemic on the Financial Statements
has been considered for each of the relevant notes,
and additional disclosures have been provided in case
COVID-19 had a material impact on a specific Financial
Statements section. The Financial Statements sections for
which this is relevant include:
• Government support received and recorded as credit to
employee benefits (Note 7)
• Income tax and the valuation of deferred tax assets
(Note 9)
OPERATING SEGMENTS
We determine and present operating segments based on
the information that is provided to the Executive Commit-
tee, our chief operating decision-maker during 2020, to
make decisions about resources to be allocated to the
segments and assess their performance. Segment results
reported to the Executive Committee include items directly
attributable to a segment as well as those items that can
be allocated on a reasonable basis. Unallocated items
comprise mainly of corporate assets and corporate costs
and are reported in “Corporate and other”.
FOREIGN CURRENCIES
Transactions in foreign currencies are translated into
the functional currency using the foreign exchange rate
at transaction date. Monetary assets and liabilities
denominated in foreign currencies are translated into
the functional currency using the exchange rates at the
balance sheet date. Resulting foreign currency differ-
ences are included in the statement of income in financing
income and expenses. Non-monetary assets and
liabilities denominated in foreign currencies are translated
into the functional currency at the exchange rate at
acquisition date.
When a subsidiary is operating in a hyperinflationary
country, the financial statements of this entity are restated
into the current purchasing power at the end of the
reporting period. Hyperinflation accounting is applied
for Argentina.
Foreign exchange differences resulting from translation into
the functional currency of investments in subsidiaries and
of intercompany loans of a permanent nature with other
functional currencies are recorded as a separate compo-
nent (cumulative translation reserve) within other compre-
hensive income. These cumulative translation adjustments
are reclassified (either fully or partly) to the statement of
income upon disposal (either fully or partly) or liquidation of
the foreign subsidiary to which the investment or the inter-
company loan with a permanent nature relates to. Foreign
currency differences arising on the translation of a financial
liability designated as an effective hedge of a net invest-
ment in a foreign operation are recognized in the cumula-
tive translation reserve (in other comprehensive income).
EXCHANGE RATES OF KEY
CURRENCIES
The principal exchange rates against the euro used
in preparing the balance sheet and the statement of
income are:
Balance sheet
Statement of income
2019
2020
% 2019
2020
US dollar
1.121
1.229
Pound sterling
0.854
0.900
Chinese yuan
7.808
7.992
9.6
5.4
2.4
1.120
1.143
0.878
0.889
7.742
7.875
%
2.1
1.3
1.7
Brazilian real
4.507
6.384
41.6
4.414
5.887
33.4
AkzoNobel Report 2020 | Financial statements
92
REVENUE RECOGNITION (NOTE 5)
Sale of goods
AkzoNobel’s main business consists of straightforward
selling of goods (paints and coatings) to customers at
contractually determined prices and conditions without
any additional services. Although the transfer of risks
and rewards is not the only criterion to be considered to
determine whether control over the goods has transferred,
it is in most situations considered to be the main indicator
of the customer’s ability to direct the use of and obtain the
benefits from the asset and largely also coincides with the
physical transfer of the goods and the obligation of the
customer to pay.
Variable considerations, including among others rebates,
bonuses, discounts and payments to customers, are
accrued for as performance obligations are satisfied and
revenue is recognized. Variable considerations are only
recognized when it is highly probable that these are not
subject to significant reversal. In case of expected returns,
no revenue is recognized for such products, but a refund
liability and an asset for the right to recover the to be
returned products are recorded. A provision for warranties
is recognized when the underlying products or services are
sold, generally based on historical warranty data.
Revenue is recognized net of rebates, discounts and
similar allowances, and net of sales tax.
Equipment provided to customers
AkzoNobel regularly provides mixing machines, store
interior and other assets to its customers at the start of a
paints or coatings delivery contract. The delivery of such
assets qualifies as a separate performance obligation.
Revenue can only be recognized at the moment of transfer
of such assets, when there is an agreed sales price or
when there is a binding take-or-pay commitment for a
minimum quantity of paints or coatings to be acquired by
the customer.
Services
AkzoNobel provides certain training, technical or support
services to customers as well as shipping and handling
activities for its customers. Service revenue is recognized
over time when the related services are being provided.
When not separately invoiced, part of the sales price of
paints or coatings is allocated to such services.
POST-RETIREMENT BENEFITS
(NOTE 7, 19)
SHARE-BASED COMPENSATION
(NOTE 7)
Contributions to defined contribution plans are recognized
in the statement of income as incurred.
Most of our defined benefit pension plans are funded
with plan assets that have been segregated in a trust or
foundation. We also provide post-retirement benefits other
than pensions to certain employees, which are gener-
ally not funded. Valuations of both funded and unfunded
plans are carried out by independent actuaries based on
the projected unit credit method. Post-retirement costs
primarily represent the increase in the actuarial present
value of the obligation for projected benefits based on
employee service during the year and interest on the net
defined benefit liability/asset. When the calculation results
in a benefit to AkzoNobel, the recognized asset is limited
to the present value of economic benefits available in the
form of any future refunds from the plan or reductions in
future contributions to the plan. An economic benefit is
available if it is realizable during the life of the plan, or on
the settlement of the plan liabilities. The effect of these
so-called asset ceiling restrictions and any changes therein
are recognized in other comprehensive income. Remea-
surement gains and losses, which arise in calculating
our obligations, are recognized in other comprehensive
income. When the benefits of a plan improve, the portion
of the increased benefits related to past service by
employees is recognized as an expense in the statement
of income immediately. We recognize gains and losses
on the curtailment or settlement of a defined benefit plan
when the curtailment or settlement occurs.
Interest on the net defined benefit liability/asset is included
in financing expenses related to post-retirement benefits.
Other charges and benefits recognized are reported in
operating income, unless recorded in other comprehensive
income.
OTHER EMPLOYEE BENEFITS
(NOTE 7, 20)
Provisions for other long-term employee benefits are
measured at present value, using actuarial assumptions and
methods. Any actuarial gains and losses are recognized
in the statement of income in the period in which they arise.
AkzoNobel has a performance-related and a restricted
share plan as well as a share-matching plan, under which
shares are conditionally granted to certain employees. The
fair value is measured at grant date and amortized over
the three-year period during which the employees normally
become unconditionally entitled to the shares with a corre-
sponding increase in shareholders’ equity. Amortization is
accelerated in the event of earlier vesting or settlement.
In case of a plan modification, the fair value is increased
when the change is beneficial to the employee.
INCOME TAX (NOTE 9)
Income tax expense comprises both current and deferred
tax, including effects of changes in tax rates. In determining
the amount of current and deferred tax we also take into
account the impact of uncertain tax positions and whether
additional taxes and interest may be due. Income tax is
recognized in the statement of income, unless it relates to
items recognized in other comprehensive income or equity.
Current tax includes the expected tax payable and receiv-
able on the taxable income for the year, using tax rates
enacted or substantially enacted at reporting date, as well
as (any adjustments to) tax payables and receivables with
respect to previous years.
Deferred tax is recognized using the liability method on
temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
Consolidated financial statements. We do not recognize
deferred tax for the initial recognition of goodwill, the
initial recognition of assets or liabilities that affect neither
accounting nor taxable profit, and differences related to
investments in subsidiaries to the extent that they will
probably not reverse in the foreseeable future and we can
control the timing of the reversal of the temporary differ-
ence. Deferred tax assets are recognized for unused tax
losses, tax credits and deductible temporary differences,
to the extent that it is probable that future taxable profits
will be available against which they can be utilized.
Measurement of deferred tax assets and liabilities is
based upon the enacted or substantially enacted tax
AkzoNobel Report 2020 | Financial statements
93
rates expected to apply to taxable income in the years in
which temporary differences are expected to be reversed.
Income tax consequences are taken into account in
the determination of deferred tax liabilities to the extent
earnings are expected to be distributed by subsidiaries
in the foreseeable future and AkzoNobel has control over
dividend distribution. Deferred tax positions are
not discounted.
consideration paid over the net fair value of the acquired
identifiable assets, liabilities and contingent liabilities.
If the cost of an acquisition is less than the fair value of the
net assets of the subsidiary acquired, the difference
is recognized directly in the statement of income. The
effects of all transactions with non-controlling interest
shareholders are recorded in equity if there is no change
in control.
EARNINGS PER SHARE (NOTE 10)
Basic earnings per share is calculated by dividing the
profit for the period attributable to shareholders of the
company by the weighted average number of common
shares outstanding during the year adjusted for any
repurchased shares. Diluted earnings per share is
calculated by adjusting the weighted average number of
common shares outstanding during the year for the
diluting effect of the shares of the performance-related
share plan, the restricted share plan and the share-
matching plan.
Adjusted earnings per share represents the basic earnings
per share from continuing operations excluding identified
items, after taxes.
GOVERNMENT GRANTS
Government grants related to costs (which include grants
related to COVID-19) are deducted from the relevant
costs to be compensated in the same period. Govern-
ment grants to compensate for the cost of an asset are
deducted from the cost of the related asset. Emission
rights granted by the government are recorded at cost. A
provision is recorded if the actual emission is higher than
the emission rights granted.
INTANGIBLE ASSETS (NOTE 11)
Intangible assets are valued at cost less accumulated
amortization and impairment charges. Intangible assets
with an indefinite useful life, such as goodwill and certain
brands, are not amortized, but tested for impairment
annually using the value-in-use method. Goodwill in a
business combination represents the excess of the
Intangible assets with a finite useful life, such as licenses,
know-how, certain brands, customer relationships,
intellectual property rights, emission rights and capital-
ized development and software costs, are capitalized at
historical cost and amortized on a straight-line basis over
the estimated useful life of the assets, which generally
ranges from 5 to 40 years for brands with finite useful lives,
5 to 25 years for customer lists and 3 to 15 years for other
intangibles. Amortization methods, useful lives and residual
values are reassessed annually. Research expenditures are
recognized as an expense as incurred.
PROPERTY, PLANT AND EQUIPMENT
(NOTE 12)
Property, plant and equipment are valued at cost less
accumulated depreciation and impairment charges. Costs
include expenditures that are directly attributable to the
acquisition of the asset, including borrowing cost of capital
investment projects under construction.
Depreciation is calculated using the straight-line method,
based on the estimated useful life of the asset compo-
nents.The useful life of plant equipment and machinery
generally ranges from 10 to 25 years, and for buildings
ranges from 20 to 50 years. Land is not depreciated. In
the majority of cases, residual value is assumed to be not
significant. Depreciation methods, useful lives and residual
values are reassessed annually.
Costs of major maintenance activities are capitalized and
depreciated over the estimated useful life. Maintenance
costs which cannot be separately defined as a component
of property, plant and equipment are expensed in the
period in which they occur. We recognize conditional asset
retirement obligations in the periods in which sufficient
information becomes available to reasonably estimate the
cash outflow.
LEASES (NOTE 13, 21)
We assess whether a contract is, or contains, a lease at
inception. A contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset
for a period of time in exchange for a consideration.
As a lessee
At commencement or on modification of a contract that
contains a lease component, we allocate the consideration
in the contract to each lease component on the basis of its
relative stand-alone prices. However, for the leases of cars
we have elected not to separate non-lease components
and account for the lease and non-lease components as a
single lease component.
We recognize a right-of-use asset and a lease liability at
the lease commencement date. The right-of-use asset is
initially measured at the present value of the lease liability.
The right-of-use asset value contains lease prepayments,
lease incentives received, the initial direct costs and an
estimate of restoration, removal and dismantling costs.
The right-of-use assets are subsequently depreciated
using the straight-line method from the commencement
date to the end of the lease term or shorter economic life.
In addition, the value of right-of-use assets is reduced by
impairment losses, if any, and adjusted for certain remea-
surements of the lease liability.
The net present value of the lease liability is measured at
the discounted value of the lease payments. The liability
includes payments to be made in optional periods if
the lessee is reasonably certain to exercise an option to
extend the lease, or not to exercise an option to terminate
the lease. The lease payments comprise the following:
• Fixed payments (including in substance fixed payments),
less any lease incentives
• Variable lease payments that depend on an index
or a rate
• The exercise price of a purchase option if it is
reasonably certain that the option will be exercised
• Payments of penalties for terminating the lease, if the
lease term reflects the lessee exercising an option to
terminate the lease
• Amounts expected to be payable under residual value
guarantees
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94
These lease payments are discounted using the interest
rate implicit in the lease contract, if that rate can be
readily determined. If that rate cannot be readily deter-
mined, the incremental borrowing rate is used. We
determine our incremental borrowing rates by obtaining
interest rates from various external financing sources and
make certain adjustments to reflect the term of the lease
and type of the asset leased. At the lease commence-
ment dates, we assess whether it is reasonably certain
to exercise the extension options. We reassess whether
it is reasonably certain to exercise the options, if there is
a significant event or significant change in circumstances
within our control.
At the commencement date, we assess whether it is
reasonably certain that:
• An option to extend is exercised; or
• An option to purchase is exercised; or
• An option to terminate the lease is not exercised
In making these assessments, all relevant facts and
circumstances that create an economic incentive for us
to exercise, or not to exercise, the option, including any
expected changes in facts and circumstances from the
commencement date until the exercise date of the option
are considered.
Short-term leases and leases of low-value assets
We do not record right-of-use assets and lease liabilities
on the balance sheet for leases of low-value assets and
short-term leases. We recognize the lease payments asso-
ciated with these leases as an expense on a straight-line
basis over the lease term.
IMPAIRMENTS (NOTE 11, 12, 13)
We assess the carrying value of intangible assets,
property, plant and equipment and right-of-use assets
whenever events or changes in circumstances indicate
that the carrying value of an asset may not be recove-
rable. In addition, for goodwill and other intangible
assets with an indefinite useful life, the carrying value is
reviewed at least annually or when circumstances indicate
the carrying amount may be impaired. If the carrying
value of an asset or its cash-generating unit exceeds its
estimated recoverable amount, an impairment loss
is recognized in the statement of income on the function
level of the asset impaired. The assessment for impair-
ment is performed at the lowest level of assets generating
largely independent cash inflows. For goodwill and
other intangible assets with an indefinite life, we have
determined this to be at business unit level (one level
below segment).
Provisions for restructuring of activities are recognized
when a detailed and formal restructuring plan has been
approved, and the restructuring has either commenced or
has been announced publicly. We do not provide for future
operating costs.
Except for goodwill, we reverse impairment losses
in the statement of income if and to the extent we have
identified a change in estimates used to determine the
recoverable amount.
ASSOCIATES AND JOINT VENTURES
(NOTE 14)
Associates and joint ventures are accounted for using the
equity method and are initially recognized at cost. The
Consolidated financial statements include our share of the
income and expenses of the associates and joint ventures,
whereby the result is determined using our accounting
principles. When the share of losses exceeds the interest
in the investee, the carrying amount is reduced to nil
and recognition of further losses is discontinued, unless
we have legal or constructive obligations on behalf
of the investee.
INVENTORIES (NOTE 16)
Inventories are measured at the lower of cost and net
realizable value. Costs of inventories comprise all costs of
purchase, costs of conversion and other costs incurred
in bringing the inventories to the present location and
condition. The costs of inventories are determined using
weighted average cost.
PROVISIONS (NOTE 20)
We recognize provisions when a present legal or construc-
tive obligation as a result of a past event exists, it is
probable that an outflow of economic benefits is required
to settle the obligation and the amount can be reliably esti-
mated. Provisions are measured at net present value. The
increase of provisions as a result of the passage of time
is recognized in the statement of income under financing
income and expenses.
FINANCIAL INSTRUMENTS
Classification
All assets are measured at amortized cost, fair value
through profit or loss or fair value through other compre-
hensive income. Financial assets are classified according
to a model based on:
• A contractual cash flow characteristics test A business
model dictating how the reporting entity manages its
financial assets in order to generate cash flows as
either:
1. Hold to collect contractual cash flows
2. Collect contractual cash flows and sell
3. Neither 1 or 2
• Election of the fair value option in some specific cases in
order to eliminate an accounting mismatch
The classification of a financial asset is determined at initial
recognition, but if certain conditions are met, an asset
might be subject to reclassification.
Valuation and impairment
Financial assets are assessed for impairment either accord-
ing to the general approach or a simplified approach.
The calculation of impairment under the general approach
uses the following stages:
• 12-month expected credit losses; taking in account
possible default events within one year
• Lifetime expected credit losses in case of an increase in
credit risk; through recognition of expected credit losses
over the remaining life of the exposure
• Lifetime expected credit losses, where interest is
calculated on the net amount of the receivables less
impairment loss
In all above stages, the impairment calculation used at
AkzoNobel is based on external credit ratings of involved
parties or default rates published by well-known credit
risk agencies.
AkzoNobel Report 2020 | Financial statements
95
96AkzoNobel Report 2020 | Financial statementsThe financial assets included in the general impairment approach are long-term loans and other long-term receivables.The calculation of impairment under the simplified approach requires recognition of lifetime expected credit loss (no tracking of changes in credit risk). The financial assets included in the simplified impairment approach are trade receivables and the remaining financial assets.MeasurementRegular purchases and sales of financial assets and liabilities are recognized on trade date. The initial measure-ment of all financial instruments is at fair value. Except for derivatives and cash and cash equivalents, the initial measurement of financial instruments is adjusted for directly attributable transaction costs.Derivative financial instruments (Note 27)Derivative financial instruments are recognized at fair value on the balance sheet. Fair values are derived from market prices and quotes from dealers and brokers or are esti-mated using observable market inputs. When determining fair values, credit risk for our contract party, as well as for AkzoNobel, is taken into account.Changes in the fair value are recognized in the statement of income, unless cash flow hedge accounting or net investment hedge accounting is applied. In those cases, the effective part of the fair value changes is deferred in other comprehensive income and released to the related specific lines in the statement of income or balance sheet at the same time as the hedged item.Financial non-current assets (Note 15) and Trade and other receivables (Note 17)Loans and receivables are measured at amortized cost, using the effective interest method, less any impair-ment losses.Cash and cash equivalents and Short-term investments (Note 21)Cash and cash equivalents and short-term investments are measured at fair value. Cash and cash equivalents include all cash balances and other investments that are directly convertible into known amounts of cash. Changes in fair values are included in financing income and expenses.Long-term and Short-term borrowings (Note 21, 27) and Trade and other payables (Note 22)Long-term and short-term borrowings, as well as trade and other payables, are measured at amortized cost, using the effective interest rate method. The interest expense on borrowings is included in financing income and expenses. The fair value of borrowings, used for disclosure purposes, is determined based on listed market price, if available. If a listed market price is not available, the fair value is calcu-lated based on the present value of principal and interest cash flows, discounted at the interest rate at the reporting date, considering AkzoNobel’s credit risk.NEW IFRS ACCOUNTING STANDARDSIFRS standards and interpretations thereof not yet in force, which may apply to our Consolidated financial statements for 2021 and beyond, have been assessed for their poten-tial impact. These include among others amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 ‘Interest Rate Benchmark Reform – Phase 2’, amendments to in IFRS 3 ‘References to the Conceptual Framework’, amend-ments to IAS 16 ‘Property, Plant and Equipment: Proceeds before Intended Use’, amendments to IAS 37 ‘Onerous Contracts – Costs of Fulfilling a Contract’, AIP IFRS 9 ‘Financial instruments – Fees in the ‘10 percent’ test for derecognition of financial liabilities’, IFRS 17 ‘Insurance contracts’ and Amendments to IAS 1 ‘Classification of Liabilities as Current or Non-current’. These changes are not expected to have a material effect on AkzoNobel’s Consolidated financial statements.Material subsidiariesThe Consolidated financial statements comprise the assets, liabilities, income and expenses of 283 legal enti-ties. We consider legal entities material when they repre-sent, for at least two subsequent years, more than 5% of either revenue or adjusted operating income or based on qualitative aspects. Material subsidiaries included in the table in this Note are fully owned at year-end 2020.AcquisitionsOn November 8, 2019, we acquired Mapaero in France to further strengthen our global position in the aerospace coatings industry. In 2019, we performed a preliminary purchase price allocation, resulting in €83 million of good-will, that has been fully allocated to business unit Automo-tive and Specialty Coatings. The purchase price allocation was completed in 2020, resulting in €6 million higher goodwill, €10 million lower intangibles and €4 million lower deferred tax liabilities.On April 1, 2020, we completed the acquisition of Mauvilac Industries Limited, a leading paints and coat-ings company on Mauritius, for €33 million. The business generated revenue of €17 million (unaudited) in 2019. This transaction resulted in €12 million goodwill and €19 million of intangibles, both fully allocated to business unit Decora-tive Paints Europe, Middle East and Africa.On December 23, 2020 we completed the acquisition of New Nautical Coatings Inc. in the US for €59 million. This company owns the globally and nationally recog-nized brands of Sea Hawk Paints, Flexdel and Blue Water Marine Paint. The business generated revenue of Note 2 Scope of consolidationMaterial subsidiaries related to continuing operationsLegal entityPrincipal place of business/country of incorporationAkzo Nobel Coatings Inc.USAkzo Nobel Paints (Shanghai) Co Ltd.ChinaImperial Chemical Industries LimitedUKAkzo Nobel Decorative Coatings B.V.NetherlandsAkzo Nobel Coatings SPAItaly 97AkzoNobel Report 2020 | Financial statements€16 million (unaudited) in 2020. We performed a prelimi-nary purchase price allocation, resulting in €22 million of goodwill and €29 million of intangibles, both fully allocated to business unit Marine and Protective Coatings.In 2020, other smaller acquisitions include the Powder Coatings business of Poederlak Benelux B.V. and the Stahl Performance Powder Coatings activities.Payments in 2020 for acquisitions in previous years included an amount of €14 million for Mapaero.DivestmentsIn 2020 and 2019, no significant divestments occurred. Discontinued operations and held for saleThe results from discontinued operations in 2020 and 2019, mainly relate to the former Specialty Chemicals and Organon BioSciences businesses. The cash flows from discontinued operations in 2020 predominantly concerned the former Deco North America business (2019: Specialty Chemicals).* Related to PPA adjustments for the 2019 Mapaero acquisition and several small acquisitions in 2020.Note 3 Segment informationDecorative PaintsOur customers mainly consist of professionals and do-it-yourselfers. We supply a variety of quality products for every situation and surface, including paints, lacquers and varnishes. We also offer a range of mixing machines and color concepts for the building and renovation industry.Performance CoatingsWe are a supplier of performance coatings that are used to protect and enhance everything from ships, cars, aircraft, yachts and architectural components (structural steel, building products, flooring) to consumer goods (mobile devices, appliances, beverage cans, furniture) and oil and gas facilities.The tables in this Note include Alternative Performance Measures (APMs). Refer to Note 4 for further information on these APMs.Discontinued operationsIn € millions20192020Revenue——Expenses——Profit before tax——Income tax——Profit for the period after tax——Results related to discontinued operations in previous years211Tax related to discontinued operations in previous years1(8)Total profit/(loss) for the period from discontinued operations22(7)Cash flows from discontinued operationsIn € millions20192020Net cash from operating activities(10)(3)Net cash from investing activities – –Net cash from financing activities––Cash flows from discontinued operations(10)(3)Recognized fair values at acquisitionIn € millionsMauvilac Industries Ltd., MauritiusNew Nautical Coat-ings Inc., USAOther* Total 2020 Other intangibles1929(6)42Property. plant and equipment2215Inventories44—8Trade and other receivables32—5Cash and cash equivalents(1)1——Deferred tax assets/(liabilities)(3)—3—Trade and other payables(3)(1)—(4)Net identifiable assets and liabilities2137(2)56Goodwill12221448Purchase consideration335912104Cash and cash equivalents acquired1(1)——Paid in 2020 related to acquisitions in previous years——1616To be paid in 2021 and later years——(7)(7)Net cash outflow345821113 Information per reportable segment
In € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
Revenue third
parties
Amortization and
depreciation
2019
3,670
5,549
57
9,276
2020
3,558
4,957
15
8,530
2019
(155)
(183)
(22)
(360)
2020
(153)
(159)
(49)
(361)
Operating income
Identified items1
2019
425
565
(149)
841
2020
551
665
(253)
963
2019
7
(123)
(34)
(150)
2020
(22)
(35)
(79)
(136)
Adjusted operating
income2
2019
418
688
(115)
991
2020
573
700
(174)
1,099
ROS%3
OPI margin4
2019
11.4
12.4
2020
16.1
14.1
2019
11.6
10.2
2020
15.5
13.4
10.7
12.9
9.1
11.3
1 ldentified items are special charges and benefits, results on acquisitions and divestments, major restructuring and impairment charges, and charges and benefits related to major legal,
environmental and tax cases. The identified items exclude the items related to interest.
2 Adjusted operating income is operating income excluding identified items.
3 ROS% is calculated as adjusted operating income (operating income excluding identified items) as a percentage of revenues from third parties. Up to 2019, ROS% used to be based on
group revenues which included intercompany revenues. Therefore, the 2019 figures have been restated for this change in definition.
4 OPI margin is calculated as operating income as a percentage of revenues from third parties. Up to 2019, OPI margin used to be based on group revenues which include intercompany
revenues. Therefore, the 2019 figures have been restated for this change in definition.
Information per reportable segment
In € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
Invested capital
Total assets
Total liabilities
Capital expenditures1
2019
2,992
3,401
621
7,014
2020
2,567
3,384
452
6,403
2019
5,569
6,794
621
2020
5,882
6,519
776
12,984
13,177
2019
3,249
2,774
393
6,416
2020
3,273
2,586
1,368
7,227
2019
62
113
39
214
2020
77
146
35
258
2019
13.5
20.7
14.1
ROI%2
2020
20.5
20.7
16.1
1 Capital expenditures include investments in intangible assets (refer to Note 11) and investments in property, plant and equipment (refer to Note 12).
2 ROI% is calculated as adjusted operating income (operating income excluding identified items) of the last 12 months as a percentage of average invested capital of the last 12 months.
Invested capital is calculated as total assets (excluding cash and cash equivalents, short-term investments, investments in associates, the receivable from pension funds in an asset position
and assets held for sale) less current tax liabilities, deferred tax liabilities and trade and other payables.
Regional information
In € millions
The Netherlands
Other European countries
US and Canada
South America
Asia
Other regions
Total
Revenue by region of destination
Intangible assets and property,
plant and equipment
Invested capital
Capital expenditures*
2019
359
3,748
1,139
815
2,656
559
9,276
2020
342
3,626
1,019
697
2,344
502
8,530
2019
1,182
1,659
501
239
1,642
102
5,325
2020
1,188
1,598
529
184
1,550
126
5,175
2019
1,766
2,469
682
347
1,528
222
7,014
2020
1,616
2,212
719
244
1,399
213
6,403
2019
42
74
29
15
44
10
214
2020
46
84
41
13
63
11
258
* Capital expenditures include investments in intangible assets (refer to Note 11) and investments in property, plant and equipment (refer to Note 12).
AkzoNobel Report 2020 | Financial statements
98
99AkzoNobel Report 2020 | Financial statements1 Includes costs related to the strategy to create a focused high-performing Paints and Coatings business.2 Includes the tax impact on APM adjustments.1 The identified items exclude the items related to interest.2 Adjusted operating income is operating income excluding identified items.3 OPI margin is calculated as operating income as a percentage of revenues from third parties. Up to 2019, OPI margin used to be based on group revenues which include intercompany revenues. Therefore, the 2019 figures have been restated for this change in definition.4 ROS% is calculated as adjusted operating income (operating income excluding identified items) as a percentage of revenues from third parties. Up to 2019, ROS% used to be based on group revenues which include intercompany revenues. Therefore, the 2019 figures have been restated for this change in definition. 5 OPI margin and ROS% for Other activities/eliminations is not shown, as this is not meaningful.In presenting and discussing AkzoNobel’s operating results, management uses certain alternative perfor-mance measures not defined by IFRS, which exclude the so-called identified items. ldentified items are special charges and benefits, results on acquisitions and divest-ments, major restructuring and impairment charges, and charges and benefits related to major legal, environmental and tax cases. These alternative performance measures Note 4 Alternative performance measuresshould not be viewed in isolation as alternatives to the equivalent IFRS measures and should be used as supple-mentary information in conjunction with the most directly comparable IFRS measures. Alternative performance measures do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Where a non-financial measure is used to calculate an operational or statistical ratio, this is also considered an alternative performance measure.Adjusted OPI, OPI margin and ROS%In € millions20192020Revenue from third partiesDecorative Paints3,6703,558Performance Coatings5,5494,957Other5715Total9,2768,530Operating incomeDecorative Paints425551Performance Coatings565665Other(149)(253)Total841963Total APM adjustments (identified items)1Decorative Paints7(22)Performance Coatings(123)(35)Other(34)(79)Total(150)(136)Adjusted operating income2Decorative Paints418573Performance Coatings688700Other(115)(174)Total9911,099OPI margin%3Decorative Paints11.615.5Performance Coatings10.213.4Other5Total9.111.3ROS%4Decorative Paints11.416.1Performance Coatings12.414.1Other5Total10.712.9Alternative performance measures 2019 2020 In € millionsContinuing operationsDiscontinued operationsTotalContinuing operationsDiscontinued operationsTotalOperating income841—841963—963APM adjustments to operating income - Transformation costs1204—204121—121 - Gain on disposal(54)—(54)——— - Other———15—15Total APM adjustments (identified items)150—150136—136Adjusted operating income991—9911,099—1,099Profit/(loss) for the period attrib-utable to shareholders of the company51722539637(7)630APM adjustments to operating income150—150136—136APM adjustment interest on tax settlement———(3)—(3)APM adjustments to income tax2(7)—(7)(28)—(28)APM adjustment deal result on sale Specialty Chemicals, net of tax—(22)(22)———Total APM adjustments143(22)121105—105Adjusted profit/(loss) for the period attributable to shareholders of the company660—660742(7)735 EBITDA1
In € millions
Decorative Paints
Performance Coatings
Other
Total
Depreciation and
amortization
(155)
(183)
(22)
(360)
OPI
425
565
(149)
841
1 EBITDA is operating income excluding depreciation and amortization.
OPI
551
665
(253)
963
2019
EBITDA
580
748
(127)
1,201
2019
2020
Alternative performance measures:
ROI%
Depreciation and
amortization
EBITDA
In € millions
2019
2020
(153)
(159)
(49)
(361)
704
824
(204)
1,324
Average invested capital
Decorative Paints
Performance Coatings
Other
Total
Adjusted operating income1
Decorative Paints
2020
Performance Coatings
Adjusted
EBITDA
714
854
(126)
1,442
Other
Total
ROI%2
Decorative Paints
Performance Coatings
Other3
Total
3,106
3,325
595
7,026
418
688
(115)
991
13.5
20.7
2,799
3,388
647
6,834
573
700
(174)
1,099
20.5
20.7
14.1
16.1
Adjusted EBITDA2
In € millions
Decorative Paints
Performance Coatings
Other
Total
Depreciation
and amortization
excluding
identified items
Adjusted OPI
Adjusted
EBITDA
Adjusted OPI
Depreciation
and amortization
excluding
identified items
418
688
(115)
991
(155)
(173)
(22)
(350)
573
861
(93)
1,341
573
700
(174)
1,099
(141)
(154)
(48)
(343)
1 For reconciliation to IFRS measures please refer to the first table in this Note.
2 ROI% is calculated as adjusted operating income (operating income excluding
identified items) of the last 12 months as a percentage of average invested capital of
the last 12 months. Invested capital is calculated as total assets (excluding cash and
cash equivalents, short-term investments, investments in associates, the receivable
from pension funds in an asset position and assets held for sale) less current tax
liabilities, deferred tax liabilities and trade and other payables.
3 ROI% for Other activities/eliminations is not shown, as this is not meaningful.
2 Adjusted EBITDA is operating income excluding depreciation, amortization and identified items.
AkzoNobel uses alternative performance measure adjust-
ments (APM adjustments) to the IFRS measures to provide
supplementary information on reporting on the underlying
developments of the business. These APM adjustments
may affect the IFRS measures operating income, net profit
and earnings per share. A reconciliation of the alternative
performance measures to the most directly comparable
IFRS measures can be found in the tables for adjusted
operating income and adjusted earnings from continuing
operations in this Note.
Alternative performance measures:
Adjusted earnings per share
In € millions
Profit for the period attributable to
shareholders of the company from
continuing operations
APM adjustments to operating income
APM adjustment to interest
APM adjustment to income tax
Adjusted profit from continuing
operations attributable to share-
holders of the company*
Weighted average number of shares
(in millions)
Earnings per share from continuing
operations (in €)
Adjusted earnings per share from
continuing operations (in €)
2019
517
150
—
(7)
660
2020
637
136
(3)
(28)
742
213.1
191.4
2.43
3.10
3.33
3.88
* For the reconciliation to IFRS measures please refer to the first table in this Note.
AkzoNobel Report 2020 | Financial statements
100
101AkzoNobel Report 2020 | Financial statements* The 2019 figures are restated to represent revenue from third parties instead of group revenue, as group revenue includes intercompany revenue.Note 5 RevenueAkzoNobel derives revenue from the transfer of goods and services over time and at a point in time in the major product lines and geographical regions as disclosed in the table in this Note. For the receivables, which are included in Trade and other receivables, reference is made to Note 17.As at December 31, 2020, and at December 31, 2019, no significant contract assets were recognized.As at December 31, 2020, the amount of contract liabilities deferred to be recognized over time in 2021 is €3 million. These contract liabilities primarily relate to shipping, training and certain technical services, for which revenue is recognized over time. The amount of €3 million included in contract liabilities at the beginning of the period has been recognized as revenue during the year 2020 (2019: €3 million).Revenue disaggregationDecorative PaintsPerformance CoatingsOtherTotalIn € millions20192020201920202019202020192020Primary geographical markets - revenue from third partiesThe Netherlands202233100945715359342Other European countries1,7471,8472,0011,779——3,7483,626US and Canada——1,1391,019——1,1391,019South America456396359301——815697Asia1,0759101,5811,434——2,6562,344Other regions190172369330——559502Total3,6703,5585,5494,95757159,2768,530Major goods/service lines - revenue from third parties*Decorative Paints Europe, Middle East and Africa2,1292,246————2,1292,246Decorative Paints South America457396————457396Decorative Paints Asia1,084916————1,084916Powder Coatings——1,2291,128——1,2291,128Marine and Protective Coatings——1,2901,068——1,2901,068Automotive and Specialty Coatings——1,3181,127——1,3181,127Industrial Coatings——1,7071,634——1,7071,634Other——5—57156215Total3,6703,5585,5494,95757159,2768,530Timing of revenue recognitionGoods transferred at a point in time3,6213,5125,3114,772——8,9328,284Services transferred over time49462381855715344246Total3,6703,5585,5494,95757159,2768,530 102AkzoNobel Report 2020 | Financial statementsIn 2020, operating income was up 15% at €963 million (2019: €841 million). Margin management and cost savings more than offset lower volumes. Operating income as a percentage of revenue (OPI margin) improved to 11.3% (2019: 9.1%). Operating income included €136 million (2019: €150 million) negative impact from identified items, mainly related to €121 million transforma-tion costs to create a focused high-performing Paints and Coatings business.Note 6 Operating incomeNote 7 Employee benefitsIn 2019, operating income was up 39% at €841 million (2018: €605 million). Price/mix effects, cost savings and lower identified items more than offset raw mate-rial inflation and lower volumes. Operating income as a percentage of revenue (OPI margin) improved to 9.1% (2018: 6.5%). Operating income included €150 million (2018: €193 million) negative impact from identified items, related to €204 million transformation costs to create a focused high-performing Paints and Coatings busi-ness (including €66 million non-cash impairments), partly offset by a gain on disposal of €54 million following asset network optimization.The average number of employees working outside the Netherlands was 30,700 (2019: 31,900).In 2020, the number of employees decreased by 5% to 32,200 people (year-end 2019: 33,800 people). Acquisi-tions in 2020 added around 250 people.Employee benefit costs in 2020 include an €33 million compensation related to government support measures for COVID-19, mainly in China and the UK. These grants * As a result of an organizational redesign completed in 2020, the 2019 employee numbers have been restated to reflect this change.* Costs by nature 2019 have been reclassified to align to our 2020 cost structure and allocations. This resulted in reclassifications between cost lines in our statement of income, which did not impact total operating income.Costs by nature 2020In € millions Employee benefits Amortization DepreciationPurchases and other costsTotalCost of sales(524)—(160)(4,061)(4,745)Selling expenses(832)(48)(83)(953)(1,916)General and administrative expenses(319)(12)(40)(292)(663)Research and development expenses(175)(4)(14)(45)(238)Other results———(5)(5)Total(1,850)(64)(297)(5,356)(7,567)Costs by nature 2019*In € millions Employee benefits Amortization DepreciationPurchases and other costsTotalCost of sales(537)—(149)(4,628)(5,314)Selling expenses(861)(54)(97)(1,205)(2,217)General and administrative expenses(300)(10)(33)(294)(637)Research and development expenses(177)(3)(14)(68)(262)Other results———(5)(5)Total(1,875)(67)(293)(6,200)(8,435)Salaries, wages and other employee benefits in operating incomeIn € millions20192020Salaries and wages(1,461)(1,449)Post-retirement cost(137)(138)Other social charges(277)(263)Total(1,875)(1,850)Average number of employees of total AkzoNobel*Average number during the year20192020Decorative Paints12,90012,100Performance Coatings18,00017,500Corporate and other3,3003,400Total34,20033,000Average number of employees in the Netherlands*Average number during the year20192020Decorative Paints600600Performance Coatings1,0001,000Corporate and other700700Total2,3002,300Employees*At year-end20192020Decorative Paints12,50011,900Performance Coatings18,00017,100Corporate and other3,3003,200Total33,80032,200 were mainly provided in the form of (partial) compensations
for costs of salaries and wages, waivers of social charges
and postponement of payment of indirect and corporate
income taxes. AkzoNobel did not submit any application
for the ‘Noodmaatregel Overbrugging voor Werkgelegen-
heid (NOW)’ in the Netherlands.
SHARE-BASED COMPENSATION
Share-based compensation relates to the equity-settled
performance-related share plan and the restricted share
plan, as well as the share-matching plan. Charges recog-
nized in the 2020 statement of income for share-based
compensation amounted to €14 million and are included in
salaries and wages (2019: €16 million).
Performance-related and restricted share plan
Under the performance-related share plan and the restrict-
ed share plan, a number of conditional shares are granted
to the members of the Board of Management, members
of the Executive Committee and executives each year. The
number of participants of the performance-related share
plan and the restricted share plan at year-end 2020 was
289 (2019: 294). The shares of the performance-related
share plan series 2017-2019 have vested and were deliv-
ered to the participants in 2020.
Fair value performance-related shares in €
Series
2017-2019
2017-20191
2017-20191
2018-20202
2019-2021
2020-20223
Opening share
price per:
January 2, 2017
May 9, 2017
July 28, 2017
April 26, 2018
January 2, 2019
April 21, 2020
Market
condition
(TSR)4
Fair Value
Non-market
based
performance
conditions5 Share price
52.42
76.34
77.16
71.65
61.09
53.42
40.14
75.63
78.88
67.51
52.57
42.95
59.03
76.72
76.23
75.78
69.60
63.88
59.03
76.72
76.23
75.78
69.60
63.88
Expected
volatility
Risk free
interest rate
23.94%
24.13%
23.77%
22.66%
20.12%
21.42%
(0.12)%
(0.09)%
(0.08)%
(0.04)%
(0.04)%
(0.33)%
1 Concerns an additional share grant.
2 Date of the AGM at which the new LTI performance criteria for the Board of Management were approved.
3 Date the Supervisory Board approved use of the average share price calculation method to determine the number of shares granted.
4 35% for the 2017-2019 grant and 50% for grants thereafter.
5 65% for the 2017-2019 grant and 50% for grants thereafter.
Executive Committee is linked for 50% to the relative TSR
performance of the company compared with the peer group
and for 50% to the ROI performance of the company, after
which a two-year holding restriction will apply.
(series 2017-2019: 85%), including extraordinary dividend
shares of 14.37% (series 2017-2019: 11.37%), the final
vesting percentage amounted to 89.21% (series 2017-
2019: 94.66%).
The plan for the executives is a restricted share plan
without any performance conditions, whereby the condi-
tional grant of shares will vest upon the condition that the
executives remain in service with the company during the
three-year vesting period, after which a one-year holding
restriction applies.
The share price of a common AkzoNobel share at year-
end 2020 amounted to €87.86 (2019: €90.64).
Fair value of restricted and performance-
related shares
The fair value of the restricted shares of the 2020-2022
grant, amounting to €64.83, is based on the share price
on March 11, 2020 of €69.73 and the expected dividend
yield of 2.40%. The fair value of the performance-related
The performance targets for the conditional grant of per-
formance shares for the Board of Management and the
The conditional shares of the 2018-2020 performance
share plan for the AkzoNobel participants vested for 78%
Share plans of AkzoNobel executives
Plan
Performance/
Vesting
period
Award
date
End of
perfor-
mance
period
End of
holding
period
Balance at
January 1,
2020
Awarded
in 2020
Vested in
2020
Forfeited
in 2020
Dividend in
2020
2017-2019 Performance Share Plan
3 years
Jan 1, 2017
Jan 1, 2020
NA
211,968
2017-2019 Performance Share Plan
3 years
Jan 1, 2017
Jan 1, 2020
Feb 12, 2022
70,332
2018-2020 Restricted Share Plan
3 years
Jan 1, 2018
Jan 1, 2021
Jan 1, 2022
179,685
2018-2020 Performance Share Plan
3 years
Jan 1, 2018
Jan 1, 2021
Feb 17, 2023
90,354
2019-2021 Restricted Share Plan
3 years
Jan 1, 2019
Jan 1, 2022
Jan 1, 2023
204,853
2019-2021 Performance Share Plan
3 years
Jan 1, 2019
Jan 1, 2022
Feb 2024
94,691
—
—
3,843
—
6,855
—
2020-2022 Restricted Share Plan
3 years
Jan 1, 2020
Jan 1, 2023
Jan 1, 2024
2020-2022 Performance Share Plan
3 years
Jan 1, 2020
Jan 1, 2023
Feb 2025
2020-2022 Restricted Share Plan
3 years Apr 1, 2020 Apr 1, 2023
NA
—
—
—
190,973
73,393
6,590
(211,956)
(70,332)
(521)
(8,600)
(328)
(9,135)
(82)
(6,676)
—
(12)
—
(15,987)
(14,123)
(24,510)
(12,544)
(14,205)
(9,979)
—
Subject
to per-
formance
condition
—
—
NA
Unvested in
2020
—
Subject
to holding
period
Balance at
December
31, 2020
—
70,332
—
—
167,020
167,020
167,020
70,034
70,034
70,034
70,034
NA
186,870
186,870
186,870
—
—
—
2,403
—
2,519
75,531
75,531
75,531
75,531
—
NA
176,686
176,686
176,686
1,509
58,247
—
—
58,247
6,590
58,247
—
58,247
6,590
Total
851,883
281,654
(307,630)
(91,360)
6,431
203,812
740,978
804,720
740,978
AkzoNobel Report 2020 | Financial statements
103
104AkzoNobel Report 2020 | Financial statementsshares of the 2020-2022 grant is for 50% based on a market condition (TSR) and for 50% based on non-market-based performance condition (ROI). The TSR part of the award is valued applying a Monte Carlo simulation model and the other part is valued based on the share price at grant date. The parameters applied for the fair value calculations are: share price at grant date (opening of first trading date from grant date), expected volatility (based on the share price development over the past three years of AkzoNobel), and risk-free interest rate (based on a Dutch zero-coupon government bond). Share-matching planThe members of the Board of Management and the members of the Executive Committee are eligible to participate in the share-matching plan. However, they will not be eligible for matching shares for the years 2019, 2020 and 2021. Under certain conditions, members who invest part of their short-term incentive in AkzoNobel shares may have such shares matched by the company. During 2020, 3,361 potential matching shares were matched, leading to a total of 1,720 potential matching shares on December 31, 2020. For an overview of the matching shares outstanding for the members of the Board of Management per December 31, 2020, we refer to the Remuneration report.Note 8 Financing income and expensesNet financing expenses for the year were €69 million (2019: €76 million). Significant variances are:• Net interest on net debt decreased by €7 million to €52 million (2019: €59 million), mainly due to lower interest cost on debt• Financing income related to post-retirement benefits decreased from €21 million in 2019 to €14 million in 2020 mainly due to the impact of lower discount rates• Interest charges on provisions decreased from €14 million in 2019 to €10 million due to changes in discount rates• Other items in 2020 and 2019 mainly include foreign currency resultsThe average interest rate used for capitalized interest was 1.9% (2019: 1.5%). Capitalized interest was negligible in both 2020 and 2019. The average interest rate on total debt was 2.4% (2019: 2.8%).Note 9 Income taxPre-tax income from continuing operations amounted to a profit of €919 million (2019: €785 million). The net tax charges related to continuing operations are included in the statement of income as shown in this Note. The total deferred tax charge including discontinued operations was €108 million (2019: €55 million). The total tax charge including discontinued operations was €249 million (2019: €229 million). Effective tax rate reconciliationIn 2020, the effective income tax rate based on the state-ment of income is 26.2% (2019: 29.3%). The second table in this Note presents the effective consolidated tax rate excluding the impact of results on discontinued operations. Including these results, the effec-tive consolidated tax rate is 27.1% (2019: 28.4%).Non-deductible expenses are mainly related to base erosion, non-deductible interest and the effects of Argen-tina hyperinflation accounting. The non-taxable income is mainly related to the Innovation box in the Netherlands, R&D credits and the tax exemption for investments.The impact of non-refundable withholding tax on the tax rate is dependent on our relative share in the profit of subsidiaries in countries that levy withholding tax on dividends and on the timing of the remittance of such divi-dends. Based on the Dutch tax system there is a limited credit for such taxes.Financing income and expensesIn € millions20192020Financing income1714Financing expenses(76)(66)Net interest on net debt(59)(52)Other interestFinancing income related to post-retirement benefits2114Interest charges on provisions(14)(10)Other items(24)(21)Net other financing credit/(charge)(17)(17)Total financing income and expenses(76)(69)Classification of current and deferred tax resultIn € millions20192020Current tax (expense)/income forThe year(171)(131)Adjustments for previous years1(2)Total current tax expense(170)(133)Deferred tax (expense)/income forOrigination and reversal of temporary differences and tax losses(22)(106)(De)recognition of deferred tax assets(45)1Changes in tax rates7(3)Total deferred tax expense(60)(108)Total(230)(241)Effective tax ratein %20192020Corporate tax rate in the Netherlands25.025.0Effect of tax rates in other countries (2.2)(0.4)Weighted average statutory income tax rate22.824.6Non-taxable income (1.0)(1.2)Non-deductible expenses3.21.8(De)recognition of deferred tax assets5.8(0.1)Non-refundable withholding taxes 0.40.6Adjustment for prior years(0.2)0.2Deferred tax adjustment due to changes in tax rates(1.7)0.3Effective tax rate 29.326.2 Deferred tax assets and liabilities
In assessing the recognition of the deferred tax assets,
management considers whether it is probable that some
portion or all of the deferred tax assets will be realized. The
ultimate realization of the deferred tax assets is dependent
upon the generation of future taxable income during the
periods in which those temporary differences become
deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment.
The amount of deferred tax assets considered realizable,
however, could change in the near term if future estimates
of projected taxable income during the carryforward period
are revised. The majority of the amount of the non-current
portion of deferred or current taxes will be recovered or
settled after more than 12 months.
In 2020, deferred tax asset recoverability has been
assessed using taxable profit forecasts, which take the
potential impact of the COVID-19 pandemic on future
results into account. These assessments showed sufficient
taxable profit to recover previously recognized deferred
tax assets in most jurisdictions, whilst in some jurisdictions
this resulted in minor derecognitions or re-recognitions,
with a net effect of a re-recognition of deferred tax assets
of €4 million. Deferred tax assets not recognized relate to
tax loss carryforwards.
Due to the divestment of the Specialty Chemicals business
in 2018, the company has been reorganizing itself into
a focused Paints and Coatings company. In 2019, this
resulted in a simplification of the intercompany financ-
ing structure, enlarging the scope of the global business
support services, centralizing R&D and supply chain
functions and implementing other cost saving initiatives.
This has substantially affected the income generated
and expenses incurred by subsidiaries in most countries,
because intercompany interest, cost sharing and royalty
flows, albeit all remaining at arm’s length, have changed
following these changes in the business set up. For
subsidiaries in several countries in Europe, these changes
in future profitability led to the derecognition or re-recogni-
tion of deferred tax assets. In aggregate, the net effect of
the derecognition and re-recognition of deferred tax assets
in 2019 was a charge of €47 million.
From the total amount of recognized net deferred tax
assets, €196 million (2019: €345 million) is related to
Deferred tax assets and liabilities 2020
In € millions
Intangible assets
Property, plant and equipment
Financial non-current assets
Post-retirement benefit provisions
Other provisions
Other items
Tax credits
Tax loss carryforwards
Deferred tax assets not recognized
Deferred tax assets (liabilities)
Balance at
January 1, 2020
Changes in
exchange rate
Recognized in
income
Recognized in
equity/Other
comprehensive
income
Acquisitions
Balance at
December 31,
2020
(410)
49
(200)
158
35
102
173
641
(410)
138
24
(6)
13
(9)
(3)
—
—
(25)
18
12
(31)
17
(79)
23
(3)
(37)
11
27
(36)
(108)
—
—
(1)
(16)
—
3
—
2
—
(12)
—
—
—
—
—
—
—
—
—
—
(417)
60
(267)
156
29
68
184
645
(428)
30
Deferred tax assets and liabilities 2019
In € millions
Intangible assets
Property, plant and equipment
Financial non-current assets
Post-retirement benefit provisions
Other provisions
Other items
Tax credits
Tax loss carryforwards
Deferred tax assets not recognized
Deferred tax assets (liabilities)
Balance at
January 1, 2019
Changes in
exchange rate
Recognized in
income
Recognized in
equity/Other
comprehensive
income
Acquisitions
Balance at
December 31,
2019
(363)
47
(158)
121
37
79
150
582
(304)
191
—
4
(10)
2
1
1
—
20
(12)
6
(8)
(1)
(32)
(21)
(3)
8
23
37
(58)
(55)
—
—
—
56
—
15
—
2
(36)
37
(39)
(1)
—
—
—
(1)
—
—
—
(41)
(410)
49
(200)
158
35
102
173
641
(410)
138
remaining differences for which no deferred tax liabilities
have been recognized is €33 million (2019: €30 million).
Deferred tax assets not recognized fully relate to tax loss
carryforwards in 2020.
entities that have suffered a loss in either 2020 or 2019
and where utilization is dependent on future taxable profit
in excess of the profit arising from the reversal of existing
taxable temporary differences. This assessment is based
on management’s long-term projections and tax planning
strategies.
A deferred tax liability is recognized for taxable temporary
differences related to investments in subsidiaries, branches
and associates and interests in joint arrangements, to
the extent that it is probable that these will reverse in the
foreseeable future. The expected net tax impact of the
AkzoNobel Report 2020 | Financial statements
105
106AkzoNobel Report 2020 | Financial statementsNote 10 Earnings per shareProfit for the period attributable to the shareholders of the company was €630 million (in 2019: €539 million).The number of shares for the earnings per share calcula-tion decreased as a result of the capital repayment and share consolidation executed in 2019 and the share buyback programs of 2019 and 2020.The losses in the tables on tax losses carried forward are gross amounts, with the tax impact included in the last column of the table.Expiration year of loss carryforwards 2020In € millions20212022202320242025LaterUnlimitedTotalDeferred taxTotal loss carryforwards 261108—1242,8983,139645Loss carryforwards not recognized in deferred tax assets—(6)———(2)(2,134)(2,142)(428)Total loss carryforwards recog-nized2—1108—122764997217Expiration year of loss carryforwards 2019In € millions20202021202220232024LaterUnlimitedTotalDeferred taxTotal loss carryforwards 22111341411332,9953,418641Loss carryforwards not recognized in deferred tax assets(1)(1)(8)(1)(2)(15)(1,221)(1,249)(242)Total loss carryforwards recog-nized1131331391181,7742,169399Deferred tax assets and liabilities per balance sheet itemDecember 31, 2019December 31, 2020In € millionsNet balance AssetsLiabilitiesNet balance AssetsLiabilitiesIntangible assets(410)32442 (417) 18 435 Property, plant and equipment498334 60 85 25 Financial non-current assets(200)10210 (267) 36 303 Post-retirement benefit provisions1581613 156 157 1 Other provisions35449 29 37 8 Other items10214745 68 129 61 Tax credits173173— 184 184 —Tax loss carryforwards641641— 645 645 —Deferred tax assets not recognized(410)(410)— (428) (428)—Tax assets/liabilities138881743 30 863 833 Set-off of tax—(352)(352)— (366) (366)Net deferred taxes138529391 30 497 467 Income tax recognized in equityIn € millions20192020Currency exchange differences on inter-company loans of a permanent nature115Share-based compensation4(1)Share buyback—3Post-retirement benefits24(18)Total39(11)Current tax21Deferred tax37(12)Total39(11)Profit for the periodIn € millions20192020Profit before tax from continuing operations785919Income tax(230)(241)Profit from continuing opera-tions555678Profit for the period attributable to non-controlling interests(38)(41)Profit for the period from continuing operations attribut-able to shareholders of the company517637Profit for the period from discon-tinued operations attributable to shareholders of the company22(7)Profit for the period attributable to shareholders of the company539630Weighted average number of common sharesNumber of shares20192020Issued common shares at January 1256,219,301199,600,331Effect of issued common shares during the year249,936264,818Capital repayment and share consolidation(26,674,886)—Effect of share buyback program(16,720,349)(8,440,749)Shares for basic earnings per share for the year213,074,002191,424,400Effect of dilutive sharesFor performance-related and restricted shares763,868674,365For share-matching plan5,7193,039Shares for diluted earnings per share213,843,589192,101,804 107AkzoNobel Report 2020 | Financial statementsEarnings per share (and adjusted earnings per share) from continuing operations increased in 2020, mainly due to the increased profit before tax from continuing operations and the impact of the share buyback program.Note 11 Intangible assetsBrands with indefinite useful lives are almost fully related to Dulux, which is the major brand, due to its global presence, high recognition and strategic nature. Other intangibles include licenses, know-how, intellectual prop-erty rights, software and development cost. Both at year-end 2020 and 2019, there were no material purchase commitments for individual intangible assets. No intangible assets were registered as security for bank loans.Adjusted earnings per share from continuing operations In € millions20192020Profit before tax from continuing operations785919Identified items reported in operating income150136Interest on tax settlement—(3)Adjusted income tax(237)(269)Non-controlling interests(38)(41)Adjusted profit from continuing operations attributable to shareholders of the company660742Adjusted earnings per share from continuing operations (in €)3.103.88Earnings per sharein €20192020Continuing operationsBasic2.433.33Diluted2.423.32Discontinued operationsBasic0.10(0.04)Diluted 0.10(0.04)Total operationsBasic2.533.29Diluted2.523.28Intangible assetsIn € millionsGoodwillBrandsCustomer listsOther intangiblesTotalBalance at December 31, 2018Cost of acquisition1,0132,2168102214,260Cost of internally developed intangibles———158158Accumulated amortization/impairment(23)(177)(506)(254)(960)Carrying value at December 31, 20189902,0393041253,458Impact adoption IFRS16———(36)(36)Balance at January 1, 20199902,039304893,422Movements in 2019Acquisitions through business combinations101(13)14411243Investments - including internally developed intangibles———3535Amortization—(12)(38)(17)(67)Impairments(12)—(21)(5)(38)Changes in exchange rates1496130Total movements103(16)9125203Balance at December 31, 2019Cost of acquisition1,1212,2089401754,444Cost of internally developed intangibles———191191Accumulated amortization/impairment(28)(185)(545)(252)(1,010)Carrying value at December 31, 20191,0932,0233951143,625Movements in 2020Acquisitions through business combinations 48 8 23 11 90 Investments - including internally developed intangibles — — — 34 34 Amortization — (11) (33) (20) (64)Changes in exchange rates (45) (76) (10) — (131)Total movements 3 (79) (20) 25 (71)Balance at December 31, 2020Cost of acquisition 1,123 2,134 921 178 4,356 Cost of internally developed intangibles — — — 212 212 Accumulated amortization/impairment (27) (190) (546) (251) (1,014)Carrying value at December 31, 2020 1,096 1,944 375 139 3,554 108AkzoNobel Report 2020 | Financial statementsNote 12 Property, plant and equipmentInvestments in property, plant and equipmentThroughout 2020, AkzoNobel has continued to assess all investment opportunities to ensure the right capital and capacity allotment and have taken decisions accordingly. With an aim to reinforce capability to support custom-ers and enhance our manufacturing and supply chain, AkzoNobel has, among others, invested in the Powder Coatings site in Como, Italy, which is expected to enable further automatization and operational efficiency with automated and integrated production lines. Another major investment has been initiated in Turkey to increase the product range in decorative and wood care paints and unlock further value engineering opportunities.We continued to invest in High Point, North Carolina, to transform our wood coatings facility into a best-in-class manufacturing site.ImpairmentsIn 2020, no significant impairments were recognized. In 2019, impairments were recognized in Performance Coatings, following the implementation of our strategic portfolio review.Annual impairment testingGoodwill and other intangibles with indefinite useful lives are tested for impairment per business unit (one level below segment level) annually or whenever an impair-ment trigger exists, applying the value-in-use method. The impairment test is in principle based on cash flow projections of the five-year plan. Elements considered to determine if a different approach would be more appropri-ate are, among others, high growth/emerging economies, geo expansion opportunities, introduction of new product ranges and opportunities from market consolidation. In 2020, the above exception was applied for Decorative Paints Asia and Decorative Paints South America, for which the revenue growth and adjusted EBITDA-margin development projections were extrapolated beyond the five-year explicit forecast period for another five years, applying reduced average growth rates.The key assumptions used in the projections for annual impairment testing are:• Revenue growth per year: based on actual experience, analysis of markets and GDP growth and the expected market share developments • Adjusted EBITDA-margin development per year: based on actual experience and management’s long-term projections• Weighted average cost of capital per year: the pre-tax discount rate determined per business unit, reflecting current market assessments of the time value of money and the risks specifically associated with the business units For all business units, a terminal value was calculated based on the long-term inflation expectations of 1.0%. The estimated pre-tax cash flows are discounted to their present value using a pre-tax weighted average cost of capital. The discount rates are determined for each busi-ness unit and range from 8.9% to 14.5% (2019: 8.8% to 12.7%), with a weighted average of 9.6% (2019: 9.4%).Sensitivity tests were performed for growth assumptions, adjusted EBITDA margin development assumptions and for the weighted average cost of capital. These sensitivity tests show that reasonably possible changes in these key assumptions would not cause carrying amounts to exceed recoverable amounts for any of the business units.In 2020 and 2019, no impairment charges were recog-nized in relation to the annual impairment test.Impact COVID-19 on annual impairment testing processThe situation around COVID-19 is being closely monitored to ensure that the impact on estimated future cash flows is reflected in the models which are used to assess the valuation of the carrying value of AkzoNobel’s asset base. In addition to the beforementioned annual impair-ment testing process, AkzoNobel has made a detailed assessment in the second quarter, specifically focussing on the potential impact of the pandemic. The outcome of both assessments showed sufficient headroom in all business units.Specific asset impairmentsIn 2020, no impairment charges were recorded in rela-tion to specific assets. In 2019, impairment charges were recorded for Performance Coatings, following the implementation of our strategic portfolio review, which was determined to be a triggering event. As this portfolio review also included certain recently acquired and not yet integrated businesses to be divested, the goodwill related to these businesses was also included in the impairment review and subsequently impaired.Goodwill and other intangibles per business unitGoodwillBrands with indefinite useful lives Other intangibles with finite useful livesTotal intangiblesIn € millions20192020201920202019202020192020Decorative Paints Europe, Middle East and Africa81978388371431481,0621,082Decorative Paints South America——11683—111684Decorative Paints Asia11108848475038945895Powder Coatings156149——5348209197Marine and Protective Coatings147163——5878205241Automotive and Specialty Coatings279281——197180476461Industrial Coatings419396——144126563522Corporate and other————49724972Total1,0931,0961,8381,7676946913,6253,554Key assumptionsIn % per yearAverage revenue growth 2021-2025Pre-tax weighted average cost of capital 2021-2025Decorative Paints2.3-6.6%9.7-14.5%Performance Coatings2.2-3.6%8.9-9.5% Property, plant and equipment
In € millions
Balance at December 31, 2018
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2018
Impact adoption IFRS 16
Balance at January 1, 2019
Movements in 2019
Acquisitions
Divestments
Investments
Transfer between categories
Depreciation
Impairments, including reversals
Changes in exchange rates
Total movements
Balance at December 31, 2019
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2019
Movements in 2020
Acquisitions
Divestments
Investments
Transfer between categories
Depreciation
Impairments, including reversals
Changes in exchange rates
Total movements
Balance at December 31, 2020
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2020
Buildings and land
Plant equipment and
machinery
Other equipment
Construction in progress
and prepayments on
projects
Assets not used
Total
1,505
(711)
794
(28)
766
8
(22)
6
44
(43)
(2)
13
4
1,528
(758)
770
3
(4)
8
28
(53)
—
(58)
(76)
1,425
(731)
694
1,894
(1,283)
611
(1)
610
4
(1)
24
57
(102)
(19)
12
(25)
1,974
(1,389)
585
1
(1)
23
83
(107)
(2)
(31)
(34)
1,937
(1,386)
551
888
(722)
166
—
166
—
(10)
13
19
(43)
(2)
6
(17)
906
(757)
149
1
(1)
6
22
(38)
(1)
(5)
(16)
890
(757)
133
178
(4)
174
—
174
—
—
136
(121)
—
—
3
18
193
(1)
192
—
(3)
187
(133)
—
—
(3)
48
244
(4)
240
10
(7)
3
—
3
—
—
—
1
—
—
—
1
11
(7)
4
—
—
—
—
—
—
(1)
(1)
10
(7)
3
4,475
(2,727)
1,748
(29)
1,719
12
(33)
179
—
(188)
(23)
34
(19)
4,612
(2,912)
1,700
5
(9)
224
—
(198)
(3)
(98)
(79)
4,506
(2,885)
1,621
AkzoNobel Report 2020 | Financial statements
109
110AkzoNobel Report 2020 | Financial statementsNote 13 LeasesNote 14 Investments in associates and joint venturesAt year-end 2020, the carrying value of equity investments in associates amounted to €164 million (2019: €147 million). AkzoNobel has granted loans of €2 million in total to certain associates (2019: €3 million). In 2020, the AkzoNobel mainly leases land, office spaces, stores and cars. Some leases provide for additional rent payments that are based on changes in local price indices. Some property leases contain extension options exercis-able by AkzoNobel up to one year before the end of the non-cancellable contract period. We have estimated that the lease liability would increase by less than 20%, if we would exercise the extension options which are currently not included in the valuation of the lease liability. This excludes so-called “evergreens” or perpetual leases.Total net cash out flow from financing activities related to leases recognized on the balance sheet was €105 million (2019: €108 million). Net cash outflow for leases not recognized on the balance sheet was €17 million (2019: €17 million).Refer to Note 27 Financial risk management for the maturities of lease liabilities.Right-of-use assetsIn € millionsLandBuildingsOtherTotalBalance at January 1, 2019Cost of acquisition5633670462Accumulated depreciation/impairment(10)(20)—(30)Carrying value at January 1, 20194631670432Movements in 2019Additions1183251Modifications(1)1——Disposals—(3)(1)(4)Depreciation(4)(63)(38)(105)Impairments—(5)—(5)Changes in exchange rates1315Total movements(3)(49)(6)(58)Balance at December 31, 2019Cost of acquisition57355102514Accumulated depreciation/impairment(14)(88)(38)(140)Carrying value at December 31, 20194326764374Movements in 2020Additions 2 52 43 97 Modifications — (13) 1 (12)Disposals (1) (6) (9)(16)Depreciation (3) (60) (36)(99)Impairments — (7) — (7)Changes in exchange rates (2) (8) (3)(13)Total movements (4) (42) (4) (50)Balance at December 31, 2020Cost of acquisition 55 353 102 510 Accumulated depreciation/impairment (16) (128) (42)(186)Carrying value at December 31, 2020 39 225 60 324 Income/(expenses) recognized in profit and lossIn € millions20192020Sub lease income610Depreciation right-of-use assets(105)(99)Impairments for right-of-use assets(5)(7)Interest expense on lease liabilities(8)(6)Short-term lease expenses(10)(9)Expenses relating to low-value assets(4)(4)Variable lease expenses(3)(4)Total expenses(129)(119)Balance sheet information of our share in associatesIn € millions2019Associates 2020Condensed balance sheet Non-current assets6871Current assets114141Total assets182212Shareholders’ equity147164Non-current liabilities66Current liabilities2942Total liabilities and equity182212Profit and loss of our share in associatesIn € millions2019Associates 2020Condensed statement of incomeRevenue 154165Profit before tax2937Profit from continuing operations2025Other comprehensive income——Profit for the period2025 111AkzoNobel Report 2020 | Financial statementsPension assets (€1,543 million) relate to pension plans in an asset position (2019: €1,418 million). For more information on post-retirement benefit provisions, refer to Note 19. Loans and receivables include the subordinated loan of €87 million (2019: €88 million) granted to the Pension Fund APF in the Netherlands and the non-current part of an escrow account related to the pre-funding of the Akzo Nobel (CPS) Pension Scheme in the UK amounting to €71 million (2019: €105 million), invested in corporate bonds. Under certain conditions, the minimum annual funding of this pension fund from the escrow account is €29 million (£26 million). The current portion of the escrow account is reported as other receivables within trade and other receivables, refer to Note 17.Of the total carrying value of inventories at year-end 2020, €17 million is measured at net realizable value (2019: €36 million). In 2020, €59 million was recognized in the statement of income for the write-down of inventories (2019: €70 million), while €28 million of write-downs were Note 15 Financial non-current assetsNote 16 InventoriesNote 17 Trade and other receivablesNote 18 Group equityTrade receivables are presented net of an allowance for impairment of €58 million (2019: €58 million). The impact from the COVID-19 pandemic on the valuation of trade receivables has been evaluated as part of the regular process on determination of the allowance for impairment. Whilst the allowance for impairment of trade receivables initially increased as a direct result of the additional risk associated with COVID-19, impairment of trade receiv-ables returned to normal levels at year-end.results from associates amounted to a profit of €25 million (2019: €20 million). No significant contingent liabilities exist related to associates.The largest associate of AkzoNobel is Metlac S.p.a., incor-porated in Italy. None of the associates are considered individually material to the group.reversed (2019: €22 million). There are no inventories subject to retention of title clauses.In 2020, €22 million of impairment losses were recognized in the statement of income (2019: €29 million). An amount of €3 million was reversed (2019: €24 million).Since the total amount of impairment losses under IFRS 9 is not significant, no separate disclosure was made in the statement of income.Other receivables include the current portion of €29 million (£26 million) of the escrow account for the Akzo Nobel (CPS) Pension Scheme in the UK.During 2020, 9,331,481 common shares repurchased in 2019 and 2020 were cancelled (2019: 28,433,528 common shares). For further details on weighted average number of shares, refer to Note 10.Financial non-current assetsIn € millions20192020Pension assets1,4181,543Loans and receivables336331Other financial non-current assets10877Total1,8621,951Trade and other receivablesIn € millions20192020Trade receivables1,8121,751Prepaid expenses3330Tax receivables other than income tax11691FX contracts910Receivables from associates8—Other receivables155112Total2,1331,994InventoriesIn € millions20192020Raw materials and supplies342378Work in progress7170Finished products and goods for resale726711Total1,1391,159Ageing of trade receivablesIn € millions20192020Performing trade receivables1,6251,644Past due trade receivables< 3 months16299> 3 months8366Allowance for impairment (58)(58)Total trade receivables1,8121,751Allowance for impairment of trade receivablesIn € millions20192020Balance at January 16958Additions charged to income2922Release of unused amounts(24)(3)Utilization(16)(14)Acquisitions—1Currency exchange differences—(6)Balance at December 315858Composition of share capital at year-end 2019In €Authorized share capitalSubscribed share capitalPriority shares (48 with nominal value of €400)19,20019,200Cumulative preferred shares (200 million with nominal value of €0.50)100,000,000—Common shares (500 million with nominal value of €0.50)250,000,00099,800,166Total350,019,20099,819,366 Composition of share capital at year-end 2020
Non-controlling interests
In €
Priority shares (48 with nominal value
of €400)
Cumulative preferred shares (200
million with nominal value of €0.50)
Common shares (500 million with
nominal value of €0.50)
Authorized
share capital
Subscribed
share capital
19,200
19,200
100,000,000
—
250,000,000
95,289,921
Total
350,019,200
95,309,121
Group entity
Partner at year-end 2020
Akzo Nobel India Limited, Kolkata, India
Privately held, India
PT ICI Paints Indonesia, Jakarta, Indonesia
PT DWI Satrya Utama, Indonesia
Akzo Nobel Paints (Malaysia) Sdn. Bhd.,
Kuala Lumpur, Malaysia
Privately held, Malaysia
Akzo Nobel Kemipol A.S., Izmir, Turkey
Privately held, Turkey
International Paint (Korea) Ltd, Busan, South-
Korea
Noroo Holdings, South Korea
2019
Equity stake
in € millions
53
25
23
17
16
%
25.24
45.00
40.05
49.00
40.00
%
25.24
45.00
40.05
49.00
40.00
Outstanding common shares
International Paints of Shanghai Co. Ltd,
Shanghai, China
Huayi Fine Chemical Co. Ltd, China: China
National Shipbuilding Equipment & Materials Corp.
49.00
10
49.00
International Paints Saudi Arabia, Saudi
Arabia
Yousuf Bin Ahmed Kanoo Co. Ltd, Saudi Arabia
40.00
15
40.00
Number of shares
2019
2020
Akzo Nobel Oman SAOC, Muscat, Oman
Omar Zawawi establishment LLC, Oman
Akzo Nobel UAE Paints LLC, United Arab
Emirates
Kanoo Group, United Arab Emirates
Akzo Nobel Paints (Guangzhou) Limited,
Guangzhou, China
Industrial Development Co. Ltd of Guanzhou,
China
Akzo Nobel Pakistan Limited, Karachi,
Pakistan
Privately held, Pakistan
Others
Total
50.00
40.00
10.00
24.19
11
9
50.00
40.00
5
9
10.00
2.99
25
218
2020
Equity stake
in € millions
50
29
21
20
16
14
12
11
8
4
1
18
204
Outstanding at January 1
256,219,301
199,600,331
Issued in connection to perfor-
mance-related share plan and share-
matching plan
Capital repayment and share
consolidation
Stock dividend
Share buyback
Shares bought back not yet
cancelled
283,370
310,991
(28,468,812)
—
—
—
(31,599,495)
(10,027,257)
3,165,967
695,776
Outstanding at December 31
199,600,331
190,579,841
Weighted average number of common shares
Number of shares
Weighted average number of
common shares
2019
2020
213,074,002
191,424,400
Subscribed share capital
For further details on subscribed share capital, refer to
Note F in the Company financial statements.
Cumulative translation reserves comprise all foreign
exchange differences arising from the translation of the
financial statements of foreign operations, as well as from
the translation of intercompany loans with a permanent
nature and liabilities and derivatives that hedge the net
investments in a foreign subsidiary.
Equity-settled transactions consist of the performance
related and restricted share plan and share-matching plan,
whereby shares are granted to the Board of Management,
Executive Committee and other executives. For details of
the share-based compensation, refer to Note 7.
January 2019. A share consolidation ratio of 9:8
was applied.
Non-controlling interests
None of the non-controlling interests are considered indi-
vidually material to the group.
Dividend
Our dividend policy is to pay a stable to rising dividend.
In 2020, an interim dividend of €0.43 (2019: €0.41) per
common share was paid. We propose a 2020 final
dividend of €1.52 (2019: €1.49) per common share,
which would equal a total 2020 dividend of €1.95
(2019: €1.90).
In line with our announcement on April 19, 2017, we
have returned the vast majority of the net proceeds
from the separation of the Specialty Chemicals business
to our shareholders. The Extraordinary General Meeting
of November 13, 2018, approved to return an amount of
€2.0 billion to shareholders by means of a capital repay-
ment and share consolidation, which was executed in
We distributed €1.0 billion by means of a special cash
dividend of €4.50 per common share (post consolidation)
on February 25, 2019, in addition to the €1.0 billion special
cash dividend already distributed in December 2017.
The share buyback program to repurchase common
shares up to the value of €2.5 billion was completed at
the end of 2019, acquiring 31.2 million common shares,
which all have been cancelled. On October 23, 2019, a
€500 million share buyback program was announced,
for which 0.4 million common shares were acquired in
2019 and 6.2 million shares in 2020, which have all
been cancelled.
On October 21, 2020, a new €300 million share buyback
program was announced for which 0.7 million shares were
acquired in 2020, that have not yet been cancelled.
The share buyback program is to be completed in the first
half of 2021.
AkzoNobel Report 2020 | Financial statements
112
113AkzoNobel Report 2020 | Financial statementsPost-retirement benefit provisions relate to defined benefit pension and other post-retirement benefit plans, including healthcare or welfare plans. The largest defined benefit pension plans are the ICI Pension Fund (ICIPF) and the Akzo Nobel (CPS) Pension Scheme in the UK which together account for 86% of defined benefit obligations (DBO) and 91% of plan assets. Other pension plans include among others the largely unfunded plans in Germany, the plans in the US and certain other smaller plans in the UK. The benefits of these pension plans are based primarily on years of service and employees’ compensation. The funding policy for the plans is consistent with local require-ments in the countries of establishment. We also provide certain healthcare and life insurance benefits to retired employees, mainly in the US and the Netherlands.Valuations of the obligations under the plans are carried out regularly by independent qualified actuaries. We accrue for the expected costs of providing such post-retirement benefits during the service years of the employ-ees. Governance of the benefit plans is the responsibility of the Executive Committee Pensions. This committee provides oversight of the costs and risks of the plans including oversight of the impact of the plans on the company in terms of cash flow, pension expenses and the balance sheet. The committee develops and maintains policies on benefit design, funding, asset allocation and assumption setting.Pension plansAlmost all of the defined benefit plans have been closed to new members since the early to mid-2000s, although in many plans long-serving employees continue to accrue benefits. For plans in the US, benefit accrual is frozen and employees participate in defined contribution plans for future service. In countries where plans are closed, new employees are eligible to join a defined contribution arrangement. In countries in high growth markets, pension schemes currently are not material. Unless mandated by law, it is our policy that any new plans are established as defined contribution plans.The most significant risks that we run in relation to defined benefit plans are investment returns falling short of expectations, low discount rates, inflation exceeding expectations, retirees living longer than expected and legislation changes. The assets and liabilities of each of the funded plans are held outside of the company in a trust or a foundation, which is governed by a board of fiduciaries or trustees, depending on the legal arrangements in the country concerned. The primary objective with regards to the investment of pension plan assets is to ensure that each individual plan has sufficient funds available to satisfy future benefit obligations in accordance with local legal and legislative requirements. For this purpose, we work closely with plan trustees or fiduciaries to develop investment strategies. Studies are carried out periodically to analyze and understand the trade-off between expected investment returns, volatility of outcomes and the impact on cash contributions. We aim to strike a cautious balance between these factors in order to agree affordable contri-bution schedules with plan fiduciaries.Plan assets principally consist of insurance (annuity) policies, long-term interest-earning investments and (investment funds with holdings primarily in) quoted equity securities. Our largest plans use derivatives (such as index futures, currency forward contracts and swaps) to reduce volatility of underlying variables, for efficient portfolio management and to improve the liability matching char-acteristics of the assets. Limits have been set on the use of derivatives which are periodically subject to review for compliance with the pension fund’s investment strategy.In line with our proactive pension risk management strategy, we seek to reduce risk in our pension plans over time. We continue to evaluate different potential de- risking strategies and opportunities on an ongoing basis. Some future de-risking transactions may have both cash flow and balance sheet impacts which may be substantial, as have some of the de-risking actions already taken. The cost of fully removing risk would exceed estimated funding deficits.Between 2014 and 2020, ICIPF and a smaller UK plan, the ICI Specialty Chemicals Pension Fund (ISCPF), have invested in annuity buy-in contracts that aim to hedge all key risks related to their pensioner populations. CPS has an insurance contract to hedge longevity risk in respect of a portion of its pensioners. In 2020, the Trustee of the ICIPF entered into a further annuity buy-in agreement with Legal and General Assurance Society Limited and the Trustee of the ISCPF entered into a further annuity buy-in agreement with Pension Insurance Corporation plc. Together they cover, in aggregate, £84 million (€94 million) of pensioner liabilities (insurer valuation). The buy-in involved the purchase of a bulk annuity policy under which the insurer will pay to ICIPF and ISCPF amounts equiva-lent to the benefits payable to members who have recently become pensioners. The pension liabilities remain with, and the matching annuity policies are held within, ICIPF and ISCPF. The accounting impact of the transaction is a lower valuation of the plan assets giving a reduction in Other comprehensive income of £21 million (€23 million) of which £18 million (€20 million) relates to ICIPF and £3 million (€3 million) relates to ISCPF.By purchasing bulk annuities, the ICIPF and ISCPF Trust-ees have both taken significant steps in actively de-risking liabilities and reducing the risk that AkzoNobel will be required to contribute additional cash in the future.In October 2018, the UK High Court provided clarity for trustees and employers on providing equal pension benefits for men and women where they are in receipt of Guaranteed Minimum Pensions (GMPs) as a result of the Lloyds Banking Group judgment. According to this judg-ment, pension schemes were required to retrospectively equalize GMPs by uplifting pensions to the same level, as far as needed, for men and women. On November 20, 2020, the High Court ruled that pension schemes will need to revisit individual transfer payments made since May 17, 1990, to check if any additional value is due as a result of GMP equalization. As a result, a past service cost of £5 million (€6 million) has been charged across the AkzoNobel pension schemes in the UK in 2020.In setting the discount rate assumption for calculating the DBO of each plan, the so called Willis Towers Watson (WTW) RATE:Link model is used for the majority of the plans in the group. RATE:Link had previously been using a Bloomberg fixed income securities Bloomberg Industry Classification Standard (BICS) framework to provide the relevant inputs. However, due to a change in the Bloom-berg BICS framework in 2020, this framework is no longer deemed suitable and RATE:Link now uses the Bloomberg BCLASS framework. Although the curve-fitting methodol-ogy has not changed in 2020, the change in Bloomberg framework used by RATE:Link has resulted in an esti-mated net €170 million remeasurement gain included in Other comprehensive income. The impact of this change Note 19 Post-retirement benefit provisions in accounting estimate in relation to bond inclusion is
included in the reconciliation table as a €270 million
gain within the overall actuarial loss due to liability financial
assumption changes in the DBO, partially offset by
a €100 million reduction in the experience gain in plan
assets in respect of the UK buy-in annuity policies.
On November 25, 2020, correspondence between the
Chancellor of the Exchequer and the UK Statistics Author-
ity (UKSA) was published regarding the future of the Retail
Price Index (RPI) measurement of inflation. With effect
from February 2030 onwards, increases in the RPI will be
aligned with those under the Consumer Prices Index (CPI)
Reconciliation balance sheet
In € millions
2019
DBO
Plan
assets
Total
DBO
Plan
assets
Balance at the beginning of the period
(13,354)
13,654
300
(14,616)
15,287
Statement of income
Current service cost
Past service cost
Net interest (charge)/income on net defined benefit (liability)/asset
Cost recognized in statement of income
Remeasurements
Actuarial (loss)/gain due to liability experience
Actuarial (loss)/gain due to liability financial assumption changes
Actuarial (loss)/gain due to liability demographic assumption changes
Actuarial loss due to buy-in
Return on plan assets (less)/greater than discount rate
(30)
(2)
(361)
(393)
50
(1,368)
189
—
—
Remeasurement effects recognized in Other comprehensive income
(1,129)
Cash flow
Employer contributions
Employee contributions
Benefits and administration costs paid from plan assets
Net cash flow
Other
Acquisitions/divestments/transfers
Changes in exchange rates
Total other
Balance at the end of the period
Asset restriction
Net balance sheet position
In the balance sheet under
Other financial non-current assets
Post-retirement benefit provisions
Current portion of provisions
Net balance sheet position
—
—
382
382
—
—
—
(30)
914
884
569
2
(881)
(310)
—
677
677
(30)
(2)
21
(11)
50
(1,368)
189
(30)
914
(245)
569
—
—
569
—
58
58
(33)
(5)
(262)
(300)
148
(915)
(74)
—
—
(841)
—
(2)
859
857
(2)
718
716
—
—
276
276
—
—
—
(23)
981
958
114
2
(859)
(743)
2
(766)
(764)
—
(2)
881
879
—
(619)
(619)
(14,616)
15,287
671
(14,184)
15,014
(3)
668
1,418
(701)
(49)
668
with owner occupiers’ housing costs (CPIH). Broadly this
is expected to result in RPI inflation being 1% lower in the
longer term than under the existing methodology. The infla-
tion assumption continues to be calculated using a market
breakeven inflation rate. However, the CPI inflation assump-
tion, on which the benefits of some plans are based, is set
with reference to RPI. Until 2030, the CPI inflation assump-
tion is calculated as 1% below RPI and from 2030 onwards
as 0.1% below RPI. The impact has been recognized
within remeasurements in Other comprehensive income.
The impact on the actuarial loss due to liability financial
assumption changes in the DBO is partially offset by an
impact on the experience gain in plan assets in respect of
the UK buy-in annuity policies and is not material.
The remaining pension plans primarily represent plans
accounted for as defined contribution plans. This includes,
among others, the Pension Fund APF in the Netherlands
and the 401k Plan in the US. The ITP2 plan in Sweden
is financed through insurance with the Alecta insurance
company and is classified as a multi-employer defined
benefit plan. As AkzoNobel does not have access to suffi-
cient information from Alecta to enable a defined benefit
accounting treatment, it is accounted for as a defined
contribution plan.
Contributions in 2020 were €1 million (2019: €1 million).
Alecta’s funding ratio in 2020 is normally allowed to vary
between 125% and 175%. The most recently quoted
ratio at December 2020 stood at 148%. The expenses
of all plans accounted for as defined contribution plans in
AkzoNobel totaled €82 million in 2020 (2019: €86 million).
Other post-retirement benefit plans
AkzoNobel provides certain healthcare and life insurance
benefits to retired employees, mainly in the US and the
Netherlands. The risks to which the US healthcare plans
expose AkzoNobel include the risk of future increases in
the cost of healthcare which would increase the cost of
maintaining the plans. The benefit payments to retirees
under the Dutch plan are frozen. Both plans expose
AkzoNobel to the risk of a further decline in discount rates,
which increases the plan obligations, and longevity risk as
the plans generally pay lifetime benefits.
Reconciliation balance sheet
The closing net balance sheet position of €827 million
(2019: €668 million) includes the pension plans
AkzoNobel Report 2020 | Financial statements
114
2020
Total
671
(33)
(5)
14
(24)
148
(915)
(74)
(23)
981
117
114
—
—
114
—
(48)
(48)
830
(3)
827
1,543
(664)
(52)
827
(€963 million net asset; 2019: €826 million net asset) and
other post-retirement plans (€136 million liability; 2019:
€158 million liability).
Plan assets
In € millions
Equities
Administrative expenses
In addition to the expenses borne by the funds themselves,
some expenses are borne directly by AkzoNobel. Adminis-
trative expenses are incurred, especially for the UK pension
funds, of €18 million (2019: €19 million), which are included
in operating income. In addition, we directly incurred asset
management expenses of €2 million (2019: €4 million),
which have been included in other comprehensive income.
Debt - fixed interest government bonds
Debt - index-linked government bonds
Debt - corporate and other bonds
UK buy-in annuity policies
Cash and cash equivalents
Other
Total
Total Percentage of total
Total Percentage of total
2019
2020
331
1,641
2,728
1,458
8,018
289
822
2
11
18
10
52
2
5
366
1,315
3,121
1,798
7,595
215
604
15,287
100
15,014
2
9
21
12
51
1
4
100
Interest costs
Interest costs on DBO for both pensions and other post-
retirement benefits, together with the interest income on
plan assets, comprise the net financing income related to
post-retirement benefits of €14 million (2019: €21 million),
refer to Note 8.
Pension plans in asset position
Pension balances recorded under Financial non-current
assets totaled €1,543 million (2019: €1,418 million). The
increase in 2020 was due to €145 million of net actu-
arial gains, €45 million of employer contributions and
net income of €7 million, partially offset by €72 million of
exchange rate translation losses in the relevant plans.
These assets could be recognized under IFRIC 14
because economic benefits are available in the form of
future refunds from the plan or reductions in future contri-
butions to the plan, either during the life of the plan or on
the (final) settlement of the plan liabilities.
Plan assets
The equities and government bond debt assets have
quoted prices in active markets, although most are held
through funds comprised of such instruments which are
not actively traded themselves. The total value of plan
assets not quoted in active markets is €8,354 million
(2019: €8,812 million, including the UK buy-in annuity
policies totaling €7,595 million (2019: €8,018 million),
investments in real estate, totaling €381 million (2019:
€405 million) and other investments in infrastructure,
catastrophe bonds, insurance policies and high-yield
credit strategies. The UK buy-in annuity policies
have a value that is equal to the DBO of the pensioners
covered by the policies. Plan assets did not directly
include any of AkzoNobel’s own transferable financial
Cash flows
In € millions
Regular contributions
Top-ups
Total
2020
44
57
101
Pensions
2021
44
44
88
2020
13
—
13
Other post-retirement benefits
Sensitivity of DBO to change in assumptions
In € millions
Discount rate: 0.5% decrease
Price inflation: 0.5% increase*
Life expectancy: one year increase from age 60
Maturity information
Weighted average duration of DBO (years)
ICIPF
UK
539
303
682
12.1
CPS
UK
Other
pension plans
Other post-
retirement
benefits
297
172
131
15.8
146
80
74
15.9
5
—
6
9.8
* The sensitivity to price inflation assumption includes corresponding changes to all inflation-related compensation increases,
pensions in payment and pensions in deferment.
2021
11
—
11
Total
987
555
893
13.5
instruments, nor any property occupied by or assets
used by the company.
Cash flows
In 2021, we expect to contribute €88 million (2020:
€101 million) to our defined benefit pension plans, includ-
ing £26 million (€29 million) of top-up contributions to the
CPS plan, paid from an escrow account, in line with the
agreed recovery plan following the March 31, 2017 trienni-
al valuation. We expect to pay a further €11 million (2020:
€13 million) to our other post-retirement benefit plans. No
allowance is made for any special one-off contributions
that may arise in relation to new de-risking opportunities.
The sensitivity effect on DBO shown allows for an alterna-
tive value for each assumption while the other actuarial
assumptions remain unchanged. While this table
illustrates the overall impact on DBO of the changes
shown, the significance of the impact and the range
of reasonably possible alternative assumptions may differ
between the different plans that comprise the total DBO.
In particular, the plans differ in benefit design, currency
and average term, meaning that different assumptions have
different levels of significance for each plan.
The sensitivity analysis is intended to illustrate the inher-
ent uncertainty in the valuation of the DBO under market
AkzoNobel Report 2020 | Financial statements
115
Key figures and assumptions by plan
In € millions or %
Percentage of total DBO
Defined Benefit Obligation at year-end
Fair value of plan assets at year-end
Plan funded status
Restriction on asset recognition
Amounts recognized on the balance sheet
Percentage of total current service cost
Current service cost
Employer contributions
Discount rate
Rate of compensation increase
Inflation
Pension increases
Life expectancy (in years)
Currently aged 60
Males
Females
Currently aged 45, from age 60
Males
Females
ICIPF
UK
62%
(9,124)
9,939
815
—
815
10%
(3)
479
1.9%
1.5%
3.1%
2.9%
26.3
27.8
27.3
29.0
CPS
UK
Other pension
plans
24%
13%
(3,499)
4,032
533
—
533
27%
(8)
37
2.0%
1.4%
3.0%
2.3%
25.9
28.3
27.0
29.5
(1,835)
1,316
(519)
(3)
(522)
63%
(19)
41
1.9%
2.7%
2.1%
2.1%
25.9
28.4
27.3
29.7
Other post-
retirement
benefits
1%
(158)
—
(158)
—
(158)
—
—
12
2.9%
—
—
—
26.1
27.8
27.2
29.0
2019
Total
100%
(14,616)
15,287
671
(3)
668
100%
(30)
569
1.9%
2.0%
2.9%
2.6%
26.2
28.0
27.2
29.2
ICIPF
UK
61%
(8,716)
9,579
863
—
863
9%
(3)
4
1.3%
1.5%
2.9%
2.8%
26.4
28.0
27.5
29.2
CPS
UK
Other
pension plans
Other post-
retirement
benefits
25%
13%
1%
(3,503)
4,101
598
—
598
24%
(8)
37
1.4%
1.3%
2.9%
2.4%
26.2
29.0
27.3
30.1
(1,829)
1,334
(495)
(3)
(498)
67%
(22)
60
1.4%
1.9%
2.0%
2.0%
26.1
28.5
27.4
29.9
(136)
—
(136)
—
(136)
—
—
13
2.6%
—
—
—
25.7
27.6
26.8
28.6
2020
Total
100%
(14,184)
15,014
830
(3)
827
100%
(33)
114
1.3%
1.5%
2.8%
2.6%
26.3
28.3
27.4
29.5
conditions at the measurement date. Its results cannot
be extrapolated due to non-linear effects that changes in
the key actuarial assumptions may have on the total
DBO. Furthermore, the analysis does not indicate a
probability of such changes occurring and it does not
necessarily represent our view of expected future changes
in DBO. Any management actions that may be taken to
mitigate the inherent risks in the post-retirement defined
benefit plans are not reflected in this analysis, as they
would normally be reflected in plan asset changes rather
than DBO changes.
The sensitivities in the table only apply to the DBO and
not to the net amounts recognized in the balance sheet.
Movements in the fair value of plan assets (which include
the de-risking instruments) would, to a significant extent,
DBO at funded and unfunded pension plans*
In € millions
Wholly or partly funded plans
Unfunded plans
Total
2019
14,268
190
14,458
2020
13,854
194
14,048
Future benefit payments
The figures in the table below are the estimated future
benefit payments to be paid from the plans to beneficiaries
over the next ten years.
* Excludes other post-retirement benefit plans.
Future benefit payments
be expected to offset movements in the DBO resulting
from changes in the given assumptions. At ICIPF, the
annuity buy-in contracts cover 99% of pensioner liabilities
(2019: 99%) and 83% of total liabilities (2019: 84%).
At CPS, the longevity hedge contract covers 49% of
pensioner liabilities (2019: 58%) and 30% of total liabilities
(2019: 35%).
In € millions
2021
2022
2023
2024
2025
2026 - 2030
Pensions
Other post-
retirement benefits
844
844
853
858
864
4,415
11
11
10
10
9
41
AkzoNobel Report 2020 | Financial statements
116
117AkzoNobel Report 2020 | Financial statementsNote 20 Other provisions and contingent liabilitiesGeneral Provisions are recognized when an outflow of economic benefits for settlement is probable and the amount can be reliably estimated. It should be understood that, in light of possible future developments, such as: (a) potential additional lawsuits; (b) possible future settlements; and (c) rulings or judgments in pending lawsuits, certain cases may result in additional liabilities and related costs. At this point in time, we cannot estimate any additional amount of loss or range of loss in excess of the recorded amounts with sufficient certainty to allow such amount or range of amounts to be meaningful. While the outcome of said cases, claims and disputes cannot be predicted with certainty, we believe, based upon legal advice and information received, that the final outcome will not materially affect our consolidated financial position but could be material to our results of operations or cash flows in any one accounting period.Provisions for restructuring of activitiesProvisions for restructuring of activities comprise of accru-als for certain employee benefits and for costs which are directly associated with plans to exit or cease specific activities and closing down of facilities. For all restructuring provisions, a detailed formal plan exists and the imple-mentation of the plan has started or the plan has been announced before the balance sheet date. Most restruc-turing plans are expected to be completed within one year from the balance sheet date.Environmental liabilitiesWe are confronted with costs arising out of environmental laws and regulations, which include obligations to eliminate or limit the effects on the environment of the disposal or release of certain wastes or substances at various sites. Proceedings involving environmental matters, such as the alleged discharge of chemicals or waste materials into the air, water, or soil, are pending against us in various coun-tries. In some cases, this concerns sites divested in prior years or derelict sites belonging to companies acquired in the past.The provision has been discounted using an average pre-tax discount rate of 0.3% (2019: 1.4%).Key plan details for the two largest pension plans1ICI Pension Fund, UKAkzo Nobel (CPS) Pension Scheme, UKType of planDefined benefit, based upon years of service and final salaryDefined benefit, based upon years of service and final salaryBenefitsRetirement pension for employee Dependents’ pensions on death of employee/pensionerOptions for ill health early retirement Retirement pension for employee Dependents’ pensions on death of employee/pensionerOptions for ill health early retirementPension increases (main benefit section)Annually linked to UK RPI with a maximum of 5%Annually linked to UK CPI with a maximum of 5%Plan structurePlans are set up under a trust and are tax approvedPlans are set up under a trust and are tax approvedGovernanceTrustee directors: Four member-nominated Five appointed with the agreement of Law Debenture One independent (Law Debenture)Trustee directors:Four member-nominatedThree company-nominatedOne independent (Law Debenture)Regulatory frameworkThe plans are tax approved and assets are held in trust for the benefit of participants. The trustees have a legal duty to manage the trust in the best interests of participants. Investment strategy is controlled by the trustees in consultation with the companyFunding basisA plan specific basis must be agreed with each trustee board in accordance with UK regulations. The basis is not the same as the IFRS calculation as it uses more prudent assumptions about the life expectancy and the discount rates reflect prudent estimates of the expected return on assets actually held, thus the trustees’ investment strate-gies will impact the discounted value of liabilitiesFrequency of funding reviewsNormally every three years Normally every three yearsLatest completed valuationMarch 31, 2017March 31, 2017Funding deficit at latest completed valuation1,2£604 million (€671 million)£123 million (€137 million)Recovery plan£125 million (€146 million)3 in January 2019 and £290 million (€333 million)3 in March 2019, following experience gains since the March 31, 2017, valuation date£26 million (€29 million) per annum in 2019 to 2022, paid in March each year from an escrow account pre-funded with £142 million (€181 million)3 in February 2019Next funding reviewMarch 31, 2020 (due to be completed before June 30, 2021)March 31, 2020 (due to be completed before June 30, 2021)Asset allocation at March 31, 2020Matching: Return seeking: 99%1%Buy-in annuity contracts cover 99% of pensioner liabili-ties and 83% of total liabilities85%15%The longevity hedge contract covers 49% of pensioner liabilities and 30% of total liabilitiesMembership at March 31, 2020ActiveDeferredPensionerTotal1166,24538,28644,6473226,33417,44224,0981 Amounts in euro are a convenience translation using the December 31, 2020, exchange rate, unless indicated otherwise.2 Based on local valuation regulations.3 Actual rate at time of transfer. instances, AkzoNobel has been named as a direct defen-
dant despite the divestments.
Akzo Nobel N.V. has withdrawn its declarations of joint and
several liability under Article 403 of Book 2 of the Dutch
Civil Code for certain Dutch former Specialty Chemicals
subsidiaries divested as per October 1, 2018, and is
following the procedures to terminate its residual liability
under those declarations under Article 404 of Book 2 of
the Dutch Civil Code. One objection against the termina-
tion of residual liability is still pending and Akzo Nobel N.V.
and Nouryon continue to cooperate to get this resolved.
Current portion of provisions
The current portion of post-retirement benefit provisions
(€52 million) and the current portion of other provisions
(€180 million) add up to €232 million (2019: €231 million),
as reflected in the balance sheet.
Discount rates
The discount rates used in calculating the provisions
recognized at December 31, 2020, are mentioned in the
paragraphs on provisions for environmental costs, liabilities
to (former) employees and sundry provisions. Changes in
the discount rate will affect our consolidated financial posi-
tion. A sensitivity test showed that a one percentage point
increase or decrease of discount rates will have an impact
down or up, respectively, of €9 million on the provisions
recognized at December 31, 2020.
Movements in other provisions
In € millions
Balance at January 1, 2020
Additions made during the year
Utilization
Amounts reversed during the year
Unwind of discount
Divestments
Changes in exchange rates
Balance at December 31, 2020
Non-current portion of provisions
Current portion of provisions
Balance at December 31, 2020
Restructuring
of activities
Environmental
costs
Liabilities to
(former)
employees
96
77
(84)
(14)
—
—
(1)
74
13
61
74
75
6
(9)
(7)
3
—
(5)
63
53
10
63
169
30
(16)
(3)
6
—
(8)
178
114
64
178
Sundry
122
47
(44)
(18)
—
(5)
(5)
97
52
45
97
Total
462
160
(153)
(42)
9
(5)
(19)
412
232
180
412
Liabilities to (former) employees
Liabilities to (former) employees consist of employer liability
plans, jubilee plans and other long-term compensation
plans, and exclude payables related to restructurings.
The majority of the cash outflows related to liabilities
to (former) employees is expected to occur after five years.
In calculating the liabilities to (former) employees, a pre-
tax discount rate of on average 0.6% (2019: 1.0%) has
been used.
Sundry provisions
Sundry provisions relate to a variety of provisions, including
provisions for (customer) claims, sales returns, guarantees
and other operational provisions. The majority of the cash
outflows related to sundry provisions is expected to occur
within one to five years. In calculating the sundry provi-
sions, a pre-tax discount rate of on average negative 0.2%
(2019: 1.2%) has been used.
Contingent liabilities
Environmental liabilities can change substantially due
to the emergence of additional information on the nature
or extent of the contamination, the geological circum-
stances, the necessity of employing particular methods
of remediation, actions by governmental agencies or
private parties, or other factors. While it is not feasible to
predict the outcome of all pending environmental expo-
sures, it is reasonably possible that there will be a need
for future provisions for environmental costs which,
in management’s opinion, based on information
currently available, would not have a material effect on
the company’s financial position but could be material
to the company’s results of operations in any one
accounting period.
A number of claims against AkzoNobel are pending, all
of which are contested. This includes a lawsuit filed in
April 2019, by PT DWI Satrya Utama (PTDSU) against
Akzo Nobel N.V., certain subsidiaries as well as certain
subsidiary directors at the Tangerang District Court,
Indonesia. PTDSU owns a 45% interest in PT ICI Paints
Indonesia (PTICIPI), an indirect subsidiary of Akzo Nobel
N.V., PTDSU alleges that it suffered damages as a result
of defendants’ improper management of PTICIPI. In
March 2020, the District Court dismissed the case on the
grounds that they do not have jurisdiction, against which
the claimant appealed. In January 2021, the High Court of
Indonesia rejected this appeal.
We are also involved in legal disputes and disputes with
tax authorities in several jurisdictions. AkzoNobel has
provided various indemnities and guarantees in respect
of past divestments to the relevant purchasers and their
permitted assigns (if applicable), which in general are
capped in time and/or amount (in proportion to the value
received). The provided guarantees and indemnities have
varying maturity periods. AkzoNobel has received various
claims under such indemnities and guarantees. In some
AkzoNobel Report 2020 | Financial statements
118
119AkzoNobel Report 2020 | Financial statementsNote 21 Net debtAkzoNobel’s net debt is mainly denominated in euro.The part of long-term borrowings that is due within one year is presented under short-term borrowings. For details on the exposure to interest rate and foreign currency risk, refer to Note 27.The average effective interest rate of the bonds outstand-ing at year-end 2020 was 1.9% (year-end 2019: 1.9%).Net debtin € millionsLong-term borrowingsShort-term borrowingsShort-term investmentsCash and cash equivalentsNet debtNet debt at January 1, 20192,069692(5,460)(2,799)(5,498)Net cash from operating activities———(33)(33)Net cash from investing activities———102102Acquisitions7—(16)224215Unwind of discount and amortized cost10(1)——9Proceeds from borrowings37—(10)—Borrowings repaid—(623)—623—New/modification of lease contracts3418——52Transfers from long-term to short-term(86)86———Movement bankoverdrafts and short-term bank loans—2—(2)—Investments in short-term investments——(2,325)2,325—Repayments of short-term investments——7,663(7,663)—Dividends———1,4461,446Capital repayments———2,0002,000Share buyback———2,5202,520Net cash from discontinued operations———1010Changes in exchange rates3(6)—(15)(18)Other changes2(6)—1(3)Net debt at December 31, 20192,042169(138)(1,271)802Net debt at January 1, 2020 2,042 169 (138) (1,271) 802 Net cash from operating activities——— (1,220) (1,220)Net cash from investing activities——— 202 202 Acquisitions 7 —— 112 119 Buy-out of non-controlling interests——— 44 44 Unwind of discount and amortized cost 12 ——— 12 Proceeds from borrowings 756 214 — (970)—Borrowings repaid— (339)— 339 —New/modification of lease contracts 82 ——— 82 Transfers from long-term to short-term (117) 117 ———Movement bank overdrafts and short-term bank loans— (29)— 29 —Investments in short-term investments—— (248) 248 —Repayments of short-term investments—— 136 (136)—Dividends——— 385 385 Share buyback——— 555 555 Net cash from discontinued operations——— 3 3 Changes in exchange rates (11) (13)— 74 50 Net debt at December 31, 2020 2,771 119 (250) (1,606) 1,034 Analysis of net debt by categoryIn € millions20192020Bonds issued1,741 2,486 Lease liabilities262 238 Other borrowings39 47 Long-term borrowings2,042 2,771 Current portion of long-term borrowings3 5 Current portion of lease liabilities90 86 Debt to credit institutions61 25 Other15 3 Short-term borrowings169 119 Total borrowings2,211 2,890 Short-term investments (138) (250)Cash and cash equivalents(1,271) (1,606)Net debt802 1,034 Bonds issuedIn € millions201920202 5/8% 2012/22 (€750million) 747 748 1 3/4% 2014/24 (€500million) 498 498 1 1/8% 2016/26 (€500million) 496 497 1 5/8% 2020/30 (€750million)— 743 Total 1,741 2,486 Aggregated maturities of long-term borrowingsIn € millions2022-2025After 2025Bonds issued1,2461,240Lease liabilities18058Other borrowings1334Total1,4391,332 120AkzoNobel Report 2020 | Financial statementsNote 22 Trade and other payablesLong-term borrowingsWe have a multi-currency revolving credit facility, which was amended in 2020 from €1.8 billion to €1.3 billion and extended to 2025. This facility does not contain financial covenants or acceleration provisions that are based on adverse changes in ratings or material adverse change. At year-end 2020 and 2019, this facility has not been drawn.In April 2020, a bond was issued with a nominal value of €750 million maturing in 2030 at a coupon rate of 1.625%.The blended incremental borrowing rate applied to the lease liabilities at year-end 2020 was 1.9% (2019: 2.2%).At year-end 2020 and 2019, none of the borrowings was secured by collateral.Short-term borrowingsWe have US dollar and euro commercial paper programs in place, which can be used to the extent that the equiva-lent portion of the €1.3 billion multi-currency revolving credit facility is not used. We had no commercial paper outstanding at year-end 2020 and 2019.Short-term investmentsShort-term investments almost entirely consist of time deposits, money market funds and other marketable secu-rities with a life time at investment date longer than three months but shorter than twelve months. For more informa-tion on credit risk management, refer to Note 27.Cash and cash equivalentsDeposits and money market funds within cash and cash equivalents almost entirely consist of time deposits imme-diately convertible into known amounts of cash and with a maturity of three months or less from the date of purchase and marketable securities that can be redeemed immedi-ately when called. At December 31, 2020, an amount of €14 million in cash and cash equivalents was restricted (2019: €21 million). Restricted cash is defined as cash that cannot be accessed centrally due to regulatory or contractual restrictions.Operating activities in 2020 resulted in a cash inflow of €1,220 million (2019: cash inflow of €33 million).The pension pre-funding in 2019 concerns the payment of €161 million for the funding of the escrow account for Akzo Nobel (CPS) Pension Scheme in the UK.Note 23 Cash flowThe above amounts cannot be reconciled directly to the respective balance sheet positions. They reflect changes in balance sheet positions only to the extent these have a cash flow impact, or they reverse the non-cash impact as included in profit for the period. These amounts exclude non-cash movements such as unwinding of discount, movements through other comprehensive income, acqui-sitions and divestments, and changes in exchange rates.Purchase commitments for property, plant and equipment aggregated €24 million (2019: €3 million).Note 24 CommitmentsWe purchased and sold goods and services to various related parties in which we hold a 50% or less equity inter-est (associates and joint ventures). Such transactions were conducted at terms comparable with transactions with third parties.During 2020, we considered the members of the Execu-tive Committee and the Supervisory Board to be the key management personnel as defined in IAS 24 “Related parties”. For details on their remuneration, as well as on shares held by members of the Supervisory Board or Board of Management, refer to Note 26. In the ordinary course of business, we also have transactions with various organizations with which certain members of the Supervi-sory Board or Executive Committee are associated. For related party transactions with pension funds, refer to Notes 15 and 19.Note 25 Related party transactionsCash and cash equivalentsIn € millions20192020Cash on hand and in banks1,0311,103Deposits and money market funds with a life up to three months240503Included under cash and cash equivalents in the balance sheet1,2711,606Debt to credit institutions(61)(25)Total per statement of cash flows1,2101,581Short-term investmentsIn € millions20192020Short-term investments with life between three and 12 months138250Total138250Trade and other payablesIn € millions20192020Trade payables to suppliers1,588 1,703 Trade payables to customers295 329 Taxes and social security contributions164 186 Amounts payable to employees232 265 Interest41 53 FX contracts18 8 Dividends76 Other liabilities6130 Total2,406 2,580 Changes in working capital as per consolidated statement of cash flowsIn € millions20192020Trade and other receivables9(14)Inventories9(84)Trade and other payables(262)282Total(244)184 121AkzoNobel Report 2020 | Financial statementsTotal compensation for key management personnel expensed during the period amounted to €21.7 million (2019: €20.9 million). An amount of €8.2 million relates to short-term employee benefits (2019: €7.9 million); €0.6 million relates to post contract benefits and other post contract compensation (2019: €0.7 million); €4.5 million relates to share-based compensation (2019: €5.9 million); €7.7 million relates to other long-term incentives (2019: €3.1 million); and €0.7 million relates to payments upon termination of employment (2019: €3.3 million). Additional charges of €1.4 million (2019: €2.9 million) were accrued which relate to taxation on excessive pay (“Belasting heffing excessieve beloningsbestanddelen”).This compensation includes total remuneration for the members of the Supervisory Board of €0.8 million (2019: €1.0 million) and for the members of the Board of Manage-ment of €9.1 million (2019: €6.5 million). For more details on the remuneration of the individual members of the Supervisory Board and the Board of Management refer-ence is made to the Remuneration report.In accordance with the Articles of Association and good corporate governance practice, the remuneration of Supervisory Board members is not dependent on the results of the company. We do not grant share-based compensation to our Supervisory Board members. An overview of shares held by the Supervisory Board members is provided on this page. A similar overview is provided of the shares held by the Board of Management. Loans The company does not grant loans, advance payments or guarantees to members of the Supervisory Board, members of the Executive Committee or any family members of such persons.Note 26 Remuneration of the Supervisory Board and the Board of Management* In the form of ADRs.Note 27 Financial risk managementFINANCIAL RISK MANAGEMENT FRAMEWORKOur activities expose us to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. These risks are inherent to the way we operate as a multinational with a large number of locally operating subsidiaries. Our overall risk management program seeks to identify, assess, and – if necessary – mitigate these financial risks in order to minimize potential adverse effects on our financial performance.Our risk mitigating activities include the use of derivative financial instruments to hedge certain risk exposures. The Board of Management is ultimately responsible for risk management. We centrally identify, evaluate and hedge financial risks, and monitor compliance with the corporate policies approved by the Board of Management, except for commodity risks, which are subject to identification, evalu-ation, hedging and monitoring in the businesses. We have treasury hubs located in Brazil and China that are primarily responsible for regional cash management and short-term financing. We do not allow extensive treasury operations at subsidiary level directly with external parties.LIQUIDITY RISK MANAGEMENT The primary objective of liquidity management is to provide for sufficient cash and cash equivalents at all times and any place in the world to enable us to meet our payment obligations. We aim for a well-spread maturity schedule of our long-term borrowings and a strong liquidity position. At year-end 2020, we had €1.6 billion available as cash and cash equivalents (2019: €1.3 billion) and €250 million available as short-term investments (2019: €138 million), refer to Note 21.In addition, we have a multi-currency revolving credit facility, which was amended in 2020 from €1.8 billion to €1.3 billion and extended to 2025. This facility does not contain financial covenants or acceleration provisions that are based on adverse changes in ratings or on other mate-rial adverse changes. At year-end 2020 and 2019, this Shares held by the members of the Supervisory BoardNumber of shares at year-end20192020Nils Smedegaard Andersen, Chairman4,5004,500Byron Grote*4,2956,667Pamela Kirby——Dick Sluimers——Sue Clark——Patrick Thomas——Michiel Jaski444444Jolanda Poots-Bijl——Shares held by the Board of ManagementNumber of shares at year-end20192020Thierry Vanlancker 19,18143,518Maarten de Vries 4,1645,678Maturity of liabilities and cash outflowsIn € millionsLess than 1 yearBetween 1 and 5 yearsOver 5 yearsAt December 31, 2019Borrowings791,259521Interest on borrowings691828Lease liabilities9018379Trade and other payables2,388——FX contracts (hedges)Outflow2,468——Inflow(2,456)——Total2,6381,624608At December 31, 2020Borrowings 33 1,259 1,274 Interest on borrowings 64 152 54 Lease liabilities 86 180 58 Trade and other payables 2,572 — — FX contracts (hedges)Outflow 1,570 — — Inflow (1,572) — — Total 2,753 1,591 1,386 facility had not been drawn. We have US dollar and euro
commercial paper programs in place, which can be used
to the extent that the equivalent portion of the €1.3 billion
multi-currency revolving credit facility is not used. We had
no commercial paper outstanding at year end 2020 and
2019. The table on maturity of liabilities and cash outflows
in this Note shows our cash outflows per maturity group.
The amounts disclosed in the table are the contractual
undiscounted cash flows.
CREDIT RISK MANAGEMENT
Credit risk arises from financial assets such as cash and
cash equivalents, deposits with financial institutions,
money market funds, trade receivables and derivative
financial instruments with a positive fair value. We have a
credit risk management policy in place to limit credit losses
due to non-performance of financial counterparties
and customers. We monitor our exposure to credit risk on
an ongoing basis at various levels. We only deal
with financial counterparties that have a sufficiently high
credit rating. Generally, we do not require collateral in
respect of financial assets. Investments in cash and cash
equivalents, short-term investments and transactions
involving derivative financial instruments are entered into
with counterparties that have sound credit ratings and a
good reputation. Derivative transactions are concluded
mostly with parties with whom we have contractual netting
agreements and ISDA agreements in place. We set limits
per counterparty for the different types of financial instru-
ments we use. We closely monitor the acceptable financial
counterparty credit ratings and credit limits and revise
where required in line with the market circumstances. We
do not expect non-performance by the counterparties
for these financial instruments. Due to our geographical
spread and the diversity of our customers, we were not
subject to any significant concentration of credit risks at
balance sheet date.
Generally, the maximum exposure to credit risk is repre-
sented by the carrying value of financial assets in the
balance sheet.
At year-end 2020, the credit risk on consolidated level was
€4.2 billion (2019: €3.7 billion) for cash and cash equiva-
lents, short-term investments, loans, trade and other
receivables. Our credit risk is well spread among both
global and local counterparties. Our largest counterparty
risk amounted to €450 million at year-end 2019 (2019:
€380 million).
FOREIGN EXCHANGE RISK
MANAGEMENT
Trade and financing transactions
We operate in a large number of countries, where we
have clients and suppliers, many of whom are outside of
the local functional currency environment. This creates
currency exposure which is partly netted out on group
level. The purpose of our foreign currency hedging
activities is to protect us from the risk that the functional
currency net cash flows resulting from trade or financ-
ing transactions are adversely affected by changes in
exchange rates. Our policy is to hedge our transactional
foreign exchange rate exposures above predefined
thresholds from recognized assets and liabilities. Cash flow
hedge accounting on forecasted transactions is applied by
exception. Derivative transactions with external parties are
bound by limits per currency.
In general, our forward exchange contracts have a maturity
of less than one year. When necessary, forward exchange
contracts are rolled over at maturity. Currency derivatives
are not used for speculative purposes.
Hedged notional amounts at year-end
The credit risk from trade receivables is measured and
analyzed at a local operating entity level, mainly by means
of ageing analysis, refer to Note 17. Additionally, trade
receivables and financial assets measured at amortized
cost are subject to the expected credit loss impairment
model either using the general or the simplified approach.
For more information on the applied impairment approach-
es per financial asset type, refer to Note 1.
In € millions
US dollar
Pound sterling
Chinese yuan
Other
Total
Buy
2019
605
599
48
238
Sell
2019
739
136
—
574
1,490
1,449
Buy
2020
174
485
31
205
895
Sell
2020
379
31
—
493
903
Investments in foreign subsidiaries, associates
and joint ventures
During 2020 and 2019, net investment hedge account-
ing was applied on hedges of certain net investments in
foreign operations, which were partly hedged. The main
net investments included were related to Chinese yuan
(2020 and 2019) and Vietnamese dong (2020 and 2019),
which were hedged with forward exchange contracts for
the same currencies. The spot results related to these
hedges were recognized in other comprehensive income
and accumulated in the cumulative translation reserves.
At year-end 2020 one hedge of net investments in Polish
zloty was outstanding. During 2020 and 2019, these
hedges were fully effective.
INTEREST RATE RISK MANAGEMENT
We are partly financed with debt in order to obtain more
efficient leverage. Fixed rate debt results in fair value inter-
est rate risk. Floating rate debt results in cash flow interest
rate risk. We treat fixed rate debt maturing within one year
as floating rate debt for debt portfolio purposes. At the end
of 2020 and 2019, the fixed/floating ratio of our outstand-
ing bonds was 100% fixed as we have no outstanding
bonds maturing within one year. During 2020 and 2019,
we have not used any interest rate derivatives.
IBOR reform refers to the global reform of interest rate
benchmarks, which includes the replacement of some
interbank offered rates (IBOR) with alternative benchmark
rates. Since our long-term borrowings have fixed interest
rates and we currently do not have any interest related
hedging instruments, the interest rate benchmark reform
will not have a material impact on the company’s financial
statements. Fallback language has been added to our
contracts while preparing for the transition to new rates.
CAPITAL RISK MANAGEMENT
Our objectives when managing capital are to safeguard
our ability to satisfy our capital providers and to maintain
a capital structure that optimizes our cost of capital. For
this we maintain a conservative financial strategy, with the
objective to remain a strong investment grade company
as rated by the rating agencies Moody’s and Standard &
Poor’s. The capital structure can be altered, among others,
AkzoNobel Report 2020 | Financial statements
122
by adjusting the amounts of dividends paid to sharehold-
ers, return capital to capital providers, or issue new debt
or shares. In April 2020, a bond was issued with a nominal
value of €750 million maturing in 2030 at a coupon rate
of 1.625%. Consistent with other companies in the indus-
try, we monitor capital headroom based on the leverage
ratio net debt/EBITDA, for which we have set a target
range of 1 to 2. The ratio was 0.8 in 2020 (2019: 0.7).
EBITDA is the sum of operating income, depreciation and
amortization; for 2020 amounting to €1,324 million (2019:
€1,201 million). Net debt is calculated as the total of long
and short-term borrowings less cash and cash equiva-
lents and short-term investments; for 2020 amounting to
€1,034 million (2019: €802 million).
Fair value of financial instruments and
IFRS 9 categories
In the table “Fair value per financial instrument category”
insight is provided in the recognition of the respec-
tive financial instruments per IFRS 9 category. The total
carrying value is based on the accounting principles as
outlined in Note 1. Financial instruments are recognized at
fair value and subsequently recognized either at fair value
or at amortized cost, using the effective interest method.
The financial instruments accounted for at fair value
through profit or loss are derivative financial instruments
and securities included in financial non-current assets,
cash and cash equivalents and short-term investments.
The remaining financial instruments are accounted for at
amortized cost.
The following valuation methods for financial instruments
carried at fair value through profit or loss are distinguished:
• Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
• Level 2: inputs other than quoted prices included within
level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices)
• Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable)
For the purpose of determining the fair value per financial
instrument category, shown in the column “Fair value”, the
following valuation methods were used:
A level 1 valuation method was used to estimate the
fair value of the bonds issued included in our long-term
Fair value per financial instrument category
In € millions
2019 year-end
Financial non-current assets
Trade and other receivables
Short-term investments
Cash and cash equivalents
Total financial assets
Long-term borrowings
Short-term borrowings
Trade and other payables
Total financial liabilities
2020 year-end
Financial non-current assets
Trade and other receivables
Short-term investments
Cash and cash equivalents
Total financial assets
Long-term borrowings
Short-term borrowings
Trade and other payables
Total financial liabilities
Carrying value per IFRS 9
category
Measured at
amortized
cost
Measured
at fair value
through profit
or loss
Carrying
amount
Out of scope
of IFRS 7*
Total
carrying value
Fair value
1,862
2,133
138
1,271
5,404
2,042
169
2,406
4,617
1,951
1,994
250
1,606
5,801
2,771
119
2,580
5,470
1,526
149
—
—
210
1,975
—
—
1,675
2,185
—
—
396
396
1,669
121
—
—
2,042
169
1,992
4,203
202
1,863
—
—
1,790
2,065
—
—
451
451
2,771
119
2,121
5,011
126
9
138
1,271
1,544
—
—
18
18
80
10
250
1,606
1,946
—
—
8
8
336
1,984
138
1,271
3,729
2,042
169
2,010
4,221
282
1,873
250
1,606
4,011
2,771
119
2,129
5,019
364
1,984
138
1,271
3,757
2,174
169
2,010
4,353
316
1,873
250
1,606
4,045
2,995
119
2,129
5,243
* Mainly includes pension assets (refer to Note 15), prepaid expenses and non income tax related receivables (refer to Note 17) and
amounts payable to employees and payables for taxes and social security contributions (refer to Note 22).
borrowings. The estimate is based on the quoted market
prices for the same or similar issues or on the current rates
offered to us for debt with similar maturities.
A level 2 valuation method was used to determine the fair
value of marketable securities included in cash and cash
equivalents and short-term investments by obtaining the
market price at reporting date. The fair value of foreign
currency contracts and swap contracts was determined
by level 2 valuation techniques using market observ-
able input (such as foreign currency interest rates based
on Reuters) and by obtaining quotes from dealers and
brokers. A level 2 valuation method was used to determine
the fair value of time deposits included in cash and cash
equivalents and short-term investments using the market
interest rate. The carrying amounts of cash and banks,
trade receivables less allowance for impairment, other
short-term borrowings and other current liabilities approxi-
mate fair value due to the short maturity period of those
instruments and were determined using level 2 fair value
methods. For €122 million of Financial non-current assets
a level 3 fair valuation method (discounted cash flow) was
used resulting in a deviation between the fair value and the
carrying value.
AkzoNobel Report 2020 | Financial statements
123
124AkzoNobel Report 2020 | Financial statementsThe impact of the decision of the United Kingdom to leave the European Union (Brexit) as per January 1, 2021, was assessed. The impact on our activities and financial infor-mation is considered not to be material.MASTER NETTING AGREEMENTSWe enter into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements. In general, under such agreements the amounts owed by each counterparty on a single day in respect of transactions outstanding in the same currency may be aggregated into a single net amount that is payable by one party to the other. In certain circumstances – e.g. when a credit event such as a default occurs – all outstanding transactions under the agreement may be terminated, the termination value is assessed and a net amount is payable in settlement of the transactions. We have evaluated the potential effect of netting agreements, including the effect of rights of set-off and concluded the impact is immaterial. We did not offset any amounts regarding derivative transactions.Note 28 Subsequent eventsSensitivities on financial instruments at year-end 2020Sensitivity object SensitivityHypothetical impactForeign currencies:We perform foreign currency sensitivity analysisby applying an adjustment to the spot ratesprevailing at year-end. This adjustment isbased on observed changes in the exchangerate in the past and management expectationfor possible future movements. We then applythe expected possible volatility to revalue allmonetary assets and liabilities (includingderivative financial instruments) in a currencyother than the functional currency of thesubsidiary in the balance sheet at year-end.A 10% (2019: 10%) strengthening of the euro versus US dollar A 10% (2019: 10%) strengthening of the euro versus the pound sterling A 10% (2019: 10%) strengthening of the euro versus Chinese yuanProfit: €8 million (2019: profit €10 million)€nil (2019: €nil)Loss: €1 million (2019: €nil)Interest rate: We perform interest rate sensitivity analysis byapplying an adjustment to the interest ratecurve prevailing at year-end. This adjustment isbased on observed changes in the interest ratein the past and management expectation forpossible future movements. We then apply theexpected possible volatility to revalue allinterest bearing assets and liabilities.A 100 basis points increase of EURIBOR interest ratesA 100 basis points increase of US LIBOR interest ratesA 100 basis points increase of GBP LIBOR interest ratesProfit: €8 million (2019: profit €5 million)Profit: €1 million (2019: €nil)Profit: €1 million (2019: profit €1million) COMPANY FINANCIAL STATEMENTS
Statement of income for the year ended December 31
Balance sheet as of December 31, before allocation of profit
In € millions
Revenue
Other income
Gross profit
Note
A
A
General and administrative expenses
Other results
Operating income
Financing income and expenses
B
Net income from subsidiaries, associates
and joint ventures
Profit before tax
Income tax
Net income
57
72
(68)
(28)
(80)
564
2019
2020
In € millions
Note
2019
2020
15
58
(24)
—
50
536
129
(96)
33
517
22
539
Assets
73
Non-current assets
Intangible assets
Deferred tax assets
(24)
49
Financial non-current assets
Total non-current assets
635
(5)
630
Current assets
Short-term receivables
Short-term investments
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Subscribed share capital
Other legal reserves
Cumulative translation reserves
Actuarial gains and losses
Other reserves
Undistributed results
Shareholders’ equity
Provisions
Non-current liabilities
Long-term borrowings
Total non-current liabilities
Current liabilities
Short-term borrowings
Other current liabilities
Total current liabilities
Total equity and liabilities
C
D
E
G
G
F
G
G
H
45
30
11,495
160
120
458
100
211
(469)
(2,684)
8,735
457
71
31
12,225
11,570
12,327
182
245
736
738
12,308
1,163
13,490
95
246
(873)
(2,587)
8,317
548
6,350
23
5,746
13
5,682
7,515
5,682
7,515
36
217
3
213
253
12,308
216
13,490
AkzoNobel Report 2020 | Financial statements
125
126AkzoNobel Report 2020 | Financial statementsAkzo Nobel N.V. is a company headquartered in the Neth-erlands.The address of our registered office is Christian Neefestraat 2, Amsterdam; the Chamber of Commerce number is 09007809. The financial statements of Akzo Nobel N.V. have been prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code, making use of the option of Article 362 of the Code, meaning that the accounting principles used are the same as for the Consolidated financial statements. Foreign currency amounts have been translated, assets and liabilities have been valued, and net income has been determined in accordance with the principles of valuation and determination of income presented in Note 1 of the Consolidated financial statements. For the Company financial statements, revenue mainly concerns service contracts and royalty related revenue from third parties; other income mainly concerns inter-company royalty income. Subsidiaries of Akzo Nobel N.V. are accounted for using the equity method, based on the pronouncements of the Dutch Accounting Standards Board.The remuneration paragraph is included in Note 26 of the Consolidated financial statements. The number of employees having a contract with the Company at year-end 2020 was 6 (2019: 7). All employees are based in the Netherlands.Akzo Nobel N.V. is head of the Dutch fiscal unity. Members of the fiscal unity are taxed as if they are taxable on a standalone basis.Note A General informationNote B Financing income and expensesNote C Intangible assetsOther items in 2020 and 2019 mainly include foreign currency results related to financing activities.Financing income and expensesIn € millions20192020Financing income - third parties-2Financing income - subsidiaries2191Financing expense - third parties(41)(49)Financing expense - subsidiaries(93)(6)Net Interest on net debt(113)38Other items3312Net Other financing income/(expenses)3312Total(80)50Intangible assetsIn € millionsOther intangiblesBalance at January 1, 2020Cost of (internally developed) intangibles51Accumulated amortization(6)Carrying value at January 1, 202045Movements in 2020Additions31Amortization(5)Total movements26Balance at December 31, 2020Cost of (internally developed) intangibles82Accumulated amortization(11)Carrying value at December 31, 202071Intangible assets include (internally developed) software and licences. In 2019, intangible assets were included in non-current financial assets. 127AkzoNobel Report 2020 | Financial statementsNote D Financial non-current assetsNote E Short-term receivablesNote F Shareholders’ equityThe holders of common shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the Annual General Meeting of shareholders. The holders of the priority shares are entitled to a dividend of 6% per share or the statutory interest in the Netherlands, whichever is lower, plus any accrued and unpaid dividends. They are entitled to 800 votes per share (in accordance with the 800 times higher nominal value per share) at the Annual General Meeting of shareholders. In addition, the holders of priority shares have the right to draw up binding lists of nominees for appointment to the Supervisory Board and the Board of Management; amendments to the Articles of Association are subject to the approval of the Meeting of Holders of Priority Shares.Priority shares may only be transferred to a transferee designated by a Meeting of Holders of Priority Shares and against payment of the par value of the shares, plus interest at the rate of 6% per annum or the statutory inter-est in the Netherlands, whichever is lower, for the period between the beginning of the year and the date of transfer. There are no restrictions on voting rights of holders of common or priority shares. The Articles of Association set out procedures for exercising voting rights. The Annual General Meeting of shareholders has resolved in 2020 to authorize the Board of Management for a period of 18 months (i) to issue shares (or grant rights to shares) in the capital of the company up to a maximum of 10%, which in case of mergers or acquisitions can be increased by up to a maximum of 10%, of the total number of shares outstanding (and to restrict or exclude the pre-emptive rights to those shares) and (ii) to acquire shares in the capital of the company, provided that the shares that will at any time be held will not exceed 10% of the issued share capital. The issue or repurchase of shares requires the approval of the Supervisory Board.During 2020, 9,331,481 common shares repurchased in 2019 and 2020 were cancelled (2019: 28,433,528 common shares). We held 695,776 common shares to be cancelled at year-end 2020 (year-end 2019: 3,165,967).Of the shareholders’ equity of €5.7 billion, an amount of €5.4 billion (2019: €6.0 billion) was unrestricted and Movements in non-current assetsSubsidiariesIn € millionsShare in capitalLoansOther non- current assetsTotalBalance at January 1, 20199,246 1,949 91 11,286 Investments/acquisitions/capital contributions179 ——179 Divestments/capital repayments(760)——(760)Net income from subsidiaries564 ——564 Equity-settled transactions14 ——14 Loans granted—1,079 —1,079 Repayment of loans—(779)—(779)Changes in exchange rates139 (4)—135 Post-retirement benefits(223)——(223)Balance at December 31, 20199,159 2,245 91 11,495 Investments/acquisitions/capital contributions——22Divestments/capital repayments(92)—(1)(93)Impairments— —(2)(2) Net income from subsidiaries536 ——536 Equity-settled transactions10 ——10 Loans granted—469 —469 Loans transferred—919 —919 Repayment of loans—(775)—(775)Changes in exchange rates(390)(7)—(397)Post-retirement benefits90 ——90 Acquisition of non-controlling interests(29)——(29)Balance at December 31, 20209,284 2,85190 12,225 Investments in subsidiaries are measured using the equity method of accounting. Due to an intra-group funding restructuring, several intercompany loans were transferred in 2019 and 2020 from certain foreign subsidiaries to Akzo Nobel N.V.. Intercompany loans are priced at fair value at the date of the transfer, taking factors like the credit quality of AkzoNobel, country and currency risks into consideration. Loans to subsidiaries that will mature in 2021 amounted to €705 million and the remaining amount of €2,015 million will mature between 2022 and 2025. The remainder of the loans to subsidiaries has no fixed repayment schedule.Short-term receivablesIn € millions20192020Receivables from subsidiaries117125FX contracts910Other receivables3447Total160182Short-term receivables are expected to be settled within a year. Receivables from subsidiaries include interest to be received on intercompany loans in the amount of €9 million (2019: €2 million). Statement of changes in equity
In € millions
Balance at January 1, 2019
Changes in exchange rates in respect of
subsidiaries, associates and joint ventures
Post-retirement benefits
Net income
Comprehensive income
Dividend
Equity-settled transactions
Share buyback
Capital repayment and share consolidation
Issue of common shares
Addition to other reserves
Balance at December 31, 2019
Changes in exchange rates in respect of
subsidiaries, associates and joint ventures
Post-retirement benefits
Net income
Comprehensive income
Dividend
Equity-settled transactions
Share buyback
Acquisition of non-controlling interests
Addition to other reserves
Balance at December 31, 2020
Subscribed
share capital
Additional
paid-in capital
Cash flow
hedge reserve
Other
legal reserves
Cumulative trans-
lation reserves
Actuarial
gains & losses
Legal reserves
512
—
—
—
—
—
—
(14)
(399)
1
—
100
—
—
—
—
—
—
(5)
—
—
95
958
—
—
—
—
—
—
—
(957)
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
248
—
—
—
—
—
—
—
(61)
—
24
211
—
—
—
—
—
—
—
—
35
246
(608)
139
—
—
139
—
—
—
—
—
—
(469)
(404)
—
—
(404)
—
—
—
—
—
(2,459)
—
(225)
—
(225)
—
—
—
—
—
—
(2,684)
—
97
—
97
—
—
—
—
—
(873)
(2,587)
Other reserves
6,604
—
—
—
—
—
20
(2,520)
(583)
—
5,214
8,735
—
—
—
—
—
13
(540)
(29)
138
8,317
Undistributed
results
Shareholders'
equity
6,579
—
—
539
539
(1,423)
—
—
—
—
(5,238)
457
—
—
630
630
(366)
—
—
—
(173)
548
11,834
139
(225)
539
453
(1,423)
20
(2,534)
(2,000)
—
—
6,350
(404)
97
630
323
(366)
13
(545)
(29)
—
5,746
available for distribution – subject to the relevant provisions
of our Articles of Association and Dutch law.
At year-end 2020, legal reserves include the €163 million
reserve relating to earnings retained by subsidiaries, asso-
ciates and joint ventures after the year 1983, to the extent
that there are limitations for AkzoNobel to arrange profit
distributions; and the €83 million reserve for capitalized
development costs.
Dividend
Our dividend policy is to pay a stable to rising dividend.
On October 21, 2020, a new €300 million share buyback
program was announced, which is to be completed in the
first half of 2021. During 2020, 0.7 million common shares
were repurchased under this program, that have not yet
been cancelled.
Unrestricted reserves at year-end
In € millions
Shareholders' equity at year-end
Subscribed share capital
Subsidiaries' restrictions to transfer
funds
Reserve for development costs
Unrestricted reserves
2019
6,350
(100)
(145)
(66)
6,039
2020
5,746
(95)
(163)
(83)
5,405
In 2020, an interim dividend of €0.43 (2019: €0.41) per
common share was paid. We propose a 2020 final divi-
dend of €1.52 (2019: €1.49) per common share, which
would equal a total 2020 dividend of €1.95 (2019: €1.90).
On October 23, 2019, an €500 million share buyback
program was announced, for which 0.4 million common
shares were acquired in 2019. The plan was completed
in April 2020, by acquiring a further 6.2 million shares
in 2020.
AkzoNobel Report 2020 | Financial statements
128
129AkzoNobel Report 2020 | Financial statementsLong-term borrowingsFor the fair value of the bonds issued, refer to Note 27 of the Consolidated financial statements. We estimated the fair value of the bonds issued based on the quoted market prices (level 1) for the same or similar issues or on the current rates offered to us for debt with similar maturities. At year-end 2020, the fair value of the bonds included in long-term borrowings was €2,710 million (2019: €1,873 million).Note G Net debtWe have a multi-currency revolving credit facility, which was amended in 2020 from €1.8 billion to €1.3 billion and extended to 2025. This facility does not contain financial covenants or acceleration provisions that are based on adverse changes in ratings or material adverse change. At year-end 2020 and 2019, this facility has not been drawn.In April 2020, a bond was issued with a nominal value of €750 million maturing in 2030 at a coupon rate of 1.625%.Note H Other current liabilitiesAt year-end 2020 and 2019, none of the borrowings was secured by collateral.In 2021, an amount of €227 million of debt from subsidiar-ies will mature and €51 million of debt from subsidiaries will mature between 2022 and 2025. The remainder of the loans from subsidiaries has no fixed repayment schedule.Short-term borrowingsWe have US dollar and euro commercial paper programs in place, which can be used to the extent that the equiva-lent portion of the €1.3 billion multi-currency revolving credit facility is not used. We had no commercial paper outstanding at year-end 2020 and 2019.Short-term investmentsShort-term investments of €245 million almost entirely consist of time deposits, money market funds and market-able securities with a life time at investment date longer than three months but shorter than twelve months.Cash and cash equivalentsDeposits and money market funds within cash and cash equivalents almost entirely consist of time deposits immediately convertible into known amounts of cash and with a maturity of three months or less from the date of purchase and marketable securities that can be redeemed immediately when called.Bonds issuedIn € millions201920202 5/8% 2012/22 (€750 million)7477481 3/4% 2014/24 (€500 million)4984981 1/8% 2016/26 (€500 million)4964971 5/8% 2020/30 (€750 million)—743Total1,7412,486Analysis of net debt by categoryIn € millions20192020Bonds issued1,7412,486Debt from subsidiaries3,9415,029Long-term borrowings5,6827,515Current portion of long-term borrowings——Short-term loans363Short-term borrowings363Total borrowings5,7187,518Short-term investments(120)(245)Cash and cash equivalents(458)(736)Net debt5,1406,537Cash and cash equivalentsIn € millions20192020Cash on hand and in banks343427Deposits and money markets funds with a maturity less than three months115309Included in cash and cash equiva-lents in the balance sheet458736Other current liabilitiesIn € millions20192020Payables to subsidiairies5363FX contracts197Debt related to pensions33Other suppliers6558Interest payable1322Other liabilities6460Total217213 130AkzoNobel Report 2020 | Financial statementsNote I Financial instrumentsNote J Contingent liabilitiesAt year-end 2020, Akzo Nobel N.V. had outstanding foreign exchange contracts to buy currencies for a total of €0.9 billion (year-end 2019: €1.5 billion), while contracts to sell currencies totaled €0.9 billion (year-end 2019: €1.4 billion). The contracts mainly related to US dollars and pound sterling and all have maturities within one year. These contracts offset the foreign exchange contracts concluded by the subsidiaries, and the fair value changes are recognized in the statement of income to offset the fair value changes on the contracts with the subsidiaries. For information on risk exposure and risk management, see Note 27 of the Consolidated financial statements.Akzo Nobel N.V. is parent of the group’s fiscal unity in the Netherlands, and is therefore liable for the liabilities of said fiscal unity as a whole.Akzo Nobel N.V. has declared in writing that it accepts joint and several liability for contractual debts of certain Dutch consolidated companies (Article 403 of Book 2 of the Dutch Civil Code). These debts, at year-end 2020, aggregating €0.4 billion (2019: €0.4 billion), are included in the Consolidated balance sheet.Akzo Nobel N.V. has withdrawn its declarations of joint and several liability under Article 403 of Book 2 of the Dutch Civil Code for certain Dutch former Specialty Chemicals subsidiaries divested as per October 1, 2018 and is follow-ing the procedures to terminate its residual liability under those declarations under Article 404 of Book 2 of the Dutch Civil Code. One objection against the termination of residual liability is still pending and Akzo Nobel N.V. and Nouryon continue to cooperate to get this resolved.Additionally, at year-end 2020, guarantees were issued on behalf of consolidated companies for an amount of €0.3 billion (2019: €0.3 billion).The debts and liabilities of the consolidated companies underlying these guarantees are included in the Consoli-dated balance sheet. Our independent auditor, PwC, has rendered, for the period to which the audit of the financial statements relates, in addition to the audit of the statutory financial statements, mainly statutory audits of controlled entities.Note K Auditor’s feesA number of claims against Akzo Nobel N.V. are pending, all of which are contested. This includes a lawsuit filed in April 2019, by PT DWI Satrya Utama (PTDSU) against Akzo Nobel N.V., certain subsidiaries as well as certain subsidiary directors at the Tangerang District Court, Indonesia. PTDSU owns a 45% interest in PT ICI Paints Indonesia (PTICIPI), an indirect subsidiary of Akzo Nobel N.V.. PTDSU alleges that it suffered damages as a result of defendants improper management of PTICIPI. In March 2020, the District Court dismissed the case on the grounds that they do not have jurisdiction, against which the claimant appealed. In January 2021, the High Court of Indonesia rejected this appeal.Amsterdam, February 16, 2021The Board of ManagementThierry VanlanckerMaarten de VriesThe Supervisory BoardNils Smedegaard AndersenJolanda Poots-BijlSue ClarkByron GroteMichiel JaskiPamela KirbyDick SluimersPatrick ThomasFees PricewaterhouseCoopers2020In € millionsIn the NetherlandsNetwork outside the NetherlandsTotalAudit of the financial statements4.35.39.6Other audit 0.10.20.3Tax services———Other non-audit services———Total4.45.59.9Fees PricewaterhouseCoopers2019In € millionsIn the NetherlandsNetwork outside the NetherlandsTotalAudit of the financial statements4.56.010.5Other audit services0.30.10.4Tax services———Other non-audit services———Total4.86.110.9 OTHER INFORMATION
PROFIT ALLOCATION
AND DISTRIBUTIONS
PROPOSAL FOR PROFIT ALLOCATION
With due observance of Dutch law and the Articles of
Association, it is proposed that net income of €259 million
is carried to the other reserves. Furthermore, with due
observance of article 43, paragraph 7, it is proposed that
dividend on priority shares of €1,152 and on common
shares of €371 million (to be increased by dividend
on shares issued and reduced by dividend on shares
repurchased in 2021 before the ex-dividend date) will be
distributed. Following the acceptance of this proposal, the
holders of common shares will receive a total dividend of
€1.95 per share, of which €0.43 was paid earlier as an
interim dividend. The final dividend of €1.52 per share will
be made available from May 6, 2021.
PROFIT ALLOCATION AND
DISTRIBUTIONS
The following articles of our articles of association govern
profit allocation and distribution:
Article 43
43.6
The Board of Management shall be authorized to deter-
mine, with the approval of the Supervisory Board, what
share of profit remaining after application of the provisions
of the foregoing paragraphs shall be carried to reserves.
The remaining profit shall be placed at the disposal of
the Annual General Meeting of shareholders, with due
observance of the provisions of paragraph 7, it being
provided that no further dividends shall be paid on the
preferred shares.
43.7
From the remaining profit, the following distributions shall,
to the extent possible, be made as follows:
(a) To the holders of priority shares: 6% per share
or the statutory interest referred to in paragraph 1
of article 13, whichever is lower, plus any accrued
and unpaid dividends
(b) To the holders of common shares: a dividend of such
an amount per share as the remaining profit, less the
aforesaid dividends and less such amounts as the
Annual General Meeting of shareholders may decide to
carry to reserves, shall permit
43.8
Without prejudice to the provisions of paragraph 4 of this
article and of paragraph 4 of article 20, the holders of
common shares shall, to the exclusion of everyone else,
be entitled to distributions made from reserves accrued by
virtue of the provision of paragraph 7b of this article.
43.9
Without prejudice to the provisions of article 42 and
paragraph 8 of this article, the Annual General Meeting of
shareholders may decide on the utilization of reserves only
on the proposal of the Board of Management approved by
the Supervisory Board.
Article 44
44.7
Cash dividends by virtue of paragraph 4 of article 20,
article 42, or article 43 that have not been collected
within five years of the commencement of the second
day on which they became due and payable shall revert
to the company.
SPECIAL RIGHTS TO HOLDERS OF
PRIORITY SHARES
The priority shares are held by “Stichting Akzo Nobel”
(Foundation Akzo Nobel), whose board is composed of the
members of the Supervisory Board who are not members
of the Audit Committee. They each have one vote on the
board of the Foundation.
The Meeting of Holders of Priority Shares has the right
to draw up binding lists of nominees for appointment to
the Supervisory Board and the Board of Management.
Amendments to the Articles of Association are subject to
the approval of this meeting.
AkzoNobel Report 2020 | Financial statements
131
INDEPENDENT
AUDITOR’S REPORT
To: The Annual General Meeting and Supervisory
Board of Akzo Nobel N.V.
Report on the Financial statements 2020
Our opinion
In our opinion:
• The Consolidated financial statements of Akzo Nobel
N.V. together with its subsidiaries (“the Group”) give a
true and fair view of the financial position of the Group
as at December 31, 2020 and of its result and cash
flows for the year then ended in accordance with
International Financial Reporting Standards as adopted
by the European Union (EU-IFRS) and with Part 9 of
Book 2 of the Dutch Civil Code
• The Company financial statements of Akzo Nobel N.V.
(“the Company”) give a true and fair view of the financial
position of the Company as at December 31, 2020 and
of its result for the year then ended in accordance with
Part 9 of Book 2 of the Dutch Civil Code
What we have audited
We have audited the accompanying financial statements
2020 of Akzo Nobel N.V., Amsterdam, the Netherlands.
The financial statements include the Consolidated financial
statements of the Group and the Company financial
statements.
The Consolidated financial statements comprise:
• The Consolidated balance sheet as at December 31,
2020
• The following statements for 2020: the Consolidated
statement of income, the Consolidated statements of
comprehensive income, of changes in equity and of
cash flows
• The notes, comprising significant accounting policies
and other explanatory information
The Company financial statements comprise:
• The balance sheet as at December 31, 2020
• The statement of income for the year then ended
• The notes, comprising the accounting policies applied
and other explanatory information
The financial reporting framework applied in the prepara-
tion of the financial statements is EU-IFRS and the relevant
provisions of Part 9 of Book 2 of the Dutch Civil Code
for the Consolidated financial statements and Part 9 of
Book 2 of the Dutch Civil Code for the Company financial
statements.
The basis for our opinion
We conducted our audit in accordance with Dutch law,
including the Dutch Standards on Auditing. We have
further described our responsibilities under those stan-
dards in the section “Our responsibilities for the audit of
the financial statements” of our report.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of Akzo Nobel N.V. in accordance
with the European Union “Regulation on specific require-
ments regarding statutory audit of public-interest entities”,
the “Wet toezicht accountantsorganisaties” (Wta, Audit
firms supervision act), the “Verordening inzake de onafhan-
kelijkheid van accountants bij assuranceopdrachten”
(ViO, Code of Ethics for Professional Accountants, a
regulation with respect to independence) and other
relevant independence requirements in the Netherlands.
Furthermore, we have complied with the “Verordening
gedrags- en beroepsregels accountants” (VGBA, Dutch
Code of Ethics).
Our audit approach
Overview and context
Akzo Nobel N.V. is a global paints and coatings company
headquartered in the Netherlands and with operations in
over 150 countries. Our group audit scope and approach
are set out in the section “The scope of our group audit”.
In our audit we paid specific attention to the areas of focus
driven by the operations of the Group, as set out below.
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in
the financial statements. In particular, we considered
where the Board of Management made important judg-
ments, for example, in respect of significant accounting
estimates that involved making assumptions and consider-
ing future events that are inherently uncertain. In Note 1
of the Consolidated financial statements, the Company
describes areas of judgment in applying accounting
policies and the key sources of estimation uncertainty.
Given the significant estimation uncertainty and the related
higher inherent risks of material misstatement in the valu-
ation of the post-retirement benefit provisions and the
accounting for and valuation of deferred tax assets and
uncertain tax positions, we considered these matters as
key audit matters as set out in the section “Key audit
matters” of this report.
The Company continued the transformation programs
under the “Winning together: 15 by 20” strategy, which
include centralization of finance activities in global busi-
ness service hubs and simplification of the information
technology (IT) environment, impacting the company’s
systems, processes and controls. Inherently transformation
processes have the potential to disrupt the organization,
processes and culture. We therefore extended our audit
procedures during the planning phase of our audit, in order
to evaluate the impact of the transformation. Due to the
significance of the transformation to the Company and the
extended audit procedures, we included the transforma-
tion as a key audit matter, as set out in the section
“Key audit matters” of this report.
The global COVID-19 pandemic and related government
restriction measures affected the Company’s produc-
tion and distribution, caused changes in sales volumes
and product mix, and required staff to work from home.
We considered the impact of the pandemic on our audit
approach, including our scoping, materiality, and risk
assessment. We concluded this to be an area of focus,
that is not considered as a key audit matter. In particu-
lar we assessed the impact on significant management
accounting judgments, including future business and cash
flow projections underpinning impairment assessments,
deferred tax asset recoverability and the going concern
assumption. We also considered the risk of fraud inherent
to increased remote working. In terms of the execution of
our audit, we considered the impact of the travel and other
restrictions on our audit and on the review and supervision
of our teams. Our teams globally largely worked remotely
and digitally, supported by video-meetings and PwC’s
digital tooling. We increased the frequency of communi-
cation between the Group and component PwC teams,
including additional joint meetings with Group and compo-
AkzoNobel Report 2020 | Financial statements
132
nent management. While maintaining compliance with
local health regulations, we performed sufficient physical
checks of inventory and documents.
“Our responsibilities for the audit of the financial
statements”.
Other areas of focus, that were not considered as key
audit matters, were related to the impairment testing of
goodwill and other intangibles with indefinite useful lives,
testing of valuation of the other provisions and information
technology general controls (ITGCs). The ITGCs are the
policies and procedures used by the Company to ensure
IT operates as intended and provides reliable data for
financial reporting purposes.
We ensured that the audit teams at both group and
component level included the appropriate skills and
competences which are needed for the audit of the Group.
We therefore included in our team experts in the areas
of pensions, share based payments and valuations and
specialists in the areas of tax, IT and treasury.
Materiality
The scope of our audit is influenced by the application
of materiality, which is further explained in the section
Based on our professional judgment we determined
certain quantitative thresholds for materiality, including the
overall materiality for the financial statements as a whole
as set out in the table below. These, together with qualita-
tive considerations, helped us to determine the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and to evalu-
ate the effect of identified misstatements, both individually
and in aggregate, on the financial statements as a whole
and on our opinion.
We also take misstatements and/or possible misstate-
ments into account that, in our judgment, are material for
qualitative reasons.
We agreed with the Audit Committee and the Supervisory
Board that we would report to them misstatements identi-
fied during our audit above €2 million (2019: €1.5 million)
as well as misstatements below that amount that, in our
view, warranted reporting for qualitative reasons.
The outline of our audit approach was as follows:
Materiality
Materiality
Overall materiality: €45 million
(2019: €39 million).
Audit scope
• We conducted audit work at
50 components in 18 countries.
• Site reviews were virtually
conducted to 9 countries
(34 components).
• Audit coverage: 65% of
consolidated revenue, 72% of
consolidated total assets and
68% of consolidated profit
before tax.
Key audit matters
• Transformation to deliver
towards the “Winning together:
15 by 20” strategy
• Valuation of post-retirement
benefit provisions
• Valuation of deferred tax assets
and uncertain tax positions.
Overall group materiality €45 million (2019: €39 million).
Basis for determining
materiality
We used our professional judgment to
determine overall materiality. As a basis for
our judgment we used 5% of total profit
before tax
Rationale for bench-
mark applied
Component materiality
We used profit before tax as the primary
benchmark, a generally accepted auditing
practice, based on our analysis of the
common information needs of users of
the financial statements. On this basis, we
believe that profit before tax is an important
metric for the financial performance of the
Company.
To each component in our audit scope, we,
based on our judgment, allocate materiality
that is less than our overall group materiality.
The range of materiality allocated across
components was between €7 million and
€38 million.
The scope of our group audit
Akzo Nobel N.V. is the parent company of a group of
entities managed by the Board of Management and
Executive Committee. The financial information of this
Group is included in the Consolidated financial statements
of Akzo Nobel N.V.
We tailored the scope of our audit to ensure that we, in
aggregate, provide sufficient coverage of the financial
statements for us to be able to give an opinion on the
financial statements as a whole, taking into account
the management structure of the Group, the nature of
operations of its components, the accounting processes
and controls, and the markets in which the components
of the Group operate. In establishing the overall group
audit strategy and plan, we determined the type of work
required to be performed at component level by the group
engagement team and by each component auditor.
The group audit included 24 components which were
subjected to audits of their complete financial information,
selected on the basis of the relative size of their opera-
tions. None of the components are individually significant
to the group. We further subjected 13 components to
specific risk-focused audit procedures as they include
significant or higher risk areas. Additionally, we selected
13 components for audit procedures to achieve appropri-
ate coverage on financial line items in the Consolidated
financial statements.
In total, in performing these procedures, we achieved the
following coverage on the financial line items:
Revenue
Total assets
Profit before tax
2020
65%
72%
68%
None of the remaining components represented more
than 2% of total group revenue, total group assets or
profit before tax. For those remaining components we
performed, among other things, analytical procedures to
corroborate our assessment that there were no significant
risks of material misstatement within those components.
For all components we used component auditors who
are familiar with the local laws and regulations to perform
AkzoNobel Report 2020 | Financial statements
133
As in all of our audits, we addressed the risk of manage-
ment override of internal controls, including evaluating
whether there was evidence of bias by management that
may represent a risk of material misstatement due to fraud.
The audit procedures to respond to the assessed risks
include, amongst others, that we evaluated the design
and the implementation of internal controls that mitigate
fraud risks, retrospective review of prior year’s estimates,
procedures on unexpected journal entries with the support
of data-analytics and we incorporated elements of unpre-
dictability in our audit. In addition, we assessed matters
reported on the Group’s whistleblowing and complaints
procedures and results of management’s investigation of
such matters if deemed applicable and discussed this with
the Audit Committee.
We refer to the key audit matter “Transformation to deliver
towards the Winning together: 15 by 20 strategy” for the
impact of the transformation on the risk of management
override of internal controls. We refer to the key audit
matters “Valuation of post-retirement benefit provisions”
and “Valuations of deferred tax assets and uncertain tax
positions”, that are examples of our approach related to
areas of higher risk due to significant accounting estimates
where management makes significant judgments.
the audit work. We collectively performed hard close audit
procedures on the interim October balance sheet positions
and results. These hard close audit procedures included
substantive audit work on certain material balances and
transactions. Roll-forward procedures and top-up testing
were performed at year-end to cover the full year period.
Where component auditors performed the work, we
determined the level of involvement we needed to have in
their audit work to be able to conclude whether we had
obtained sufficient and appropriate audit evidence as a
basis for our opinion on the Consolidated financial state-
ments as a whole.
We issued instructions to the component audit teams in
our audit scope. These instructions included amongst
others our risk analysis, materiality and scope of the work.
We explained to the component audit teams the structure
of the Group, the main developments that are relevant for
the component auditors, the risks identified, the material-
ity levels to be applied and our global audit approach. We
had individual calls with each of the in-scope component
audit teams throughout the audit. During these calls, we
discussed the significant accounting and audit matters
identified by the component auditors, their reports, the
findings of their procedures and other matters which could
be of relevance for the Consolidated financial statements.
The group engagement team virtually attended site review
meetings with a selection of the component teams and
local management. During these meetings we discussed
the strategy and financial performance of the local busi-
nesses, as well as the audit plan and execution, significant
risks and other relevant audit topics. The most significant
components are selected every year and other compo-
nents are selected depending on specific considerations
which include, amongst others audit observations,
specific risks identified and other major events. In view of
developing a broader understanding of the local impact
of the pandemic we increased the number of compo-
nents covered compared to prior year. In the current year
components in the following countries were selected:
United States, China, Germany, France, United Kingdom,
Italy, South Korea, Turkey and the Netherlands.
The group engagement team performed the audit work on
the group consolidation, financial statement disclosures
and a number of complex items and processes controlled
and monitored centrally by Akzo Nobel N.V. These include
impairment testing of goodwill and other intangible assets
with indefinite useful lives, share-based payments, trea-
sury, ITGCs and the Akzo Nobel N.V. standalone entity.
The group engagement team also performed central
procedures over controls performed by the business units
and other central functions, where relevant for our audit.
This included indirect entity level controls (e.g. to prevent
and detect fraud), including the code of conduct, corpo-
rate directives, whistle-blower policy, internal representa-
tions, business partnering program and internal audits.
By performing the procedures above at components,
combined with additional procedures at group level,
we have been able to obtain sufficient and appropriate
audit evidence on the Group’s financial information,
as a whole, to provide a basis for our opinion on the
financial statements.
Our focus on the risk of fraud and
non-compliance with laws and regulations
The primary responsibility for the prevention and detection
of fraud and non-compliance with laws and regulations lies
with the Board of Management with the oversight of the
Supervisory Board.
As part of our process of identifying fraud risks, we evalu-
ated fraud risk factors with respect to financial report-
ing fraud, misappropriation of assets and bribery and
corruption. We, together with our forensics specialists,
evaluated the risk of material misstatement due to fraud.
We conducted interviews with both members of the Board
of Management, and with members of the Executive
Committee, the Supervisory board and of others within the
company to obtain an understanding the Company’s fraud
risk assessment and of the processes for identifying and
responding to the risks of fraud and the internal control
that management has established to mitigate these risks.
In addition, we performed procedures to obtain an
understanding of the legal and regulatory frameworks that
are applicable for the Group. We identified provisions of
those laws and regulations, generally recognized to have
a direct effect on the determination of material amounts
and disclosures in the financial statements such as the
financial reporting framework and tax and pension laws
and regulations.
AkzoNobel Report 2020 | Financial statements
134
Key audit matters
Key audit matters are those matters that, in our profes-
sional judgment, were of most significance in the audit of
the financial statements. We have communicated the key
audit matters to the Supervisory Board. The key audit
matters are not a comprehensive reflection of all matters
identified by our audit and that we discussed. In this
section, we described the key audit matters and included
a summary of the audit procedures we performed on
those matters.
We addressed the key audit matters in the context of our
audit of the financial statements as a whole, and in
forming our opinion thereon. We do not provide separate
opinions on these matters or on specific elements of the
financial statements. Any comment or observation we
Key audit matters
Key audit matter
Transformation to deliver towards the “Winning together: 15 by 20 strategy”
In line with 2018 and 2019, the group continued its focus on transforming the company as part of manage-
ment’s three-year strategy ‘Winning together: 15 by 20’. The transformation programs include further steps
in centralization of finance activities in global business service hubs and simplification of the IT environment,
impacting the Company’s systems, processes and controls. Inherently, transformation processes have the
potential to lead to a disruption of the organization, processes and culture.
The specific and ambitious external target of 15% ROS by 2020 inherently increases pressure on management
to achieve such targets, and as such contributes to the risk of management override of internal controls risk,
which is a presumed audit risk in our audit. This risk was partially mitigated by management’s announcement in
April 2020 of suspension of the financial target as a result of the uncertainty of the impact of the pandemic on
AkzoNobel. The remuneration targets remained in place.
In addition, the planned increase in profitability of the company is expected to be reflected in management
estimates, such as the forecasts used in the valuation of deferred tax assets and goodwill impairment analysis.
Valuation of post-retirement benefit provisions
Note 19
The post-retirement benefit provisions consist of defined benefit obligations (€14.2 billion) more than offset by
plan assets (€15.0 billion). The largest pension plans are the ICI Pension Fund (ICIPF) and the AkzoNobel (CPS)
Pension Scheme in the UK which together account for 86 percent of the defined benefit obligation (DBO) and
91 percent of the plan assets.
We consider this to be a key audit matter because positions are significant to the company and the assess-
ment process is complex and involves significant management judgment. The actuarial assumptions used
include demographic assumptions (rates of employee turnover, disability, early retirement and mortality) and
financial assumptions (discount rate, future salary, benefit increases/indexation and inflation), as disclosed in
Note 19 of the Consolidated financial statements. Technical expertise is required to determine closing positions.
Valuation of deferred tax assets and uncertain tax positions
Note 9
The Group operates globally and is therefore subject to income taxes in various tax jurisdictions. The assess-
ment of the valuation of deferred tax assets, resulting from net operating losses, tax credits and temporary
differences, and provisions for uncertain tax positions is significant to our audit as the positions are significant to
the company, calculations are complex and depend on high estimation uncertainty and judgmental assump-
tions. The key assumptions include long-term projected revenue growth, savings supported by the transforma-
tion plans and programs, margin development and local fiscal regulations. The company’s disclosures concern-
ing income taxes are included in note 9 to the Consolidated financial statements.
Our audit work and observations
We extended our audit procedures to evaluate the impact of the transformation on systems, processes and controls.
During the planning phase of our audit we updated our understanding of the transformation programs, as well as our
understanding of the project governance, detailed timeline, scope of entities and processes of the transition of finance
activities to global business service hubs. We held discussions directly with the different business service hubs in
Poland, India, China and United States, in order to understand the status of the transition, understand the processes
and controls in place to address the changes in the internal controls and evaluate the maturity of the processes. In
order to obtain further evidence of the effectiveness of the controls in place, we also performed walkthroughs on
selected controls in the business service hub in India. We used this information as part of our risk assessment proce-
dures, determination of the scope of our audit and communication to our component teams.
For the simplification of the IT environment we involved our IT specialists. We obtained an understanding of the project
governance and the validation approach and we tested the data migration. We used data analytics to identify unex-
pected journal entries.
In addition, for the testing of management’s estimates, such as forecasts used in the valuation of deferred tax assets
and goodwill impairment analysis, we validated the planned increase in profitability supported by, amongst others,
approved plans and incurred costs savings.
From the procedures performed, we did not have material findings with respect to the balance sheet positions and
results recorded and disclosed.
With the assistance of our actuarial experts, we evaluated management’s actuarial assumptions, the valuation method-
ologies applied, and we assessed the objectivity and competence of the company’s external pension experts used for
the calculation of the post-retirement benefit positions.
We have challenged management, primarily on their assumptions applied to which the post-retirement benefit provi-
sions are the most sensitive, by performing independent testing over the assumptions and methodologies used and
comparing to the published actuarial tables, amongst others, with support of our actuarial experts. We paid particular
attention to the discount rate changes as described by the company in note 19, given the significance.
We also tested the participant census data and the valuation of the plan assets through independent price testing (e.g.
by reconciling to independently published market prices).
Furthermore, we tested the transactions as described in note 19 and we verified the appropriate accounting. We also
assessed the adequacy of the company’s disclosure in note 19 to the Consolidated financial statements.
Our procedures did not result in material findings with respect to the valuation and disclosure of post-retirement benefit
provisions at December 31, 2020.
With respect to the valuation of deferred tax assets and uncertain tax positions we performed the following procedures
with the assistance of our tax specialists:
• We tested management’s assessment of the recoverability of the deferred tax assets, by challenging their key
assumptions. We specifically focused on the development of the budget compared to the actual results, the impact
of COVID-19 on the country results, the impact of the structural nature of (transformation) savings and the complete-
ness of the future cost included in the forecasts compared to the current cost base.
• We obtained an understanding and assessed completeness of the tax exposures and uncertain tax positions recog-
nised, through discussions with group and local management. We evaluated the probability of future cash outflows
related to the uncertain tax positions identified by the company.
• We also assessed the applicable local fiscal regulations and developments, in particular those related to changes in
the statutory income tax rate and the statutes of limitation, since these are key assumptions underlying the valuation
of the deferred tax assets and uncertain tax positions. We analysed the tax positions and evaluated the assumptions
and methodologies used.
• In addition, we assessed the adequacy of the company’s disclosures on deferred tax assets and uncertain tax posi-
tions and assumptions used.
Our procedures did not result in material findings with respect to the valuation of deferred tax assets, the uncertain
tax positions recorded and related disclosures at December 31, 2020.
AkzoNobel Report 2020 | Financial statements
135
made on the results of our procedures should be read in
this context.
Report on other legal and regulatory
requirements
cant doubt on the company’s ability to continue as a going
concern in the financial statements.
Report on the other information included in the
annual report
In addition to the financial statements and our auditor’s
report thereon, the annual report contains other informa-
tion (the “Other information”) that consists of:
• The Management report, as defined in Note 1 of the
Consolidated financial statements
• The remuneration report
• The other information pursuant to Part 9 of Book 2 of
the Dutch Civil Code
• Other parts of the annual report: Sustainability
statements, Leadership and governance other than as
part of the Management Report, and Financial summary
Based on the procedures performed as set out below, we
conclude that the Other information:
• is consistent with the financial statements and does not
contain material misstatements
• contains the information that is required by Part 9 of
Our appointment
We were appointed as auditors of Akzo Nobel N.V. on
April 29, 2014 by the Supervisory Board following the
passing of a resolution by the shareholders at the Annual
Meeting held on April 29, 2014, and effective January 1,
2016. Our engagement has been renewed annually.
No prohibited non-audit services
To the best of our knowledge and belief, we have not
provided prohibited non-audit services as referred to in
Article 5(1) of the European Regulation on specific require-
ments regarding statutory audit of public-interest entities.
Services rendered
The services, in addition to the audit, that we have
provided to the company and its controlled entities, for the
period to which our statutory audit relates, are disclosed in
note L to the financial statements.
Book 2 and the sections 2:135b and 2:145 subsection
2 of the Dutch Civil Code
Responsibilities for the financial statements
and the audit
We have read the Other information. Based on our knowl-
edge and understanding obtained in our audit of the finan-
cial statements or otherwise, we have considered whether
the other information contains material misstatements. By
performing our procedures, we comply with the require-
ments of Part 9 of Book 2 and section 2:135b subsection
7 of the Dutch Civil Code and the Dutch Standard 720.
The scope of such procedures was substantially less than
the scope of those performed in our audit of the financial
statements.
The Board of Management is responsible for the prepara-
tion of the Other information, including the Management
report (as defined in Note 1 of the Consolidated financial
statements) and the other information in accordance with
Part 9 of Book 2 of the Dutch Civil Code and the remu-
neration report in accordance with the sections 2:135b
and 2:145 subsection 2 of the Dutch Civil Code.
Responsibilities of the Board of Management
and the Supervisory Board for the financial
statements
The Board of Management is responsible for:
• The preparation and fair presentation of the financial
statements in accordance with EU-IFRS and with Part 9
of Book 2 of the Dutch Civil Code
• Such internal control as the Board of Management
determines is necessary to enable the preparation of
the financial statements that are free from material
misstatement, whether due to fraud or error
As part of the preparation of the financial statements, the
Board of Management is responsible for assessing the
company’s ability to continue as a going concern. Based
on the financial reporting frameworks mentioned, the
Board of Management should prepare the financial state-
ments using the going-concern basis of accounting unless
the Board of Management either intends to liquidate
the company or to cease operations, or has no realistic
alternative but to do so. The Board of Management should
disclose events and circumstances that may cast signifi-
The Supervisory Board is responsible for overseeing the
company’s financial reporting process.
Our responsibilities for the audit of the financial
statements
Our responsibility is to plan and perform an audit engage-
ment in a manner that allows us to obtain sufficient and
appropriate audit evidence to provide a basis for our
opinion. Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high but not absolute level
of assurance, which makes it possible that we may not
detect all material misstatements. Misstatements may arise
due to fraud or error. They are considered to be material
if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of the financial statements.
Materiality affects the nature, timing and extent of our audit
procedures and the evaluation of the effect of identified
misstatements on our opinion.
A more detailed description of our responsibilities is set out
in the appendix to our report.
Amsterdam, February 16, 2021
PricewaterhouseCoopers Accountants N.V.
Original has been signed by Fernand Izeboud RA
AkzoNobel Report 2020 | Financial statements
136
Appendix to our auditor’s report on the financial
statements 2020 of Akzo Nobel N.V.
In addition to what is included in our auditor’s report, we
have further set out in this appendix our responsibilities for
the audit of the financial statements and explained what an
audit involves.
The auditor’s responsibilities for the audit of the
financial statements
We have exercised professional judgment and have
maintained professional scepticism throughout the audit
in accordance with Dutch Standards on Auditing, ethical
requirements and independence requirements. Our audit
consisted, among other things of the following:
• Identifying and assessing the risks of material
misstatement of the financial statements, whether
due to fraud or error, designing and performing audit
procedures responsive to those risks, and obtaining
audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions,
misrepresentations, or the intentional override of
internal control.
• Obtaining an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of
the company’s internal control.
• Evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by the Board of
Management.
• Concluding on the appropriateness of the Board of
Management’s use of the going-concern basis of
accounting, and based on the audit evidence obtained,
concluding whether a material uncertainty exists related
to events and/or conditions that may cast significant
doubt on the company’s ability to continue as a going
concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s
report and are made in the context of our opinion on
the financial statements as a whole. However, future
events or conditions may cause the company to cease
to continue as a going concern.
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, not communicating
the matter is in the public interest.
• Evaluating the overall presentation, structure and
content of the financial statements, including the
disclosures, and evaluating whether the financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
Considering our ultimate responsibility for the opinion on
the Consolidated financial statements, we are responsible
for the direction, supervision and performance of the group
audit. In this context, we have determined the nature
and extent of the audit procedures for components of
the Group to ensure that we performed enough work to
be able to give an opinion on the financial statements as
a whole. Determining factors are the geographic struc-
ture of the Group, the significance and/or risk profile of
group entities or activities, the accounting processes and
controls, and the industry in which the Group operates. On
this basis, we selected group entities for which an audit
or review of financial information or specific balances was
considered necessary.
We communicate with the Supervisory Board regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our
audit. In this respect, we also issue an additional report to
the audit committee in accordance with Article 11 of the
EU Regulation on specific requirements regarding statutory
audit of public-interest entities. The information included in
this additional report is consistent with our audit opinion in
this auditor’s report.
We provide the Supervisory Board with a statement that
we have complied with relevant ethical requirements
regarding independence, and communicate with them
all relationships and other matters that may reasonably
be thought to bear on our independence, and where
applicable, related actions taken to eliminate threats or
safeguards applied.
From the matters communicated with the Supervisory
Board, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
AkzoNobel Report 2020 | Financial statements
137
ASSURANCE REPORT
OF THE INDEPENDENT
AUDITOR
To: Supervisory Board and Board of
Management of Akzo Nobel N.V.
Assurance report on the selected non-financial
indicators in the annual report 2020
Our conclusion
We have reviewed the selected non-financial indicators
in the annual report 2020 of Akzo Nobel N.V. Amsterdam
(“AkzoNobel” or “the company”). Based on the procedures
performed and evidence obtained, nothing has come to
our attention that causes us to believe that the selected
non-financial indicators in the annual report 2020 are not
prepared, in all material respects, in accordance with
AkzoNobel’s reporting criteria.
What we have reviewed
The object of our assurance engagement concerns
selected non-financial indicators for the year ended
December 31, 2020. The selected indicators are marked
with the symbol
(the “indicators”) in the annual report
2020 of Akzo Nobel N.V. (the “annual report”), and are as
follows:
• Organizational health score
• Female executives (in %)
• Fatalities employees (number)
• Fatalities contractors – temporary workers plus
• Volatile organic compounds (in kilotons)
• Volatile organic compounds (kg per ton of production)
• Energy use (in 1000 TJ)
• Energy use (GJ per ton of production)
• Total waste (total kg per ton of production)
• Hazardous waste to landfill (in kilotons)
• Hazardous waste to landfill (total kg per ton of
production)
• Renewable energy – own operations (in %)
• Renewable electricity – own operations (in %)
• Greenhouse gas emissions (kg CO2(e) per ton of
production)
• Greenhouse gas emissions – direct CO2(e) emissions
(Scope 1) (in million tons)
• Greenhouse gas emissions – indirect CO2(e) emissions
(Scope 2) (in million tons)
• Greenhouse gas emissions – direct CO2(e) emissions
(Scope 1) (total kg per ton of production)
• Greenhouse gas emissions – indirect CO2(e) emissions
(Scope 2) (total kg per ton of production)
• Total waste – reusable (in kilotons)
• Total waste – non-reusable (in kilotons)
• Total non-reusable waste (total kg per ton of production)
• Fresh water use (in million M3)
• Fresh water use (M3 per ton of production)
• Scope 3 upstream (million tons)
• Scope 3 downstream (million tons)
• Cradle-to-grave carbon footprint (Scope 1, 2 and 3)
(million tons)
• Suppliers in sustainability program – in line with our
expectation (in %)
• Suppliers in sustainability program – under development
(in %)
independent (number)
• Suppliers participating in CSR program (in % against
• Lost time injury rate employees/temporary workers (per
baseline)
200,000 hours worked)
• Eco-premium solutions (in % of revenue)
• Lost time injury rate contractors (per 200,000 hours
worked)
• Regulatory actions – Level 4 (number)
• Total reportable injury rate employees/temporary
workers (per 200,000 hours worked)
• Total reportable injury rate contractors (per 200,000
hours worked)
• Loss of primary containment – Level 1 (number)
• Loss of primary containment – Level 2 (number)
• Process safety event – Level 3 (number)
• Occupational illness rate employees (per 1,000,000
hours worked)
The basis for our conclusion
We conducted our review in accordance with Dutch
law, including the Dutch Standard 3000A “Assurance
engagements, other than audits or reviews of historical
financial information (attestation-engagements)”. This
engagement is aimed to provide limited assurance.
Our responsibilities under this standard are further
described in the section “Our responsibilities for the
review” of our report.
We believe that the assurance information we have
obtained is sufficient and appropriate to provide a basis
for our conclusion.
Independence and quality control
We are independent of Akzo Nobel N.V. in accordance
with the “Verordening inzake de onafhankelijkheid van
accountants bij assurance opdrachten” (ViO, Code
of Ethics for Professional Accountants, a regulation
with respect to independence) and other relevant
independence requirements in the Netherlands.
Furthermore, we have complied with the “Verordening
gedrags- en beroepsregels accountants” (VGBA, Code
of Ethics for Professional Accountants, a regulation with
respect to rules of professional conduct).
We apply the “Nadere voorschriften kwaliteitssystemen”
(NVKS, Regulations for quality systems) and accordingly
maintain a comprehensive system of quality control
including documented policies and procedures regarding
compliance with ethical requirements, professional
standards and other applicable legal and regulatory
requirements.
Applicable criteria
The indicators need to be read and understood in
conjunction with the reporting criteria. The Board of
Management of AkzoNobel is solely responsible for
selecting and applying these reporting criteria, taking
into account applicable law and regulations related
to reporting.
The reporting criteria used for the preparation of the
Indicators are AkzoNobel’s reporting criteria developed by
the company, as disclosed in the “Managing sustainability”
paragraph of the annual report and further elaborated in
The Reporting Principles 2020 which were made available
online* www.akzonobel.com/en/about-us/sustainability-/
reporting-principles-. The absence of a significant body
of established practice on which to draw, to evaluate and
measure non-financial information allows for different,
but acceptable, measurement techniques and can affect
comparability between entities and over time.
* The maintenance and integrity of AkzoNobel’s website is the responsibility of the
Board of Management; the work carried out by us does not involve consideration
of these matters and, accordingly, we accept no responsibility for any changes
that may have occurred to the Reporting Principles 2020 when presented on
AkzoNobel’s website after the date of this assurance report.
AkzoNobel Report 2020
138
• To consider whether the indicators as a whole, including
the disclosures, reflect the purpose of the reporting
criteria used
We communicated with the Supervisory Board and Board
of Management on the planned scope and timing of the
engagement and on the significant findings that result from
our engagement.
Amsterdam, February 16, 2021
PricewaterhouseCoopers Accountants N.V.
Original has been signed by Fernand Izeboud RA
Responsibilities for the indicators and the
review thereof
Responsibilities of the Board of Management and
Supervisory Board
The Board of Management of Akzo Nobel N.V. is
responsible for the preparation of the indicators in
accordance with AkzoNobel’s reporting criteria, including
the identification of the intended users and the criteria
being applicable for the purpose of these users.
Furthermore, the Board of Management is responsible
for such internal control as it determines is necessary to
enable the preparation of the indicators that are free from
material misstatement, whether due to fraud or error.
The Supervisory Board is responsible for overseeing the
company’s reporting process on the indicators.
Our responsibilities for the review
Our responsibility is to plan and perform our review in a
manner that allows us to obtain sufficient and appropriate
evidence to provide a basis for our conclusion.
Our conclusion aims to provide limited assurance. The
procedures performed in this context consisted primarily of
making inquiries with officers of the entity and determining
the plausibility of the information included in the indicators.
The level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that
would have been obtained had a reasonable assurance
engagement been performed.
Misstatements may arise due to fraud or error. They
are considered to be material if, individually or in the
aggregate, they could reasonably be expected to influence
the decisions of users taken on the basis of the Indicators.
Materiality affects the nature, timing and extent of our
assurance procedures and the evaluation of the effect of
identified misstatements on our conclusion.
Procedures performed
We have exercised professional judgment and have
maintained professional scepticism throughout the review
in accordance with the Dutch Standard 3000A, ethical
requirements and independence requirements.
Our review consisted, among other procedures, of the
following:
• Evaluating the appropriateness of the reporting
criteria used, their consistent application and related
disclosures in the indicators. This includes the
evaluation of the reasonableness of estimates made by
the Board of Management
• Obtaining an understanding of internal control relevant
to the review in order to design assurance procedures
that are appropriate in the circumstances, but not
for the purpose of expressing a conclusion on the
effectiveness of the company’s internal control
• Identifying areas with a higher risk of material
misstatement within the indicators, whether due to
fraud or error, designing and performing assurance
procedures responsive to those risks, and obtaining
evidence that is sufficient and appropriate to provide a
basis for our conclusion. These procedures consisted,
among others, of:
- Interviewing management (and/or relevant staff)
responsible for the sustainability strategy, policy and
results
- Interviewing relevant staff responsible for providing the
information for, carrying out internal control procedures
on, and consolidating the data in the indicators
- Determining the nature and extent of the review
procedures for the group components and locations.
For this, the nature, extent and/or risk profile of
these components are decisive. Based thereon we
selected the components and locations to visit. We
have performed remote review procedures in Turkey
to validate our understanding of local processes. In
addition, during our procedures in Turkey we also
validated source data and evaluated the design and
implementation of internal controls and validation
procedures
- Obtaining assurance evidence that the indicators
reconcile with underlying records of the company
- Reviewing, on a limited test basis, relevant internal and
external documentation
- Performing an analytical review of the data and trends
in the information submitted for consolidation at
corporate level
• Evaluating the consistency of the indicators with the
information in the annual report, which is not included in
the scope of our review
AkzoNobel Report 2020
139
FINANCIAL SUMMARY
Consolidated statement of income
In € millions
Revenue
Adjusted operating income3
Operating income
Financing income and expenses
Results from associates and joint ventures
Income tax
Profit for the period from continuing operations
Discontinued operations
Non-controlling interests
Net income, attributable to shareholders
Common shares, in millions at year-end
Dividend2
Number of employees at year-end
Average number of employees
Employee benefits
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
Ratios
ROS
OPI margin
ROI4
Net income in % of shareholders’ equity
Employee benefits in % of revenue
Interest coverage
Per share information
Net income
Adjusted earnings per share
Shareholders’ equity
Highest share price during the year
Lowest share price during the year
Year-end share price
2011
2012
2013
14,604
15,390
14,590
1,154
1,157
(311)
24
(241)
629
(59)
(64)
506
234.7
304
52,020
51,100
2,765
286
23
7.9
7.9
10.0
5.6
18.9
4.7
2.04
3.10
39.25
53.74
29.25
37.36
972
(1,198)
(205)
13
(203)
(1,593)
(436)
(63)
(2,092)
239.0
214
50,610
52,200
3,018
295
(23)
6.3
(7.8)
8.2
–1
19.6
–1
(8.82)
2.55
24.12
49.75
35.16
49.75
897
958
(200)
14
(111)
661
131
(68)
724
242.6
210
49,600
50,200
2,950
291
19
6.1
6.6
9.0
12.9
20.2
5.1
3.00
2.62
23.06
56.08
42.65
55.71
2014
14,296
1,072
987
(156)
21
(252)
600
18
(72)
546
246.0
212
47,200
48,200
2,824
297
20
7.5
6.9
10.9
9.5
19.8
8.6
2.23
2.81
23.53
60.77
47.63
57.65
2015
14,859
1,462
1,573
(114)
17
(416)
1,060
6
(87)
979
249.0
222
45,600
46,100
2,728
322
34
9.8
10.6
14.0
15.1
18.4
16.2
3.95
4.02
26.04
74.81
55.65
61.68
20165 6
9,434
928
923
(91)
18
2017
9,612
905
825
(78)
17
(234)
(253)
616
436
(82)
970
252.2
239
36,300
36,200
1,794
261
25
9.8
9.8
14.4
14.8
19.0
13.2
3.87
3.80
25.99
64.74
50.17
59.39
511
393
(72)
832
252.6
1,287
35,700
36,200
1,935
266
23
9.4
8.6
13.9
14.2
20.1
12.3
3.31
4.40
23.22
82.64
59.11
73.02
2018
9,256
798
605
(52)
20
(118)
455
6,274
(55)
6,674
256.2
390
34,500
34,900
1,976
265
17
8.6
6.5
12.6
56.4
21.3
8.0
26.19
1.91
46.19
82.70
68.82
70.40
20197
9,276
991
841
(76)
20
(230)
555
22
(38)
539
199.6
1,423
33,800
34,200
1,875
271
25
10.7
9.1
14.1
8.5
20.2
14.3
2.53
3.10
32.33
91.86
69.12
90.69
2020
8,530
1,099
963
(69)
25
(241)
678
(7)
(41)
630
190.6
366
32,200
33,000
1,850
258
29
12.9
11.3
16.1
11.0
21.7
18.5
3.29
3.88
30.26
91.60
48.50
87.86
¹ Not meaningful as operating income and net income were losses.
2 Cash dividend paid to shareholders of AkzoNobel.
3 Adjusted operating income = operating income excluding identified items.
4 ROI% is calculated as adjusted operating income (operating income excluding identified items) of the last 12 months as a percentage of
average invested capital of the last 12 months. Invested capital is calculated as total assets (excluding cash and cash equivalents, short-
term investments, investments in associates, the receivable from pension funds in an asset position and assets held for sale) less current
tax liabilities, deferred tax liabilities and trade and other payables. OPI is calculated as operating income as percentage of revenues from
third parties.
5 Represented to present the Specialty Chemicals business as discontinued operations.
6 Represented to the new adjusted earnings per share definition, which no longer excludes post-tax amortization charges.
7 2019 includes the impact of the adoption of IFRS 16 “Leases”.
AkzoNobel Report 2020
140
Consolidated balance sheet
In € millions
Intangible assets
Property, plant and equipment
Right-of-use assets
Other non-current assets
Total non-current assets
Inventories
Receivables
Short-term investments
Cash and cash equivalents
Assets held for sale
Total current assets
Shareholders’ equity
Non-controlling interests
Total equity
Provisions
Long-term borrowings
Other non-current liabilities
Total non-current liabilities
Short-term borrowings
Current liabilities
Current portion of provisions
Liabilities held for sale
Total current liabilities
Average invested capital2
Capital expenditures5
Depreciation2
OWC4
Net debt
Ratios
Equity/non-current assets
Inventories and receivables/current liabilities
Operating working capital as % of revenue1
2011
7,392
3,705
–
2,664
13,761
1,924
3,035
–
1,635
–
6,594
9,031
529
9,560
2,392
3,035
541
5,968
494
3,782
551
–
4,827
2012
4,454
3,739
–
2,628
10,821
1,545
2,789
–
1,752
921
7,007
5,764
464
6,228
2,677
3,388
434
6,499
662
3,632
455
352
5,101
2013
3,906
3,589
–
2,219
9,714
1,426
2,622
–
2,098
203
6,349
5,594
427
6,021
1,938
2,666
389
4,993
961
3,438
601
49
5,049
2014
4,142
3,835
–
2,148
10,125
1,545
2,831
–
1,732
66
6,174
5,790
477
6,267
2,143
2,527
412
5,082
811
3,634
494
11
4,950
2015
4,156
4,003
–
2,125
10,284
1,504
2,810
–
1,365
–
5,679
6,484
496
6,980
1,865
2,161
360
4,386
430
3,716
451
–
4,597
11,537
11,817
10,007
9,871
10,475
658
419
1,891
1,894
0.69
1.31
13.2
826
463
1,572
2,298
0.58
1.19
10.7
666
472
1,384
1,529
0.62
1.18
9.9
588
477
1,418
1,606
0.62
1.20
10.1
651
487
1,385
1,226
0.68
1.16
9.7
2016
4,413
4,190
–
1,736
10,339
1,532
2,846
–
1,479
–
5,857
6,553
481
7,034
1,938
2,644
367
4,949
87
3,704
422
–
4,213
6,422
634
206
1,405
1,252
0.68
1.18
10.2
2017
3,409
1,832
–
1,894
7,135
1,094
2,026
–
1,322
4,601
9,043
5,865
442
6,307
964
2,300
285
3,549
973
2,912
241
2,196
6,322
2018
3,458
1,748
–
1,965
7,171
1,139
2,215
5,460
2,799
–
11,613
11,834
204
12,038
899
1,799
368
3,066
599
2,870
211
–
20193
3,625
1,700
374
2,541
8,240
1,139
2,196
138
1,271
–
4,744
6,350
218
6,568
981
2,042
391
3,414
169
2,602
231
–
3,680
3,002
2020
3,554
1,621
324
2,614
8,113
1,159
2,049
250
1,606
–
5,064
5,746
204
5,950
896
2,771
467
4,134
119
2,742
232
–
3,093
6,494
6,340
7,026
6,834
613
202
927
184
181
898
1,951
(5,861)
0.88
1.07
10.2
1.68
1.17
9.7
214
293
1,068
802
0.80
1.28
11.9
258
297
878
1,034
0.73
1.17
9.9
¹ Operating working capital is measured against four times fourth quarter revenue.
2 2016 is represented to present the Specialty Chemicals business as discontinued operations.
3 2019 includes the impact of the adoption of IFRS 16 “Leases”.
4 As from 2018 trade payables include certain other payables, which were previously classified as Other working capital. Trade payables,
Operating working capital and Other working capital items have been represented for this change of definition for some €240 million.
5 Capital expenditures include investments in intangible assets as from 2018.
AkzoNobel Report 2020
141
Segment statistics
In € millions
Decorative Paints
Revenue2
Adjusted operating income
Operating income
ROS3
OPI margin3
Average invested capital
ROI3
Capital expenditures
20111
2012
2013
2014
2015
2016
2017
2018
20194
2020
4,201
237
235
5.6
5.6
5,032
4.7
155
4,297
108
(2,012)
2.5
(46.8)
4,701
2.3
206
4,174
3,909
4,007
3,835
3,898
3,699
3,670
3,558
199
398
4.8
9.5
2,896
6.9
171
248
248
6.3
6.3
2,824
8.8
143
345
345
8.6
8.6
2,959
11.7
158
357
366
9.3
9.5
2,783
12.8
107
351
334
9.0
8.6
2,803
12.5
112
346
308
9.4
8.3
2,798
12.4
50
418
425
11.4
11.6
3,106
13.4
62
573
551
16.1
15.5
2,799
20.5
77
Average number of employees
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
17,100
17,200
16,800
15,500
15,100
14,800
14,700
14,100
12,900
12,100
246
14
250
(117)
248
24
252
16
265
23
259
25
265
23
262
22
284
33
294
46
Performance Coatings
Revenue2
Adjusted operating income
Operating income
ROS3
OPI margin3
Average invested capital
ROI3
Capital expenditures
Average number of employees
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
5,170
5,702
5,571
5,589
5,955
5,665
5,775
5,587
5,549
4,957
456
458
8.8
8.9
2,267
20.1
116
542
542
9.5
9.5
2,499
21.7
123
525
525
9.4
9.4
2,463
21.3
143
545
545
9.8
9.8
2,480
22.0
143
792
792
13.3
13.3
2,692
29.4
147
759
735
13.4
13.0
2,586
29.4
159
669
668
11.6
11.6
2,860
23.4
129
629
577
11.3
10.3
3,066
20.5
107
688
565
12.4
10.2
3,325
20.7
113
700
665
14.1
13.4
3,388
20.7
146
21,300
21,700
21,300
21,000
19,700
19,300
19,800
19,200
18,000
17,500
243
22
263
25
262
25
266
26
302
40
294
38
292
34
291
30
308
31
283
38
1 Restated to present Decorative Paints North America as a discontinued operation.
2 The 2019 figures are restated to represent revenue from third parties instead of group revenue.
3 ROS% is calculated as adjusted operating income (operating income excluding identified items) as a percentage of revenues from
third parties (as from 2019, before 2019 this was based on group revenue). ROI% is calculated as adjusted operating income
(operating income excluding identified items) of the last 12 months as a percentage of average invested capital of the last 12
months. Invested capital is calculated as total assets (excluding cash and cash equivalents, short-term investments, investments in
associates, the receivable from pension funds in an asset position and assets held for sale) less current tax. OPI margin is calculated
as operating income as a percentage of group revenue.
4 2019 includes the impact of the adoption of IFRS 16 “Leases”.
AkzoNobel Report 2020
142
Regional statistics
In € millions
20161
2017
2018
20193
2020
20161
2017
2018
20193
2020
20161
2017
2018
20193
2020
The Netherlands
Other European countries
Other Asian countries
Revenue by destination
Revenue by origin
Capital expenditures
Average invested capital
Number of employees2
267
404
15
1,497
2,600
Germany
Revenue by destination
Revenue by origin
Capital expenditures
Average invested capital
399
470
12
468
282
423
17
1,528
2,500
460
598
10
662
318
458
25
1,560
2,400
443
561
12
573
359
484
42
1,622
2,400
409
502
11
634
342
434
46
1,713
2,300
372
467
7
544
Number of employees2
1,400
1,500
1,500
1,400
1,200
2,225
1,739
39
675
2,332
1,823
47
700
2,319
1,846
33
732
2,360
1,903
42
918
6,700
6,600
6,900
7,000
US and Canada
1,213
1,298
27
1,037
3,000
1,189
1,257
23
864
1,134
1,200
18
699
1,139
1,210
29
694
2,276
1,882
59
1,081
7,100
1,019
1,065
41
645
1,521
1,442
53
561
1,443
1,392
41
625
1,375
1,323
22
656
1,388
1,334
29
718
1,139
1,067
39
703
6,600
6,800
6,600
6,400
5,800
Other regions
552
473
7
94
573
487
9
87
559
476
12
184
559
513
10
218
502
444
11
238
2,900
2,800
2,800
2,700
2,200
2,200
2,000
2,200
2,100
Sweden
South America
Revenue by destination
Revenue by origin
Capital expenditures
Average invested capital
164
389
9
60
162
408
9
104
146
372
7
94
Number of employees2
1,200
1,100
1,000
UK
Revenue by destination
Revenue by origin
Capital expenditures
Average invested capital
808
972
43
755
777
891
39
746
818
918
29
758
141
366
5
101
900
838
951
16
850
140
349
3
100
900
838
975
15
623
850
791
20
378
900
840
23
391
815
781
13
352
815
742
15
363
697
649
13
335
3,100
2,900
2,800
2,600
2,600
China
1,435
1,456
53
897
1,494
1,493
32
787
1,329
1,321
13
732
1,268
1,271
15
908
1,205
1,198
24
852
Number of employees2
3,300
3,200
3,200
3,200
3,000
6,200
6,000
5,300
4,900
4,500
1 Represented to present the Specialty Chemicals business as discontinued operations.
2 At year-end.
3 2019 includes the impact of the adoption of IFRS 16 “Leases”.
AkzoNobel Report 2020
143
GLOSSARY
Adjusted EBITDA
Adjusted EBITDA is operating income excluding
depreciation, amortization and identified items.
AGM or EGM
Annual General Meeting of shareholders; Extraordinary
General Meeting of shareholders.
BBS
Behavior-based safety. A global program run at all
AkzoNobel locations.
Business Partner Code of Conduct
Explains what we stand for as a company, what we value
and how we run our business. It brings our core values of
safety, integrity and sustainability to life and shows what
they mean in practice.
Capital expenditures
The total of investments in property, plant and equipment
and investments in intangible assets.
Carbon footprint
The total amount of greenhouse gas (GHG) emissions
caused during a defined period of a product’s lifecycle.
It is expressed in terms of the amount of carbon dioxide
equivalents CO2(e) emitted.
Circular economy
An economic system which is restorative and regenerative
by design, and which aims to keep products, components
and materials at their highest utility and value at all times,
distinguishing between technical and biological cycles.
Code of Conduct
Defines our core principles and how we work. It
incorporates fundamental principles on issues such
as business integrity, labor relations, human rights,
health, safety, environment and security and community
involvement.
Comprehensive income
The change in equity during a period resulting from
transactions and other events, other than those changes
resulting from transactions with shareholders in their
capacity as shareholders.
Constant currencies
Calculations exclude the impact of changes in foreign
exchange rates.
Earnings per share
Net income attributable to shareholders divided by the
weighted average number of common shares outstanding
during the year. Adjusted earnings per share are the
basic earnings per share, excluding identified items and
taxes thereon.
EBITDA
Operating income excluding depreciation and
amortization.
Eco-efficiency
Using fewer resources and creating less waste and
pollution in the creation of goods and services.
Eco-premium solutions with downstream benefits
A measure of the eco-efficiency of our products. An eco-
premium solution is significantly better than competing
offers in the market in at least one eco-efficiency criterion
(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.
EMEA
Europe, Middle East and Africa.
Emerging Europe
Central and Eastern Europe (excluding Austria), the Baltic
States and Turkey.
Emissions and waste
We report emissions to air, land and water for those
substances which may have an impact on people or the
environment: CO2, NOx and SOx, VOCs, chemical oxygen
demand, hazardous and non-hazardous waste. Definitions
are in the Sustainability statements.
Greenhouse gases
Greenhouse gases include CO2, CO, CH4, N2O and HFCs,
which have a global warming impact. We also include the
impact of VOCs in our targets.
HSE&S
Health, safety, environment and security.
Identified items
Identified items are special charges and benefits, results
on acquisitions and divestments, major restructuring and
impairment charges and charges related to major legal,
environmental and tax cases.
Invested capital
Total assets (excluding cash and cash equivalents,
short-term investments, investments in associates, the
receivable from pension funds in an asset position, assets
held for sale) less current income tax payable, deferred tax
liabilities and trade and other payables.
Lifecycle assessment
Lifecycle assessments are the basis of our value chain
sustainability programs. Eco-efficiency analysis (EEA) is our
standard assessment method.
Leverage ratio
Calculated as net debt divided by EBITDA, which is
calculated as the total of the last 12 months.
Loss of primary containment
A loss of primary containment is an unplanned release
of material, product, raw material or energy to the
environment (including those resulting from human error).
Loss of primary containment incidents are divided into
three categories, dependent on severity, from small,
on-site spill/near misses up to Level 1 – a significant
escape.
Lost time injury rate (LTIR)
The number of lost time injuries per 200,000 hours
worked. Full definitions are in the Sustainability statements.
AkzoNobel Report 2020
144
Mature Europe
Comprised of Western, Northern and Southern Europe,
including Austria.
Mature markets
Comprised of Mature Europe, the US, Canada, Japan and
Oceania.
Natural resource use
We do not report specific natural resource use, except
water. We do report our use of energy and raw materials.
Net debt
Defined as long-term borrowings plus short-term
borrowings less cash, cash equivalents and short-term
investments.
Operating income
Operating income is defined in accordance with IFRS and
includes the relevant identified items. Adjusted operating
income excludes identified items.
Operational cash flow
We use operational cash flow to monitor cash generation.
It is defined as operating income excluding depreciation
and amortization, adjusted for the change in operating
working capital and capital expenditures.
OPI margin
Operating income as a percentage of revenue.
R&D
Research and development.
Regulatory action
We have defined four categories of regulatory action, from
self-reported issues (Level 1) to formal legal notifications
with fines above €100,000 (Level 4).
REI
Resource Efficiency Index is gross margin divided by
cradle-to-grave carbon footprint. The index measures
value created from use of raw materials and energy.
ROI (return on investment)
ROI is adjusted operating income of the last 12 months as
a percentage of average invested capital.
ROI excluding unallocated cost is adjusted operating
income of the last 12 months as a percentage of average
invested capital for Decorative Paints and Performance
Coatings. It excludes unallocated corporate center cost
and invested capital.
damage totaling more than €25 million; inability to maintain
business; or serious reputational damage to AkzoNobel
stakeholders.
Shareholders’ equity per share
Akzo Nobel N.V. shareholders’ equity divided by the
number of common shares outstanding at year-end.
ROI% excluding unallocated cost
January 2020 - December 2020
in € millions
Average invested capital
2019
2020
7,026
6,834
Total reportable rate of injuries (TRR)
The number of injuries per 200,000 hours worked. Full
definitions are in the Sustainability statements.
South America
Includes Central America.
TSR (total shareholder return)
Compares the performance of different companies’
stocks and shares over time. Combines share price
appreciation and dividends paid to show the total return to
shareholders. The relative TSR position reflects the market
perception of overall performance relative to a reference
group.
VOC
Volatile organic compounds.
Less: unallocated average invested capital
(595)
(647)
Average invested capital excluding unallo-
cated capital
Adjusted operating income excluding
unallocated cost
Total
6,431
6,187
1,106
1,273
17.2
20.6
ROS (return on sales)
ROS is adjusted operating income as a percentage of
revenue.
ROS excluding unallocated cost is adjusted operating
income as a percentage of revenue for Decorative Paints
and Performance Coatings. It excludes unallocated
corporate center cost.
ROS% excluding unallocated cost
January 2020 - December 2020
in € millions
Total revenue
Less: revenue unallocated
2019
2020
9,276
8,530
(57)
(15)
Revenue excluding unallocated revenue
9,219
8,515
Adjusted operating income excluding
unallocated cost
1,106
1,273
ROS% excluding unallocated cost
12.0
15.0
Relevant markets
Segments and regions of the paints and coatings industry
from which AkzoNobel generates revenue.
Safety incident
We have defined three levels of safety incidents. The
highest category – Level 3 – involves: any loss of life; more
than five severe injuries; environmental, asset or business
AkzoNobel Report 2020
145
Energy
Executive Committee
Financial information
Financial instruments
Financial summary
Grow & Deliver
How we created value
Human rights
8, 39, 41
Risk management
56, 66
Safety
86
95
Segment information
Shareholders’ equity
140
Strategy
13
7
37
Supervisory Board
Supervisory Board Chairman’s statement
Supplier sustainability
Independent auditor’s report
132
Sustainable Development Goals (SDGs)
74
34
97
127
12
59, 69
58
44
30
29
61
8, 31, 39, 42
31, 39, 42
5, 6, 58
INDEX
2020 results at a glance
Acquisitions
AkzoNobel Cares
Assurance report of the independent auditor
Audit Committee
Automotive and Specialty Coatings
Behaviors
Board of Management
Borrowings
2
8, 96
36
138
63
20
13, 34
56, 66
96, 119, 120
Innovation
Industrial Coatings
Intangible assets
Internal controls
Carbon footprint/Cradle-to-grave
41, 48, 51
carbon footprint
Case studies
10, 19, 28, 40, 45, 49, 54
Invested capital
Cash, cash flow and net debt
8, 89, 115,119
“Let’s Colour”
CEO statement
Circular economy
Climate
Code of Conduct
4
42
39
Marine and Protective Coatings
Net debt
Nomination Committee
66, 77
Operating income
Company financial statements
125
Outlook
Company purpose
Compliance
Inside cover, 5, 13
Paint the Future
69, 76
People. Planet. Paint.
Consolidated balance sheet
141
Pensions
Consolidated statement of cash flows
Consolidated statement of changes in equity
Consolidated statement of comprehensive income
Consolidated statement of income
89
90
87
87
Powder Coatings
Product stewardship
Profit allocation
Property, plant and equipment
Core values
Corporate governance
COVID-19
Decorative Paints
Dividend proposal
Earnings per share
13, 37
Provisions
66
Raw materials
5, 9, 10, 34, 38, 61, 92
Regional statistics
16, 17, 18
Remuneration
8, 9, 85
Remuneration Committee
9, 100, 106
Report of the Supervisory Board
Eco-premium solutions
3, 8, 46, 51
Resource productivity
Emissions
Employees
39, 41
Return on investment
9, 33, 37
Return on sales
Sustainability statements
Talent management
Waste
Water
Winning together: 15 by 20
22
15
107
57, 63, 73
8
36
24
8, 119
64
8
9
15, 19
30, 48
113
26
47
62, 131
7, 94
117
37, 38, 42
143
78, 121
64
60
39, 42
2, 6
2, 6
AkzoNobel Report 2020
146
Appendix: List of affiliated legal entities and
corporations
List at December 31, 2020, of affiliated legal
entities and corporations in conformity with
articles 379 and 414, Book 2 of the Dutch
Civil Code belonging to Akzo Nobel N.V.,
Amsterdam
List of consolidated legal entities and
corporations
Argentina
Akzo Nobel Argentina S.A.
Australia
Akzo Nobel Car Refinishes Australia Pty Ltd
Akzo Nobel Coatings (Holdings) Pty Limited
Akzo Nobel Pty. Limited
Austria
Akzo Nobel Coatings GmbH
Akzo Nobel Holding Österreich GmbH
Belgium
Auto Body Services CV (ABS)
International Paint (Belgium) NV
Akzo Nobel Paints Belgium NV
Cleming BVBA
Bolivia
Pinturas Coral De Bolívia Ltda
Ownership %1
Buenos Aires
99.997
Port Melbourne
Sunshine
Sunshine
Salzburg
Vienna
Vilvoorde
Vilvoorde
Vilvoorde
Vilvoorde
100.000
100.000
100.000
100.000
100.000
84.615
100.000
100.000
100.000
Santa Cruz de la Sierra
Gaborone
Barueri
Botswana
Dulux Botswana (Pty) Limited
Brazil
Akzo Nobel Ltda
Canada
Akzo Nobel Coatings Ltd.
Akzo Nobel Wood Coatings Ltd
Cayman Islands
Ichem Reinsurance Company Limited
ICI International Investments
Chile
International Paint (Akzo Nobel Chile) Ltda
China
Akzo Nobel (Shanghai) Co. Ltd.
Akzo Nobel Car Refinishes (Suzhou) Company Limited
Santiago
Shanghai
Ontario
Port Hope
George Town
George Town
Akzo Nobel Coatings (Dongguan) Co. Ltd.
Akzo Nobel Powder Coatings (Ningbo) Co., Ltd. Ningbo
Tian Jin
Akzo Nobel Coatings (Tianjin) Co., Ltd.
Akzo Nobel Coatings (Jiaxing) Co. Ltd.
Jiashan
Akzo Nobel Powder Coatings (Langfang) Co. Ltd.
Suzhou
Dongguan
Akzo Nobel (China) Investment Co., Ltd.
Akzo Nobel Decorative Coatings (Langfang) Co., Ltd.
Langfang
Shanghai
Langfang
Akzo Nobel International Paint (Suzhou) Co. Ltd. Suzhou
Akzo Nobel Industrial Finishes (Hong Kong) Limited
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Hong Kong
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
51.000
100.000
51.000
90.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Akzo Nobel Powder Coatings (Chengdu) Co., Ltd.
Chengdu
Akzo Nobel Powder Coatings (Wuhan) Co., Ltd Wuhan
Akzo Nobel Performance Coatings (Shanghai) Co. Ltd.
Shanghai
Akzo Nobel Performance Coatings (Changzhou) Co., Ltd.
Changzhou
Chengdu
Akzo Nobel Paints (Chengdu) Co. Ltd.
Hong Kong
International Paint (Hong Kong) Limited
Hong Kong
Akzo Nobel Chang Cheng Ltd
Hong Kong
International Paint (East Russia) Ltd
Akzo Nobel Chang Cheng Coatings (Guangdong) Co., Ltd.
Shenzhen
Shanghai
Guangzhou
Shanghai
International Paint of Shanghai Co Ltd
Akzo Nobel Paints (Guangzhou) Co. Ltd
Akzo Nobel Paints (Shanghai) Co. Ltd
Shanghai ICI Research & Development & Management Co. Ltd
Akzo Nobel Paints Limited
Akzo Nobel HK (Holdings) Limited
Akzo Nobel Decorative Coatings (China) Ltd (in liquidation)
Shanghai
Hong Kong
Hong Kong
Schramm Hong Kong Co., Limited
Schramm SSCP (Tianjin) Ltd (in liquidation)
Ultra Million Limited
Uranus Limited
Mapaero HK Ltd
Colombia
Interquim S.A.
Czech Republic
Akzo Nobel Coatings CZ, a.s.
Denmark
International Farvefabrik A/S
Akzo Nobel Deco A/S
Ecuador
Interquimec S.A.
Egypt
Akzo Nobel Powder Coatings S.A.E.
Akzo Nobel Egypt LLC
Estonia
Akzo Nobel Baltics AS
Finland
Oy International Paint (Finland) AB
France
Akzo Nobel Powder Coatings SAS
Akzo Nobel Car Refinishes SAS
International Peinture SAS
Akzo Nobel Industrial Finishes S.A.S.
Akzo Nobel Distribution SAS
DISATECH SAS
SCI Boucher
Mapaero S.A.S.
Akzo Nobel Packaging Coatings S.A.S.
Akzo Nobel Decorative Paints France S.A.
Akzo Nobel S.A.S.
Germany
Akzo Nobel GmbH
Akzo Nobel Hilden GmbH
Akzo Nobel Coatings GmbH
Akzo Nobel Powder Coatings GmbH
Akzo Nobel Deco GmbH
Guangzhou
Hong Kong
Beizhakou Town
Hong Kong
Hong Kong
Hong Kong
Medellin
100.000
Prague
Herlev
Copenhagen
Quito
100.000
100.000
100.000
100.000
Giza
6th of October City
100.000
100.000
Tallinn
Vantaa
Dourdan
Montataire
Le Havre
Etréchy
Corbas
Limoges
Pamiers
Pamiers
Montataire
Thiverny
Montataire
Cologne
Hilden
Stuttgart
Reutlingen
Wunstorf
100.000
100.000
100.000
100.000
100.000
100.000
99.991
100.000
100.000
100.000
100.000
99.991
100.000
100.000
100.000
100.000
100.000
100.000
Schramm Holding GmbH
Schramm Coatings GmbH
Mapaero GmbH
International Farbenwerke GmbH
Greece
Akzo Nobel Coatings S.A.
International Paint (Hellas) S.A.
Varnishes and Paints Industry Vivechrom Dr. Stefanos D. Pateras S.A.
Offenbach am Main 100.000
Offenbach am Main 100.000
100.000
Norderstedt
100.000
Börnsen
100.000
100.000
Athens
Piraeus
Mandra Attica
79.184
St. Peter Port
Guernsey
Impkemix Trustee Limited
Hungary
Akzo Nobel Coatings Zrt
India
Akzo Nobel Global Business Services LLP
Akzo Nobel India Limited
ICI India Research & Technology Centre
Indonesia
PT Akzo Nobel Car Refinishes Indonesia
Jakarta
PT Akzo Nobel Wood Finishes and Adhesives Indonesia
Pune
Kolkata
Mumbai
Budapest
PT International Paint Indonesia
PT ICI Paints Indonesia
PT ICI Indonesia
Ireland
Akzo Nobel Car Refinishes (Ireland) Ltd
ICI Fertilisers (Ireland) Limited
ICI Ireland Limited
Dulux Paints Ireland Limited
Akzo Nobel (CR9) Limited
Italy
Akzo Nobel Coatings S.P.A.
Japan
Akzo Nobel Coatings K.K.
Kazakhstan
Akzo Nobel Kazakhstan LLP
Kenya
Akzo Nobel Kenya Limited
Korea (South)
Akzo Nobel Powder Coatings Korea Co., Limited
Jakarta
Jakarta
Jakarta
Dublin
Cork
Cork
Cork
Dublin
Tokyo
Almaty
Nairobi
Akzo Nobel Industrial Coatings Korea Ltd.
International Paint (Korea) Ltd
International Paint (Research) Ltd
Kuwait
International Warba Coatings Paint Mfg Co. W.L.L.
Ansan
Ansan
Busan
Geoje City
Cesano Boscone (MI) 100.000
100.000
100.000
100.000
74.756
25.000
100.000
Jakarta
100.000
100.000
55.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
60.000
100.000
49.000
100.000
100.000
Latvia
Akzo Nobel Baltics SIA
Lithuania
Akzo Nobel Baltics, UAB
Mauritius
Mauvilac Industries Limited
Malaysia
Colourland Paints Sdn Bhd
Akzo Nobel Paints Marketing Sdn Bhd
International Paint Sdn Bhd
Akzo Nobel Industrial Coatings Sdn Bhd
Akzo Nobel Paints (Malaysia) Sdn. Bhd.
Akzo Nobel Adhesives Sdn Bhd
Akzo Nobel Coatings Sdn Bhd
Kuwait
Riga
Vilnius
Port Louis
100.000
Petaling Jaya
Petaling Jaya
Johor Darul Takzim
Kuala Lumpur
Kuala Lumpur
Selangor
Selangor
100.000
100.000
70.000
100.000
59.949
100.000
100.000
AkzoNobel Report 2020 | Appendix
147
Mexico
Akzo Nobel Automotive and Aerospace Coatings México S.A. de C.V.
Akzo Nobel Inda S.A. de C.V.
Compania Mexicana de Pinturas International SA De CV
Mexico City
Monterrrey
100.000
100.000
Mexico City
100.000
Morocco
Akzo Nobel Coatings S.A. (Morocco)
Sadvel SA
Distral Maroc S.A.
Akzo Nobel Performance Coatings Morocco S.A.R.L.
Casablanca
Casablanca
Rabat
59.569
99.655
99.967
Casablanca
100.000
Yangon
100.000
Amsterdam
Amsterdam
Arnhem
Arnhem
Arnhem
Hoofddorp
Arnhem
Sassenheim
Myanmar
Akzo Nobel (M) Co. Ltd.
Netherlands
Akzo Nobel Coatings Chile Holding I B.V.
Akzo Nobel Coatings Chile Holding II B.V.
* Syncoflex B.V.
* Akzo Nobel Nederland B.V.
* Akzo Nobel China B.V.
* Panter B.V.
* Akzo Nobel Sourcing B.V.
* Akzo Nobel Coatings B.V.
* Akzo Nobel Decorative Coatings Turkey B.V. Arnhem
Arnhem
Akzo Nobel Assurantie N.V.
Arnhem
* Akzo Nobel Management B.V.
Arnhem
* Akzo Nobel Insurance Management B.V.
Arnhem
* Carelaa B.V.
Arnhem
* Akzo Nobel Coatings International B.V.
Arnhem
* Remmert Holland B.V.
Weert
* Sikkens Verkoop Nederland B.V.
Sassenheim
* Akzo Nobel Sino Coatings B.V.
Arnhem
* Akzo Nobel Holding Duitsland B.V.
Sassenheim
* Akzo Nobel Car Refinishes B.V.
Sassenheim
* Akzo Nobel Powder Coatings B.V.
Sassenheim
* Akzo Nobel Decorative Coatings B.V.
Wormerveer
* De Sikkens Grossier B.V.
Hardinxveld-Giessendam
* Van Noordenne Verf B.V.
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Rhoon
Woerden
Rotterdam
Rotterdam
Ammerzoden
Sassenheim
Avondale
* International Paint (Nederland) B.V.
* Akzo Nobel (C) Holdings B.V.
* ICI Omicron B.V.
ICI Theta B.V.
* B.V. Alabastine (Holland)
* Sikkens Verkoop B.V.
New Zealand
Akzo Nobel Coatings Ltd
Norway
Akzo Nobel Coatings AS
Oman
Akzo Nobel Oman SAOC
Pakistan
Akzo Nobel Pakistan Limited
Panama
International Paint (Panama) Inc.
Papua New Guinea
Akzo Nobel Limited
Peru
Akzo Nobel Peru S.A.C.
Poland
Akzo Nobel Car Refinishes Polska Sp. z o.o. Warsaw
Karachi
Muscat
Geheru
Lima
Oslo
Mercantil
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
50.000
97.011
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
68.340
49.000
100.000
100.000
100.000
100.000
100.000
100.000
60.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Popesti Leordeni
Doha
Carregado
Setúbal
Kostrzyn Wlkp.
Gdansk
Warsaw
Akzo Nobel Industrial Coatings Sp. z o.o.
International Paint Sp. z o.o.
Akzo Nobel Decorative Paints Sp. z o.o.
Portugal
Akzo Nobel Tintas para Automoveis Lda
International Paint Ibéria, Lda
Qatar
Akzo Nobel LLC
Romania
Fabryo Corporation S.r.l.
Russian Federation
“Akzo Nobel Dekor” CJSC
OOO “Akzo Nobel Car Refinishes”
OOO “Akzo Nobel Lakokraska”
OOO “Akzo Nobel Coatings”
International Paint (East Russia) LLC
Saudi Arabia
Akzo Nobel Saudi Arabia Ltd
Singapore
Akzo Nobel Car Refinishes (Singapore) Pte Ltd Singapore
Singapore
International Paint Singapore Pte Ltd
Singapore
Akzo Nobel Paints (Singapore) Pte Ltd
Singapore
Akzo Nobel Adhesives Pte Ltd
Slovenia
Akzo Nobel Adhezivi d.o.o.
South Africa
Akzo Nobel Powder Coatings South Africa (Proprietary) Limited
Moscow
Moscow
Orehovo-Zuevo
Lipetsk
Vladivostok
Dammam
Ljubljana
PJA (South Africa) (Proprietary) Limited
Akzo Nobel South Africa (Pty) Ltd
ICI Dulux (Pty) Limited
Spain
Akzo Nobel Coatings, S.L.
Akzo Nobel Industrial Paints, S.L.
Akzo Nobel Car Refinishes SL
Akzo Nobel Packaging Coatings S.A.
Sri Lanka
Akzo Nobel Paints Lanka (Pvt) Ltd
Swaziland
Dulux Swaziland (Pty) Limited
Sweden
Akzo Nobel Car Refinishes AB
Akzo Nobel Sweden Finance AB
Akzo Nobel Industrial Finishes AB
International Färg AB
Akzo Nobel Adhesives AB
Akzo Nobel Industrial Coatings AB
Akzo Nobel Decorative Coatings AB
Switzerland
Akzo Nobel Coatings AG
Akzo Nobel Car Refinishes AG
Taiwan
Akzo Nobel Chang Cheng (Taiwan) Ltd
International Paint (Taiwan) Ltd
Akzo Nobel Paints Taiwan Limited
Thailand
Akzo Nobel Coatings Ltd
Schramm SSCP (Thailand) Co., Ltd.
Akzo Nobel Paints (Thailand) Limited
Tunisia
Société Tunisienne de Peintures Astral S.A.
Groterg
Alberton
Johannesburg
Johannesburg
100.000
Barcelona
100.000
Barcelona
Barcelona
100.000
Vilafranca del Penedes 100.000
Colombo
40.000
Matsapha
100.000
Tyresoe
Göteborg
Gamleby
Göteborg
Stockholm
Malmö
Malmö
Neuenkirch
Bäretswil
Taipei
Kaoshiung
Chung Li
Nakornprathom
Rayong
Amphur Pakkred
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Megrine
60.000
Dubai
Jebel Ali Free Zone
Dubai
Kiev
Istanbul
Kampala
Delaware
Delaware
Delaware
Delaware
Delaware
New Castle
New Castle
Florida
Delaware
Turkey
Izmir
Akzo Nobel Kemipol A.S.
Gebze
Marshall Boya Ve Vernik Sanayii A.S.
Dilovasi
Tekyar Teknik Yardim A.S.
Izmir
Akzo Nobel Boya Sanayi ve Ticaret A.S.
Akzo Nobel Server Boya Sanayi ve Ticaret A.S. Tuzla
International Paint Pazarlama Limited Sirketi
United States (US)
Akzo Nobel Coatings Inc.
Akzo Nobel Inc.
Akzo Nobel Services Inc.
Mapaero Inc.
International Paint LLC
Expert Management Inc
ICI Americas Inc.
New Nautical Coatings Inc.
Blue Water Marine Paint LLC
Uganda
Akzo Nobel Uganda Limited
Ukraine
LLC “Akzo Nobel Holding Ukraine”
United Arab Emirates
Akzo Nobel Decorative Paints L.L.C.
Akzo Nobel ME Coatings FZE
Akzo Nobel UAE Paints L.L.C.
United Kingdom
Akzo Nobel Powder Coatings Limited
Akzo Nobel Aerospace Coatings Limited
Akzo Nobel Coatings Limited
Akzo Nobel Limited
Akzo Nobel Coatings (BLD) Limited
Akzo Nobel ICI Holdings
Akzo Nobel Finance Limited
Mapaero UK Ltd
Akzo Nobel UK Ltd
International Paints (Holdings) Limited
Akzo Nobel Industrial Finishes Limited
International Paint Limited
Imperial Chemical Industries Limited
Ergon Investments International Limited
Ergon Investments UK Limited
Hammerite Products Limited
Horseferry Investments Limited
ICI Chemicals & Polymers Limited
I C I Finance Limited
ICI International Limited
Akzo Nobel Packaging Coatings Limited
ICI Paints (Trade Contract) Limited
Intex Yarns (Manufacturing) Limited
Mortar Investments International Limited
Akzo Nobel (NASH) Limited
Akzo Nobel (NSC) Limited
Scottish Agricultural Industries Limited
Stevenston Holdings Limited
Dulux Limited
J.P. Mcdougall & Co. Limited
Sales Support Group Limited
Akzo Nobel Holdings Limited
Akzo Nobel Decorative Coatings Limited
Akzo Nobel Industrial Coatings Limited
Deeside Coatings Limited
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Crawley
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Edinburgh
Edinburgh
Slough
Slough
Slough
Slough
Slough
Slough
Slough
51.000
92.974
100.000
100.000
55.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
49.000
100.000
48.979
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
99.902
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
AkzoNobel Report 2020 | Appendix
148
Slough
Flexcrete Technologies Limited
Cambrian SW Limited
Slough
Cambrian Decorator Supplies (C.D.S) Limited Slough
Slough
Akzo Nobel (CPS) Pension Trustee Limited
Slough
Akzo Nobel Finance (2) Limited
Slough
Akzo Nobel CIF Nominees Limited
Slough
Akzo Nobel Films (Holdings) Limited
Fothergill and Harvey Limited
Slough
Holywell-Halkyn Mining and Tunnel Company Limited
International Coatings Limited
Cuprinol Limited
ICI Limited
ICI North America Limited
Mortar Investments UK Limited
Polycell Products Limited
Resinous Chemicals Limited
Akzo Nobel Properties Limited
Akzo Nobel Coatings (Holdings) Limited
Uruguay
Pinturas Inca S.A.
Vietnam
Akzo Nobel Coatings Vietnam Limited
Akzo Nobel Powder Coatings (Vietnam) Co., Ltd.
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Montevideo
Bien Hoa
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
97.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
Schramm SSCP Hanoi Company Limited
Dong Nai
Phuong Lieu Commune
100.000
Akzo Nobel Paints Vietnam Ltd
Zambia
Dulux Zambia (2005) Limited
Binh Duong
Lusaka
100.000
100.000
100.000
List of non-consolidated legal entities and
corporations
Italy
Metlac S.p.A.
Metlac Holding S.r.l.
Netherlands
ZRVCS Holding B.V.
Alessandria
Alessandria
71.667
49.000
Amsterdam
49.000
1 The ownership percentage represents the interest Akzo Nobel N.V. or one or more
of its majority subsidiaries singly or jointly have in the issued share capital of the
participation. The list does not include entities that are of insignificant relevance in
respect of the insight required by law, such as dormant companies and companies
in liquidation.
2 With respect to the Dutch legal entities marked *, Akzo Nobel N.V. has declared in
writing that it accepts joint and several liability for contractual debts of the relevant
companies, in conformity with article 403, Book 2, of the Netherlands Civil Code.
AkzoNobel Report 2020 | Appendix
149