Our beating heart:
People. Planet. Paint.
AkzoNobel has a long and proud heritage. Throughout our history, we’ve made things happen.
We’ve always evolved and expanded our horizons.
Some things, however, have always remained constant. Like being an employer of choice.
A responsible global citizen. A pioneer. That’s our bedrock. The foundations of what we stand for.
So we have a truly meaningful purpose, with People. Planet. Paint. as our beating heart.
We’re ideally placed to demonstrate our passion for bringing genuine benefi ts to society and the
world we live in. How? By using our pioneering spirit and centuries of paints and coatings expertise
to make a real impact. By delivering the sustainable and innovative solutions that our customers,
communities – and the planet – are increasingly relying on.
So there’s a deeper, wider meaning to People. Planet. Paint. It’s not only about doing business
sustainably. It touches everything we do. It’s our reason for being. It excites us. It challenges us.
It’s about making a genuine and lasting difference so we can remain at the forefront of our industry.
10
Contents
2022 results at a glance
CEO statement
How we created value
Strategy and operations
Sustainability statements
Leadership and governance
Financial information
Glossary
Index
Appendix
Case studies:
Out of the blue
We've got the power
Biting back to combat disease
Promoting gender equality
2
4
6
12
29
57
98
158
160
161
10
19
28
84
28
84
People
We care passionately about people
and building communities, with safety,
integrity and sustainability at our core.
Planet
We challenge ourselves and our partners
every day to be better global citizens
and protect the future of our planet.
Paint
We keep pushing boundaries to develop
paint solutions that make a world of
difference.
19
2
Strategy and operations | AkzoNobel Report 2022
www.akzonobel.com
Case study videos
This Report 2022 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.
Disclaimer
This PDF of AkzoNobel’s annual report is derived from the offi cial version of the
company’s Report 2022. The European Single Electronic Filing format (the ESEF
reporting package) is the offi cial version. The ESEF reporting package is available
on our Report 2022 website. In case of discrepancies between this PDF version
and the ESEF reporting package, the latter prevails. The auditor’s report and
assurance report of the independent auditor included in this PDF version relate
only to the ESEF reporting package.
AkzoNobel Report 2022
1
Our beating heart:
People. Planet. Paint.
AkzoNobel has a long and proud heritage. Throughout our history, we’ve made things happen.
We’ve always evolved and expanded our horizons.
Some things, however, have always remained constant. Like being an employer of choice.
A responsible global citizen. A pioneer. That’s our bedrock. The foundations of what we stand for.
So we have a truly meaningful purpose, with People. Planet. Paint. as our beating heart.
We’re ideally placed to demonstrate our passion for bringing genuine benefi ts to society and the
world we live in. How? By using our pioneering spirit and centuries of paints and coatings expertise
to make a real impact. By delivering the sustainable and innovative solutions that our customers,
communities – and the planet – are increasingly relying on.
So there’s a deeper, wider meaning to People. Planet. Paint. It’s not only about doing business
sustainably. It touches everything we do. It’s our reason for being. It excites us. It challenges us.
It’s about making a genuine and lasting difference so we can remain at the forefront of our industry.
10
Contents
2022 results at a glance
CEO statement
How we created value
Strategy and operations
Sustainability statements
Leadership and governance
Financial information
Glossary
Index
Appendix
Case studies:
Out of the blue
We've got the power
Biting back to combat disease
Promoting gender equality
2
4
6
12
29
57
98
158
160
161
10
19
28
84
28
84
People
Planet
Paint
We care passionately about people
We challenge ourselves and our partners
We keep pushing boundaries to develop
and building communities, with safety,
every day to be better global citizens
paint solutions that make a world of
integrity and sustainability at our core.
and protect the future of our planet.
difference.
19
2
Strategy and operations | AkzoNobel Report 2022
www.akzonobel.com
Case study videos
This Report 2022 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.
Disclaimer
This PDF of AkzoNobel’s annual report is derived from the offi cial version of the
company’s Report 2022. The European Single Electronic Filing format (the ESEF
reporting package) is the offi cial version. The ESEF reporting package is available
on our Report 2022 website. In case of discrepancies between this PDF version
and the ESEF reporting package, the latter prevails. The auditor’s report and
assurance report of the independent auditor included in this PDF version relate
only to the ESEF reporting package.
AkzoNobel Report 2022
1
2022 results at a glance
Revenue by destination
North America
13%
EMEA
46%
Financial summary
€10,846 mln revenue
€708 mln operating income
€789 mln adjusted operating income*
€2.01 earnings per share
35,200 employees
Latin America
12%
North Asia
16%
South Asia Pacifi c
13%
Sustainable solutions
40%
Adjusted EBITDA*
€1,157 mln
Return on sales (ROS)*
Return on investment (ROI)*
7.3%
9.8%
Sustainable solutions development
in % of revenue
Adjusted EBITDA development*
in € millions
39
2021
40
2022
>50
1,442 1,436
2030 ambition
2020
2021
1,157
2022
Return on sales development*
Return on investment development*
in %
in %
12.9 11.4 7.3
2020
2021
2022
16.1 16.0 9.8
2020
2021
2022
2
AkzoNobel Report 2022
* Alternative performance
measures (APM)
AkzoNobel uses APM adjustments
to the IFRS measures to provide
supplementary information on the
reporting of the underlying develop-
ments 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 Note 4 of the
Consolidated fi nancial statements.
AkzoNobel Report 2022
3
2022 results at a glance
Revenue by destination
North America
13%
EMEA
46%
Financial summary
€10,846 mln revenue
€708 mln operating income
€789 mln adjusted operating income*
€2.01 earnings per share
35,200 employees
Latin America
12%
North Asia
16%
South Asia Pacifi c
13%
Sustainable solutions
40%
Adjusted EBITDA*
€1,157 mln
Return on sales (ROS)*
Return on investment (ROI)*
7.3%
9.8%
Sustainable solutions development
Adjusted EBITDA development*
in € millions
40
2022
>50
1,442 1,436
2030 ambition
2020
2021
1,157
2022
Return on sales development*
in %
12.9 11.4 7.3
2020
2021
2022
Return on investment development*
in %
16.1 16.0 9.8
2020
2021
2022
in % of revenue
39
2021
2
AkzoNobel Report 2022
* Alternative performance
measures (APM)
AkzoNobel uses APM adjustments
to the IFRS measures to provide
supplementary information on the
reporting of the underlying develop-
ments 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 Note 4 of the
Consolidated fi nancial statements.
AkzoNobel Report 2022
3
“I’m convinced
that our ongoing
transformation
will set us up for
profi table growth for
years to come.”
I joined AkzoNobel
as CEO in 2022,
so it will always be a
signifi cant year for me
on a personal level. It’s
a privilege to be leading
this great company,
one with such a strong
heritage, talented people
and a fantastic portfolio of
globally respected brands.
E
M
U
A
L
L
I
U
G
-
X
U
O
P
G
E
R
G
CEO statement | AkzoNobel Report 2022
On a more general level, 2022
proved to be a year of persistent
worldwide uncertainty as global
events caused signifi cant cost
infl ation, challenged supply chains,
dented consumer confi dence and
weakened market demand. The war
in Ukraine had a severe impact on the
wider economy, especially in Europe
(which accounts for around half our
revenue), while China’s zero COVID-19
policy put pressure on one of our most
important markets.
Like many other companies, we felt the
impact of this turbulence and disruption.
Degrading market conditions from the
second quarter onwards resulted in us
missing our targets and abandoning our
€2 billion adjusted EBITDA ambition for
2023. However, I’m convinced that our
ongoing transformation will set us up for
profi table growth for years to come.
It’s been a question of fi nding the
right balance between adapting to the
external challenges we’re facing – which
require decisive measures – and the
agility we need to run our businesses.
One of our key successes in weathering
the storm has been our ability to offset
the impact of raw material and freight
cost infl ation with strong pricing initiati-
ves, with cumulative price increases of
23% over the last two years.
Despite the complex market conditions,
we achieved volume growth in Latin
America and South Asia, as well as
in our Marine and Protective, Vehicle
Refi nishes and Aerospace businesses.
Meanwhile, we continued to work on our
operational effi ciency and effectiveness.
We introduced cost and working capital
reduction measures in mid-2022, which
will remain a priority throughout 2023.
We also seized opportunities to grow
through acquisitions. In April, we
welcomed Colombia-based paints and
coatings company Grupo Orbis, a strong
business which will help to cement
our market position in Latin America.
Another deal we fi nalized (in December)
was for the liquid wheel coatings
business of Lankwitzer Lackfabrik
GmbH, which perfectly complements
our powder coatings portfolio. Finally, we
announced our intention to acquire all
the African paints and coatings activities
of Kansai Paint (due to be completed in
2023, pending the relevant approvals).
Since joining the company, I’ve been
particularly impressed with the passion
and commitment of our people when it
comes to sustainability and innovation.
So it was good to see the two come
4
CEO statement
together in the Paint the Future
Collaborative Sustainability Challenge, a
great combination of two fundamental
elements of our People. Planet. Paint.
company purpose. Other highlights in
2022 included a major “Let’s Colour”
project to repaint Jodhpur in India
(see page 10), exciting product launches
such as our mosquito-repellent coating
in Brazil (see page 28) and our
investment in a new production line
for water-based texture paints at our
Songjiang site in Shanghai (see page
34). Overall, we made strong progress
in reducing our own carbon emissions,
reduce our full value chain emissions,
which we’ll continue working on
although we still have work to do to
site in Nashville, Tennessee.
Our CEO (fourth from right) and CFO, Maarten de Vries (third from left), pictured during a visit to our US Powder Coatings
collectively with our suppliers and
chain improvements – as well as getting
US, the UK, France, Spain and the
customers. Moving forward, we’ll also
a stronger grip on our working capital to
Netherlands – and I’ve been impressed
remain keenly focused on all four of our
rebuild cash generation and strengthen
by the enthusiasm and dedication of
key sustainability ambitions.
our balance sheet – will serve us well.
the colleagues I’ve met. There’s both an
energy and a determination to succeed
Looking at 2023, it will be a challenging
On behalf of the entire Executive
which makes me excited about leading
year, with market headwinds likely to be
Committee, I want to thank you, our
AkzoNobel on the next phase of its
felt for months to come. We'll continue
shareholders, customers, partners and
journey.
to balance growth opportunities and
other stakeholders, for your support
profitability through cost actions and
throughout 2022. And a huge thank
expected margin expansion as we
you to AkzoNobel’s teams around the
Grégoire (Greg) Poux-Guillaume
CEO and Chair of the Board of Management
defend our pricing and raw material cost
world for all their efforts. I’ve had time
and Executive Committee
pressure abates. Our focus on supply
to visit a number of our sites – in the
Our CEO pictured operating a color
mixing machine at the recently renovated
TEC (Training, E-Commerce, Color
mixing) Center in Sassenheim,
the Netherlands.
AkzoNobel Report 2022 | CEO statement
5
“I’m convinced
that our ongoing
transformation
will set us up for
profi table growth for
years to come.”
E
M
I joined AkzoNobel
agility we need to run our businesses.
as CEO in 2022,
One of our key successes in weathering
so it will always be a
the storm has been our ability to offset
signifi cant year for me
the impact of raw material and freight
on a personal level. It’s
cost infl ation with strong pricing initiati-
a privilege to be leading
ves, with cumulative price increases of
this great company,
23% over the last two years.
one with such a strong
heritage, talented people
Despite the complex market conditions,
and a fantastic portfolio of
we achieved volume growth in Latin
globally respected brands.
America and South Asia, as well as
in our Marine and Protective, Vehicle
U
A
L
On a more general level, 2022
Refi nishes and Aerospace businesses.
proved to be a year of persistent
Meanwhile, we continued to work on our
worldwide uncertainty as global
operational effi ciency and effectiveness.
events caused signifi cant cost
We introduced cost and working capital
infl ation, challenged supply chains,
reduction measures in mid-2022, which
dented consumer confi dence and
will remain a priority throughout 2023.
L
I
U
weakened market demand. The war
in Ukraine had a severe impact on the
We also seized opportunities to grow
wider economy, especially in Europe
through acquisitions. In April, we
(which accounts for around half our
welcomed Colombia-based paints and
revenue), while China’s zero COVID-19
coatings company Grupo Orbis, a strong
policy put pressure on one of our most
business which will help to cement
important markets.
our market position in Latin America.
Another deal we fi nalized (in December)
Like many other companies, we felt the
was for the liquid wheel coatings
impact of this turbulence and disruption.
business of Lankwitzer Lackfabrik
Degrading market conditions from the
GmbH, which perfectly complements
second quarter onwards resulted in us
our powder coatings portfolio. Finally, we
missing our targets and abandoning our
announced our intention to acquire all
€2 billion adjusted EBITDA ambition for
the African paints and coatings activities
2023. However, I’m convinced that our
of Kansai Paint (due to be completed in
ongoing transformation will set us up for
2023, pending the relevant approvals).
profi table growth for years to come.
Since joining the company, I’ve been
It’s been a question of fi nding the
particularly impressed with the passion
right balance between adapting to the
and commitment of our people when it
external challenges we’re facing – which
comes to sustainability and innovation.
require decisive measures – and the
So it was good to see the two come
G
-
X
U
O
P
G
E
R
G
4
CEO statement | AkzoNobel Report 2022
CEO statement
Our CEO (fourth from right) and CFO, Maarten de Vries (third from left), pictured during a visit to our US Powder Coatings
site in Nashville, Tennessee.
together in the Paint the Future
Collaborative Sustainability Challenge, a
great combination of two fundamental
elements of our People. Planet. Paint.
company purpose. Other highlights in
2022 included a major “Let’s Colour”
project to repaint Jodhpur in India
(see page 10), exciting product launches
such as our mosquito-repellent coating
in Brazil (see page 28) and our
investment in a new production line
for water-based texture paints at our
Songjiang site in Shanghai (see page
34). Overall, we made strong progress
in reducing our own carbon emissions,
although we still have work to do to
reduce our full value chain emissions,
which we’ll continue working on
collectively with our suppliers and
customers. Moving forward, we’ll also
remain keenly focused on all four of our
key sustainability ambitions.
chain improvements – as well as getting
a stronger grip on our working capital to
rebuild cash generation and strengthen
our balance sheet – will serve us well.
Looking at 2023, it will be a challenging
year, with market headwinds likely to be
felt for months to come. We'll continue
to balance growth opportunities and
profitability through cost actions and
expected margin expansion as we
defend our pricing and raw material cost
pressure abates. Our focus on supply
On behalf of the entire Executive
Committee, I want to thank you, our
shareholders, customers, partners and
other stakeholders, for your support
throughout 2022. And a huge thank
you to AkzoNobel’s teams around the
world for all their efforts. I’ve had time
to visit a number of our sites – in the
US, the UK, France, Spain and the
Netherlands – and I’ve been impressed
by the enthusiasm and dedication of
the colleagues I’ve met. There’s both an
energy and a determination to succeed
which makes me excited about leading
AkzoNobel on the next phase of its
journey.
Grégoire (Greg) Poux-Guillaume
CEO and Chair of the Board of Management
and Executive Committee
Our CEO pictured operating a color
mixing machine at the recently renovated
TEC (Training, E-Commerce, Color
mixing) Center in Sassenheim,
the Netherlands.
AkzoNobel Report 2022 | CEO statement
5
How we created value
By delivering more value to our
customers, shareholders,
employees and society in general,
we can better accelerate
profitability while positioning
ourselves for growth.
Financial overview
Revenue was 13% higher and 11%
higher in constant currencies, resulting
from significant pricing initiatives, with
pricing up 14%.
Volumes were 7% lower, mainly due
to destocking in the distribution
channels in Decorative Paints in Europe
and in Performance Coatings, as well
as the impact from COVID-19 in
China. Furthermore, volumes were
negatively impacted by supply con-
straints, especially in North America.
Acquisitions added 4%, mainly related
to Grupo Orbis.
Revenue from third parties
in € millions
Decorative Paints
Performance Coatings
6,472
5,603
3,979
4,371
4,957
3,558
Summary of financial outcomes*
in € millions
Revenue
EBITDA*
Adjusted EBITDA*
Operating income
Identified items*
Adjusted operating income*
OPI margin*
ROS*
Average invested capital*
ROI (%)*
Capital expenditures
Net debt
Leverage ratio (net debt/EBITDA)*
Number of employees
Net cash from operating activities
Net income attributable to shareholders
Weighted average number of shares (in millions)
Earnings per share from total operations (in €)
Adjusted earnings per share from continuing
operations (in €)*
∆%
13
(27)
(19)
(37)
(28)
18
2021
9,587
1,469
1,436
1,118
26
1,092
11.7
11.4
6,829
16.0
288
2,340
1.6
32,800
605
829
185.0
4.48
4.07
2022
10,846
1,076
1,157
708
(81)
789
6.5
7.3
8,062
9.8
292
4,089
3.8
35,200
263
352
174.7
2.01
2.45
* Alternative performance measures: Please refer to reconciliation to the most directly comparable
IFRS measures in Note 4 of the Consolidated financial statements.
Revenue development full-year 2022 in %
Increase
Decrease
Total
4
11
2
13
10
5
0
-5
14
-7
Volume
Price/
mix
Acquisitions/
divestments
Total
in CC
Exchange
rates
Total
Revenue by destination in %
A North Asia
B South Asia Pacific
2020
2021
2022
C EMEA
Innovation investment
research and development expenses
in € millions
D North America
E Latin America
Based on full-year 2022.
238
230
258
Capital expenditures 2022:
total €292 million
A Decorative Paints
B Performance Coatings
C Corporate and other
2020
2021
2022
Capital expenditures are expected to be around 3% of
revenues for 2023.
16
13
46
13
12
91
167
34
E
A
D
C
C
B
B
A
For the full-year 2022, raw material
were more than offset by lower volumes
and other variable costs (including
and the continued impact from raw
freight), adjusted for the impact of lower
material and freight costs infl ation.
volumes, increased €1,143 million
Operating income included €49 million
compared with the full-year 2021.
negative Identifi ed items, mainly related
Operating income was lower at €708
positive, related to one-off gains from
to restructuring costs (2021: €2 million
CLIMATE CHANGE
28%
2022
50%
2030 ambition
million (2021: €1,118 million) as a
the Brazil ICMS case, partly offset by
Carbon emission reduction
result of lower volumes, despite pricing
restructuring costs). Adjusted operating
Own operations (baseline 2018, absolute)
initiatives more than compensating for
income at €493 million (2021: €614
raw material and freight costs infl ation.
million). ROS at 7.6% (2021: 11.0%).
Adjusted operating income at €789
million (2021: €1,092 million); ROS at
Acquisitions
In April 2022, the acquisition of
Colombia-based paints and coatings
7.3% (2021: 11.4%).
Business results
6%
2022
50%
2030 ambition
Decorative Paints revenue was
A provisional purchase price allocation
(Scope 3 emissions, selected Scope 3
up 10% and 8% higher in constant
is included in the fi gures and will be
upstream and downstream. Baseline 2018,
currencies, with signifi cant pricing
fi nalized in Q1 2023.
absolute)
company Grupo Orbis was completed.
Carbon emission reduction value chain
initiatives partly offset by lower volumes,
mainly due to destocking in the
Grupo Orbis results as from the
distribution channels in Europe and
acquisition date are included in the
softer market demand in China due to
Decorative Paints Latin America
the impact from COVID-19. Pricing was
business unit, and under Other in
up 12%, acquisitions added 5%.
Performance Coatings. The allocation
50%
2022
100%
2030 ambition
Operating income of €392 million
and Performance Coatings segments is
(of total electricity used in own operations)
of revenues to the Decorative Paints
Renewable electricity
(2021: €622 million), as pricing initiatives
based on the nature and products of the
were more than offset by the combined
underlying activities. Further allocation of
impact from lower volumes, continued
revenues to business unit level within the
raw material and freight costs infl ation
Performance Coatings segment will be
and higher operating expenses.
available as from Q1 2023.
1%
2022
30%
2030 ambition
Operating income included €5 million
On December 1, 2022, the acquisition
Energy reduction
negative Identifi ed items, mainly related
of the wheel liquid coatings business
Baseline 2018 (of total energy used in own
to restructuring costs (2021: €42 million
of Lankwitzer Lackfabrik GmbH was
operations, relative)
positive, mainly related to one-off gains
completed. Lankwitzer results as from
from the Brazil ICMS case and UK
the acquisition date are included in
pensions curtailment, partly offset by
the Powder Coatings business unit in
restructuring costs). Adjusted operating
Performance Coatings.
income at €397 million (2021: €580
million). ROS at 9.1% (2021: 14.6%).
On June 1, 2022, the intention to
Performance Coatings revenue was
was announced, with an enterprise
16% higher and up 13% in constant
value of approximately €0.5 billion. The
acquire Kansai Paints’ activities in Africa
initiatives in all segments, with pricing
in the second half of 2023.
up 16%. Volumes were lower due to
destocking, COVID-19 impact in China
Financing income and
and supply chain constraints, mainly in
expenses
North America.
Net fi nancing income and expenses
increased by €85 million, resulting from
Operating income of €444 million
an increase in exchange rate results of
(2021: €616 million), as pricing initiatives
€64 million negative (which includes €20
CIRCULARITY
56%
2022
100%
2030 ambition
The amount of materials (in own operations)
reused by AkzoNobel and third parties
currencies, driven by strong pricing
acquisition is expected to be completed
Circular use of materials
6
AkzoNobel Report 2022
AkzoNobel Report 2022
7
How we created value
By delivering more value to our
customers, shareholders,
employees and society in general,
we can better accelerate
profitability while positioning
ourselves for growth.
∆%
13
(27)
(19)
(37)
(28)
18
Summary of financial outcomes*
in € millions
Revenue
EBITDA*
Adjusted EBITDA*
Operating income
Identified items*
Adjusted operating income*
OPI margin*
ROS*
Average invested capital*
ROI (%)*
Net debt
Capital expenditures
Leverage ratio (net debt/EBITDA)*
Number of employees
Net cash from operating activities
Net income attributable to shareholders
Weighted average number of shares (in millions)
Earnings per share from total operations (in €)
Adjusted earnings per share from continuing
2021
9,587
1,469
1,436
1,118
26
1,092
11.7
11.4
6,829
16.0
288
2,340
1.6
605
829
185.0
4.48
4.07
32,800
2022
10,846
1,076
1,157
708
(81)
789
6.5
7.3
8,062
9.8
292
4,089
3.8
35,200
263
352
174.7
2.01
2.45
Financial overview
Revenue was 13% higher and 11%
higher in constant currencies, resulting
from significant pricing initiatives, with
pricing up 14%.
Volumes were 7% lower, mainly due
to destocking in the distribution
channels in Decorative Paints in Europe
and in Performance Coatings, as well
China. Furthermore, volumes were
negatively impacted by supply con-
straints, especially in North America.
Revenue from third parties
in € millions
Decorative Paints
Performance Coatings
6,472
5,603
3,979
4,371
4,957
3,558
as the impact from COVID-19 in
operations (in €)*
* Alternative performance measures: Please refer to reconciliation to the most directly comparable
IFRS measures in Note 4 of the Consolidated financial statements.
Acquisitions added 4%, mainly related
Revenue development full-year 2022 in %
to Grupo Orbis.
Increase
Decrease
Total
4
11
2
13
10
5
0
-5
14
-7
Volume
Price/
mix
Acquisitions/
divestments
Total
in CC
Exchange
Total
rates
Revenue by destination in %
A North Asia
B South Asia Pacific
D North America
E Latin America
Based on full-year 2022.
2020
2021
2022
C EMEA
Innovation investment
research and development expenses
in € millions
238
230
Capital expenditures 2022:
258
total €292 million
A Decorative Paints
B Performance Coatings
C Corporate and other
2020
2021
2022
revenues for 2023.
Capital expenditures are expected to be around 3% of
16
13
46
13
12
91
167
34
E
A
D
C
C
B
B
A
For the full-year 2022, raw material
and other variable costs (including
freight), adjusted for the impact of lower
volumes, increased €1,143 million
compared with the full-year 2021.
Operating income was lower at €708
million (2021: €1,118 million) as a
result of lower volumes, despite pricing
initiatives more than compensating for
raw material and freight costs infl ation.
Adjusted operating income at €789
million (2021: €1,092 million); ROS at
7.3% (2021: 11.4%).
Business results
Decorative Paints revenue was
up 10% and 8% higher in constant
currencies, with signifi cant pricing
initiatives partly offset by lower volumes,
mainly due to destocking in the
distribution channels in Europe and
softer market demand in China due to
the impact from COVID-19. Pricing was
up 12%, acquisitions added 5%.
Operating income of €392 million
(2021: €622 million), as pricing initiatives
were more than offset by the combined
impact from lower volumes, continued
raw material and freight costs infl ation
and higher operating expenses.
Operating income included €5 million
negative Identifi ed items, mainly related
to restructuring costs (2021: €42 million
positive, mainly related to one-off gains
from the Brazil ICMS case and UK
pensions curtailment, partly offset by
restructuring costs). Adjusted operating
income at €397 million (2021: €580
million). ROS at 9.1% (2021: 14.6%).
Performance Coatings revenue was
16% higher and up 13% in constant
currencies, driven by strong pricing
initiatives in all segments, with pricing
up 16%. Volumes were lower due to
destocking, COVID-19 impact in China
and supply chain constraints, mainly in
North America.
Operating income of €444 million
(2021: €616 million), as pricing initiatives
were more than offset by lower volumes
and the continued impact from raw
material and freight costs infl ation.
Operating income included €49 million
negative Identifi ed items, mainly related
to restructuring costs (2021: €2 million
positive, related to one-off gains from
the Brazil ICMS case, partly offset by
restructuring costs). Adjusted operating
income at €493 million (2021: €614
million). ROS at 7.6% (2021: 11.0%).
Acquisitions
In April 2022, the acquisition of
Colombia-based paints and coatings
company Grupo Orbis was completed.
A provisional purchase price allocation
is included in the fi gures and will be
fi nalized in Q1 2023.
Grupo Orbis results as from the
acquisition date are included in the
Decorative Paints Latin America
business unit, and under Other in
Performance Coatings. The allocation
of revenues to the Decorative Paints
and Performance Coatings segments is
based on the nature and products of the
underlying activities. Further allocation of
revenues to business unit level within the
Performance Coatings segment will be
available as from Q1 2023.
On December 1, 2022, the acquisition
of the wheel liquid coatings business
of Lankwitzer Lackfabrik GmbH was
completed. Lankwitzer results as from
the acquisition date are included in
the Powder Coatings business unit in
Performance Coatings.
On June 1, 2022, the intention to
acquire Kansai Paints’ activities in Africa
was announced, with an enterprise
value of approximately €0.5 billion. The
acquisition is expected to be completed
in the second half of 2023.
Financing income and
expenses
Net fi nancing income and expenses
increased by €85 million, resulting from
an increase in exchange rate results of
€64 million negative (which includes €20
CLIMATE CHANGE
28%
2022
50%
2030 ambition
Carbon emission reduction
Own operations (baseline 2018, absolute)
6%
2022
50%
2030 ambition
Carbon emission reduction value chain
(Scope 3 emissions, selected Scope 3
upstream and downstream. Baseline 2018,
absolute)
50%
2022
100%
2030 ambition
Renewable electricity
(of total electricity used in own operations)
1%
2022
30%
2030 ambition
Energy reduction
Baseline 2018 (of total energy used in own
operations, relative)
CIRCULARITY
56%
2022
100%
2030 ambition
Circular use of materials
The amount of materials (in own operations)
reused by AkzoNobel and third parties
6
AkzoNobel Report 2022
AkzoNobel Report 2022
7
How we created value
HEALTH AND WELL-BEING
38,087
2020-2022
100,000+
2030 ambition
People empowered
Members of local communities empowered
with new skills (cumulative)
591
2020-2022
2,000+
2030 ambition
Community projects (cumulative)
72
2022
76
Ambition
Organizational health score (OHI)
26%
2022
30%
2025 ambition
Female executives
Dividend in €
2020
1.95
2021
1.98
2022
1.981
1 Proposed
Earnings per share total operations in €
2022
2021
2020
3.29
4.48
2.01
Adjusted earnings per share from
continuing operations in €
2020
3.88
2021
4.07
2022
2.45
8
AkzoNobel Report 2022
milion expenses from Argentina and
Türkiye hyperinflation accounting) and
an increase in interest on net debt by
€25 million due to issuance of bonds
and to short-term debt related to the
Grupo Orbis acquisition.
Outstanding share capital
The outstanding share capital was
174.4 million common shares at the
end of December 2022. This included
3.9 million shares acquired in the share
buyback programs not yet cancelled.
Income tax
The effective tax rate was 35.5%
(2021: 22.3%). Excluding Identified
items, the effective tax rate was 32.5%
(2021: 24.9%).
The high effective tax rate in 2022 is
mainly related to a €13 million true-up
of the tax charge related to the UK
ACT case (booked as Identified item),
non-deductible charges resulting from
hyperinflation accounting and the impact
from the UK tax rate change.
The low effective tax rate in 2021 was
mainly related to the impact from the
Brazil ICMS and UK ACT cases, in
combination with a net re-recognition
of deferred tax assets (all booked as
Identified items).
Shareholders' equity
Shareholders' equity amounted to
€4.3 billion at December 31, 2022,
compared with €5.4 billion at year-end
2021. Main movements relate to profit
for the period of €352 million, offset by
movements from share buybacks of
€660 million (including taxes), dividend
of €347 million, actuarial losses of
€289 million (including taxes) and
currency effects of €163 million negative
(including taxes).
Dividend
The dividend policy remains unchanged
and is to pay a stable to rising dividend.
The final 2021 dividend of €1.54 per
common share was approved by the
AGM in April 2022 and was paid. The
total 2021 dividend amounted to €1.98
per share (2020: €1.95).
The weighted average number of shares
for the full-year 2022 was 174.7 million
shares. The weighted average number
of shares excludes shares bought back
and not yet cancelled and is the basis
for the calculation of earnings per share.
Share buyback
In February 2021, a €1 billion share
buyback program was announced,
which was completed in January 2022.
In February 2022, a €500 million share
buyback program was announced,
which was completed in December
2022.
Cash flow and net debt
Net cash from operating activities
decreased to an inflow of €263 million
(2021: inflow of €605 million), mainly
driven by lower profit for the period.
Net cash from investing activities
resulted in an outflow of €1,095 million
(2021: outflow of €134 million). The
increase in outflow mainly relates to a
higher outflow for acquisitions (mainly
related to the Grupo Orbis acquisition)
and the 2022 net outflow from
investments in short-term investments
(2021: net inflow).
Net cash from financing activities
resulted in an inflow of €1,141 million
(2021: outflow of €974 million). The
change from outflow to inflow is mainly
related to the inflow in 2022 of €2,189
million from changes from borrowings
(including the dual-tranche bond
of €1.2 billion in Q1 2022), and the
lower outflow from the share buyback.
In 2022, an interim dividend of €0.44
per share (2021: €0.44) was paid. A final
2022 dividend of €1.54 (2021: €1.54)
per share is proposed.
At December 31, 2022, net debt was
€4,089 million versus €2,340 million
at year-end 2021, mainly due to the
share buyback programs (€669 million),
acquisitions (€661 million), dividend
(€379 million) and capital expenditures
(€292 million). The net debt/EBITDA
leverage ratio at December 31, 2022,
was 3.8 (December 31, 2021: 1.6).
Invested capital
Invested capital at December 31, 2022,
totaled €8.1 billion, up €1.0 billion from
year-end 2021. This increase was mainly
caused by higher intangible and tangible
fixed assets (included in non-current
assets; largely resulting from the Grupo
Orbis acquisition), higher operating
working capital (trade) and FX impact.
Early in 2022, we announced plans to invest in the expansion of in-house resin manufacturing. The scale-up program
will help build resilience against supply disruptions while making an important contribution to achieving our financial and
Scope 3 (upstream) carbon reduction ambitions.
Operating working capital
Impact from the war in Ukraine
measures; no Identified item treatment
Operating working capital was
and sanctions on Russia
is applied.
€1.8 billion at December 31, 2022
Our business in Ukraine and Russia
(December 31, 2021: €1.2 billion).
combined represents about 2% of our
The application of hyperinflation
This increase in operating working
revenue (2021: 2%), of which the vast
accounting and the use of end of
capital was mainly due to increased
majority concerns Russia.
month rates to translate the statement
raw material prices, higher pricing and
of income into euros resulted in a
currency impact. Payables decreased,
Following the EU sanctions, the majority
€5 million positive impact on revenues, a
mainly as a result of destocking initiatives
of our Performance Coatings activities in
€46 million negative impact on operating
in the second half of the year.
Russia was suspended and the residual
income and a €63 million negative
Russian business is locally operated.
impact on net income for the year.
Pensions
AkzoNobel has assessed the potential
The net balance sheet position
accounting impact from the localization
2023 Outlook*
(according to IAS19) of the pension
of the Russian business. Taking into
AkzoNobel expects the ongoing macro-
plans at December 31, 2022, was a
account the applicable IFRS standards,
economic uncertainties to continue
surplus of €0.7 billion (December 31,
we've concluded that our Russian
and weigh on organic volume growth.
2021: surplus of €1.1 billion). The
business can still be included in our
The company will focus on margin
development during 2022 was mainly
scope of consolidation.
the result of the net effect in key
management, cost reduction, working
capital normalization and de-leveraging.
countries from higher discount rates,
No significant impairments of assets
lower plan asset returns and higher other
occurred in Russia; in Ukraine, the value
Cost reduction programs are expected
results, including FX.
of the assets is immaterial.
to mitigate the ongoing pressure from
inflation in operating expenses for
Sustainability progress
Impact from hyperinflation
2023. AkzoNobel expects declining
Guided by our People. Planet. Paint.
accounting (Türkiye and
raw material costs to have a favorable
approach, we’ve identified three
Argentina)
impact on profitability.
key global topics – climate change,
We have retrospectively applied IAS 29
circularity and health and well-being.
hyperinflation accounting for Türkiye as
Based on current market conditions,
During 2022, we made further progress
from January 1, 2022. For Argentina,
AkzoNobel targets to deliver €1.2 to
towards our 2030 key sustainability
hyperinflation accounting was already
€1.5 billion adjusted EBITDA. The
ambitions. This progress is highlighted
applicable from January 1, 2018.
company aims to lower its leverage ratio
in charts throughout this section and
In addition, and in line with IAS 21,
to less than 3.4 times net debt/EBITDA,
further detailed in the Sustainability
foreign currency rates at the end of the
including the impact of the Kansai Paint
statements.
Employees
reporting period are used to translate
Africa acquisition, by the end of 2023
both balance sheet and the statement of
and return to around 2 times post-2023.
income into euros.
At December 31, 2022, the number
of people employed was 35,200
The impact from hyperinflation accoun-
(December 31, 2021: 32,800).
ting is included in all IFRS-based
* Targets are based on organic volumes and constant
currencies, and assume no significant market disruptions.
This outlook contains APMs. Please refer to reconciliation
to the most directly comparable IFRS measures in Note 4
of the Consolidated financial statements.
AkzoNobel Report 2022
9
How we created value
591
2020-2022
2,000+
2030 ambition
72
2022
76
Ambition
26%
2022
30%
2025 ambition
Female executives
1 Proposed
2020
1.95
2020
3.29
2021
1.98
2021
4.48
2022
1.981
2022
2.01
Adjusted earnings per share from
continuing operations in €
2020
3.88
2021
4.07
2022
2.45
8
AkzoNobel Report 2022
HEALTH AND WELL-BEING
38,087
2020-2022
100,000+
2030 ambition
milion expenses from Argentina and
Outstanding share capital
Türkiye hyperinflation accounting) and
The outstanding share capital was
an increase in interest on net debt by
174.4 million common shares at the
€25 million due to issuance of bonds
end of December 2022. This included
and to short-term debt related to the
3.9 million shares acquired in the share
Grupo Orbis acquisition.
buyback programs not yet cancelled.
People empowered
Income tax
The weighted average number of shares
Members of local communities empowered
The effective tax rate was 35.5%
for the full-year 2022 was 174.7 million
with new skills (cumulative)
(2021: 22.3%). Excluding Identified
shares. The weighted average number
Community projects (cumulative)
ACT case (booked as Identified item),
buyback program was announced,
Organizational health score (OHI)
Brazil ICMS and UK ACT cases, in
items, the effective tax rate was 32.5%
of shares excludes shares bought back
(2021: 24.9%).
and not yet cancelled and is the basis
for the calculation of earnings per share.
The high effective tax rate in 2022 is
mainly related to a €13 million true-up
Share buyback
of the tax charge related to the UK
In February 2021, a €1 billion share
non-deductible charges resulting from
which was completed in January 2022.
hyperinflation accounting and the impact
from the UK tax rate change.
In February 2022, a €500 million share
The low effective tax rate in 2021 was
which was completed in December
mainly related to the impact from the
2022.
buyback program was announced,
combination with a net re-recognition
Cash flow and net debt
of deferred tax assets (all booked as
Net cash from operating activities
Identified items).
Shareholders' equity
decreased to an inflow of €263 million
(2021: inflow of €605 million), mainly
driven by lower profit for the period.
Shareholders' equity amounted to
Net cash from investing activities
€4.3 billion at December 31, 2022,
resulted in an outflow of €1,095 million
compared with €5.4 billion at year-end
(2021: outflow of €134 million). The
2021. Main movements relate to profit
increase in outflow mainly relates to a
for the period of €352 million, offset by
higher outflow for acquisitions (mainly
movements from share buybacks of
related to the Grupo Orbis acquisition)
€660 million (including taxes), dividend
and the 2022 net outflow from
of €347 million, actuarial losses of
investments in short-term investments
€289 million (including taxes) and
(2021: net inflow).
(including taxes).
Dividend
Net cash from financing activities
resulted in an inflow of €1,141 million
(2021: outflow of €974 million). The
The dividend policy remains unchanged
change from outflow to inflow is mainly
and is to pay a stable to rising dividend.
related to the inflow in 2022 of €2,189
common share was approved by the
(including the dual-tranche bond
AGM in April 2022 and was paid. The
of €1.2 billion in Q1 2022), and the
total 2021 dividend amounted to €1.98
lower outflow from the share buyback.
per share (2020: €1.95).
At December 31, 2022, net debt was
In 2022, an interim dividend of €0.44
€4,089 million versus €2,340 million
per share (2021: €0.44) was paid. A final
at year-end 2021, mainly due to the
2022 dividend of €1.54 (2021: €1.54)
share buyback programs (€669 million),
per share is proposed.
acquisitions (€661 million), dividend
Dividend in €
currency effects of €163 million negative
Earnings per share total operations in €
The final 2021 dividend of €1.54 per
million from changes from borrowings
(€379 million) and capital expenditures
(€292 million). The net debt/EBITDA
leverage ratio at December 31, 2022,
was 3.8 (December 31, 2021: 1.6).
Invested capital
Invested capital at December 31, 2022,
totaled €8.1 billion, up €1.0 billion from
year-end 2021. This increase was mainly
caused by higher intangible and tangible
fixed assets (included in non-current
assets; largely resulting from the Grupo
Orbis acquisition), higher operating
working capital (trade) and FX impact.
Operating working capital
Operating working capital was
€1.8 billion at December 31, 2022
(December 31, 2021: €1.2 billion).
This increase in operating working
capital was mainly due to increased
raw material prices, higher pricing and
currency impact. Payables decreased,
mainly as a result of destocking initiatives
in the second half of the year.
Pensions
The net balance sheet position
(according to IAS19) of the pension
plans at December 31, 2022, was a
surplus of €0.7 billion (December 31,
2021: surplus of €1.1 billion). The
development during 2022 was mainly
the result of the net effect in key
countries from higher discount rates,
lower plan asset returns and higher other
results, including FX.
Sustainability progress
Guided by our People. Planet. Paint.
approach, we’ve identified three
key global topics – climate change,
circularity and health and well-being.
During 2022, we made further progress
towards our 2030 key sustainability
ambitions. This progress is highlighted
in charts throughout this section and
further detailed in the Sustainability
statements.
Employees
At December 31, 2022, the number
of people employed was 35,200
(December 31, 2021: 32,800).
Early in 2022, we announced plans to invest in the expansion of in-house resin manufacturing. The scale-up program
will help build resilience against supply disruptions while making an important contribution to achieving our financial and
Scope 3 (upstream) carbon reduction ambitions.
Impact from the war in Ukraine
and sanctions on Russia
Our business in Ukraine and Russia
combined represents about 2% of our
revenue (2021: 2%), of which the vast
majority concerns Russia.
Following the EU sanctions, the majority
of our Performance Coatings activities in
Russia was suspended and the residual
Russian business is locally operated.
AkzoNobel has assessed the potential
accounting impact from the localization
of the Russian business. Taking into
account the applicable IFRS standards,
we've concluded that our Russian
business can still be included in our
scope of consolidation.
No significant impairments of assets
occurred in Russia; in Ukraine, the value
of the assets is immaterial.
Impact from hyperinflation
accounting (Türkiye and
Argentina)
We have retrospectively applied IAS 29
hyperinflation accounting for Türkiye as
from January 1, 2022. For Argentina,
hyperinflation accounting was already
applicable from January 1, 2018.
In addition, and in line with IAS 21,
foreign currency rates at the end of the
reporting period are used to translate
both balance sheet and the statement of
income into euros.
The impact from hyperinflation accoun-
ting is included in all IFRS-based
measures; no Identified item treatment
is applied.
The application of hyperinflation
accounting and the use of end of
month rates to translate the statement
of income into euros resulted in a
€5 million positive impact on revenues, a
€46 million negative impact on operating
income and a €63 million negative
impact on net income for the year.
2023 Outlook*
AkzoNobel expects the ongoing macro-
economic uncertainties to continue
and weigh on organic volume growth.
The company will focus on margin
management, cost reduction, working
capital normalization and de-leveraging.
Cost reduction programs are expected
to mitigate the ongoing pressure from
inflation in operating expenses for
2023. AkzoNobel expects declining
raw material costs to have a favorable
impact on profitability.
Based on current market conditions,
AkzoNobel targets to deliver €1.2 to
€1.5 billion adjusted EBITDA. The
company aims to lower its leverage ratio
to less than 3.4 times net debt/EBITDA,
including the impact of the Kansai Paint
Africa acquisition, by the end of 2023
and return to around 2 times post-2023.
* Targets are based on organic volumes and constant
currencies, and assume no significant market disruptions.
This outlook contains APMs. Please refer to reconciliation
to the most directly comparable IFRS measures in Note 4
of the Consolidated financial statements.
AkzoNobel Report 2022
9
Watch the video on our
Report 2022 website
Case study
Out of the blue
Jodhpur in India has joined the growing
list of iconic locations to be transformed
as part of our global “Let’s Colour”
program.
Known as the Blue City and a popular
tourist destination, we brought new
energy to its historic streets by repainting
250 homes and creating 20 vibrant
murals. The roofs of more than 100
houses were also coated with Dulux
Weathershield Protect, which can help
to reduce temperatures by up to 5˚C.
The work was carried out by AkzoNobel
Paint Academy painters, local artists and
residents, who combined their creative
talents with AkzoNobel volunteers.
“We’re extremely proud to bring our
‘Let’s Colour’ program to Jodhpur,” said
Rajiv Rajgopal, Managing Director of
AkzoNobel India. “As well as preserving
Jodhpur’s remarkable heritage, we
want to make a sustainable difference
by protecting homes and making them
cooler.”
In addition to painting more than
250,000 square feet of walls, various
community walkways and staircases
were also given a rainbow makeover,
using Dulux FloorPlus paint.
“The color blue has been an integral
part of Jodhpur’s identity for centuries,”
continued Rajgopal. “Reigniting the
city’s timeless appeal – and creating
new livelihood opportunities for the local
community – were integral to the whole
project and perfectly showcase how
everything we do starts with People.
Planet. Paint.”
10
Watch the video on our
Report 2022 website
Case study
Out of the blue
Jodhpur in India has joined the growing
AkzoNobel India. “As well as preserving
list of iconic locations to be transformed
Jodhpur’s remarkable heritage, we
as part of our global “Let’s Colour”
want to make a sustainable difference
program.
by protecting homes and making them
cooler.”
Known as the Blue City and a popular
tourist destination, we brought new
In addition to painting more than
energy to its historic streets by repainting
250,000 square feet of walls, various
250 homes and creating 20 vibrant
community walkways and staircases
murals. The roofs of more than 100
were also given a rainbow makeover,
houses were also coated with Dulux
using Dulux FloorPlus paint.
Weathershield Protect, which can help
to reduce temperatures by up to 5˚C.
“The color blue has been an integral
part of Jodhpur’s identity for centuries,”
The work was carried out by AkzoNobel
continued Rajgopal. “Reigniting the
Paint Academy painters, local artists and
city’s timeless appeal – and creating
residents, who combined their creative
new livelihood opportunities for the local
talents with AkzoNobel volunteers.
community – were integral to the whole
“We’re extremely proud to bring our
project and perfectly showcase how
‘Let’s Colour’ program to Jodhpur,” said
everything we do starts with People.
Rajiv Rajgopal, Managing Director of
Planet. Paint.”
10
Color of the Year 2023
WILD
WONDER™
THE NEXT PHASE OF OUR TRANSFORMATION
Grow
& Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Our strategy
Ambitions 2023
Growth in line with
relevant markets
€1.2 to €1.5 bln
adjusted EBITDA
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
Our Decorative Paints activities are reported in
three regions: Asia; Europe, Middle East and
Africa; Latin America.
Performance Coatings
20
Our Performance Coatings activities are
organized into four main businesses:
Automotive and Specialty Coatings, Industrial
Coatings, Marine and Protective Coatings,
Powder Coatings.
For more details on key 2022 fi gures, see the previous How we
created value pages and the segment information in Note 3 of the
Consolidated fi nancial statements.
AkzoNobel is a global paints and
than €140 billion paints and coatings
With stakeholders increasingly
coatings company with a proud heritage,
industry. Our broad geographic
demanding more sustainable solutions,
which can be traced back to 1792.
presence and leading positions in many
we’re able to capitalize on this trend by
Our world class portfolio of established
market segments still provide several
leveraging our leadership position when
brands is trusted by customers around
opportunities for growth, despite the
it comes to sustainability – refl ected
the world and we continue to be guided
challenging economic outlook for 2023.
in the recognition we've received
by our overarching mantra of People.
from various rating agencies, such as
Planet. Paint.
We have a signifi cant presence in the
EcoVadis, MSCI and Sustainalytics.
South Asia Pacifi c region, where we
Sustainable solutions already account
An enduring set of core values – safety,
generate around 13% of total revenue.
for 40% of revenue and we have a target
integrity and sustainability – underpins
And, thanks to our acquisition of Grupo
to increase this to more than 50% by
everything we do. Key behaviors –
Orbis – completed in 2022 – we now
2030. We’re creating a more effi cient
based on passion for paint, precise
have a more signifi cant presence in Latin
company, while lowering our carbon
processes, powerful performance and
America, which accounts for 12% of
footprint, and are proud to have set
proud people – guide our ways of
total revenue.
working.
science-based carbon reduction targets
for our full value chain – a truly fact-
More selective opportunities for growth
based approach.
Our Grow & Deliver strategy balances
also exist. For example, we’re growing
growth with profi tability improvement.
our Decorative Paints business in
Innovation is essential to our success.
Right now, macro-economic uncertainty
China by leveraging our premium Dulux
For us, this means understanding and
means we need to focus on delivering
brand to serve customers in a greater
anticipating the changing needs and
profi t and cash, while keeping a close
number of cities with more innovative
expectations of customers when it
eye on our markets and selectively
and sustainable solutions. In addition,
comes to providing them with products
pursuing growth opportunities. Our
aerospace – as well as marine and
and services. Our industry-leading Paint
goal is to be a leader in the industry.
protective coatings – market segments
the Future collaborative innovation
And we’re well placed in the more
once again offer growth opportunities.
ecosystem is just one example of how
Passion for paint
Precise processes
Powerful performance
Proud people
Be customer
focused
Execute with
discipline
Deliver on
commitments
Take
ownership
12
AkzoNobel Report 2022 | Strategy and operations
AkzoNobel Report 2022 | Strategy and operations
AkzoNobel Report 2022
13
13
STRATEGY AND OPERATIONS
An overview of our strategy, approach to
innovation and the performance of our Paints
and Coatings businesses during the year.
13
15
16
20
Strategy
Innovation
Decorative Paints
Our Decorative Paints activities are reported in
three regions: Asia; Europe, Middle East and
Africa; Latin America.
Performance Coatings
Our Performance Coatings activities are
organized into four main businesses:
Automotive and Specialty Coatings, Industrial
Coatings, Marine and Protective Coatings,
Powder Coatings.
For more details on key 2022 fi gures, see the previous How we
created value pages and the segment information in Note 3 of the
Consolidated fi nancial statements.
Color of the Year 2023
WILD
WONDER™
THE NEXT PHASE OF OUR TRANSFORMATION
Grow
& Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Deliver
Our strategy
Ambitions 2023
Growth in line with
relevant markets
€1.2 to €1.5 bln
adjusted EBITDA
AkzoNobel is a global 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 world and we continue to be guided
by our overarching mantra of People.
Planet. Paint.
An enduring set of core values – safety,
integrity and sustainability – underpins
everything we do. Key behaviors –
based on passion for paint, precise
processes, powerful performance and
proud people – guide our ways of
working.
Our Grow & Deliver strategy balances
growth with profi tability improvement.
Right now, macro-economic uncertainty
means we need to focus on delivering
profi t and cash, while keeping a close
eye on our markets and selectively
pursuing growth opportunities. Our
goal is to be a leader in the industry.
And we’re well placed in the more
than €140 billion paints and coatings
industry. Our broad geographic
presence and leading positions in many
market segments still provide several
opportunities for growth, despite the
challenging economic outlook for 2023.
We have a signifi cant presence in the
South Asia Pacifi c region, where we
generate around 13% of total revenue.
And, thanks to our acquisition of Grupo
Orbis – completed in 2022 – we now
have a more signifi cant presence in Latin
America, which accounts for 12% of
total revenue.
More selective opportunities for growth
also exist. For example, we’re growing
our Decorative Paints business in
China by leveraging our premium Dulux
brand to serve customers in a greater
number of cities with more innovative
and sustainable solutions. In addition,
aerospace – as well as marine and
protective coatings – market segments
once again offer growth opportunities.
With stakeholders increasingly
demanding more sustainable solutions,
we’re able to capitalize on this trend by
leveraging our leadership position when
it comes to sustainability – refl ected
in the recognition we've received
from various rating agencies, such as
EcoVadis, MSCI and Sustainalytics.
Sustainable solutions already account
for 40% of revenue and we have a target
to increase this to more than 50% by
2030. We’re creating a more effi cient
company, while lowering our carbon
footprint, and are proud to have set
science-based carbon reduction targets
for our full value chain – a truly fact-
based approach.
Innovation is essential to our success.
For us, this means understanding and
anticipating the changing needs and
expectations of customers when it
comes to providing them with products
and services. Our industry-leading Paint
the Future collaborative innovation
ecosystem is just one example of how
Passion for paint
Precise processes
Powerful performance
Proud people
Be customer
focused
Execute with
discipline
Deliver on
commitments
Take
ownership
12
AkzoNobel Report 2022 | Strategy and operations
AkzoNobel Report 2022 | Strategy and operations
AkzoNobel Report 2022
13
13
Our strategy
Innovation
A game-changing partnership between
PlayStation and our Bruguer brand
in Spain resulted in the launch of an
exclusive range of wall paint. The Galaxy
PlayStation by Bruguer collection
is based on the colors of the PS5’s
DualSense wireless controllers. It means
gaming set-ups and surroundings
can now be personalized to create a
truly immersive experience. A great
way for both partners to demonstrate
their shared passion for creativity and
innovation.
our pioneering spirit is helping us to
continue pushing boundaries.
targeted value-creating acquisitions,
aligned with our strategic mandates.
We’re also building the product
management capabilities necessary
to deliver the products our customers
desire, and which will help us win in the
market at the most competitive cost
– with less complexity and increased
collaboration with our suppliers.
Strategic mandates – per market
segment and region – are used to
provide clear direction for each
of our businesses, including relative
priorities for growth and profi tability
improvement.
During 2022, we completed the
acquisition of Grupo Orbis and
announced our intended acquisition of
the African paints and coatings activities
from Kansai Paint (expected to be
completed in the second half of 2023).
To help deliver our strategy, we’re
evolving our operating model, moving
from functional excellence in silos to
driving cross-functional collaboration,
with an emphasis on end-to-end
processes and becoming even more
customer focused.
We’re committed to retaining a strong
investment grade credit rating and
have clear capital allocation priorities,
including a disciplined approach to
In addition, we continue to integrate our
systems and applications to provide
business services that are both effective
and cost competitive, allowing for
greater focus on what matters most.
During 2023, we’ll focus on execution.
Margin management is particularly
important to ensure we benefi t from our
robust pricing initiatives in response to
signifi cant raw material cost infl ation.
We’re building on our experience and
setting ourselves up to deal with future
cycles. When it comes to costs, we’ve
identifi ed multiple opportunities –
especially within our integrated supply
chain – to deliver signifi cant savings.
These actions are necessary to adapt
to changes in the markets where we
operate and offset cost infl ation, while
delivering improved performance during
both the short and medium term.
Furthermore, attention is required to
normalize our working capital position,
which will result in stronger cash fl ow and
lower net debt/EBITDA leverage ratio.
Grow revenue
in line with relevant markets
in line with relevant markets
Deliver results
€1.2 to €1.5 bln adjusted EBITDA
€1.2 to €1.5 bln adjusted EBITDA
Grow with our market
Outgrow selected segments
Provide innovative sustainable
solutions
G ro w
Manage our margins
Simplify our product range
Simplify our product range
Fine-tune make and deliver
Fine-tune make and deliver
D eliver
Make our processes and systems work for our customers and us
Stretching boundaries in
paints and coatings
Innovation is the spark that ignites our ability to turn great ideas into
reality. Inspired by our company purpose – People. Planet. Paint. – the
products and technologies we develop aren’t just important for our own
business, they’re also essential for our customers – and the planet.
From saving energy, reflecting heat and protecting and
– In 2021/2022, we held two Paint the Future start-
beautifying assets, to making ships go faster, lighting
up challenges – a regional event in India and a
brighter and air cleaner, our world class reputation for
global edition. We’re currently exploring the value
pushing boundaries can be found in all our products.
proposition of the three global winners (SolCold,
Transforming the industry
Aerones and SprayVision), along with the two
regional winners (HyperReality Technologies and
The paints and coatings industry can play a key role in
Fluid AI). We also launched our Collaborative
decarbonizing manufacturing industries globally. As an
Sustainability Challenge, where we invited partners
innovation leader, we’re working on a 50% reduction
from across the value chain to develop a shared
in carbon emissions by 2030 for the whole value chain
approach to tackling carbon reduction
(baseline 2018) – a commitment that’s been validated
– We continue to invest in new equipment and
by the Science Based Targets initiative (SBTi). In 2022,
facilities. In 2022, we opened a new €11 million
we reduced Scope 3 emissions 6% (baseline 2018).
global R&D center at our Slough site
in the UK
The size and the scale of this challenge requires the
• A track record of bringing commercial innovations
transformation of our generation. And it’s this huge
to market
opportunity that’s winning over our innovation eco system
– In 2022, we extended our wall paint platform, Kids
– of colleagues and partners – as they understand the
Paint in China, by introducing new products with
possibilities and grasp the momentum gathering among
anti-viral and anti-bacterial functionality
suppliers and customers in the value chain. What’s
– We launched a mosquito-repellent coating in Brazil
required in particular is a more collaborative approach,
which helps combat disease. Its repellent action is
based on the realization that each contributor will need
specifically designed to combat the Aedes aegypti
to innovate changes which will lead to carbon reduction
mosquito (see case study on page 28)
at several different points in the chain.
– We developed cutting-edge 3D color technology
And we’re confident we can meet and solve this
experience to help make paint selection
innovation challenge of the coming decade, because
as smooth as possible for both architects and
that offers a super-realistic color and gloss
we’ve had a head start:
home decorators
• A vision, based on our company purpose People.
“Collaborative
innovation
will play a
major role
in helping
us to meet
our own sus-
tainability
ambitions –
and those
of our cus-
tomers.”
Roger Jakeman,
Chief Technology
Officer
Planet. Paint. to transform the market by bringing
The paints and coatings industry has entered a very
sustainable value to our customers through
exciting period of transformation. Because we act
collaborative innovation
on this responsibly, we’ll continue to attract the best
• An innovation network underpinned by different
problem solvers and support them with the innovation
initiatives and actions:
culture that’s required to succeed.
– Together with nine partners, we were involved
in ENVISION – a unique collaboration which set
Innovation in numbers
out to devise a way of invisibly harvesting energy
from surfaces. We supported the project with an
innovative coatings solution that allows heat to be
captured by colors that traditionally reflect near-
infrared light, making buildings energy positive –
and existing houses more sustainable
~3,000 R&D professionals worldwide
€1.25 bln spent on R&D (last five years)
2,825 patents/patent applications
70 laboratories worldwide
14
Strategy and operations | AkzoNobel Report 2022
AkzoNobel Report 2022 | Strategy and operations
15
Our strategy
Innovation
A game-changing partnership between
PlayStation and our Bruguer brand
in Spain resulted in the launch of an
exclusive range of wall paint. The Galaxy
PlayStation by Bruguer collection
is based on the colors of the PS5’s
DualSense wireless controllers. It means
gaming set-ups and surroundings
can now be personalized to create a
truly immersive experience. A great
way for both partners to demonstrate
their shared passion for creativity and
innovation.
our pioneering spirit is helping us to
targeted value-creating acquisitions,
greater focus on what matters most.
continue pushing boundaries.
aligned with our strategic mandates.
During 2023, we’ll focus on execution.
Margin management is particularly
We’re also building the product
During 2022, we completed the
important to ensure we benefi t from our
management capabilities necessary
acquisition of Grupo Orbis and
robust pricing initiatives in response to
to deliver the products our customers
announced our intended acquisition of
signifi cant raw material cost infl ation.
desire, and which will help us win in the
the African paints and coatings activities
We’re building on our experience and
market at the most competitive cost
from Kansai Paint (expected to be
setting ourselves up to deal with future
– with less complexity and increased
completed in the second half of 2023).
cycles. When it comes to costs, we’ve
collaboration with our suppliers.
identifi ed multiple opportunities –
To help deliver our strategy, we’re
especially within our integrated supply
Strategic mandates – per market
evolving our operating model, moving
chain – to deliver signifi cant savings.
segment and region – are used to
from functional excellence in silos to
provide clear direction for each
driving cross-functional collaboration,
These actions are necessary to adapt
of our businesses, including relative
with an emphasis on end-to-end
to changes in the markets where we
priorities for growth and profi tability
processes and becoming even more
operate and offset cost infl ation, while
improvement.
customer focused.
delivering improved performance during
both the short and medium term.
We’re committed to retaining a strong
In addition, we continue to integrate our
Furthermore, attention is required to
investment grade credit rating and
systems and applications to provide
normalize our working capital position,
have clear capital allocation priorities,
business services that are both effective
which will result in stronger cash fl ow and
including a disciplined approach to
and cost competitive, allowing for
lower net debt/EBITDA leverage ratio.
Grow revenue
in line with relevant markets
in line with relevant markets
Deliver results
€1.2 to €1.5 bln adjusted EBITDA
€1.2 to €1.5 bln adjusted EBITDA
Grow with our market
Outgrow selected segments
Provide innovative sustainable
solutions
G ro w
Manage our margins
Simplify our product range
Simplify our product range
Fine-tune make and deliver
Fine-tune make and deliver
D eliver
Make our processes and systems work for our customers and us
Stretching boundaries in
paints and coatings
Innovation is the spark that ignites our ability to turn great ideas into
reality. Inspired by our company purpose – People. Planet. Paint. – the
products and technologies we develop aren’t just important for our own
business, they’re also essential for our customers – and the planet.
“Collaborative
innovation
will play a
major role
in helping
us to meet
our own sus-
tainability
ambitions –
and those
of our cus-
tomers.”
Roger Jakeman,
Chief Technology
Officer
From saving energy, reflecting heat and protecting and
beautifying assets, to making ships go faster, lighting
brighter and air cleaner, our world class reputation for
pushing boundaries can be found in all our products.
Transforming the industry
The paints and coatings industry can play a key role in
decarbonizing manufacturing industries globally. As an
innovation leader, we’re working on a 50% reduction
in carbon emissions by 2030 for the whole value chain
(baseline 2018) – a commitment that’s been validated
by the Science Based Targets initiative (SBTi). In 2022,
we reduced Scope 3 emissions 6% (baseline 2018).
The size and the scale of this challenge requires the
transformation of our generation. And it’s this huge
opportunity that’s winning over our innovation eco system
– of colleagues and partners – as they understand the
possibilities and grasp the momentum gathering among
suppliers and customers in the value chain. What’s
required in particular is a more collaborative approach,
based on the realization that each contributor will need
to innovate changes which will lead to carbon reduction
at several different points in the chain.
And we’re confident we can meet and solve this
innovation challenge of the coming decade, because
we’ve had a head start:
• A vision, based on our company purpose People.
Planet. Paint. to transform the market by bringing
sustainable value to our customers through
collaborative innovation
• An innovation network underpinned by different
initiatives and actions:
– Together with nine partners, we were involved
– In 2021/2022, we held two Paint the Future start-
up challenges – a regional event in India and a
global edition. We’re currently exploring the value
proposition of the three global winners (SolCold,
Aerones and SprayVision), along with the two
regional winners (HyperReality Technologies and
Fluid AI). We also launched our Collaborative
Sustainability Challenge, where we invited partners
from across the value chain to develop a shared
approach to tackling carbon reduction
– We continue to invest in new equipment and
facilities. In 2022, we opened a new €11 million
global R&D center at our Slough site
in the UK
• A track record of bringing commercial innovations
to market
– In 2022, we extended our wall paint platform, Kids
Paint in China, by introducing new products with
anti-viral and anti-bacterial functionality
– We launched a mosquito-repellent coating in Brazil
which helps combat disease. Its repellent action is
specifically designed to combat the Aedes aegypti
mosquito (see case study on page 28)
– We developed cutting-edge 3D color technology
that offers a super-realistic color and gloss
experience to help make paint selection
as smooth as possible for both architects and
home decorators
The paints and coatings industry has entered a very
exciting period of transformation. Because we act
on this responsibly, we’ll continue to attract the best
problem solvers and support them with the innovation
culture that’s required to succeed.
in ENVISION – a unique collaboration which set
out to devise a way of invisibly harvesting energy
from surfaces. We supported the project with an
innovative coatings solution that allows heat to be
captured by colors that traditionally reflect near-
infrared light, making buildings energy positive –
and existing houses more sustainable
Innovation in numbers
~3,000 R&D professionals worldwide
€1.25 bln spent on R&D (last five years)
2,825 patents/patent applications
70 laboratories worldwide
14
Strategy and operations | AkzoNobel Report 2022
AkzoNobel Report 2022 | Strategy and operations
15
Decorative Paints
Asia
2022 SUMMARY
We faced market challenges in China,
mainly due to uncertainties created by
COVID-19, which impacted consumer
confi dence and the real estate sector.
Despite diffi cult market conditions,
we continued to invest in innovation,
including bio-based products, to lead
premium market growth in core Chinese
cities. Dulux expanded its geographical
presence by adding more than 200 cities
and over 10,000 additional paint stores.
In South East and South Asia, we made
solid progress on volume and value
growth, mainly driven by reopening after
COVID-19 and increasing the number
of stores. Several new products were
launched in India (Dulux SmartChoice)
and Vietnam (Maxilite by Dulux), along
with water-proofi ng products in India,
Malaysia, Indonesia and Pakistan. Our
Paint the Future startup challenge in
India was also a success.
Revenue in € millions
1,073
1,172
916
2020
2021
2022
Key brands
“Our team
delivered
strong
growth and
market
penetration
by gaining
share, as
well as
expanding
into adjacent
segments.”
“We once
again demon-
strated our
resilience
and agility
to deliver
balanced and
sustainable
results,
despite a
turbulent
year.”
Oscar Wezenbeek,
Director of Decorative
Paints South East and
South Asia
Mark Kwok, Director
of Decorative Paints
North Asia
Digital delight
Two startups – HyperReality Technologies and Fluid
AI – won our Paint the Future India awards and
will work with us to enhance the digital consumer
experience for Dulux paints.
16
Strategy and operations | AkzoNobel Report 2022
OTHER KEY DEVELOPMENTS
• Started construction on a new
manufacturing plant in Faisalabad,
Pakistan, which is scheduled to start
operations in 2023
• Invested in a new production line
for water-based texture paints in
Shanghai, China (see page 34)
2022 highlight
We remained on course with the
construction of a new logistics
hub, which is set to become the
company’s largest warehousing
base in China. Due to be completed
by mid-2023, it’s located at our
decorative paints site in Songjiang,
Shanghai. The new €10 million
facility – a nerve center for produc-
tion, storage and transport – is
equipped with a heat-insulating and
light-permeable roof and features
around 5,000 solar panels
that can generate
that can generate
1.6 million kWh
1.6 million kWh
of electricity
of electricity
annually.
annually.
• Introduced the fi rst United States
Department of Agriculture (USDA)
certifi ed bio-based paint in both
Malaysia and Singapore. Dulux Better
Living Air Clean Biobased contains
22% bio-based content
• Our collaboration with Paint the Future
China winner Archifi ction resulted in
the opening of the Dulux Naked Eye
3D Experience House in Shanghai
• Our Dulux brand was used on several
landmark buildings, including Kai
Tak Sports Park in Hong Kong and
Taichung International Airport in
Taiwan
• Launched two Dulux Experience
Stores in Indonesia
• As part of Project Indradhanush,
we started working with more than
500 women in rural India to promote
entrepreneurship and skill building in
decorative paints to help provide a
sustainable source of income
• The fi rst Dulux Living Center offi cially
opened in Chengdu, China. The
immersive brand store creates an
interactive space designed to provide
an extraordinary consumer shopping
experience
2022 SUMMARY
2022 highlight
Our results were impacted by lower
demand due to the turbulent business
environ ment. The war in Ukraine, high
raw material and energy costs and
unpreceden ted infl ation in the region
caused a shift in consumer spending to
the basic needs. As a result, the team
worked hard to adapt to the changing
market dynamics and reset our business.
We continued to focus on serving our
customers and building our brands, while
implementing pricing initiatives to offset
cost in fl ation. We’re excited about
our intended acquisition of the African
activities of Kansai Paint, a clear sign
we’re continuing to build for the future,
while remaining committed to achieving
our strategic ambitions.
“2022 was
a turbulent
year. The war
in Ukraine,
rising energy
costs and
reduced
macro-
econo mic
confi dence
impacted
our business
signifi cantly.
I’m extremely
proud of
the commit-
ment and
resilience
of the team
to adapt.”
Jan-Piet van Kesteren,
Director of Decorative
Transforming
Tashan
More than 20 buildings in the Marmara
district of Türkiye were given a new
lease of life by our Marshall brand.
A joint venture with the local council
at Bilecik Gölpazarı, the project
involved renovating 23 important
Revenue in € millions
2,246
2,429
2,405
2020
2021
2022
historical structures within the Tashan
Paints Europe, Middle
conservation area.
East and Africa
Decorative Paints
EMEA
We announced our intention to acquire all the African paints and
coatings activities of Kansai Paint, which is active in 12 countries in
Africa. The intended transaction (to be fi nalized in 2023) includes
the Plascon brand, which has more than 100 years of heritage
in South Africa.Together with our own Dulux brand, they’re the
longest-established paint brands in the region. Also included are all
of Kansai Paint’s automotive and protective coatings, and coatings
for wood and coil. The intended deal will further strengthen our
leading business in the region and provide an excellent platform for
future growth.
OTHER KEY DEVELOPMENTS
• Our sustainability initiatives to reduce the environmental footprint
of our products gained strong momentum. This included switching
much of our plastic packs in Europe to (partially) recycled plastic
content, while we now use bio-based binders for some of our
highest volume wall paints
• The benefi ts of our cross-business complexity reduction program
focused on recipe, raw material and packaging consolidation – as
well as late differentiation – started to kick in and helped us partially
mitigate the huge raw material price increases and improve our agility
• Developed our signifi cant stores footprint by moving to a fully auto-
nomous franchise organization in the Netherlands and welcoming
new partners into the growing Sikkens stores organization in France
• Numerous “Let’s Colour” community projects were staged across
the region, while our long-standing partnership with SOS Children’s
Villages continued to be a pivotal part of our social program,
especially supporting families evacuating Ukraine
• The Dulux Academy continued to fl ourish. The program now delivers
courses at 13 venues across the UK and has trained 13,000
painters and decorators to date
• Continued to build e-commerce direct-to-consumer delivery capability
in several European markets to directly support ambitious growth
plans for key retailers
Key brands
AkzoNobel Report 2022 | Strategy and operations
17
Decorative Paints
Asia
2022 SUMMARY
2022 highlight
We remained on course with the
We faced market challenges in China,
construction of a new logistics
mainly due to uncertainties created by
hub, which is set to become the
COVID-19, which impacted consumer
company’s largest warehousing
confi dence and the real estate sector.
base in China. Due to be completed
Despite diffi cult market conditions,
by mid-2023, it’s located at our
we continued to invest in innovation,
decorative paints site in Songjiang,
including bio-based products, to lead
Shanghai. The new €10 million
premium market growth in core Chinese
facility – a nerve center for produc-
cities. Dulux expanded its geographical
tion, storage and transport – is
presence by adding more than 200 cities
equipped with a heat-insulating and
and over 10,000 additional paint stores.
light-permeable roof and features
In South East and South Asia, we made
around 5,000 solar panels
solid progress on volume and value
that can generate
that can generate
growth, mainly driven by reopening after
1.6 million kWh
1.6 million kWh
of electricity
of electricity
annually.
annually.
“Our team
delivered
strong
growth and
market
penetration
by gaining
share, as
well as
expanding
into adjacent
segments.”
“We once
again demon-
strated our
resilience
and agility
to deliver
balanced and
sustainable
results,
despite a
turbulent
year.”
Oscar Wezenbeek,
Mark Kwok, Director
Director of Decorative
of Decorative Paints
Paints South East and
North Asia
South Asia
COVID-19 and increasing the number
of stores. Several new products were
launched in India (Dulux SmartChoice)
and Vietnam (Maxilite by Dulux), along
with water-proofi ng products in India,
Malaysia, Indonesia and Pakistan. Our
Paint the Future startup challenge in
India was also a success.
Revenue in € millions
1,073
1,172
916
2020
2021
2022
Key brands
• Introduced the fi rst United States
Department of Agriculture (USDA)
certifi ed bio-based paint in both
Malaysia and Singapore. Dulux Better
Living Air Clean Biobased contains
22% bio-based content
• Our collaboration with Paint the Future
China winner Archifi ction resulted in
the opening of the Dulux Naked Eye
3D Experience House in Shanghai
• Our Dulux brand was used on several
landmark buildings, including Kai
Tak Sports Park in Hong Kong and
Taichung International Airport in
Taiwan
• Launched two Dulux Experience
Stores in Indonesia
• As part of Project Indradhanush,
we started working with more than
500 women in rural India to promote
entrepreneurship and skill building in
decorative paints to help provide a
OTHER KEY DEVELOPMENTS
Digital delight
• Started construction on a new
sustainable source of income
manufacturing plant in Faisalabad,
• The fi rst Dulux Living Center offi cially
Pakistan, which is scheduled to start
opened in Chengdu, China. The
Two startups – HyperReality Technologies and Fluid
operations in 2023
immersive brand store creates an
AI – won our Paint the Future India awards and
• Invested in a new production line
interactive space designed to provide
will work with us to enhance the digital consumer
for water-based texture paints in
an extraordinary consumer shopping
Decorative Paints
EMEA
2022 highlight
We announced our intention to acquire all the African paints and
coatings activities of Kansai Paint, which is active in 12 countries in
Africa. The intended transaction (to be fi nalized in 2023) includes
the Plascon brand, which has more than 100 years of heritage
in South Africa.Together with our own Dulux brand, they’re the
longest-established paint brands in the region. Also included are all
of Kansai Paint’s automotive and protective coatings, and coatings
for wood and coil. The intended deal will further strengthen our
leading business in the region and provide an excellent platform for
future growth.
OTHER KEY DEVELOPMENTS
• Our sustainability initiatives to reduce the environmental footprint
of our products gained strong momentum. This included switching
much of our plastic packs in Europe to (partially) recycled plastic
content, while we now use bio-based binders for some of our
highest volume wall paints
• The benefi ts of our cross-business complexity reduction program
focused on recipe, raw material and packaging consolidation – as
well as late differentiation – started to kick in and helped us partially
mitigate the huge raw material price increases and improve our agility
• Developed our signifi cant stores footprint by moving to a fully auto-
nomous franchise organization in the Netherlands and welcoming
new partners into the growing Sikkens stores organization in France
• Numerous “Let’s Colour” community projects were staged across
the region, while our long-standing partnership with SOS Children’s
Villages continued to be a pivotal part of our social program,
especially supporting families evacuating Ukraine
• The Dulux Academy continued to fl ourish. The program now delivers
courses at 13 venues across the UK and has trained 13,000
painters and decorators to date
• Continued to build e-commerce direct-to-consumer delivery capability
in several European markets to directly support ambitious growth
plans for key retailers
Key brands
2022 SUMMARY
Our results were impacted by lower
demand due to the turbulent business
environ ment. The war in Ukraine, high
raw material and energy costs and
unpreceden ted infl ation in the region
caused a shift in consumer spending to
the basic needs. As a result, the team
worked hard to adapt to the changing
market dynamics and reset our business.
We continued to focus on serving our
customers and building our brands, while
implementing pricing initiatives to offset
cost in fl ation. We’re excited about
our intended acquisition of the African
activities of Kansai Paint, a clear sign
we’re continuing to build for the future,
while remaining committed to achieving
our strategic ambitions.
Transforming
Tashan
More than 20 buildings in the Marmara
district of Türkiye were given a new
lease of life by our Marshall brand.
A joint venture with the local council
at Bilecik Gölpazarı, the project
involved renovating 23 important
historical structures within the Tashan
conservation area.
Revenue in € millions
2,246
2,429
2,405
“2022 was
a turbulent
year. The war
in Ukraine,
rising energy
costs and
reduced
macro-
econo mic
confi dence
impacted
our business
signifi cantly.
I’m extremely
proud of
the commit-
ment and
resilience
of the team
to adapt.”
Jan-Piet van Kesteren,
Director of Decorative
Paints Europe, Middle
East and Africa
experience for Dulux paints.
Shanghai, China (see page 34)
experience
2020
2021
2022
16
Strategy and operations | AkzoNobel Report 2022
AkzoNobel Report 2022 | Strategy and operations
17
Decorative Paints
Latin America
2022 SUMMARY
Although we faced signifi cant market
challenges, including supply constraints
and high infl ation, we delivered solid
results and continued to make progress
in line with our strategy. Results were
driven by pricing, growth in the premium
market segment, innovation, margin
management and strong commercial
initiatives – including an improved
shopping experience – as well as
investment in branding campaigns.
2022 highlight
We completed the acquisition
of Colombia-based paints and
coatings company Grupo Orbis,
which strengthened our long-term
position as a leading decorative
paints player in Latin America. The
business we acquired has a presence
in ten countries in Central America,
Latin America and the Antilles, with the
transaction including the Pintuco paints and
coatings business; Andercol and Poliquim (resins,
emulsions, adhesives and specialty chemicals);
and Mundial (paints and related product
distribution services)*. Grupo Orbis also has a
Revenue in € millions
794*
strong and widely admired approach to sustainability,
with its social programs being organized through the
Pintuco Foundation.
396
477
* The acquired coatings activities are now part of our
Performance Coatings business.
2020
2021
2022
OTHER KEY DEVELOPMENTS
*Includes Grupo Orbis
Decorative Paints revenue
by destination in %
C
B
A EMEA
A
B Latin America
C Asia
55
18
27
Key brands
• Our premium interior wall paints continued to grow market
share, driven by blue stores expansion, revenue management,
the Promise branding campaign and our professional Academy
• Launched a series of innovative new products, including
Proteção Sol & Chuva in Brazil, Duralba in Argentina and
Incamur in Uruguay
• Rolled out the second wave of Dulux Promise, our fi rst regional
campaign to be introduced simultaneously in Brazil, Argentina
and Uruguay
• A new solar power project at our Recife site in Brazil entered its
fi nal construction phase. It’s expected to be fully operational in
early 2023
• In Brazil, external recognition for our activities included best
consumer service in the paint sector (Reclame Aqui), best
premium paint in the retail sector (ABRART) and preferred paint
among painters (Show do Pintor)
• Dozens of homes in Belo Horizonte, Brazil, were turned into a
giant geometric mural as part of a “Let’s Colour” project staged
giant geometric mural as part of a “Let’s Colour” project staged
with Morro Arte Mural. Famous local artist Criola used 540 liters
with Morro Arte Mural. Famous local artist Criola used 540 liters
of our Coral paint to create the eye-catching design
Standing tall
Our Coral brand created a special shade of
protective coating for the new Christ the Protector
protective coating for the new Christ the Protector
statue in Brazil. Towering 43.5 meters over Rio
statue in Brazil. Towering 43.5 meters over Rio
Grande do Sul, it’s Latin America’s largest statue
Grande do Sul, it’s Latin America’s largest statue
of Christ and the world’s third biggest.
“The integra-
tion of Grupo
Orbis is
accelerating
growth. We’ll
continue to
build on our
strong foun-
dations in
products,
brands, store
presence and
organizatio-
nal health
to further
expand our
long-term
position.”
Daniel Campos, Director
of Decorative Paints Latin
America
Case study
Hornsea 2 has the capacity to produce
plays such a vital role as the go-to
more than 1.3 gigawatts of energy –
technology for this industry. It’s one of
enough to power more than 1.4 million
the most trusted products for protecting
homes. The project follows on from
structures operating in the harshest
the successful 2021 completion of
environments and has more than
Hornsea 1 – previous holder of the
30 years of proven performance, while
world’s biggest offshore wind farm title.
also protecting over 4,000 offshore wind
Its 174 7MW turbines, also coated by
assets worldwide.”
We’ve got the power
The world’s largest
installed offshore wind
farm, Hornsea 2, became
operational during 2022
and it’s being protected
from the ravages of
the North Sea by our
high-performance epoxy
technology.
AkzoNobel, already supply power to
around a million homes in the UK.
“It’s fantastic to be involved in such an
ambitious project with this kind of size
and scale,” says Simon Parker, Director
Located around 89 kilometers off the
of AkzoNobel’s Marine and Protective
east coast of England, all 165 of its giant
Coatings business. “As the world
8MW turbines feature our International
moves to a more sustainable future, it’s
branded Interzone 954 coatings on their
essential that vital infrastructure isn’t just
foundations. The product has fi rmly
fi t for purpose, but is equipped for the
established itself as the go-to solution
long term as well.
for engineers and fabrication yards when
it comes to protecting assets against
“That’s where epoxy technology – and
demanding offshore conditions.
in particular our Interzone range –
18
Strategy and operations | AkzoNobel Report 2022
19
Decorative Paints
Latin America
2022 SUMMARY
Although we faced signifi cant market
challenges, including supply constraints
and high infl ation, we delivered solid
results and continued to make progress
in line with our strategy. Results were
driven by pricing, growth in the premium
market segment, innovation, margin
management and strong commercial
initiatives – including an improved
shopping experience – as well as
investment in branding campaigns.
2022 highlight
We completed the acquisition
of Colombia-based paints and
coatings company Grupo Orbis,
which strengthened our long-term
position as a leading decorative
paints player in Latin America. The
business we acquired has a presence
in ten countries in Central America,
Latin America and the Antilles, with the
transaction including the Pintuco paints and
coatings business; Andercol and Poliquim (resins,
emulsions, adhesives and specialty chemicals);
and Mundial (paints and related product
distribution services)*. Grupo Orbis also has a
Revenue in € millions
strong and widely admired approach to sustainability,
with its social programs being organized through the
794*
Pintuco Foundation.
396
477
* The acquired coatings activities are now part of our
Performance Coatings business.
2020
2021
2022
OTHER KEY DEVELOPMENTS
*Includes Grupo Orbis
Decorative Paints revenue
by destination in %
C
B
A
B Latin America
A EMEA
C Asia
55
18
27
• Our premium interior wall paints continued to grow market
share, driven by blue stores expansion, revenue management,
the Promise branding campaign and our professional Academy
• Launched a series of innovative new products, including
Proteção Sol & Chuva in Brazil, Duralba in Argentina and
• Rolled out the second wave of Dulux Promise, our fi rst regional
campaign to be introduced simultaneously in Brazil, Argentina
Incamur in Uruguay
and Uruguay
• A new solar power project at our Recife site in Brazil entered its
fi nal construction phase. It’s expected to be fully operational in
Key brands
early 2023
“The integra-
tion of Grupo
Orbis is
accelerating
growth. We’ll
continue to
build on our
strong foun-
dations in
products,
brands, store
presence and
organizatio-
nal health
to further
expand our
long-term
position.”
• In Brazil, external recognition for our activities included best
consumer service in the paint sector (Reclame Aqui), best
premium paint in the retail sector (ABRART) and preferred paint
Daniel Campos, Director
among painters (Show do Pintor)
of Decorative Paints Latin
• Dozens of homes in Belo Horizonte, Brazil, were turned into a
America
giant geometric mural as part of a “Let’s Colour” project staged
giant geometric mural as part of a “Let’s Colour” project staged
with Morro Arte Mural. Famous local artist Criola used 540 liters
with Morro Arte Mural. Famous local artist Criola used 540 liters
of our Coral paint to create the eye-catching design
Standing tall
Our Coral brand created a special shade of
protective coating for the new Christ the Protector
protective coating for the new Christ the Protector
statue in Brazil. Towering 43.5 meters over Rio
statue in Brazil. Towering 43.5 meters over Rio
Grande do Sul, it’s Latin America’s largest statue
Grande do Sul, it’s Latin America’s largest statue
of Christ and the world’s third biggest.
Case study
plays such a vital role as the go-to
technology for this industry. It’s one of
the most trusted products for protecting
structures operating in the harshest
environments and has more than
30 years of proven performance, while
also protecting over 4,000 offshore wind
assets worldwide.”
We’ve got the power
The world’s largest
installed offshore wind
farm, Hornsea 2, became
operational during 2022
and it’s being protected
from the ravages of
the North Sea by our
high-performance epoxy
technology.
Located around 89 kilometers off the
east coast of England, all 165 of its giant
8MW turbines feature our International
branded Interzone 954 coatings on their
foundations. The product has fi rmly
established itself as the go-to solution
for engineers and fabrication yards when
it comes to protecting assets against
demanding offshore conditions.
Hornsea 2 has the capacity to produce
more than 1.3 gigawatts of energy –
enough to power more than 1.4 million
homes. The project follows on from
the successful 2021 completion of
Hornsea 1 – previous holder of the
world’s biggest offshore wind farm title.
Its 174 7MW turbines, also coated by
AkzoNobel, already supply power to
around a million homes in the UK.
“It’s fantastic to be involved in such an
ambitious project with this kind of size
and scale,” says Simon Parker, Director
of AkzoNobel’s Marine and Protective
Coatings business. “As the world
moves to a more sustainable future, it’s
essential that vital infrastructure isn’t just
fi t for purpose, but is equipped for the
long term as well.
“That’s where epoxy technology – and
in particular our Interzone range –
18
Strategy and operations | AkzoNobel Report 2022
19
Performance Coatings
Automotive and Specialty Coatings
2022 SUMMARY
It was a strong year for Aerospace Coatings as
the market recovered, which also saw many
wins at customer level. A big highlight was the
innovation award we received for our chrome-
free technology. Vehicle Refi nishes produced a
similar performance, achieving good results in all
regions. High energy costs and labor shortages
continued to impact our customers, while
presenting us with opportunities to support our
customers’ sustainability ambitions. It was a
mixed year for our Automotive activities, which
were impacted by semi-conductor shortages,
although we did see an encouraging recovery in
the second half of the year. While our Consumer
Electronics business was impacted by lower
demand, our teams worked hard to uncover
new opportunities ahead of what is expected to
be another challenging year.
2022 highlight
We introduced the vehicle refi nish industry’s fi rst repair calculator to measure,
manage and reduce carbon emissions. The CO2eRepairCalculator is designed
to help customers reduce their carbon footprint when using our premium
refi nish products. It identifi es the carbon levels associated with the painting
and drying process – including the energy consumed – and is linked directly
to the vehicle refi nishing products being used. Bodyshops are therefore able
to see how changes in the products they use and the processes they follow
can have a direct impact on reducing
carbon emissions and energy costs, as
well as improving their productivity.
“It was another
year of solid
performance
and, given
the rebound
of both aero-
space and
automotive,
there are
many oppor-
tunities
ahead of us.”
Patrick Bourguignon,
Director of Automotive
and Specialty Coatings
Nintendo
partnership
Supplied special coatings for the interior
of the Nintendo Switch OLED, which
offers a larger screen with more intense
colors.
Revenue in € millions
Revenue by destination in %
Key brands
1,127
1,231
1,390
2020
2021
2022
20
Strategy and operations | AkzoNobel Report 2022
C
B
A
A EMEA
B Americas
C Asia Pacifi c
43
33
24
New milestone
Sharing success
Capacity boost
Our Acoat Selected program for the
We supplied our latest aerospace
In July, we announced a €15 million
vehicle refi nishes industry – which offers
grade Intura interior coating system to
investment to boost production capacity
business benchmarking, management
composite materials business Diab for
at our aerospace coatings facility in
training and process optimization –
its innovative thermoplastic sandwich
Pamiers, France. The funds will also be
celebrated its 45th anniversary.
panel – which was recognized at the
used to reduce environmental impact
2022 JEC Composites Innovation
and improve safety processes and
Awards.
working conditions.
Chrome-free
BYD agreement
Virtual training
primer
We became global refi nish partner for
Launched a new innovation in aerospace
In close collaboration with a leading
electric vehicle maker BYD – extending
industry training by investing in virtual
OEM, our Aerospace Coatings business
the agreement we already had in China
reality technology which mimics a
developed a chrome-free basic primer
– enabling us to push ahead with our
customer’s production environment.
system which offers the performance of
shared ambition of reducing carbon
The VR headset immerses the trainee
traditional chromate primers, without the
emissions.
use of chromates.
in a virtual paint booth, complete with
everything from aircraft parts to the
production fl oor itself.
AkzoNobel Report 2022 | Strategy and operations
21
2022 SUMMARY
presenting us with opportunities to support our
customers’ sustainability ambitions. It was a
It was a strong year for Aerospace Coatings as
mixed year for our Automotive activities, which
the market recovered, which also saw many
were impacted by semi-conductor shortages,
wins at customer level. A big highlight was the
although we did see an encouraging recovery in
innovation award we received for our chrome-
the second half of the year. While our Consumer
free technology. Vehicle Refi nishes produced a
Electronics business was impacted by lower
similar performance, achieving good results in all
demand, our teams worked hard to uncover
regions. High energy costs and labor shortages
new opportunities ahead of what is expected to
continued to impact our customers, while
be another challenging year.
2022 highlight
We introduced the vehicle refi nish industry’s fi rst repair calculator to measure,
manage and reduce carbon emissions. The CO2eRepairCalculator is designed
to help customers reduce their carbon footprint when using our premium
refi nish products. It identifi es the carbon levels associated with the painting
and drying process – including the energy consumed – and is linked directly
to the vehicle refi nishing products being used. Bodyshops are therefore able
to see how changes in the products they use and the processes they follow
can have a direct impact on reducing
carbon emissions and energy costs, as
well as improving their productivity.
Performance Coatings
Automotive and Specialty Coatings
“It was another
year of solid
performance
and, given
the rebound
of both aero-
space and
automotive,
there are
many oppor-
tunities
ahead of us.”
Patrick Bourguignon,
Director of Automotive
and Specialty Coatings
Nintendo
partnership
Supplied special coatings for the interior
of the Nintendo Switch OLED, which
offers a larger screen with more intense
colors.
Revenue in € millions
Revenue by destination in %
Key brands
1,127
1,231
1,390
2020
2021
2022
20
Strategy and operations | AkzoNobel Report 2022
C
B
A
A EMEA
B Americas
C Asia Pacifi c
43
33
24
New milestone
Sharing success
Capacity boost
Our Acoat Selected program for the
vehicle refi nishes industry – which offers
business benchmarking, management
training and process optimization –
celebrated its 45th anniversary.
We supplied our latest aerospace
grade Intura interior coating system to
composite materials business Diab for
its innovative thermoplastic sandwich
panel – which was recognized at the
2022 JEC Composites Innovation
Awards.
In July, we announced a €15 million
investment to boost production capacity
at our aerospace coatings facility in
Pamiers, France. The funds will also be
used to reduce environmental impact
and improve safety processes and
working conditions.
Chrome-free
primer
In close collaboration with a leading
OEM, our Aerospace Coatings business
developed a chrome-free basic primer
system which offers the performance of
traditional chromate primers, without the
use of chromates.
BYD agreement
Virtual training
We became global refi nish partner for
electric vehicle maker BYD – extending
the agreement we already had in China
– enabling us to push ahead with our
shared ambition of reducing carbon
emissions.
Launched a new innovation in aerospace
industry training by investing in virtual
reality technology which mimics a
customer’s production environment.
The VR headset immerses the trainee
in a virtual paint booth, complete with
everything from aircraft parts to the
production fl oor itself.
AkzoNobel Report 2022 | Strategy and operations
21
Performance Coatings
Industrial Coatings
2022 SUMMARY
It was a year of two halves. The fi rst half-year was
characterized by strong trading conditions in most of our
markets and regions. In Packaging Coatings, demand for
aluminum beverage cans globally was very strong across
all regions, while Coil Coatings continued to benefi t
from pent-up post-COVID-19 demand. Our European
business, however, was impacted by the war in Ukraine.
The second half-year was challenging in all segments
as the combined effects of high energy costs and
infl ation impacted all our end markets in Europe.
Customers reduced output signifi cantly to manage
energy, which affected demand. The COVID-19
resurgence in Asia also impacted our business, notably
in China.
Despite these strong headwinds, we continued to
service and innovate for our customers across all
segments. We responded in particular to the strongly
developing requirement for sustainable solutions, such
as energy-effi cient coatings, which will be a key feature
in 2023 and years to come.
2022 highlight
We introduced our CERAM-A-STAR 1050 Select
standard color palette for coil coatings. It’s formulated
standard color palette for coil coatings. It’s formulated
using our market reference SMP technology
to provide improved productivity and more
effi cient use of working capital for our coil
coater customers. Our other service partners
benefi t from the reduction in color complexity,
shorter lead times and lower risk of slow-
moving inventory. The use of our leading SMP
technology also translates into greater confi dence
technology also translates into greater confi dence
in the security of supply. This is important for
our customers in the evolving landscape of coil
and extruded metal manufacturing, who have faced
and extruded metal manufacturing, who have faced
supply challenges in the PVDF (polyvinylidene fl uoride)
supply challenges in the PVDF (polyvinylidene fl uoride)
supply chain. Our new portfolio is based on greener chemistry
supply chain. Our new portfolio is based on greener chemistry
alternatives than PVDF, so customers now have more sustainable
alternatives than PVDF, so customers now have more sustainable
options to achieve a comparable fi nish and performance in most applications.
“We managed
our external
challenges,
while focus-
ing on the
future,
delivering
strong
pricing in all
segments
and main-
taining high
customer
confi dence.”
Daniela Vlad,
Director of Industrial
Coatings (until
February 1, 2023)
Revenue in € millions
Revenue by destination in %
OTHER KEY DEVELOPMENTS
1,634
1,893
2,181
2020
2021
2022
C
B
A
A EMEA
B Americas
C Asia Pacifi c
43
33
24
Key brands
• Renewed our POLYDURE range of
polyester paint systems to offer more
product customization, more support and
more performance to our customers
• Launched Acquaduro, a 2k water-
based polyurethane system of wood
fi nishes which will enable our Chemcraft
distributors in North America to offer an
alternative to solvent-borne technologies
• Introduced PVDF (polyvinylidene fl uoride)
product alternatives including CERAM-A-
STAR Plus and SILKSTAR 5000
Making a mark
Several landmark buildings and sports venues were coated with our products, including the Aqua
Tower in Miami, Orlando International Airport, and the National Ski Jumping Center and National
Speed Skating Oval in Beijing, China.
Anniversary
for Zweihorn
brand
Wood coatings
embrace more
renewables
Shaping change
together
Rolled out our #ShapingChangeTogether
campaign. It highlights the fact that the
Our Zweihorn premium wood fi nishes
UV and water-based products
move away from bisphenol A-based
brand celebrated its 110th anniversary.
containing at least 5% bio-based raw
coatings – as well as all bisphenols used
Established in 1912, the portfolio
materials – in line with market demand
for metal food and beverage packaging
includes paints, stains, varnishes, oils
– were launched and approved by key
– requires the entire value chain to
and waxes, and special products for
customers in the wood fi nishes market.
take action.
carpenters and joiners.
It will help them – and their third party
suppliers – to become more sustainable
and marks the fi rst step towards wider
use of renewables within wood coatings.
22
Strategy and operations | AkzoNobel Report 2022
AkzoNobel Report 2022 | Strategy and operations
23
Performance Coatings
Industrial Coatings
2022 SUMMARY
infl ation impacted all our end markets in Europe.
Customers reduced output signifi cantly to manage
It was a year of two halves. The fi rst half-year was
energy, which affected demand. The COVID-19
characterized by strong trading conditions in most of our
resurgence in Asia also impacted our business, notably
markets and regions. In Packaging Coatings, demand for
in China.
aluminum beverage cans globally was very strong across
all regions, while Coil Coatings continued to benefi t
Despite these strong headwinds, we continued to
from pent-up post-COVID-19 demand. Our European
service and innovate for our customers across all
business, however, was impacted by the war in Ukraine.
segments. We responded in particular to the strongly
The second half-year was challenging in all segments
as energy-effi cient coatings, which will be a key feature
as the combined effects of high energy costs and
in 2023 and years to come.
developing requirement for sustainable solutions, such
“We managed
our external
challenges,
while focus-
ing on the
future,
delivering
strong
pricing in all
segments
and main-
taining high
customer
confi dence.”
Coatings (until
February 1, 2023)
2022 highlight
We introduced our CERAM-A-STAR 1050 Select
standard color palette for coil coatings. It’s formulated
standard color palette for coil coatings. It’s formulated
using our market reference SMP technology
to provide improved productivity and more
effi cient use of working capital for our coil
coater customers. Our other service partners
benefi t from the reduction in color complexity,
shorter lead times and lower risk of slow-
moving inventory. The use of our leading SMP
technology also translates into greater confi dence
technology also translates into greater confi dence
in the security of supply. This is important for
our customers in the evolving landscape of coil
and extruded metal manufacturing, who have faced
and extruded metal manufacturing, who have faced
supply challenges in the PVDF (polyvinylidene fl uoride)
supply challenges in the PVDF (polyvinylidene fl uoride)
supply chain. Our new portfolio is based on greener chemistry
supply chain. Our new portfolio is based on greener chemistry
Daniela Vlad,
alternatives than PVDF, so customers now have more sustainable
alternatives than PVDF, so customers now have more sustainable
Director of Industrial
options to achieve a comparable fi nish and performance in most applications.
Revenue in € millions
Revenue by destination in %
OTHER KEY DEVELOPMENTS
1,634
1,893
2,181
2020
2021
2022
C
B
A
A EMEA
B Americas
C Asia Pacifi c
43
33
24
Key brands
• Renewed our POLYDURE range of
polyester paint systems to offer more
product customization, more support and
more performance to our customers
• Launched Acquaduro, a 2k water-
based polyurethane system of wood
fi nishes which will enable our Chemcraft
distributors in North America to offer an
alternative to solvent-borne technologies
• Introduced PVDF (polyvinylidene fl uoride)
product alternatives including CERAM-A-
STAR Plus and SILKSTAR 5000
Making a mark
Several landmark buildings and sports venues were coated with our products, including the Aqua
Tower in Miami, Orlando International Airport, and the National Ski Jumping Center and National
Speed Skating Oval in Beijing, China.
Anniversary
for Zweihorn
brand
Our Zweihorn premium wood fi nishes
brand celebrated its 110th anniversary.
Established in 1912, the portfolio
includes paints, stains, varnishes, oils
and waxes, and special products for
carpenters and joiners.
Wood coatings
embrace more
renewables
UV and water-based products
containing at least 5% bio-based raw
materials – in line with market demand
– were launched and approved by key
customers in the wood fi nishes market.
It will help them – and their third party
suppliers – to become more sustainable
and marks the fi rst step towards wider
use of renewables within wood coatings.
Shaping change
together
Rolled out our #ShapingChangeTogether
campaign. It highlights the fact that the
move away from bisphenol A-based
coatings – as well as all bisphenols used
for metal food and beverage packaging
– requires the entire value chain to
take action.
22
Strategy and operations | AkzoNobel Report 2022
AkzoNobel Report 2022 | Strategy and operations
23
Performance Coatings
Marine and Protective Coatings
2022 SUMMARY
There was market recovery across our
business and regions during the year.
Despite a continuation of COVID-19
impact in some areas, we remained
proactive in supporting the success
of our customers’ projects around the
world. The sustained momentum of the
energy transition and the associated
investment provided improved demand
recovery in our Protective Coatings
business. Similarly in Marine Coatings,
the rebound of global sea-borne
trade post-COVID-19 – together with
the increased International Maritime
Organization (IMO) focus on vessel
effi ciency improvements – supported
increased activity in this market. In
Yacht Coatings, customer demand for
our high quality products, services and
people expertise remained positive in
the recreational boating and superyacht
market.
Chartek demand
continues
There was high demand throughout
the year for our Chartek brand and its
high-performance range of fi reproofi ng
products, which continue to be the
energy industry benchmark.
“We were
extremely
pleased to
continue
doing what
we do best
– supporting
the success
of our custo-
mers in a
sustainable
way.”
Simon Parker,
Director of Marine and
Protective Coatings
B-Free Explore
sets sail
We introduced B-Free Explore, the fi rst
product in a new biocide-free range
designed to provide recreational boaters
with solutions that have a lower impact
on the environment compared with
traditional fouling control products.
Launch of
Interzone 954GF
Introduced Interzone 954GF for marine
vessel cargo holds and other areas
requiring high abrasion resistance. It
offers increased protection, is suitable
over hydro-blasted surfaces and delivers
a 20% VOC emission saving compared
with the market average product.
Revenue in € millions
1,068
1,164
1,374
2020
2021
2022
Revenue by destination in %
A EMEA
B Americas
C Asia Pacific
35
24
41
C
A
B
Key brands
Saving time
and costs
Launched Micron Extra SPC onto the
yacht market, which caters for the rising
Milestone
for Intercept
8500LPP
demand for easy-to-use hull solutions
Our pioneering Intercept 8500LPP
that deliver time and cost savings.
antifouling reached its 60-month
in-service milestone, with customers
continuing to choose the ultra-
performing coating for re-applications
and use on new vessels.
2022 highlight
Our Interzone epoxy
technology continued to be
the system of choice for the
wind energy industry. We now
protect more than 4,000 operational
assets in this market, including France’s first
commercial offshore project, the new St. Nazaire wind farm. Our
portfolio was also expanded with the introduction of Interzone 9545
tri-cure hybrid epoxy technology. It can reduce VOC emissions by 70%
and boost offshore wind foundation coating productivity by 50% –
helping to support opportunities to expand production in this important
market. Meanwhile, Interzone 1000 epoxy continues to be the go-to
technology and product when glass flake protection is required to align
with key industry standards.
Photo: Smulders
Customer
collaboration
We worked together with customers
to develop knowledge and address
challenges in the construction of facilities
to handle sustainable fuels such as HVO
and biodiesel.
24
Strategy and operations | AkzoNobel Report 2022
AkzoNobel Report 2022 | Strategy and operations
25
Performance Coatings
Marine and Protective Coatings
2022 SUMMARY
There was market recovery across our
business and regions during the year.
Despite a continuation of COVID-19
impact in some areas, we remained
proactive in supporting the success
of our customers’ projects around the
world. The sustained momentum of the
energy transition and the associated
investment provided improved demand
recovery in our Protective Coatings
business. Similarly in Marine Coatings,
the rebound of global sea-borne
trade post-COVID-19 – together with
the increased International Maritime
Organization (IMO) focus on vessel
effi ciency improvements – supported
increased activity in this market. In
Yacht Coatings, customer demand for
our high quality products, services and
people expertise remained positive in
the recreational boating and superyacht
market.
Chartek demand
continues
There was high demand throughout
the year for our Chartek brand and its
high-performance range of fi reproofi ng
products, which continue to be the
energy industry benchmark.
“We were
extremely
pleased to
continue
doing what
we do best
– supporting
the success
of our custo-
mers in a
sustainable
way.”
Simon Parker,
Director of Marine and
Protective Coatings
B-Free Explore
sets sail
We introduced B-Free Explore, the fi rst
product in a new biocide-free range
designed to provide recreational boaters
with solutions that have a lower impact
on the environment compared with
traditional fouling control products.
Launch of
Interzone 954GF
Introduced Interzone 954GF for marine
vessel cargo holds and other areas
requiring high abrasion resistance. It
offers increased protection, is suitable
over hydro-blasted surfaces and delivers
a 20% VOC emission saving compared
with the market average product.
Revenue in € millions
1,068
1,164
1,374
2020
2021
2022
Revenue by destination in %
A EMEA
B Americas
C Asia Pacific
35
24
41
C
A
B
Key brands
Saving time
and costs
Launched Micron Extra SPC onto the
yacht market, which caters for the rising
demand for easy-to-use hull solutions
that deliver time and cost savings.
Milestone
for Intercept
8500LPP
Our pioneering Intercept 8500LPP
antifouling reached its 60-month
in-service milestone, with customers
continuing to choose the ultra-
performing coating for re-applications
and use on new vessels.
2022 highlight
Our Interzone epoxy
technology continued to be
the system of choice for the
wind energy industry. We now
protect more than 4,000 operational
assets in this market, including France’s first
commercial offshore project, the new St. Nazaire wind farm. Our
portfolio was also expanded with the introduction of Interzone 9545
tri-cure hybrid epoxy technology. It can reduce VOC emissions by 70%
and boost offshore wind foundation coating productivity by 50% –
helping to support opportunities to expand production in this important
market. Meanwhile, Interzone 1000 epoxy continues to be the go-to
technology and product when glass flake protection is required to align
with key industry standards.
Photo: Smulders
Customer
collaboration
We worked together with customers
to develop knowledge and address
challenges in the construction of facilities
to handle sustainable fuels such as HVO
and biodiesel.
24
Strategy and operations | AkzoNobel Report 2022
AkzoNobel Report 2022 | Strategy and operations
25
Performance Coatings
Powder Coatings
“We focused
on cementing
our clear
market
leadership
and adapted
to our
customers’
changing
needs to
continue
providing
reliable
and trusted
solutions.”
Jeff Jirak, Director of
Powder Coatings
2022 SUMMARY
It was a challenging year, which
began with industry-wide supply
constraints, followed by a macro-
economic slowdown. As a result, our
Architectural business was impacted by
lower demand. We did see increased
demand and uptake for our lower cure
temperature solutions, due to higher
energy costs. However, these cost
increases – along with infl ation in general
– dampened overall demand in many
regions, irrespective of end markets.
Despite these challenges, there were
positive signs of recovery in our
Automotive business in the second half
of the year and we continued to invest
in new innovations, including automotive
applications for wheels, underbodies
and EV batteries. The liquid to powder
revolution has excellent growth potential,
given the underlying increase in demand
for more sustainable coating solutions.
So we’re well positioned, based on
certain lower environmental impacts our
powder coatings can offer.
2022 highlight
We launched our new Futura Collection 2022-2025, which delivers a superdurable
performance designed to enable buildings to stand the test of time. The legacy of a
building is determined by its ability to withstand its surroundings. The Futura collection
therefore refl ects our proven commitment to sustainability, while helping designers
connect to the latest developments in the built environment. In fact, our architectural
offering was the fi rst-ever range of powder coatings to achieve an Environmental
Product Declaration (EPD), acknowledging the fact that we’re providing the industry
with more sustainable solutions and alternatives.
Brand refresh
Relaunched and refreshed our Interpon
brand with a dedicated microsite and
targeted campaigns to help us further
grow our digital presence.
Site investments
Made further investments in our factories in
Asia, Europe and Africa.
Lankwitzer
deal
Acquired the liquid wheel coatings
business of Lankwitzer Lackfabrik GmbH
– perfectly complementing our existing
powder coatings portfolio.
Low E update
Updated our Interpon Low E product range,
based on increasing energy prices and
growing demand for sustainable solutions.
Leading
the charge
Received approvals from multiple
leading electric vehicle original
equipment manufacturers and battery
manufacturers to apply our superior
Resicoat and Interpon technologies and
solutions.
Corrosion
prevention
Launched Redox One Coat, a corrosion
prevention solution for agricultural and
construction equipment, metal outdoor
furniture, lighting, leisure equipment and
steel products.
Revenue in € millions
Revenue by destination in %
Key brands
1,128
1,315
1,376
2020
2021
2022
C
B
A EMEA
A
B Americas
C Asia Pacifi c
47
21
32
26
Strategy and operations | AkzoNobel Report 2022
Resicoat R8
Our Resicoat R8 range of powder coatings
was introduced. The products are completely
free of intentionally added Bisphenol A (BPA).
AkzoNobel Report 2022 | Strategy and operations
27
Performance Coatings
Powder Coatings
“We focused
on cementing
our clear
market
leadership
and adapted
to our
customers’
changing
needs to
continue
providing
reliable
and trusted
solutions.”
Jeff Jirak, Director of
Powder Coatings
2022 SUMMARY
Despite these challenges, there were
positive signs of recovery in our
It was a challenging year, which
Automotive business in the second half
began with industry-wide supply
of the year and we continued to invest
constraints, followed by a macro-
in new innovations, including automotive
economic slowdown. As a result, our
applications for wheels, underbodies
Architectural business was impacted by
and EV batteries. The liquid to powder
lower demand. We did see increased
revolution has excellent growth potential,
demand and uptake for our lower cure
given the underlying increase in demand
temperature solutions, due to higher
for more sustainable coating solutions.
energy costs. However, these cost
So we’re well positioned, based on
increases – along with infl ation in general
certain lower environmental impacts our
– dampened overall demand in many
powder coatings can offer.
regions, irrespective of end markets.
2022 highlight
We launched our new Futura Collection 2022-2025, which delivers a superdurable
performance designed to enable buildings to stand the test of time. The legacy of a
building is determined by its ability to withstand its surroundings. The Futura collection
therefore refl ects our proven commitment to sustainability, while helping designers
connect to the latest developments in the built environment. In fact, our architectural
offering was the fi rst-ever range of powder coatings to achieve an Environmental
Product Declaration (EPD), acknowledging the fact that we’re providing the industry
with more sustainable solutions and alternatives.
Brand refresh
Relaunched and refreshed our Interpon
brand with a dedicated microsite and
targeted campaigns to help us further
grow our digital presence.
Site investments
Made further investments in our factories in
Asia, Europe and Africa.
Lankwitzer
deal
Acquired the liquid wheel coatings
business of Lankwitzer Lackfabrik GmbH
– perfectly complementing our existing
powder coatings portfolio.
Low E update
Updated our Interpon Low E product range,
based on increasing energy prices and
growing demand for sustainable solutions.
Leading
the charge
Received approvals from multiple
leading electric vehicle original
equipment manufacturers and battery
manufacturers to apply our superior
Resicoat and Interpon technologies and
solutions.
Corrosion
prevention
Launched Redox One Coat, a corrosion
prevention solution for agricultural and
construction equipment, metal outdoor
furniture, lighting, leisure equipment and
steel products.
Revenue in € millions
Revenue by destination in %
Key brands
1,128
1,315
1,376
2020
2021
2022
C
B
A EMEA
A
B Americas
C Asia Pacifi c
47
21
32
26
Strategy and operations | AkzoNobel Report 2022
Resicoat R8
Our Resicoat R8 range of powder coatings
was introduced. The products are completely
free of intentionally added Bisphenol A (BPA).
AkzoNobel Report 2022 | Strategy and operations
27
Color of the Year 2020
TRANQUIL
DAWN™
Case study
Biting back to
combat disease
“Public health is a major issue in countries across
the world,” explains Daniel Campos, Director of our
Decorative Paints business in Latin America. “In
Brazil, dengue is a particular problem. We wanted
to help people look after their families by offering a
breakthrough product which has been proven to
give continuous protection against the Aedes aegypti
mosquito, 24 hours a day, for up to two years.”
The effectiveness of Well-being Protection Anti-
Mosquito was tested in an independent external
laboratory, certifi ed by the Brazilian Network of
Analytical Laboratories in Health. All the tests took
place on painted walls and ceilings in a life-size house
environment and successfully proved that mosquitoes
were repelled from the room after contact, with the
active ingredient being retained in the varnish matrix.
The new product is currently only
available in Brazil.
Our Coral brand in Brazil has introduced a
mosquito-repellent coating which will be a
powerful ally in the fi ght against a noto rious
carrier of dengue fever.
Known as Well-being Protection Anti-Mosquito,
the colorless matt varnish contains an
active ingredient called permethrin.
Its repellent action is specifi cally
designed to combat the Aedes
aegypti mosquito, which
was largely responsible
for dengue cases in
Brazil surging 180.5% by
November 2022 (versus
2021), according to fi gures
from the Brazilian Ministry
of Health.
When a mosquito lands on
the new transparent topcoat,
the permethrin is absorbed
through its feet and over-excites
the insect’s nervous system, causing it
to disengage or fall off. Permethrin is a well-known
repellent and is commonly used in fabrics for mosquito
nets and protective clothing.
SUSTAINABILITY
STATEMENTS
This section details our sustainability perfor-
mance. It explains our ambitions, outlines our
approach to creating shared value and shows
our performance on key environmental and
social indicators.
Our approach to sustainability
CLIMATE CHANGE
Carbon emissions in own operations
Carbon emissions in our full value chain
Climate change adaptation and
risk management
CIRCULARITY
Waste and water management
Recycled content in packaging
HEALTH AND WELL-BEING
Health and safety
Employees
AkzoNobel Cares
VALUE CHAIN
Sustainable solutions
Sustainability and risk management
with our suppliers
Human rights
Managing sustainability
EU taxonomy disclosure
Sustainability performance summary
30
32
33
35
36
38
38
40
41
41
44
46
48
48
49
50
52
53
55
For additional information, visit:
akzonobel.com/en/about-us/sustainability-
The indicators that fall within the scope of
limited assurance of the external auditor are
marked with the following symbol:
See page 152 for the Limited assurance report
of the independent auditor, which includes
details on scoping and outcomes.
28
29
Color of the Year 2020
TRANQUIL
DAWN™
Case study
Biting back to
combat disease
Our Coral brand in Brazil has introduced a
“Public health is a major issue in countries across
mosquito-repellent coating which will be a
the world,” explains Daniel Campos, Director of our
powerful ally in the fi ght against a noto rious
Decorative Paints business in Latin America. “In
carrier of dengue fever.
Brazil, dengue is a particular problem. We wanted
to help people look after their families by offering a
Known as Well-being Protection Anti-Mosquito,
breakthrough product which has been proven to
the colorless matt varnish contains an
give continuous protection against the Aedes aegypti
active ingredient called permethrin.
mosquito, 24 hours a day, for up to two years.”
Its repellent action is specifi cally
designed to combat the Aedes
The effectiveness of Well-being Protection Anti-
aegypti mosquito, which
Mosquito was tested in an independent external
was largely responsible
laboratory, certifi ed by the Brazilian Network of
for dengue cases in
Analytical Laboratories in Health. All the tests took
Brazil surging 180.5% by
place on painted walls and ceilings in a life-size house
November 2022 (versus
environment and successfully proved that mosquitoes
2021), according to fi gures
were repelled from the room after contact, with the
from the Brazilian Ministry
active ingredient being retained in the varnish matrix.
of Health.
When a mosquito lands on
available in Brazil.
The new product is currently only
the new transparent topcoat,
the permethrin is absorbed
through its feet and over-excites
the insect’s nervous system, causing it
to disengage or fall off. Permethrin is a well-known
repellent and is commonly used in fabrics for mosquito
nets and protective clothing.
SUSTAINABILITY
STATEMENTS
This section details our sustainability perfor-
mance. It explains our ambitions, outlines our
approach to creating shared value and shows
our performance on key environmental and
social indicators.
Our approach to sustainability
CLIMATE CHANGE
Carbon emissions in own operations
Carbon emissions in our full value chain
Climate change adaptation and
risk management
CIRCULARITY
Waste and water management
Recycled content in packaging
HEALTH AND WELL-BEING
Health and safety
Employees
AkzoNobel Cares
VALUE CHAIN
Sustainable solutions
Sustainability and risk management
with our suppliers
Human rights
Managing sustainability
EU taxonomy disclosure
Sustainability performance summary
30
32
33
35
36
38
38
40
41
41
44
46
48
48
49
50
52
53
55
For additional information, visit:
akzonobel.com/en/about-us/sustainability-
The indicators that fall within the scope of
limited assurance of the external auditor are
marked with the following symbol:
See page 152 for the Limited assurance report
of the independent auditor, which includes
details on scoping and outcomes.
28
29
Sustainability
2022 sustainability
highlights
PAGE 34
Increased
capacity for
sustainable
solutions
To boost capacity for
the supply of more
sustainable solutions,
we’ve invested in a new
production line for water-
based texture paints
at our Songjiang site in
Shanghai, China.
PAGE 36
Tackling
climate change
together
The unique 24-hour
Collaborative
Sustainability Challenge
brought AkzoNobel and
value chain partners
together to accelerate
the collective reduction
of carbon emissions and
limit global warming.
PAGE 40
Taking solvent
recovery to the
next level
By installing solvent
recovery units, our
Industrial Coatings
sites are reusing and
reprocessing solvents
to help us reduce
our emissions and
waste.
PAGE 45
Minding the
gender pay gap
An external review of our
compensation practices,
conducted as part of
our commitment to
diversity and inclusion,
has found no signifi cant
gender pay gap.
PAGE 51
Paint the Future
accelerates
sustainable
startup
solutions
Three new startups
joined the growing
ranks of global Paint the
Future challenge winners
and have started our
accelerator program.
Our approach to
sustainability
At AkzoNobel, we’ve made it our
business to deliver the sustainable
and innovative solutions that our
customers, communities – and the
planet – are increasingly relying on.
pushing boundaries and fi nding
inventive ways to collectively
make a positive contribution to an
ever-changing world. This will be
vital if we’re to realize our science-
based target of halving our carbon
emissions by 2030.
We’re fully focused on ensuring
that the pioneering paints and
coatings we supply today can help
to safeguard our world far beyond
tomorrow.
Pushing boundaries to
ensure a sustainable future
Guided by our People. Planet. Paint.
approach, which lies at the heart of
everything we do, we’ve identifi ed
three key global topics – climate
change, circularity, and health and
well-being.
Collaborating with customers,
suppliers, academia and other
stakeholders is fundamental to
what we want to achieve. It’s about
ESG rating agencies and
benchmarks
As we work towards our ambitious
targets, we benchmark ourselves
versus peers and industry. We
annually review the benchmarks we
actively participate in, taking into
account stakeholder preference,
such as investors, suppliers and
customers. We prioritize active
participation in those benchmarks
that help to drive continuous
improvement and rely mostly on
publicly available information. We’re
proud that we’ve remained at the
forefront of the paints and coatings
industry throughout 2022, based
on these ESG rating agencies and
benchmarks.
ESG rating
agency
EcoVadis
FTSE4Good
Key achievement
We were awarded a Platinum rating in the latest review,
positioning us in the top 1% of our industry.
We were included in the latest FTSE4Good Index Series – that
makes more than 15 years we’ve been included in this infl uential
ranking.
MSCI
We’ve received the highest possible rating (AAA) for seven
consecutive years.
Sustainalytics
We’re assessed as “low risk” and ESG top rated in our industry.
More information about the ratings we’ve received from various external ESG rating agencies
can be found on our website.
Key partnerships
We’re a member of associations and organizations that are aligned with our approach to
sustainable business. More information about these collaborations is available on our website.
Climate change
Circularity
Health and well-being
How we help limit climate change. We
How we move towards a circular
How we safeguard the health and well-
focus on halving our carbon emissions in
economy. We’re reducing waste
being of our employees, customers,
our value chain – by moving to renew-
throughout our value chain – increasing
end-users and other stakeholders in the
able electricity and reducing overall energy
the use of renewable and recycled
communities where we operate.
consumption for our own operations –
materials and material effi ciency – while
and developing solutions that help
protecting surfaces and materials, making
customers reduce their overall carbon
them last longer.
footprint.
28%
2022
50%
2030 ambition
56%
2022
100%
2030 ambition
38,087
2020-2022
100,000+
2030 ambition
Carbon emission reduction
Circular use of materials
People empowered
Own operations (baseline 2018, absolute)
The amount of materials (in own
Members of local communities
operations) reused by AkzoNobel
empowered with new skills (cumulative)
50%
2030 ambition
and third parties
40%
2022
Sustainable solutions
Revenue from sustainable solutions
United Nations SDGs
Our approach to sustainability is designed to contribute to the global
agenda represented by the UN Sustainable Development Goals. As a
company, we recognize their strategic importance to our business and
to the world – and continue to focus on those SDGs where we can
have the biggest impact.
30
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
31
Sustainability
2022 sustainability
highlights
PAGE 34
Increased
capacity for
sustainable
solutions
To boost capacity for
the supply of more
sustainable solutions,
we’ve invested in a new
production line for water-
based texture paints
at our Songjiang site in
Shanghai, China.
PAGE 36
Tackling
climate change
together
The unique 24-hour
Collaborative
Sustainability Challenge
brought AkzoNobel and
value chain partners
together to accelerate
the collective reduction
of carbon emissions and
limit global warming.
PAGE 40
Taking solvent
recovery to the
next level
By installing solvent
recovery units, our
Industrial Coatings
sites are reusing and
reprocessing solvents
to help us reduce
our emissions and
waste.
PAGE 45
Minding the
gender pay gap
An external review of our
compensation practices,
conducted as part of
our commitment to
diversity and inclusion,
has found no signifi cant
gender pay gap.
PAGE 51
Paint the Future
accelerates
sustainable
startup
solutions
Three new startups
joined the growing
ranks of global Paint the
Future challenge winners
and have started our
accelerator program.
Our approach to
sustainability
pushing boundaries and fi nding
inventive ways to collectively
At AkzoNobel, we’ve made it our
make a positive contribution to an
business to deliver the sustainable
ever-changing world. This will be
and innovative solutions that our
vital if we’re to realize our science-
customers, communities – and the
based target of halving our carbon
planet – are increasingly relying on.
emissions by 2030.
We’re fully focused on ensuring
ESG rating agencies and
that the pioneering paints and
benchmarks
coatings we supply today can help
As we work towards our ambitious
to safeguard our world far beyond
targets, we benchmark ourselves
tomorrow.
versus peers and industry. We
annually review the benchmarks we
Pushing boundaries to
actively participate in, taking into
ensure a sustainable future
account stakeholder preference,
Guided by our People. Planet. Paint.
such as investors, suppliers and
approach, which lies at the heart of
customers. We prioritize active
everything we do, we’ve identifi ed
participation in those benchmarks
three key global topics – climate
that help to drive continuous
change, circularity, and health and
improvement and rely mostly on
well-being.
publicly available information. We’re
proud that we’ve remained at the
Collaborating with customers,
forefront of the paints and coatings
suppliers, academia and other
industry throughout 2022, based
stakeholders is fundamental to
on these ESG rating agencies and
what we want to achieve. It’s about
benchmarks.
ESG rating
Key achievement
agency
EcoVadis
We were awarded a Platinum rating in the latest review,
positioning us in the top 1% of our industry.
FTSE4Good
We were included in the latest FTSE4Good Index Series – that
makes more than 15 years we’ve been included in this infl uential
MSCI
We’ve received the highest possible rating (AAA) for seven
ranking.
consecutive years.
Sustainalytics
We’re assessed as “low risk” and ESG top rated in our industry.
More information about the ratings we’ve received from various external ESG rating agencies
can be found on our website.
Key partnerships
We’re a member of associations and organizations that are aligned with our approach to
sustainable business. More information about these collaborations is available on our website.
Climate change
Circularity
Health and well-being
How we help limit climate change. We
focus on halving our carbon emissions in
our value chain – by moving to renew-
able electricity and reducing overall energy
consumption for our own operations –
and developing solutions that help
customers reduce their overall carbon
footprint.
How we move towards a circular
economy. We’re reducing waste
throughout our value chain – increasing
the use of renewable and recycled
materials and material effi ciency – while
protecting surfaces and materials, making
them last longer.
How we safeguard the health and well-
being of our employees, customers,
end-users and other stakeholders in the
communities where we operate.
28%
2022
50%
2030 ambition
56%
2022
100%
2030 ambition
38,087
2020-2022
100,000+
2030 ambition
Carbon emission reduction
Own operations (baseline 2018, absolute)
Circular use of materials
The amount of materials (in own
operations) reused by AkzoNobel
and third parties
People empowered
Members of local communities
empowered with new skills (cumulative)
Sustainable solutions
Revenue from sustainable solutions
40%
2022
50%
2030 ambition
United Nations SDGs
Our approach to sustainability is designed to contribute to the global
agenda represented by the UN Sustainable Development Goals. As a
company, we recognize their strategic importance to our business and
to the world – and continue to focus on those SDGs where we can
have the biggest impact.
30
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
31
CLIMATE
CHANGE
Sustainability
Carbon emissions in own operations
We’re taking action to limit climate
change. In our value chain,
we’re aiming to halve our carbon
emissions. We’re also developing
solutions to help our customers
reduce their carbon footprint.
We’re aware that climate change could
affect our operations, our supply chain
and our customers. So, in 2017, we
committed to becoming a carbon-
neutral company by 2050. In 2021,
we announced an ambitious target of
reducing carbon emissions across our
full value chain by 50% by 2030, taking
2018 as our baseline.
These ambitions are aligned with the
Paris Agreement – which aims to limit
climate change and ensure the global
temperature doesn’t rise more than
1.5˚C above pre-industrial levels – and
are approved by the Science Based
Targets initiative (SBTi).
For our own operations, we’re moving
to renewable electricity and reducing
our overall energy consumption. Across
our value chain, we engage with our
suppliers and develop sustainable
solutions that help our customers reduce
their carbon footprint.
In addition, we’re exposed to risks and
opportunities that follow from climate
change, which we detail in this section.
Our carbon footprint explained
(see illustration below)
• Scope 3 upstream: the processes
required to produce the materials we
use in our products contribute 46% to
our total footprint. Engaging with our
suppliers is one of our main priorities
in reducing this part of our carbon
footprint
• Scope 1 and 2: the production of our
products contributes 2% to our total
carbon footprint, which is within our
direct control
• Scope 3 downstream: the
application and curing of our coatings
accounts for 30% of our total carbon
footprint, mainly due to coatings
cured at elevated temperatures.
VOC (volatile organic compounds)
emissions make up 11% of our total
footprint. We added this category to
our SBTi commitment as VOCs are
an important emission factor for the
paints and coatings industry
• Scope 3 downstream: end-of-life
emissions relate to the carbon in our
products which is released at the end
of their lifecycle, accounting for 11%
of carbon emissions
The carbon footprint in our value chain
% contribution to carbon footprint
% contribution to carbon footprint
VOC
11%
Suppliers
Scope 3:
46%
AkzoNobel
Scope 1+2:
2%
Customers
Scope 3:
30%
End-of-life
Scope 3:
11%
Carbon emissions in own
Energy
Regional split energy use in %
operations
Part of reducing our carbon emissions
To achieve our target of reducing our
from our own operations (Scope 1
carbon footprint in our own operations
and 2) is reducing the amount of
by 50% (Scope 1 and 2), we’re
energy we consume. We’re committed
working on two enablers: increasing
to reducing our relative energy
the percentage of renewable electricity
consumption by 30% by 2030 (baseline
E
to 100% and reducing the energy we
2018) and plan to do so through an
consume by 30% by 2030 (versus
ambitious 5% relative year-over-year
2018).
reduction objective.
A
B
C
D
From an absolute reduction perspective,
For 2022, our absolute energy
our combined Scope 1 and 2 reduced
consumption reduced 7% versus 2021,
by 28% versus our 2018 baseline
while our relative energy consumption
A North America
(absolute). Compared with 2021, we
was 1% up compared with 2021, and
B Latin America
further reduced carbon emissions by
reduced by 1% versus 2018. The pie
C North Asia
12% in 2022 (absolute). We’re well on
charts to the right show the breakdown
D South Asia
track towards our 50% reduction target
for our regional energy consumption.
E EMEA
for 2030. From a relative perspective,
our Scope 1 stayed flat since 2018,
We track the cumulative energy
while our Scope 2 emissions reduced
reduction impact of improvement
by 32%.
projects such as shutdown management
Energy breakdown in %
Greenhouse gas emissions (CO2)
continuous improvement.
in million tons
Direct CO2(e) (Scope 1)
Indirect CO2(e) (Scope 2)
kg CO2(e) per ton of production
75
0.18
0.06
2019
73
0.17
0.06
2020
71
0.17
0.06
2021
67
0.15
0.06
2022
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
6.0
1.83
5.7
1.89
6.3
1.90
5.9
2019
2020
2021
2022
The energy consumption of AkzoNobel in absolute measures and per
ton of production.
and LED installation. This helps us better
understand our performance and adjust
our strategy as we continue in a cycle of
Despite the programs in place, achieving
the 5% relative reduction target has
been challenging, partly due to changes
in our product and portfolio mix. For
example, changes in our product
portfolio mix include increased demand
for products that take a higher energy
D
C
B
A
intensity to produce. The current
A Electricity non-renewable
macro-economic environment has also
B Electricity renewable
impacted our volumes and therefore our
C Gas
relative energy consumption. In addition,
D Other
the VOC emission abatement systems
and solvent recovery units we’re
installing to reduce VOC emissions and
We’re continuing to investigate targeted
waste are relatively energy intensive.
investment for energy reduction
programs, refine our energy monitoring
While an overall relative energy consump-
management and implement a renewed
tion reduction of 5% was not achieved,
governance structure.
we’ve implemented many energy
reduction initiatives. For example, our Hull
Renewable energy
site in the UK installed CEMA lighting,
As shown in the graph above, electricity
which reduced the lighting system’s
makes up the vast majority of our total
carbon emissions by 70%. And in France,
energy use (81%). Of that, our total
a renewal of Montataire’s compressor
percentage of renewable electricity was
room and a warehouse LED project have
50% in 2022, well on track towards our
reduced annual electricity consumption
target of 100% by 2030 and already
by more than 1.8 GWh.
achieving our 2025 interim target of 50%.
AkzoNobel Report 2022 | Sustainability statements
33
18
10
16
11
45
40
41
15
4
28%
2022
50%
2030 ambition
Carbon emission reduction
Own operations (baseline 2018, absolute)
6%
2022
50%
2030 ambition
Carbon emission reduction value chain
Scope 3 emissions, selected Scope 3
upstream and downstream (baseline 2018,
absolute)
50%
2022
100%
2030 ambition
Renewable electricity
(of total electricity used in own operations)
1%
2022
30%
2030 ambition
Energy reduction (baseline 2018, relative)
32
Sustainability statements | AkzoNobel Report 2022
CLIMATE
CHANGE
Sustainability
Carbon emissions in own operations
Carbon emission reduction
For our own operations, we’re moving
our SBTi commitment as VOCs are
Own operations (baseline 2018, absolute)
to renewable electricity and reducing
an important emission factor for the
We’re taking action to limit climate
In addition, we’re exposed to risks and
change. In our value chain,
opportunities that follow from climate
we’re aiming to halve our carbon
change, which we detail in this section.
emissions. We’re also developing
solutions to help our customers
Our carbon footprint explained
reduce their carbon footprint.
(see illustration below)
• Scope 3 upstream: the processes
We’re aware that climate change could
required to produce the materials we
affect our operations, our supply chain
use in our products contribute 46% to
and our customers. So, in 2017, we
our total footprint. Engaging with our
committed to becoming a carbon-
suppliers is one of our main priorities
neutral company by 2050. In 2021,
in reducing this part of our carbon
we announced an ambitious target of
footprint
reducing carbon emissions across our
• Scope 1 and 2: the production of our
full value chain by 50% by 2030, taking
products contributes 2% to our total
2018 as our baseline.
carbon footprint, which is within our
direct control
These ambitions are aligned with the
• Scope 3 downstream: the
Paris Agreement – which aims to limit
application and curing of our coatings
climate change and ensure the global
accounts for 30% of our total carbon
temperature doesn’t rise more than
footprint, mainly due to coatings
1.5˚C above pre-industrial levels – and
cured at elevated temperatures.
are approved by the Science Based
VOC (volatile organic compounds)
Targets initiative (SBTi).
emissions make up 11% of our total
footprint. We added this category to
our overall energy consumption. Across
paints and coatings industry
our value chain, we engage with our
• Scope 3 downstream: end-of-life
suppliers and develop sustainable
emissions relate to the carbon in our
solutions that help our customers reduce
products which is released at the end
their carbon footprint.
of their lifecycle, accounting for 11%
of carbon emissions
The carbon footprint in our value chain
% contribution to carbon footprint
% contribution to carbon footprint
VOC
11%
Suppliers
Scope 3:
46%
AkzoNobel
Scope 1+2:
2%
Customers
End-of-life
Scope 3:
30%
Scope 3:
11%
Carbon emissions in own
operations
To achieve our target of reducing our
carbon footprint in our own operations
by 50% (Scope 1 and 2), we’re
working on two enablers: increasing
the percentage of renewable electricity
to 100% and reducing the energy we
consume by 30% by 2030 (versus
2018).
From an absolute reduction perspective,
our combined Scope 1 and 2 reduced
by 28% versus our 2018 baseline
(absolute). Compared with 2021, we
further reduced carbon emissions by
12% in 2022 (absolute). We’re well on
track towards our 50% reduction target
for 2030. From a relative perspective,
our Scope 1 stayed flat since 2018,
while our Scope 2 emissions reduced
by 32%.
Greenhouse gas emissions (CO2)
in million tons
Direct CO2(e) (Scope 1)
Indirect CO2(e) (Scope 2)
kg CO2(e) per ton of production
75
0.18
0.06
2019
73
0.17
0.06
2020
71
0.17
0.06
2021
67
0.15
0.06
2022
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
6.0
1.83
5.7
1.89
6.3
1.90
5.9
2019
2020
2021
2022
The energy consumption of AkzoNobel in absolute measures and per
ton of production.
Energy
Part of reducing our carbon emissions
from our own operations (Scope 1
and 2) is reducing the amount of
energy we consume. We’re committed
to reducing our relative energy
consumption by 30% by 2030 (baseline
2018) and plan to do so through an
ambitious 5% relative year-over-year
reduction objective.
For 2022, our absolute energy
consumption reduced 7% versus 2021,
while our relative energy consumption
was 1% up compared with 2021, and
reduced by 1% versus 2018. The pie
charts to the right show the breakdown
for our regional energy consumption.
We track the cumulative energy
reduction impact of improvement
projects such as shutdown management
and LED installation. This helps us better
understand our performance and adjust
our strategy as we continue in a cycle of
continuous improvement.
Despite the programs in place, achieving
the 5% relative reduction target has
been challenging, partly due to changes
in our product and portfolio mix. For
example, changes in our product
portfolio mix include increased demand
for products that take a higher energy
intensity to produce. The current
macro-economic environment has also
impacted our volumes and therefore our
relative energy consumption. In addition,
the VOC emission abatement systems
and solvent recovery units we’re
installing to reduce VOC emissions and
waste are relatively energy intensive.
While an overall relative energy consump-
tion reduction of 5% was not achieved,
we’ve implemented many energy
reduction initiatives. For example, our Hull
site in the UK installed CEMA lighting,
which reduced the lighting system’s
carbon emissions by 70%. And in France,
a renewal of Montataire’s compressor
room and a warehouse LED project have
reduced annual electricity consumption
by more than 1.8 GWh.
Regional split energy use in %
E
A
B
C
D
A North America
B Latin America
C North Asia
D South Asia
E EMEA
Energy breakdown in %
D
C
B
A
A Electricity non-renewable
B Electricity renewable
C Gas
D Other
18
10
16
11
45
40
41
15
4
We’re continuing to investigate targeted
investment for energy reduction
programs, refine our energy monitoring
management and implement a renewed
governance structure.
Renewable energy
As shown in the graph above, electricity
makes up the vast majority of our total
energy use (81%). Of that, our total
percentage of renewable electricity was
50% in 2022, well on track towards our
target of 100% by 2030 and already
achieving our 2025 interim target of 50%.
AkzoNobel Report 2022 | Sustainability statements
33
28%
2022
50%
2030 ambition
6%
2022
50%
2030 ambition
Carbon emission reduction value chain
Scope 3 emissions, selected Scope 3
upstream and downstream (baseline 2018,
absolute)
50%
2022
100%
2030 ambition
Renewable electricity
(of total electricity used in own operations)
1%
2022
30%
2030 ambition
Energy reduction (baseline 2018, relative)
32
Sustainability statements | AkzoNobel Report 2022
Sustainability
Carbon emissions in our full value chain
During 2022, we continued to install
solar panels at several sites and
purchase renewable electricity with
certificates of origin. Generating
renewable electricity on site alleviates
pressure on the electricity grid and
further reduces our carbon footprint. In
total, 53 of our locations now use 100%
renewable electricity and 26 sites are
using solar panels as a supplementary
source of energy.
Our Izmir powder coatings facility in
Türkiye completed a major solar energy
project in 2022, with more than 2,300
panels installed. Similarly, our Songjiang
decorative paints facility installed over
5,000 solar panels during 2022.
Volatile organic compounds
The production of solvent-based paints
and coatings causes emissions of
volatile organic compounds (VOCs).
These emissions are included in our
cradle-to-grave carbon footprint. In our
own operations, we achieved a relative
7% reduction versus 2021 in VOC
emissions per ton of product, and a
total reduction of 45% versus the 2018
baseline.
We’re reducing VOC emissions in two
distinct ways. Firstly, we implement
abatement technologies such as thermal
oxidizers or activated carbon filters.
Secondly, we optimize our footprint by
concentrating solvent-based production
in more efficient or automated factories
to altogether eliminate emissions. In
addition, we’re also actively working
on transitioning from solvent-based to
water-based solutions where possible.
Increased capacity for sustainable solutions
Greg Poux-Guillaume, CEO
We’re actively running reduction projects
coatings that are less carbon intensive.
We’ve invested in a new production
line for water-based texture paints at
our Songjiang site in Shanghai, China
– boosting capacity for supplying
more sustainable products.
The site is one of four water-based
decorative paints plants in China
and among our largest globally. The
new 2,500 square meter facility will
produce Dulux products for various
markets, such as interior decoration,
architecture and leisure.
Recent projects include introducing
new solar energy systems and a more
automated high-speed filling line.
“As our largest single country
market, China has huge potential,”
explains Mark Kwok, Director of
Decorative Paints North Asia. “The
new production line will help enhance
our leading position in paints and
coatings in China by expanding
new markets and further driving us
towards our strategic ambitions.”
China is increasingly focusing on
energy conservation and emission
reduction, which in turn is being
reflected in the type of products
customers want to buy. The
production of low VOC, water-based
paints will therefore need to keep
expanding to meet this demand.
34
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
35
Carbon emissions in our full
We’re focused on developing
information about upstream emission
value chain
increasingly more sustainable solutions
management, see Sustainability and risk
Our efforts to mitigate climate change
and are integrating carbon reduction
management with our suppliers.
stretch beyond our own operations as
into our internal plans and tooling. As
we work towards reducing our carbon
the development of new solutions,
Downstream emission
emissions by 50% throughout our whole
investments in the value chain and
management
value chain by 2030.
market acceptance takes time, we
We’re directly engaging with our key
“We encourage our value chain
partners to join us in setting
ambitious, science-based
emission reduction targets. It’s
only through shared responsibility
that we can drive signifi cant
value chain decarbonization.”
expect the majority of the reduction of
customers to align on potential carbon
our Scope 3 carbon footprint towards
reduction in their processes, for example
the latter part of the decade.
during coating application. An example is
approaching customers using gas to cure
Emission reduction levers
our coatings and offering them products
During 2022, we further analyzed the
that require lower curing temperatures
breakdown of our Scope 3 emissions.
– which can help lower their carbon
We identifi ed key levers for reduction
footprint and save energy costs. With
which can be grouped into four
this approach, we aim to become the
categories: Energy transition; Application
partner of choice for carbon conscious
effi ciency; Solvent emissions; Circular
customers.
solutions.
There’s an increased demand for
throughout the company in these
In our Automotive and Specialty
As most of our carbon footprint comes
key focus areas, and have set up a
Coatings business, demand for ambient
from our Scope 3 emissions, our
governance structure to ensure they’re
and UV curing coatings is rising. We’re
ambitions are a key driver for innovation
embedded in future plans, such as our
looking to collaborate with customers
and collaboration with our value chain
R&D pipeline and supplier engagements.
and advise them on carbon reduction
partners, especially suppliers and
strategies for their coating processes.
customers. In setting these ambitious
Upstream emission
targets, we’ve taken responsibility for the
management
The innovation and development of our
decarbonization of our operations and
Throughout the year, we engaged with
sustainable solutions not only plays a key
made the commitment to help our value
our top 200 suppliers, for example
role, but involves the majority of our
chain partners decarbonize theirs. This is
during a live webcast, to share our
approximately 3,000 people in RD&I
also the most challenging target, as it sits
ambitions and encourage these key
teams and our €258 million innovation
outside the scope of our direct control.
stakeholders to do the same. Key
investments.
impact areas for our suppliers are:
Carbon footprint in our
value chain
increasing process effi ciency; moving to
We saw a sharp increase in customer
renewable energy; and reducing the use
needs regarding product carbon
Our 50% (absolute) reduction ambition
of fossil materials and fuels. We’re now
footprint in 2022, especially in the
encompasses the categories below,
working together on joint programs with
transportation, energy and buildings
covering around 95% of our total Scope 3
key suppliers to achieve further carbon
segments. We’re now able to provide
emissions:
reduction in our full value chain.
carbon footprint data where needed and
• Upstream: Category 1 (purchased
our internal teams are trained to use it in
goods and services, including
In 2022, Together for Sustainability (TfS)
customer collaborations.
packaging)
launched the Product Carbon Footprint
• Downstream: Category 10 and 11
Guideline to ensure a consistent
Across our value chain
(application and use of sold products),
measure of carbon emissions along
During 2022, we continued to integrate
VOC emissions and Category 12
the value chain in the chemical industry
sustainability and innovation into our daily
(end-of-life)
and beyond. We fully support this new
business to work towards our ambitions.
global guidance and encourage our
For example, through our Paint the
Our 2022 Scope 3 carbon footprint
suppliers to join us in using it as a way
Future platform, we actively promote
was 13.2 million tons, 9% down from
of identifying collaborative opportunities.
open innovation in areas contributing to
2021, driven by lower volumes and
This is in line with our ambition to move
carbon reduction (see Tackling climate
improvements in our portfolio such as
gradually from using industry averages
change together on page 36).
more water-based solutions.
to supplier-specifi c data. For more
Sustainability
Carbon emissions in our full value chain
During 2022, we continued to install
project in 2022, with more than 2,300
total reduction of 45% versus the 2018
solar panels at several sites and
panels installed. Similarly, our Songjiang
baseline.
purchase renewable electricity with
decorative paints facility installed over
certificates of origin. Generating
5,000 solar panels during 2022.
We’re reducing VOC emissions in two
renewable electricity on site alleviates
distinct ways. Firstly, we implement
pressure on the electricity grid and
Volatile organic compounds
abatement technologies such as thermal
further reduces our carbon footprint. In
The production of solvent-based paints
oxidizers or activated carbon filters.
total, 53 of our locations now use 100%
and coatings causes emissions of
Secondly, we optimize our footprint by
renewable electricity and 26 sites are
volatile organic compounds (VOCs).
concentrating solvent-based production
using solar panels as a supplementary
These emissions are included in our
in more efficient or automated factories
source of energy.
cradle-to-grave carbon footprint. In our
to altogether eliminate emissions. In
Our Izmir powder coatings facility in
7% reduction versus 2021 in VOC
on transitioning from solvent-based to
Türkiye completed a major solar energy
emissions per ton of product, and a
water-based solutions where possible.
own operations, we achieved a relative
addition, we’re also actively working
Increased capacity for sustainable solutions
We’ve invested in a new production
Recent projects include introducing
China is increasingly focusing on
line for water-based texture paints at
new solar energy systems and a more
energy conservation and emission
our Songjiang site in Shanghai, China
automated high-speed filling line.
reduction, which in turn is being
– boosting capacity for supplying
reflected in the type of products
more sustainable products.
“As our largest single country
customers want to buy. The
The site is one of four water-based
explains Mark Kwok, Director of
paints will therefore need to keep
decorative paints plants in China
Decorative Paints North Asia. “The
expanding to meet this demand.
market, China has huge potential,”
production of low VOC, water-based
and among our largest globally. The
new production line will help enhance
new 2,500 square meter facility will
our leading position in paints and
produce Dulux products for various
coatings in China by expanding
markets, such as interior decoration,
new markets and further driving us
architecture and leisure.
towards our strategic ambitions.”
Carbon emissions in our full
value chain
Our efforts to mitigate climate change
stretch beyond our own operations as
we work towards reducing our carbon
emissions by 50% throughout our whole
value chain by 2030.
“We encourage our value chain
partners to join us in setting
ambitious, science-based
emission reduction targets. It’s
only through shared responsibility
that we can drive signifi cant
value chain decarbonization.”
Greg Poux-Guillaume, CEO
As most of our carbon footprint comes
from our Scope 3 emissions, our
ambitions are a key driver for innovation
and collaboration with our value chain
partners, especially suppliers and
customers. In setting these ambitious
targets, we’ve taken responsibility for the
decarbonization of our operations and
made the commitment to help our value
chain partners decarbonize theirs. This is
also the most challenging target, as it sits
outside the scope of our direct control.
Carbon footprint in our
value chain
Our 50% (absolute) reduction ambition
encompasses the categories below,
covering around 95% of our total Scope 3
emissions:
• Upstream: Category 1 (purchased
goods and services, including
packaging)
• Downstream: Category 10 and 11
(application and use of sold products),
VOC emissions and Category 12
(end-of-life)
Our 2022 Scope 3 carbon footprint
was 13.2 million tons, 9% down from
2021, driven by lower volumes and
improvements in our portfolio such as
more water-based solutions.
We’re focused on developing
increasingly more sustainable solutions
and are integrating carbon reduction
into our internal plans and tooling. As
the development of new solutions,
investments in the value chain and
market acceptance takes time, we
expect the majority of the reduction of
our Scope 3 carbon footprint towards
the latter part of the decade.
Emission reduction levers
During 2022, we further analyzed the
breakdown of our Scope 3 emissions.
We identifi ed key levers for reduction
which can be grouped into four
categories: Energy transition; Application
effi ciency; Solvent emissions; Circular
solutions.
We’re actively running reduction projects
throughout the company in these
key focus areas, and have set up a
governance structure to ensure they’re
embedded in future plans, such as our
R&D pipeline and supplier engagements.
Upstream emission
management
Throughout the year, we engaged with
our top 200 suppliers, for example
during a live webcast, to share our
ambitions and encourage these key
stakeholders to do the same. Key
impact areas for our suppliers are:
increasing process effi ciency; moving to
renewable energy; and reducing the use
of fossil materials and fuels. We’re now
working together on joint programs with
key suppliers to achieve further carbon
reduction in our full value chain.
In 2022, Together for Sustainability (TfS)
launched the Product Carbon Footprint
Guideline to ensure a consistent
measure of carbon emissions along
the value chain in the chemical industry
and beyond. We fully support this new
global guidance and encourage our
suppliers to join us in using it as a way
of identifying collaborative opportunities.
This is in line with our ambition to move
gradually from using industry averages
to supplier-specifi c data. For more
information about upstream emission
management, see Sustainability and risk
management with our suppliers.
Downstream emission
management
We’re directly engaging with our key
customers to align on potential carbon
reduction in their processes, for example
during coating application. An example is
approaching customers using gas to cure
our coatings and offering them products
that require lower curing temperatures
– which can help lower their carbon
footprint and save energy costs. With
this approach, we aim to become the
partner of choice for carbon conscious
customers.
There’s an increased demand for
coatings that are less carbon intensive.
In our Automotive and Specialty
Coatings business, demand for ambient
and UV curing coatings is rising. We’re
looking to collaborate with customers
and advise them on carbon reduction
strategies for their coating processes.
The innovation and development of our
sustainable solutions not only plays a key
role, but involves the majority of our
approximately 3,000 people in RD&I
teams and our €258 million innovation
investments.
We saw a sharp increase in customer
needs regarding product carbon
footprint in 2022, especially in the
transportation, energy and buildings
segments. We’re now able to provide
carbon footprint data where needed and
our internal teams are trained to use it in
customer collaborations.
Across our value chain
During 2022, we continued to integrate
sustainability and innovation into our daily
business to work towards our ambitions.
For example, through our Paint the
Future platform, we actively promote
open innovation in areas contributing to
carbon reduction (see Tackling climate
change together on page 36).
34
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
35
Sustainability
Tackling climate change together
A boundary-pushing approach to
hacking carbon reduction challenges
has been established by AkzoNobel and
partners from across the extended value
chain (including customers, suppliers,
NGOs and academia).
The global Collaborative Sustainability
Challenge, a new initiative of Paint
the Future, kicked off in May 2022.
It brought together senior and next
generation leaders to begin hacking
four key areas: energy transition,
process efficiency, solvent emissions
and circular solutions. In total, 28
partners signed up to continue working
on possible solutions to help limit
climate change.
Six months later, November’s Discovery
Day brought everybody back together
to present what they had learned and
to agree on the five projects that will
continue. AkzoNobel is involved in the
following three and will help:
• The coatings industry take sustain-
ability into account by identifying
potential value proposition-based
metrics that could be used to
measure sustainability of products
and promote sustainable choices
• Raw material suppliers realize dis-
ruptive new process technologies that
enable sustainable product solutions
by proposing working models that
share risks along the value chain
• The marine coatings industry
provide products to the market with
minimal solvent applications by
campaigning for solutions for a faster
decarbonization of the value chain
“Working together on this is vital,”
says Wijnand Bruinsma, Director of
Sustainability. “We know the only way to
achieve our target of halving our carbon
emissions across the full value chain by
2030 is to collaborate with our partners
– and we’re thrilled to have generated so
much momentum.”
Climate change adaptation
and risk management
Climate change adaptation and
risk management
As recommended by the Task Force on
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, flooding
and weather events – and transitional
risks, such as changes in technology,
market dynamics and regulation.
Carbon pricing
We have sustainability assessments
in place for all material investment
projects. For the last seven years, we’ve
implemented an internal carbon price for
these investment decisions, anticipating
the impact of any future carbon pricing.
Annually, we quantify the potential
transitional risk impact of any global
carbon taxation by multiplying our
carbon footprint (Scopes 1 and 2) with
the internal carbon price. To analyze
different potential scenarios, we
calculate the impact using a carbon
price ranging from €50 to €150 (per
ton), the latter being the suggested UN
price on carbon. That range results in an
impact well below 1% of 2022 revenues.
Our suppliers and customers might
be impacted by carbon pricing, which
creates both risks and opportunities.
For example, we can mitigate the
carbon cost impact for our customers
by offering sustainable solutions (see
Carbon emissions in our full value chain).
Physical risks: Natural
catastrophes
As climate change will most likely
increase the frequency of natural
hazards, during 2022 we’ve further
analyzed the natural hazards our
operations are exposed to.
As part of our risk and insurance
process, we collect information about
our sites by conducting risk engineering
More than 2,300 solar panels have been installed at our Izmir powder coatings
factory in Türkiye. The factory roof has been covered with 5,250 square meters
of solar panels, contributing to our ambition of using 100% renewable electricity
by 2030. We were proud to become the first company to invest in solar energy in
site surveys. Risk engineering is a
would mean for our current risk profile.
methodology for mapping hazard
As indicated in Summary of significant
risks – to evaluate the frequency and
accounting policies in Note 1 of the
the consequences of potential hazards
Consolidated financial statements, we
related to the production process – and
assess the carrying value of intangible
natural hazards.
assets, property, plant and equipment
and right-of-use assets whenever events
Annually, around 20% of sites are
or changes in circumstances indicate
assessed following a materiality-based
that the carrying value of an asset may
approach. The scope and frequency is
not be recoverable as a result of risks,
based on the replacement value of the
including environmental and climate
site, in a cycle of three to five years.
change. With regards to the risks related
the Aegean Free Trade Zone.
to water, we use the Aqueduct water risk
Natural hazards taken into account
atlas developed by the World Resources
critical supply chains is potentially under
during this process are: earthquakes,
Institute to assess the level of risk at our
risk. We also proactively map supplier
floods, drought, hailstorms, lightning,
production locations – an exercise run
locations against natural catastrophes
wind, tornados, subsidence, landslides
every three years (see Report 2021).
and work with suppliers on risk
and active volcanos.
For 2022, we observed a decrease in
mitigation plans (see Sustainability and
overall water consumption compared
risk management with our suppliers).
Based on these assessments, several
with 2021.
sites are in scope with increased risk,
due mainly to the potential for natural
Suppliers
Transitional risks
We’re also exposed to transitional risks,
catastrophes. Based on the individual
We continued to assess our suppliers in
such as market and technology shifts,
risk assessments, we put measures
2022 and take steps to better under-
reputation risks and policy and legal
in place to mitigate the risks to an
stand and manage risks around the
changes. Identifying and addressing
acceptable level.
globe from a supply perspective. We
risks, including transitional risks related
implemented a new early warning pro-
to climate change, is part of our regular
We’re currently studying what additional
cess using the “riskmethods” tool, which
risk management process (see Risk
temperature changes (climate scenarios)
immediately informs us if one of our
management).
2022 sustainable solutions for climate change
Many sustainable solutions that help our customers lower their carbon footprint were launched during 2022.
Energy efficiency – new low-curing
Reduced solvent emissions – we
Circular solutions – we scaled up
powder coatings in the agriculture,
continued switching wood care and trim
the use of bio-based renewable raw
construction and equipment market
paints to water-based technology, which
materials in our wood finishes for the
segment help our customers reduce
is making up more than half of our volume
furniture market.
energy consumption.
in Decorative Paints EMEA in 2022.
36
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
37
Sustainability
Tackling climate change together
Climate change adaptation
and risk management
Climate change adaptation and
risk management
As recommended by the Task Force on
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, flooding
and weather events – and transitional
risks, such as changes in technology,
market dynamics and regulation.
Carbon pricing
We have sustainability assessments
in place for all material investment
projects. For the last seven years, we’ve
implemented an internal carbon price for
these investment decisions, anticipating
the impact of any future carbon pricing.
Physical risks: Natural
catastrophes
As climate change will most likely
increase the frequency of natural
hazards, during 2022 we’ve further
analyzed the natural hazards our
operations are exposed to.
As part of our risk and insurance
process, we collect information about
our sites by conducting risk engineering
A boundary-pushing approach to
• The coatings industry take sustain-
hacking carbon reduction challenges
ability into account by identifying
has been established by AkzoNobel and
potential value proposition-based
partners from across the extended value
metrics that could be used to
chain (including customers, suppliers,
measure sustainability of products
NGOs and academia).
and promote sustainable choices
• Raw material suppliers realize dis-
Annually, we quantify the potential
transitional risk impact of any global
The global Collaborative Sustainability
ruptive new process technologies that
carbon taxation by multiplying our
Challenge, a new initiative of Paint
enable sustainable product solutions
carbon footprint (Scopes 1 and 2) with
the Future, kicked off in May 2022.
by proposing working models that
the internal carbon price. To analyze
It brought together senior and next
share risks along the value chain
generation leaders to begin hacking
• The marine coatings industry
four key areas: energy transition,
provide products to the market with
different potential scenarios, we
calculate the impact using a carbon
price ranging from €50 to €150 (per
process efficiency, solvent emissions
minimal solvent applications by
ton), the latter being the suggested UN
and circular solutions. In total, 28
campaigning for solutions for a faster
price on carbon. That range results in an
partners signed up to continue working
decarbonization of the value chain
impact well below 1% of 2022 revenues.
on possible solutions to help limit
climate change.
“Working together on this is vital,”
says Wijnand Bruinsma, Director of
Our suppliers and customers might
be impacted by carbon pricing, which
Six months later, November’s Discovery
Sustainability. “We know the only way to
creates both risks and opportunities.
Day brought everybody back together
achieve our target of halving our carbon
For example, we can mitigate the
to present what they had learned and
emissions across the full value chain by
carbon cost impact for our customers
to agree on the five projects that will
2030 is to collaborate with our partners
by offering sustainable solutions (see
continue. AkzoNobel is involved in the
– and we’re thrilled to have generated so
Carbon emissions in our full value chain).
following three and will help:
much momentum.”
site surveys. Risk engineering is a
methodology for mapping hazard
risks – to evaluate the frequency and
the consequences of potential hazards
related to the production process – and
natural hazards.
Annually, around 20% of sites are
assessed following a materiality-based
approach. The scope and frequency is
based on the replacement value of the
site, in a cycle of three to five years.
Natural hazards taken into account
during this process are: earthquakes,
floods, drought, hailstorms, lightning,
wind, tornados, subsidence, landslides
and active volcanos.
Based on these assessments, several
sites are in scope with increased risk,
due mainly to the potential for natural
catastrophes. Based on the individual
risk assessments, we put measures
in place to mitigate the risks to an
acceptable level.
We’re currently studying what additional
temperature changes (climate scenarios)
would mean for our current risk profile.
As indicated in Summary of significant
accounting policies in Note 1 of the
Consolidated financial statements, 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 recoverable as a result of risks,
including environmental and climate
change. With regards to the risks related
to water, we use the Aqueduct water risk
atlas developed by the World Resources
Institute to assess the level of risk at our
production locations – an exercise run
every three years (see Report 2021).
For 2022, we observed a decrease in
overall water consumption compared
with 2021.
Suppliers
We continued to assess our suppliers in
2022 and take steps to better under-
stand and manage risks around the
globe from a supply perspective. We
implemented a new early warning pro-
cess using the “riskmethods” tool, which
immediately informs us if one of our
More than 2,300 solar panels have been installed at our Izmir powder coatings
factory in Türkiye. The factory roof has been covered with 5,250 square meters
of solar panels, contributing to our ambition of using 100% renewable electricity
by 2030. We were proud to become the first company to invest in solar energy in
the Aegean Free Trade Zone.
critical supply chains is potentially under
risk. We also proactively map supplier
locations against natural catastrophes
and work with suppliers on risk
mitigation plans (see Sustainability and
risk management with our suppliers).
Transitional risks
We’re also exposed to transitional risks,
such as market and technology shifts,
reputation risks and policy and legal
changes. Identifying and addressing
risks, including transitional risks related
to climate change, is part of our regular
risk management process (see Risk
management).
2022 sustainable solutions for climate change
Many sustainable solutions that help our customers lower their carbon footprint were launched during 2022.
36
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
37
Energy efficiency – new low-curing
powder coatings in the agriculture,
construction and equipment market
segment help our customers reduce
energy consumption.
Reduced solvent emissions – we
continued switching wood care and trim
paints to water-based technology, which
is making up more than half of our volume
in Decorative Paints EMEA in 2022.
Circular solutions – we scaled up
the use of bio-based renewable raw
materials in our wood finishes for the
furniture market.
CIRCU-
LARITY
Sustainability
Waste and water management
Moving towards a circular
economy means reducing
waste and increasing circularity
throughout our value chain.
We’re driven by reduce, reuse
and recycle, while our products
seek to protect and give longer
life to surfaces and materials.
Reducing waste and increasing
circularity
We’re on a journey towards achieving
100% circular use of materials in our
own operations by 2030. To get there,
we’re focused on reducing the amount
of waste and increasing the circular
use of materials.
In 2022, we achieved circular use
of materials for 56% of our obsolete
material and waste streams. In line
with our strategy of reducing, reusing
and recycling materials, our material
optimization process focuses on
diverting slow-moving and obsolete
materials from incineration to internal
reuse and third-party recyclers
and outlets.
We drive waste reduction through
multi-disciplinary collaboration between
our commercial teams, supply chain,
manufacturing, HSE&S and our
innovation teams. One objective for
all manufacturing sites was to identify
waste reduction initiatives. This resulted
in the registration of 153 projects making
progress on our KPIs. With a combined
waste avoidance of about 9,000 tons,
our total waste would otherwise be
15% (absolute) higher.
Our relative waste (kg per ton of material
produced) reduced by 5% overall,
meeting our annual internal goal of
5%. While the disposal of slow-moving
obsolete stock and legacy waste
remained a challenge, numerous waste
reduction projects helped to achieve the
5% relative reduction.
We’re making progress on our ambition
of zero waste to landfi ll (defi ned as
<1% of total waste). In 2022, our waste
to landfi ll reduced by 16% (absolute)
versus 2021 (238 tons) to 2.2% of
total waste. Overall, we’ve reduced
56%
2022
100%
2030 ambition
Circular use of materials
The amount of materials (in own operations)
reused by AkzoNobel and third parties
Material fl ow in kilotons
Product
3,107
Raw
materials
Own
operations
By-product*
9
Waste
59
Reusable*
29
Non-reusable
30
Landfill
1
Incineration
29
* The amount of materials reused by AkzoNobel and third parties (reusable
waste and by-products) divided by the total waste and by-products, provides
the percentage of circular use of materials.
38
Sustainability statements | AkzoNobel Report 2022
Water fl ow in milion m3 (total for AkzoNobel)
Potable
water
1.61
Ground-
water
1.66
Own operations
Product
0.74
Other*
1.13
Surface
water in
5.36
Cooling
water
6.76
* Factory process water other than water that ends up in the
product, and water used for drinking, sanitation and irrigation
Water use in %
We concentrate our water consumption
Total waste in kilotons
C
B
A
reduction efforts at our water intensive
sites – which we defi ne as a site that
uses more than 15,000m3 per year,
excluding cooling water. These sites
21.0
are expected to meet our target of less
than 250 liters of relative fresh water
consumption per ton of product. As per
our internal, best-in-class benchmark
analysis, a site that consumes less than
250 liters per ton of product produced
is considered to have “water reuse”
A Cooling
B Product
C Other
2019
2020
2021
2022
measures in place. Currently 34% of our
Waste means any substance or object arising from our routine operations which
we discard or intend to discard.
sites (42) meet the defi nition of a water
intensive site, representing 76% of our
78
9
13
total fresh water consumption. In 2022,
Total fresh water use in million m3
14 out of the 42 water intensive sites
Total fresh water use
m3 per ton of production
Total reusable waste
Total non-reusable waste
Total kg per ton of production
19.9
19.0
20.0
30
32
2.9
9.1
33
34
2.5
8.1
31
35
2.9
9.6
30
29
2.8
8.6
waste to landfi ll by 89% (absolute)
versus the 2018 baseline.
Water management
reached the target.
For 2023, we’ll further integrate our
approach to water management at
water intensive sites with our Climate
The bulk of our water use is for cooling
Risk Management approach. For
(78% in 2022). This occurs at only a
physical risks related to climate
handful of our production locations
change and our exposure to water
in areas with a low water availability
stressed areas, refer to Climate change
2019
2020
2021
2022
risk (assessed through the Aqueduct
adaptation and risk management.
Total fresh water use is the sum of the intake of groundwater, surface water and
potable water.
tool). Water is also used as a raw
material in paints and for cleaning (see
above graph).
AkzoNobel Report 2022 | Sustainability statements
39
CIRCU-
LARITY
Sustainability
Waste and water management
Moving towards a circular
economy means reducing
We drive waste reduction through
multi-disciplinary collaboration between
waste and increasing circularity
our commercial teams, supply chain,
throughout our value chain.
manufacturing, HSE&S and our
We’re driven by reduce, reuse
innovation teams. One objective for
and recycle, while our products
all manufacturing sites was to identify
seek to protect and give longer
waste reduction initiatives. This resulted
life to surfaces and materials.
in the registration of 153 projects making
progress on our KPIs. With a combined
Reducing waste and increasing
waste avoidance of about 9,000 tons,
circularity
our total waste would otherwise be
We’re on a journey towards achieving
15% (absolute) higher.
100% circular use of materials in our
own operations by 2030. To get there,
Our relative waste (kg per ton of material
we’re focused on reducing the amount
produced) reduced by 5% overall,
of waste and increasing the circular
meeting our annual internal goal of
use of materials.
5%. While the disposal of slow-moving
obsolete stock and legacy waste
In 2022, we achieved circular use
remained a challenge, numerous waste
of materials for 56% of our obsolete
reduction projects helped to achieve the
material and waste streams. In line
5% relative reduction.
with our strategy of reducing, reusing
and recycling materials, our material
We’re making progress on our ambition
optimization process focuses on
of zero waste to landfi ll (defi ned as
Water fl ow in milion m3 (total for AkzoNobel)
Potable
water
1.61
Ground-
water
1.66
Own operations
Product
0.74
Other*
1.13
Surface
water in
5.36
Cooling
water
6.76
* Factory process water other than water that ends up in the
product, and water used for drinking, sanitation and irrigation
diverting slow-moving and obsolete
<1% of total waste). In 2022, our waste
Water use in %
C
B
A
A Cooling
B Product
C Other
78
9
13
waste to landfi ll by 89% (absolute)
versus the 2018 baseline.
Water management
The bulk of our water use is for cooling
(78% in 2022). This occurs at only a
handful of our production locations
in areas with a low water availability
risk (assessed through the Aqueduct
tool). Water is also used as a raw
material in paints and for cleaning (see
above graph).
We concentrate our water consumption
reduction efforts at our water intensive
sites – which we defi ne as a site that
uses more than 15,000m3 per year,
excluding cooling water. These sites
are expected to meet our target of less
than 250 liters of relative fresh water
consumption per ton of product. As per
our internal, best-in-class benchmark
analysis, a site that consumes less than
250 liters per ton of product produced
is considered to have “water reuse”
measures in place. Currently 34% of our
sites (42) meet the defi nition of a water
intensive site, representing 76% of our
total fresh water consumption. In 2022,
14 out of the 42 water intensive sites
reached the target.
For 2023, we’ll further integrate our
approach to water management at
water intensive sites with our Climate
Risk Management approach. For
physical risks related to climate
change and our exposure to water
stressed areas, refer to Climate change
adaptation and risk management.
Total waste in kilotons
Total reusable waste
Total non-reusable waste
Total kg per ton of production
21.0
33
34
20.0
30
32
19.9
19.0
31
35
30
29
2019
2020
2021
2022
Waste means any substance or object arising from our routine operations which
we discard or intend to discard.
Total fresh water use in million m3
Total fresh water use
m3 per ton of production
2.5
8.1
2.9
9.1
2.9
9.6
2.8
8.6
2019
2020
2021
2022
Total fresh water use is the sum of the intake of groundwater, surface water and
potable water.
AkzoNobel Report 2022 | Sustainability statements
39
Circular use of materials
materials from incineration to internal
to landfi ll reduced by 16% (absolute)
The amount of materials (in own operations)
reuse and third-party recyclers
versus 2021 (238 tons) to 2.2% of
reused by AkzoNobel and third parties
and outlets.
total waste. Overall, we’ve reduced
56%
2022
100%
2030 ambition
Material fl ow in kilotons
Raw
materials
Own
operations
By-product*
9
Product
3,107
Waste
59
* The amount of materials reused by AkzoNobel and third parties (reusable
waste and by-products) divided by the total waste and by-products, provides
the percentage of circular use of materials.
38
Sustainability statements | AkzoNobel Report 2022
Reusable*
29
Non-reusable
30
Landfill
1
Incineration
29
Sustainability
Taking solvent recovery to the next level
Our Industrial Coatings sites are
focused on reusing and reprocessing
solvents to avoid generating waste.
We currently operate 19 solvent
recovery units across the EMEA
region, North America and Asia.
Over the past three years, we’ve
installed a total of 14 solvent
recovery units in Asia. In 2022, an
efficiency improvement program
increased the efficiency of these
installations from 70% to 90%.
In 2022, our site in Hilden, Germany
(pictured below) also installed a
solvent recovery unit. The cleaning
solvents used at the site can now be
distilled internally. As a result, waste
at the site for the year was reduced
by more than 50%, representing
1,800 tons.
Recycled content in
packaging
Recycled content in packaging
In 2022, we delivered towards our
ambition to use at least 50% recycled
content in the plastic packaging used by
our Decorative Paints Europe business
by 2025.
Through collaboration with our
packaging suppliers, we’ve been able
to achieve up to 70% recycled content
in our key packs without increasing
the packaging weight or reducing its
performance. In 2022, we updated most
packs in the UK – our largest European
market – and have further worked
towards the roll-out in mainland Europe.
Currently, almost one third of plastic
packaging contains recycled content.
We expect that to grow to more than
two thirds of products in 2023, with the
remainder to be changed in 2024.
Colleagues at our Hilden
site in Germany reduced
waste at the site by more
than 50% in 2022.
2022 sustainable solutions for circularity
These products are among the many sustainable solutions launched in 2022, showing our commitment to reducing
waste and increasing circularity.
Reduced materials – we launched
a powder coatings solution that coats
objects with only one or two layers,
versus three with liquid coatings.
Renewable materials – we began
using a bio-based binder in much of our
high-volume decorative paint in the
EMEA region.
Recycled materials – decorative paint
containing recycled post-consumer
waste paint was rolled out in several
European countries under the Sikkens
and Dulux brands.
40
Sustainability statements | AkzoNobel Report 2022
HEALTH
AND WELL-
BEING
Sustainability
Health and safety
The health and well-being of
number of two-wheelers used for
our employees, customers,
end-users and other stake -
holders in the communities
where we operate is very
important to us.
business purposes and ensured drivers
are qualified. Wellness Checkpoint
continues to support the evaluation of
psycho-social risk factors. Our approach
to industrial hygiene and occupational
health is backed up by a company-
wide, digitally-supported compliance
Health and safety
Safety, as one of our core values, is
assurance process.
embedded into everything we do. We
care about the safety of our colleagues
We launched our Mental Well-being
and everyone we work with. It’s our
campaign in 2022 – which resulted in
vision to achieve zero injuries and harm
more than 2,500 people participating in
through operational excellence.
global training and awareness sessions
– and offered more support programs in
Management programs in the areas
local languages.
of people safety and health, process
safety and security help us live up to the
highest standards in our activities and
at our sites. Our commitment to running
our operations safely is underpinned
by our Life-Saving Rules and Golden
Principle to stop work if conditions or
behavior are unsafe.
People safety and health
In 2022, we accelerated our life-
critical procedures and Health, Safety,
Environment & Security (HSE&S)
roadmap program. We identified
areas that need improvement in our
own operations and put them on the
roadmap with targeted plans and
governance. We also continued to
invest in functional excellence and the
development of our capability in root
cause analysis.
Our lift truck/pedestrian segregation
Because we care about the safety of our colleagues and
everyone we deal with, we’re all empowered to stop work
for safety reasons – it’s the Golden Principle underpinning
our Life-Saving Rules.
program was successfully launched,
In 2022, the total reportable rate (TRR)
taking a risk-based approach to
for employees and temporary workers
continued with Behavior Based
versus an ambition level of 0.20. In total,
Safety (BBS), focusing on increased
66% of our manufacturing sites have
quality through more coached
been reportable injury-free for over a
observations.
year, remaining stable from 2021. The
lost time injury rate (LTIR) for employees
We relaunched industrial hygiene and
and temporary workers remained low
ergonomic programs and continued
at 0.13 (2021: 0.11) and the severity
to actively manage occupational
of injuries remained low. The most
illness-related absenteeism. A stricter
common causes of reportable injuries
implementation of our two-wheeler
remain slips, trips and falls. The most
driving policy though our 2022 safe
frequent injuries are fractures, cuts/
driving program also reduced the
lacerations and sprain/strains.
AkzoNobel Report 2022 | Sustainability statements
41
38,087
2020-2022
100,000+
2030 ambition
People empowered
Members of local communities empowered
with new skills (cumulative)
591
2020-2022
2,000+
2030 ambition
Community projects
(cumulative)
72
2022
76
Ambition
26%
2022
30%
2025 ambition
Female executives
Organizational health score (OHI)
prioritize the highest risk areas. We also
was again low at 0.24 (2021: 0.21),
Sustainability
Taking solvent recovery to the next level
Our Industrial Coatings sites are
increased the efficiency of these
focused on reusing and reprocessing
installations from 70% to 90%.
solvents to avoid generating waste.
We currently operate 19 solvent
In 2022, our site in Hilden, Germany
recovery units across the EMEA
(pictured below) also installed a
region, North America and Asia.
solvent recovery unit. The cleaning
solvents used at the site can now be
Over the past three years, we’ve
distilled internally. As a result, waste
installed a total of 14 solvent
at the site for the year was reduced
recovery units in Asia. In 2022, an
by more than 50%, representing
efficiency improvement program
1,800 tons.
Recycled content in
packaging
Recycled content in packaging
In 2022, we delivered towards our
ambition to use at least 50% recycled
content in the plastic packaging used by
our Decorative Paints Europe business
by 2025.
Through collaboration with our
packaging suppliers, we’ve been able
to achieve up to 70% recycled content
in our key packs without increasing
the packaging weight or reducing its
performance. In 2022, we updated most
packs in the UK – our largest European
market – and have further worked
towards the roll-out in mainland Europe.
Currently, almost one third of plastic
packaging contains recycled content.
We expect that to grow to more than
two thirds of products in 2023, with the
remainder to be changed in 2024.
Colleagues at our Hilden
site in Germany reduced
waste at the site by more
than 50% in 2022.
These products are among the many sustainable solutions launched in 2022, showing our commitment to reducing
2022 sustainable solutions for circularity
waste and increasing circularity.
Reduced materials – we launched
Renewable materials – we began
Recycled materials – decorative paint
a powder coatings solution that coats
using a bio-based binder in much of our
containing recycled post-consumer
objects with only one or two layers,
high-volume decorative paint in the
waste paint was rolled out in several
versus three with liquid coatings.
EMEA region.
European countries under the Sikkens
and Dulux brands.
40
Sustainability statements | AkzoNobel Report 2022
HEALTH
AND WELL-
BEING
Sustainability
Health and safety
The health and well-being of
our employees, customers,
end-users and other stake -
holders in the communities
where we operate is very
important to us.
Health and safety
Safety, as one of our core values, is
embedded into everything we do. We
care about the safety of our colleagues
and everyone we work with. It’s our
vision to achieve zero injuries and harm
through operational excellence.
Management programs in the areas
of people safety and health, process
safety and security help us live up to the
highest standards in our activities and
at our sites. Our commitment to running
our operations safely is underpinned
by our Life-Saving Rules and Golden
Principle to stop work if conditions or
behavior are unsafe.
People safety and health
In 2022, we accelerated our life-
critical procedures and Health, Safety,
Environment & Security (HSE&S)
roadmap program. We identified
areas that need improvement in our
own operations and put them on the
roadmap with targeted plans and
governance. We also continued to
invest in functional excellence and the
development of our capability in root
cause analysis.
Our lift truck/pedestrian segregation
program was successfully launched,
taking a risk-based approach to
prioritize the highest risk areas. We also
continued with Behavior Based
Safety (BBS), focusing on increased
quality through more coached
observations.
We relaunched industrial hygiene and
ergonomic programs and continued
to actively manage occupational
illness-related absenteeism. A stricter
implementation of our two-wheeler
driving policy though our 2022 safe
driving program also reduced the
number of two-wheelers used for
business purposes and ensured drivers
are qualified. Wellness Checkpoint
continues to support the evaluation of
psycho-social risk factors. Our approach
to industrial hygiene and occupational
health is backed up by a company-
wide, digitally-supported compliance
assurance process.
We launched our Mental Well-being
campaign in 2022 – which resulted in
more than 2,500 people participating in
global training and awareness sessions
– and offered more support programs in
local languages.
Because we care about the safety of our colleagues and
everyone we deal with, we’re all empowered to stop work
for safety reasons – it’s the Golden Principle underpinning
our Life-Saving Rules.
In 2022, the total reportable rate (TRR)
for employees and temporary workers
was again low at 0.24 (2021: 0.21),
versus an ambition level of 0.20. In total,
66% of our manufacturing sites have
been reportable injury-free for over a
year, remaining stable from 2021. The
lost time injury rate (LTIR) for employees
and temporary workers remained low
at 0.13 (2021: 0.11) and the severity
of injuries remained low. The most
common causes of reportable injuries
remain slips, trips and falls. The most
frequent injuries are fractures, cuts/
lacerations and sprain/strains.
AkzoNobel Report 2022 | Sustainability statements
41
38,087
2020-2022
100,000+
2030 ambition
People empowered
Members of local communities empowered
with new skills (cumulative)
591
2020-2022
2,000+
2030 ambition
Community projects
(cumulative)
72
2022
76
Ambition
Organizational health score (OHI)
26%
2022
30%
2025 ambition
Female executives
Sustainability
Total reportable injury rate employees including
temporary workers (per 200,000 hours)
0.24
0.23
0.21
0.24
2019
2020
2021
2022
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. For
TRR contractors, please see our Performance summary.
Lost time injury rate employees including
temporary workers (per 200,000 hours)
0.08
0.09
0.11
0.13
2019
2020
2021
2022
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. For lost time injury
rate contractors, please see our Performance summary.
Process safety events
Loss of primary containment – Level 1
Loss of primary containment – Level 2
2021
2022
5
67
2
51
A loss of primary containment is an unplanned release of material product,
raw material or energy to the environment. They are divided into categories,
dependent on severity, from small, on-site spills up to Level 1.
Unfortunately, a colleague in Popesti,
Romania, sustained a life-changing
injury, a partial amputation of their left
index finger. A full investigation has been
carried out and the learnings shared
globally. There were no further life-
changing injuries or fatalities in 2022.
During 2022, the number of contractor
accidents was 10 (2021: 6).
COVID-19 management has remained
a focus throughout 2022. Most global
areas are now returning to normality,
with ongoing symptom checks
and suitable quarantines thereafter.
All AkzoNobel locations follow the
guidance from local authorities.
Parts of Asia, China in particular, have
been subject to further lockdowns during
the year. Careful local management has
ensured employees have been suitably
protected and operations maintained.
Special care was given to overall well-
being during these periods.
Process safety
We systematically assess, manage and
communicate the operational risks of
injuries or harm that may result from the
work we do.
In 2022, we continued our dedicated
Process Safety Management (PSM)
improvement project, designed to
strengthen our processes and achieve
leading standards in process safety.
To ensure our people, sites and
environments stay as safe as possible,
we introduced our Process Safety
Fundamentals training plan for front-line
workers. In 2022, more than 10,000
people were trained to identify and
manage hazards and the program roll-
out will continue in 2023.
During 2022, we also continued the
deployment of our Basis of Safety
standards, with a focus on resins,
aluminum bonding and high-speed
dispersers. The standards define
company expectations for these higher-
risk activities. Various engineering
standards have been adopted: for
grounding and bonding; flexible hose
management; and maintenance of
solvent storage tanks. Our locations
have now completed gap assessments
and equipment modifications are
under way.
Safety Day 2022
Our annual Safety Day is the moment
for us to celebrate safety and reflect
on how we’re doing. This year’s theme
was “Learning today makes us safer
tomorrow”, building on our human
performance principles of “Be Human –
Be Safe”. By sharing our successes and
near misses, we’re collectively learning
and improving.
During 2022, our Ansan site in South Korea
celebrated 3,000 injury-free days on World Day
for Safety and Health at Work. Pictured here is the
site celebrating Safety Day 2022.
42
Sustainability statements | AkzoNobel Report 2022
Sustainable technology and responsible architecture blend beautifully in this visually stunning museum in Uruguay. Inspired
by the shape of an ark, the futuristic Atchugarry Museum of Contemporary Art (MACA) is surrounded by 40 hectares of
greenery. Our Cetol woodcare brand supplied more than 1,000 liters of products for both the interior and exterior, which help
to protect the striking structure. The new museum is regarded as a prime example of how wood can be used for architectural
purposes and not just for decorative applications.
With 53 losses of primary contain-
fewer than the previous year (2021: 4).
Compliance assurance is a key HSE&S
ment (LoPCs) this year, we have
Theft and vandalism at our stores
priority because it ensures our license
improved since last year (2021: 72).
continued to represent the highest
to operate and business continuity in a
The causes identified by our incident
incident sub-type, which is similar to
fast-changing regulatory environment.
investigations mainly attributed the
wider society.
number of spills to operational discipline
(69%) and asset integrity (28%).
HSE&S management
In total, 75% of our manufacturing
foundation
Our company-wide compliance
assurance process is proactive and
digitally supported by tools from a
leading third-party supplier.
locations did not have any LoPCs (up
Our company-wide HSE&S manage-
from 69% in 2021), demonstrating
ment system is globally certified against
our vision of zero spills is achievable.
ISO 14001 and ISO 45001 standards.
However, 12% of our locations caused
The management system consists
72% of the spills in 2022. We continue
of policies, procedures, templates and
to focus on those locations, ensuring
best practices to promote learning
improvement plans act on the under-
across the organization.
lying root causes.
Security
HSE&S audits are performed in
three-year (for high hazard sites) to
Our security program protects people,
five-year (other sites) cycles. During
information, assets and critical
2022, we con ducted 33 audits in total,
business processes, both on and
51% of them remotely and 6% in a
off-site. During 2022, zero Level 3
hybrid format.
(most severe events) incidents occurred,
AkzoNobel Report 2022 | Sustainability statements
43
Sustainability
Total reportable injury rate employees including
Unfortunately, a colleague in Popesti,
In 2022, we continued our dedicated
temporary workers (per 200,000 hours)
Romania, sustained a life-changing
Process Safety Management (PSM)
0.24
0.23
0.21
0.24
2019
2020
2021
2022
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. For
TRR contractors, please see our Performance summary.
injury, a partial amputation of their left
improvement project, designed to
index finger. A full investigation has been
strengthen our processes and achieve
carried out and the learnings shared
leading standards in process safety.
globally. There were no further life-
changing injuries or fatalities in 2022.
To ensure our people, sites and
During 2022, the number of contractor
environments stay as safe as possible,
accidents was 10 (2021: 6).
we introduced our Process Safety
COVID-19 management has remained
workers. In 2022, more than 10,000
a focus throughout 2022. Most global
people were trained to identify and
areas are now returning to normality,
manage hazards and the program roll-
Fundamentals training plan for front-line
Lost time injury rate employees including
with ongoing symptom checks
out will continue in 2023.
temporary workers (per 200,000 hours)
and suitable quarantines thereafter.
0.08
0.09
0.11
All AkzoNobel locations follow the
During 2022, we also continued the
0.13
guidance from local authorities.
deployment of our Basis of Safety
Parts of Asia, China in particular, have
aluminum bonding and high-speed
been subject to further lockdowns during
dispersers. The standards define
standards, with a focus on resins,
2019
2020
2021
2022
the year. Careful local management has
company expectations for these higher-
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. For lost time injury
rate contractors, please see our Performance summary.
ensured employees have been suitably
risk activities. Various engineering
protected and operations maintained.
standards have been adopted: for
Special care was given to overall well-
grounding and bonding; flexible hose
Process safety events
being during these periods.
2021
2022
Process safety
management; and maintenance of
solvent storage tanks. Our locations
have now completed gap assessments
Loss of primary containment – Level 1
Loss of primary containment – Level 2
5
67
2
51
A loss of primary containment is an unplanned release of material product,
raw material or energy to the environment. They are divided into categories,
dependent on severity, from small, on-site spills up to Level 1.
work we do.
We systematically assess, manage and
and equipment modifications are
communicate the operational risks of
under way.
injuries or harm that may result from the
Safety Day 2022
Our annual Safety Day is the moment
for us to celebrate safety and reflect
on how we’re doing. This year’s theme
was “Learning today makes us safer
tomorrow”, building on our human
performance principles of “Be Human –
Be Safe”. By sharing our successes and
near misses, we’re collectively learning
and improving.
During 2022, our Ansan site in South Korea
celebrated 3,000 injury-free days on World Day
for Safety and Health at Work. Pictured here is the
site celebrating Safety Day 2022.
42
Sustainability statements | AkzoNobel Report 2022
Sustainable technology and responsible architecture blend beautifully in this visually stunning museum in Uruguay. Inspired
by the shape of an ark, the futuristic Atchugarry Museum of Contemporary Art (MACA) is surrounded by 40 hectares of
greenery. Our Cetol woodcare brand supplied more than 1,000 liters of products for both the interior and exterior, which help
to protect the striking structure. The new museum is regarded as a prime example of how wood can be used for architectural
purposes and not just for decorative applications.
With 53 losses of primary contain-
ment (LoPCs) this year, we have
improved since last year (2021: 72).
The causes identified by our incident
investigations mainly attributed the
number of spills to operational discipline
(69%) and asset integrity (28%).
In total, 75% of our manufacturing
locations did not have any LoPCs (up
from 69% in 2021), demonstrating
our vision of zero spills is achievable.
However, 12% of our locations caused
72% of the spills in 2022. We continue
to focus on those locations, ensuring
improvement plans act on the under-
lying root causes.
Security
Our security program protects people,
information, assets and critical
business processes, both on and
off-site. During 2022, zero Level 3
(most severe events) incidents occurred,
fewer than the previous year (2021: 4).
Theft and vandalism at our stores
continued to represent the highest
incident sub-type, which is similar to
wider society.
HSE&S management
foundation
Our company-wide HSE&S manage-
ment system is globally certified against
ISO 14001 and ISO 45001 standards.
The management system consists
of policies, procedures, templates and
best practices to promote learning
across the organization.
HSE&S audits are performed in
three-year (for high hazard sites) to
five-year (other sites) cycles. During
2022, we con ducted 33 audits in total,
51% of them remotely and 6% in a
hybrid format.
Compliance assurance is a key HSE&S
priority because it ensures our license
to operate and business continuity in a
fast-changing regulatory environment.
Our company-wide compliance
assurance process is proactive and
digitally supported by tools from a
leading third-party supplier.
AkzoNobel Report 2022 | Sustainability statements
43
Sustainability
Employees
To support our people and help them
perform at their best, we continuously
look for ways to improve our organiza-
tional health and shape a purposeful and
inclusive culture.
Our organizational health
We broadly focus on three areas related
to organizational health: strengthening
our organizational change management
capability, developing our High
Performing Teams (HPT) program and
monitoring our organizational health with
the Insight survey.
Insight survey results from 2022 show
we maintained the previous year’s record
high response rate of 86% and achieved
an overall stable organizational health
score (OHI) of 72 (2021: 72), which is
just a few points away from top quartile.
Following the outcomes of the OHI
survey, leaders and their teams can
access the data, refl ect on their results
and identify improvement actions, which
are then supported by our Regional
Culture and Change teams and HR.
Organizational health score (OHI)
Ambition
69
72
72
76
0.4
0.2
2020
2021
2022
AkzoNobel score on the organizational health index
of McKinsey.
Female executives in %
Ambition
30
26
21
22
0.4
0.2
2020
2021
2022
2025
Percentage of women at executive level. Executive level
includes all employees with an executive position grade
at AkzoNobel and its subsidiaries, including the members
of the Executive Committee who are not members of
the Board of Management. Please refer to the reporting
principles for the full defi nition.
44
Sustainability statements | AkzoNobel Report 2022
Diversity and inclusion employee networks
Equal Access Board
Disability
Women Inspired
Network
Gender
Vibe
Race and ethnicity
True Colors
LGBTI+
According to their needs, leaders are
encouraged to deploy specifi c team
nudges, design action plans and monitor
progress.
Our OHI results are accessible to our
entire (online) population, in line with our
aim of driving a culture of transparency.
A diverse and inclusive
workplace
We continue our journey towards
an even more inclusive, diverse and
capable workforce with a focus on
leadership refl ecting the diversity of the
communities where we operate. Our
three priorities are:
• Fostering an inclusive culture
• Building and expanding our internal
diversity and inclusion networks
• Strengthening our leadership diversity
with a focus on gender balance
We’re building on this strong
foundation to ensure our people can
be and perform at their best. To further
support diversity and inclusion (D&I) at
AkzoNobel, we’re rolling out a network
of D&I Agents – who’ve been trained
to facilitate D&I workshops – and our
D&I Ambassadors Plus, who’ll help
connect employees on the ground
with central efforts. Overall, we have
almost 300 Culture and Change agents
around the world and 13 D&I agents
equipped to give workshops on diversity
and inclusion. Almost 700 employees
signed up to become D&I Ambassadors,
committed to modeling inclusive and
respectful behavior. Around 90% of
employees have already completed
online inclusive behavior training and
70% of sites have run our inclusive
behavior workshop.
Diversity and inclusion is a topic of
growing interest across our organization
and has strong leadership support
through the D&I Sounding Board –
comprised of Executive Committee
members, senior executives and the
global D&I advisor. In 2022, our inclusive
language guide was completed. The
year also saw the launch of our Vibe
network, a community that celebrates
the cultural and racial diversity of our
workforce. Existing networks continued
to grow and have an impact: the True
Colors network (LGBTI+) has improved
on our standing in the Workplace Pride
Global Benchmark by almost five points;
the Equal Access Board is supporting
employees with disabilities by providing
the resources they need to perform at
their best; and our Women Inspired
Network hosted an array of global and
regional events.
We’re proud to say we’ve made
progress towards our goal of having
30% female executives by 2025.
In 2022, we had 26% female
representation at the senior executive
level (2021: 22%), 50% in the Executive
Committee (2021: 43%) and 37.5% in
Committee (excluding Board of Manage-
Managing and developing talent
our Supervisory Board (2021: 33%). The
ment)3. Our executives are considered
In 2022, we continued to be recognized
impact of Grupo Orbis was immaterial
as AkzoNobel’s sub-top as referred
as a leading employer in many of our
(two executives, both male).
to in the bill – in total 312 people, of
key countries, including Brazil, China,
In 2022, the Dutch Gender Diversity
(26%). The restated number for 2021
Singapore, Sweden, Vietnam, the UK
which 230 are male and 82 are female
France, Germany, India, the Netherlands,
Bill introduced gender balance targets
would have been 23%. How we plan
and the US.
for Akzo Nobel N.V. and its group
to reach our 30% female ambition is
companies meeting the requirements of
described on the previous page under
As part of our ongoing journey towards a
a large company under Dutch law. The
A diverse and inclusive workplace,
sustainable and diverse leadership pipe-
requirements applicable to AkzoNobel’s
and further elaboration is provided
line, we continued to plan the develop-
Dutch large group companies1 are
in the diversity and inclusion position
ment of our top talent. The Grow2Lead
fulfilled on their behalf by Akzo Nobel
statement available on our website.
program, a nine-month blended learning
N.V. in this Report 2022. The group
Further information on the gender
experience, was completed by 494
of the company’s executives to which
balance targets applicable to the Board
talents across regions and functions.
the 30% female ambition applies has
of Management and the Supervisory
been updated to include the Board of
Board can be found in the Corporate
Management, Supervisory Board and
governance statement.
executives of each large group company
to comply with the requirements.2 In
addition, we’ve added our Executive
1 Each of Akzo Nobel Nederland B.V., Akzo Nobel
Decorative Coatings B.V., Akzo Nobel Car Refinishes B.V.
and International Paint (Nederland) B.V. qualify as a “large
company”, as referred to above.
2 Of the total 11 people in the group, four were not already
included on the executives list (two male and two female).
3 Year-end 2022 representing four people (one male and
three female).
Minding the gender
pay gap
“Caring for our people is an important
part of our company culture,
enshrined in our purpose – People.
Planet. Paint. – and our approach
to sustainability,” says Joëlle Boxus,
Chief HR Officer and member of the
Executive Committee. “No matter who
you are, we believe you should have
equal opportunities to grow and be
successful with AkzoNobel.”
Our commitment to becoming
a more inclusive employer
recognizes that we rely on the
exceptional talent of our 35,200
colleagues. A diverse and
inclusive working environment
where people feel supported
and empowered lends itself to
a high-performing workforce
that truly reflects our customer
base and the communities we
operate in.
That’s why we’re committed to
for the global population. The
information, such as educational
fostering an inclusive environment
uncorrected difference in fixed annual
background.
where employees are rewarded
reward between men and women
equally, regardless of their gender
was found to be 2.2% in favor of
Global salary comparisons between
– in addition to improving female
women. The European benchmark
women and men show a small
representation. To prevent a gender
2020 (published in November 2020
difference in base pay across the
pay gap, we follow a rewards
by the European Commission) shows
board throughout the company, with
philosophy of globally-structured
an average pay difference in favor
some differences by country, both in
compensation based on market
of men of 13%. After correcting for
favor of women and men. We plan
references and performance.
background variables, the annual pay
to further explore gender pay gap
gap is 0.9% in favor of men. The small
details per country and identify areas
In 2022, an external party reviewed
gap remaining could be explained
of attention, including variable pay
our current compensation practice
by gender bias or missing variable
elements when applicable.
AkzoNobel Report 2022 | Sustainability statements
45
To support our people and help them
Diversity and inclusion employee networks
Sustainability
Employees
perform at their best, we continuously
look for ways to improve our organiza-
tional health and shape a purposeful and
inclusive culture.
Our organizational health
We broadly focus on three areas related
to organizational health: strengthening
our organizational change management
capability, developing our High
Performing Teams (HPT) program and
monitoring our organizational health with
Insight survey results from 2022 show
we maintained the previous year’s record
the Insight survey.
Disability
Equal Access Board
Women Inspired
Vibe
Race and ethnicity
True Colors
LGBTI+
Network
Gender
high response rate of 86% and achieved
According to their needs, leaders are
signed up to become D&I Ambassadors,
an overall stable organizational health
encouraged to deploy specifi c team
committed to modeling inclusive and
score (OHI) of 72 (2021: 72), which is
nudges, design action plans and monitor
respectful behavior. Around 90% of
just a few points away from top quartile.
progress.
Following the outcomes of the OHI
employees have already completed
online inclusive behavior training and
survey, leaders and their teams can
Our OHI results are accessible to our
70% of sites have run our inclusive
access the data, refl ect on their results
entire (online) population, in line with our
behavior workshop.
and identify improvement actions, which
aim of driving a culture of transparency.
are then supported by our Regional
Diversity and inclusion is a topic of
Culture and Change teams and HR.
A diverse and inclusive
growing interest across our organization
workplace
and has strong leadership support
We continue our journey towards
through the D&I Sounding Board –
an even more inclusive, diverse and
comprised of Executive Committee
Organizational health score (OHI)
capable workforce with a focus on
members, senior executives and the
Ambition
69
72
72
leadership refl ecting the diversity of the
global D&I advisor. In 2022, our inclusive
76
communities where we operate. Our
language guide was completed. The
three priorities are:
year also saw the launch of our Vibe
• Fostering an inclusive culture
network, a community that celebrates
0.4
• Building and expanding our internal
the cultural and racial diversity of our
0.2
diversity and inclusion networks
workforce. Existing networks continued
2020
2021
2022
AkzoNobel score on the organizational health index
of McKinsey.
• Strengthening our leadership diversity
to grow and have an impact: the True
with a focus on gender balance
Colors network (LGBTI+) has improved
on our standing in the Workplace Pride
We’re building on this strong
Global Benchmark by almost five points;
foundation to ensure our people can
the Equal Access Board is supporting
Female executives in %
be and perform at their best. To further
employees with disabilities by providing
Ambition
26
21
22
support diversity and inclusion (D&I) at
the resources they need to perform at
30
AkzoNobel, we’re rolling out a network
their best; and our Women Inspired
of D&I Agents – who’ve been trained
Network hosted an array of global and
to facilitate D&I workshops – and our
regional events.
0.4
D&I Ambassadors Plus, who’ll help
0.2
connect employees on the ground
We’re proud to say we’ve made
2020
2021
2022
2025
with central efforts. Overall, we have
progress towards our goal of having
Percentage of women at executive level. Executive level
includes all employees with an executive position grade
at AkzoNobel and its subsidiaries, including the members
of the Executive Committee who are not members of
the Board of Management. Please refer to the reporting
principles for the full defi nition.
almost 300 Culture and Change agents
30% female executives by 2025.
around the world and 13 D&I agents
In 2022, we had 26% female
equipped to give workshops on diversity
representation at the senior executive
and inclusion. Almost 700 employees
level (2021: 22%), 50% in the Executive
Committee (2021: 43%) and 37.5% in
our Supervisory Board (2021: 33%). The
impact of Grupo Orbis was immaterial
(two executives, both male).
In 2022, the Dutch Gender Diversity
Bill introduced gender balance targets
for Akzo Nobel N.V. and its group
companies meeting the requirements of
a large company under Dutch law. The
requirements applicable to AkzoNobel’s
Dutch large group companies1 are
fulfilled on their behalf by Akzo Nobel
N.V. in this Report 2022. The group
of the company’s executives to which
the 30% female ambition applies has
been updated to include the Board of
Management, Supervisory Board and
executives of each large group company
to comply with the requirements.2 In
addition, we’ve added our Executive
Committee (excluding Board of Manage-
ment)3. Our executives are considered
as AkzoNobel’s sub-top as referred
to in the bill – in total 312 people, of
which 230 are male and 82 are female
(26%). The restated number for 2021
would have been 23%. How we plan
to reach our 30% female ambition is
described on the previous page under
A diverse and inclusive workplace,
and further elaboration is provided
in the diversity and inclusion position
statement available on our website.
Further information on the gender
balance targets applicable to the Board
of Management and the Supervisory
Board can be found in the Corporate
governance statement.
Managing and developing talent
In 2022, we continued to be recognized
as a leading employer in many of our
key countries, including Brazil, China,
France, Germany, India, the Netherlands,
Singapore, Sweden, Vietnam, the UK
and the US.
As part of our ongoing journey towards a
sustainable and diverse leadership pipe-
line, we continued to plan the develop-
ment of our top talent. The Grow2Lead
program, a nine-month blended learning
experience, was completed by 494
talents across regions and functions.
1 Each of Akzo Nobel Nederland B.V., Akzo Nobel
Decorative Coatings B.V., Akzo Nobel Car Refinishes B.V.
and International Paint (Nederland) B.V. qualify as a “large
company”, as referred to above.
2 Of the total 11 people in the group, four were not already
included on the executives list (two male and two female).
3 Year-end 2022 representing four people (one male and
three female).
Minding the gender
pay gap
“Caring for our people is an important
part of our company culture,
enshrined in our purpose – People.
Planet. Paint. – and our approach
to sustainability,” says Joëlle Boxus,
Chief HR Officer and member of the
Executive Committee. “No matter who
you are, we believe you should have
equal opportunities to grow and be
successful with AkzoNobel.”
Our commitment to becoming
a more inclusive employer
recognizes that we rely on the
exceptional talent of our 35,200
colleagues. A diverse and
inclusive working environment
where people feel supported
and empowered lends itself to
a high-performing workforce
that truly reflects our customer
base and the communities we
operate in.
That’s why we’re committed to
fostering an inclusive environment
where employees are rewarded
equally, regardless of their gender
– in addition to improving female
representation. To prevent a gender
pay gap, we follow a rewards
philosophy of globally-structured
compensation based on market
references and performance.
In 2022, an external party reviewed
our current compensation practice
for the global population. The
uncorrected difference in fixed annual
reward between men and women
was found to be 2.2% in favor of
women. The European benchmark
2020 (published in November 2020
by the European Commission) shows
an average pay difference in favor
of men of 13%. After correcting for
background variables, the annual pay
gap is 0.9% in favor of men. The small
gap remaining could be explained
by gender bias or missing variable
information, such as educational
background.
Global salary comparisons between
women and men show a small
difference in base pay across the
board throughout the company, with
some differences by country, both in
favor of women and men. We plan
to further explore gender pay gap
details per country and identify areas
of attention, including variable pay
elements when applicable.
44
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
45
Sustainability
AkzoNobel Cares
Overall, employee turnover in 2022 was
15% (14% in 2021); voluntary turnover
was 9% (8% in 2021). The recovery
of the labor market had an impact,
especially on voluntary turnover.
We’ve focused on building capability
to support our strategy and initiatives,
especially for product management,
margin management and end-to-end
supply chain. We defi ned the skills our
employees need in those areas and
designed learning solutions to address
potential gaps.
The “Your Development Journey”
campaign was introduced to help
employees take charge of their own
development, and offered more than 80
webinars worldwide. We continued to
offer other resources around adapting to
a changing environment, covering topics
such as resilience and digital, social and
emotional skills.
To increase awareness of our approach
to sustainable business, we’ve
developed a workshop that explains
how our company purpose – People.
Planet. Paint. – drives our sustainability
ambitions and how we’ll achieve
our targets. More opportunities to learn
about this topic will continue to be
rolled out.
46
Sustainability statements | AkzoNobel Report 2022
The Pintuco
Foundation, in
partnership with the
National Tourism
Fund, refreshed
and restored tourist
destinations across
Colombia, including
the town of Carolina
del Principe.
AkzoNobel Cares
People and communities all around
the world benefit from the programs
running under our AkzoNobel Cares
umbrella, including “Let’s Colour”, the
Pintuco Foundation, SOS Children’s
Villages and the Education Fund. Local
volunteers from AkzoNobel work closely
with partners to transform communities
and make a positive impact. Overall,
we aim to empower more than 100,000
members of local communities with new
skills between 2020 and 2030, through
more than 2,000 projects. We’ve
changed our ambition from 35,000 by
2025 to align the time horizon with our
other key sustainability ambitions.
Our main social programs focus on
inspiring, uplifting and renovating
communities through our “Let’s Colour”
initiative. We also educate, mentor
and train future generations, unlocking
possibilities for people who need them
most. In 2022, we staged 239 projects
and trained 24,225 people in painting,
entrepreneurship, professional skills and
soft skills. The Grupo Orbis acquisition
added ten projects in 2022 (around 4%
of the total) and 1,666 people trained
(around 7%).
“Let’s Colour”
Our global “Let’s Colour” initiative is all
about adding color to people’s lives.
We believe in the power of paint to
transform lives by uplifting communities,
changing behavior and making living
spaces more fun, livable and enjoyable.
In 2022, we donated more than 170,000
liters of paint to renovate community
Left: “Let’s Colour”
brightened things up
at the Pilinszky János
Primary School in
Nyúl, Hungary. More
than 30 volunteers
refreshed the walls
with 133 liters of
Dulux paint.
Right: A “Let’s
Colour” collaboration
between our Coral
brand and McLaren
Racing resulted in
this stunning mural
in São Paulo, Brazil.
The powerful image
is designed to help
raise awareness for
gender equality.
living spaces in 32 countries, with more
International Netherlands, has been in
than 1,650 employees volunteering their
a transition year between 2021’s STEM
time. A great example of “Let’s Colour”
project in China and the one we’ve just
in 2022 was our project to re-energize
started in Delhi, India. The Saksham
Jodhpur, the Blue City, in India. See the
project will share vocational skills in
case study on page 10 to learn more.
collaboration with our AkzoNobel Paint
SOS Children’s Villages
Academy. The fi rst batch of trainees
started in December. They’ve been given
Around 20 young people and eight mentors participated in a “Let’s Colour”
transformation project at the Banda Aceh SOS Children’s Village in Indonesia
after receiving training in color and painting techniques.
This year we celebrated the fi fth year
the chance to attend the Paint Academy,
of our global partnership with SOS
where they’ll gain the specialist skills they
And to further help provide dignifi ed
Children’s Villages. As a member of the
need to start careers as painters.
livelihood to young people, AkzoNobel
Global YouthCan! network, we work
together to advance the employability
Local AkzoNobel Cares
of young people at risk. Through our
programs
collaborated with the Responsible
Mica Initiative (RMI) to give vocational
skills training in painting. This included
painter academies and by offering
We continued to run the AkzoNobel
training nearly 200 Indian girls and boys
soft skills training, entrepreneurship
Paint Academy in nine cities in India,
in the mica-dependent communities of
programs, mentoring and traineeships,
offering skills development to young
Jharkhand and Bihar.
we empowered around 2,550 young
people in need and opening the door
people with new skills in 2022. Our paint
for participants to gain employment with
As of this year, the Pintuco Foundation
was also used to refresh living spaces
paint applicators. Recognizing that some
is also contributing to the AkzoNobel
for children growing up in family-like
people – such as those from the LGBTI+
Cares program. This Colombia-based
care. We welcomed Germany to our
community – often lack access to these
non-profi t entity of Grupo Orbis and
global partnership, bringing the total to
opportunities, we continued to promote
Pintuco is, much like “Let’s Colour”,
24 countries involved so far.
diversity and inclusion focused skill
transforming lives with color and offering
Education Fund
training in 2022 to help bridge inequality.
(skills) training opportunities for people in
Several programs focused on giving
local communities. The social projects are
Our joint Education Fund, of which we
youth rehabilitating from drug use and
developed through alliances with public
share the board with our partner Plan
prison inmates new skills for their future.
and private organizations.
2022 sustainable solutions for health and well-being
Customers and end-users benefi ted from a number of sustainable solutions launched in 2022, designed with safety,
health and well-being in mind.
Reduce harmful substances –
Anti-bacterial benefi ts – a new all-in-
Safer handling – launched a new
launched new food packaging coatings
one decorative paint rolled out in China,
exterior wood fi nishes primer for high
that are free from BPA, including
offering anti-bacterial protection due to
moisture resistant MDF, which is safer
Aqualure G1 50.
its silver ion technology.
for users as it contains fewer substances
of concern.
AkzoNobel Report 2022 | Sustainability statements
47
Sustainability
AkzoNobel Cares
Overall, employee turnover in 2022 was
15% (14% in 2021); voluntary turnover
was 9% (8% in 2021). The recovery
of the labor market had an impact,
especially on voluntary turnover.
We’ve focused on building capability
to support our strategy and initiatives,
especially for product management,
margin management and end-to-end
supply chain. We defi ned the skills our
employees need in those areas and
designed learning solutions to address
potential gaps.
AkzoNobel Cares
and trained 24,225 people in painting,
The “Your Development Journey”
People and communities all around
entrepreneurship, professional skills and
campaign was introduced to help
the world benefit from the programs
soft skills. The Grupo Orbis acquisition
employees take charge of their own
running under our AkzoNobel Cares
added ten projects in 2022 (around 4%
development, and offered more than 80
umbrella, including “Let’s Colour”, the
of the total) and 1,666 people trained
webinars worldwide. We continued to
Pintuco Foundation, SOS Children’s
(around 7%).
offer other resources around adapting to
Villages and the Education Fund. Local
a changing environment, covering topics
volunteers from AkzoNobel work closely
such as resilience and digital, social and
with partners to transform communities
emotional skills.
and make a positive impact. Overall,
we aim to empower more than 100,000
To increase awareness of our approach
members of local communities with new
to sustainable business, we’ve
skills between 2020 and 2030, through
developed a workshop that explains
more than 2,000 projects. We’ve
how our company purpose – People.
changed our ambition from 35,000 by
Planet. Paint. – drives our sustainability
2025 to align the time horizon with our
ambitions and how we’ll achieve
other key sustainability ambitions.
“Let’s Colour”
our targets. More opportunities to learn
Our global “Let’s Colour” initiative is all
about this topic will continue to be
Our main social programs focus on
about adding color to people’s lives.
rolled out.
inspiring, uplifting and renovating
We believe in the power of paint to
communities through our “Let’s Colour”
transform lives by uplifting communities,
initiative. We also educate, mentor
changing behavior and making living
and train future generations, unlocking
spaces more fun, livable and enjoyable.
possibilities for people who need them
In 2022, we donated more than 170,000
most. In 2022, we staged 239 projects
liters of paint to renovate community
The Pintuco
Foundation, in
partnership with the
National Tourism
Fund, refreshed
and restored tourist
destinations across
Colombia, including
the town of Carolina
del Principe.
Left: “Let’s Colour”
brightened things up
at the Pilinszky János
Primary School in
Nyúl, Hungary. More
than 30 volunteers
refreshed the walls
with 133 liters of
Dulux paint.
Right: A “Let’s
Colour” collaboration
between our Coral
brand and McLaren
Racing resulted in
this stunning mural
in São Paulo, Brazil.
The powerful image
is designed to help
raise awareness for
gender equality.
living spaces in 32 countries, with more
than 1,650 employees volunteering their
time. A great example of “Let’s Colour”
in 2022 was our project to re-energize
Jodhpur, the Blue City, in India. See the
case study on page 10 to learn more.
SOS Children’s Villages
This year we celebrated the fi fth year
of our global partnership with SOS
Children’s Villages. As a member of the
Global YouthCan! network, we work
together to advance the employability
of young people at risk. Through our
painter academies and by offering
soft skills training, entrepreneurship
programs, mentoring and traineeships,
we empowered around 2,550 young
people with new skills in 2022. Our paint
was also used to refresh living spaces
for children growing up in family-like
care. We welcomed Germany to our
global partnership, bringing the total to
24 countries involved so far.
Education Fund
Our joint Education Fund, of which we
share the board with our partner Plan
International Netherlands, has been in
a transition year between 2021’s STEM
project in China and the one we’ve just
started in Delhi, India. The Saksham
project will share vocational skills in
collaboration with our AkzoNobel Paint
Academy. The fi rst batch of trainees
started in December. They’ve been given
the chance to attend the Paint Academy,
where they’ll gain the specialist skills they
need to start careers as painters.
Local AkzoNobel Cares
programs
We continued to run the AkzoNobel
Paint Academy in nine cities in India,
offering skills development to young
people in need and opening the door
for participants to gain employment with
paint applicators. Recognizing that some
people – such as those from the LGBTI+
community – often lack access to these
opportunities, we continued to promote
diversity and inclusion focused skill
training in 2022 to help bridge inequality.
Several programs focused on giving
youth rehabilitating from drug use and
prison inmates new skills for their future.
Around 20 young people and eight mentors participated in a “Let’s Colour”
transformation project at the Banda Aceh SOS Children’s Village in Indonesia
after receiving training in color and painting techniques.
And to further help provide dignifi ed
livelihood to young people, AkzoNobel
collaborated with the Responsible
Mica Initiative (RMI) to give vocational
skills training in painting. This included
training nearly 200 Indian girls and boys
in the mica-dependent communities of
Jharkhand and Bihar.
As of this year, the Pintuco Foundation
is also contributing to the AkzoNobel
Cares program. This Colombia-based
non-profi t entity of Grupo Orbis and
Pintuco is, much like “Let’s Colour”,
transforming lives with color and offering
(skills) training opportunities for people in
local communities. The social projects are
developed through alliances with public
and private organizations.
2022 sustainable solutions for health and well-being
Customers and end-users benefi ted from a number of sustainable solutions launched in 2022, designed with safety,
health and well-being in mind.
46
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
47
Reduce harmful substances –
launched new food packaging coatings
that are free from BPA, including
Aqualure G1 50.
Anti-bacterial benefi ts – a new all-in-
one decorative paint rolled out in China,
offering anti-bacterial protection due to
its silver ion technology.
Safer handling – launched a new
exterior wood fi nishes primer for high
moisture resistant MDF, which is safer
for users as it contains fewer substances
of concern.
VALUE
CHAIN
In this section you’ll find
information about:
Our sustainable product portfolio
Sustainability and risk
management with our suppliers
Human rights
Our approach to managing
sustainability
EU taxonomy
Sustainability
Sustainable solutions
Sustainability and risk management
with our suppliers
Sustainable solutions
In 2020, we set an ambition to increase
revenue from sustainable solutions to
more than 50% by 2030. We consider
sustainable solutions to be those that
bring tangible sustainability benefi ts to
our customers, and market demand
for them is growing. By identifying the
sustainable solutions in our portfolio, we
can engage in a more collaborative way
with our customers – many of whom
have set their own sustainability targets.
By focusing on the sustainability benefi ts
we offer, we continue to infl uence the
growing acceptance of more sustainable
solutions in our markets. We work closely
with our suppliers and customers to
deliver these products and services, while
ensuring economic value at every stage.
The Sustainable Product Portfolio
Assessment (SPPA) framework is what
we use to identify the sustainability
value we bring to our customers. The
SPPA framework is based on the
World Business Council for Sustainable
Development’s (WBCSD) Portfolio
Sustainability Assessment, which we
co-developed with other chemical
companies. It’s now the leading
sustainable portfolio framework tool
in the chemical industry. The SPPA
gives a holistic view of the sustainability
characteristics of our product portfolio.
Together with our customer-focused
product stewardship process, it helps
us tailor value-selling strategies to
specifi c customer needs. By taking this
harmonized approach to our portfolio
management, we’re able to create
a unique baseline for future portfolio
ambitions.
Our products fall into one of three
categories: Sustainable solutions,
Performers or Transitioners. A
sustainable solution is a product that
meets at least one of the sustainability
criteria pictured below, without adverse
effects throughout the value chain.
Health and
well-being
Reduced carbon
and energy
Less
waste
Reduce, reuse
and renew
Longer-lasting
performance
In 2022, 40% of our revenue came
from sustainable solutions. During the
year, we launched new products with
clear sustainability benefi ts and further
reduced the use of certain chemical
substances of concern, in line with
our strategy. Several examples of
sustainable solutions can be found
throughout this report, including in the
Sustainability statements.
Our products fall into one of three categories:
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
In 2022, we held a webcast for our
top 200 suppliers as part of our
collaborative approach to limiting climate
change. Wijnand Bruinsma (Director
of Sustainability), Jan Paul van der
Velde (Chief Procurement Offi cer) and
Petra Lehmann (Global Procurement
Sustainability Manager) kicked off the
discussion about working together
to fi nd solutions that contribute to
our ambition of halving our carbon
emissions.
During the year, more product
management teams were trained on the
use of the SPPA. We also expanded the
coverage of our SPPA versus 2021, with
the remainder extrapolated based on
the sustainable solutions’ percentage of
the relevant business unit. The reporting
period for sustainable solutions is
November 2021 to October 2022.
We continue to
infl uence the
growing acceptance
of more sustain-
able solutions.
We work with our suppliers to create
close to a 100% participation rate by
value and continuously improve our
2025 (currently at 77%).
sustainability and theirs. As 46% of
our carbon emissions come from our
Despite the challenging geopolitical
upstream activities, this is an area where
situation and ongoing COVID-19
we can make a big impact through
lockdowns, we’ve been able to deliver
We continued our cross-functional
collaboration and innovation with
on our TfS target of conducting 25
Raw Material Sustainability Group
our suppliers.
(RMSG). The RMSG steers and provides
audits in risk regions during 2022. Where
needed, we requested corrective action.
governance to sustainability aspects
Together for Sustainability
concerning raw materials. Several
(TfS)
subject matter experts are part of this
In addition to the joint ideas we’re
Supplier Sustainability
Balanced Scorecard
group, for example in the area of product
working on with key suppliers, in 2022
We continue to use our Supplier
stewardship. Product stewardship is our
we continued to shape, assess and
Sustainability Balanced Scorecard
approach to ensuring product safety and
improve our suppliers’ sustainability
(SSBS) to collect eco-performance
its sustainability aspects are considered
practices by using and building
KPIs. In 2022, we brought our SSBS in
throughout the value chain – from raw
on Together for Sustainability (TfS)
line with our SBTi target by requesting
material extraction, R&D, manufacturing,
programs and partnerships. Throughout
product carbon footprint from our
transport, marketing and application,
the year, we increased the number of
suppliers, in addition to waste, energy
through to end-of-life. We monitor and
suppliers in our program from 1,028
and greenhouse gas emissions
drive continuous improvement with
to 1,432.
our Product Stewardship Continuous
information, to see if they’re moving
in the right direction when it comes to
Improvement Tool. Our Priority
We systematically see that it takes
meeting their own sustainability goals.
Substance Program, which we use to
time for suppliers newly brought
In 2022, we deployed the program
identify and control the use of hazardous
into the program to operate at the
to 50 suppliers, and over the next
substances, is embedded in our
sustainability level we require from
few years we intend to reach 100
processes to comply with regulations.
them. Therefore, we allocate signifi cant
participating companies, representing
time to support suppliers to reach our
80% of our upstream carbon emissions.
The development and implementation
minimum requirements and thereafter
We continue to work together with
of more sustainable solutions in the built
to continuously improve. Because the
our suppliers to achieve our SBTi
environment was a specifi c focus in
number of suppliers in our program
targets and will approach the remaining
2022. To enhance the capabilities of our
increased signifi cantly, we see a drop
suppliers through the TfS carbon
technical and sales teams, we organized
in the percentage of suppliers meeting
emission program.
company-wide training on green building
our expectations against this (higher)
certifi cations and the customer benefi ts of
baseline. In absolute numbers, we
Building capabilities
our sustainable solutions in realizing more
still see an increase from 582 (2021)
We’re able to play a role in helping
sustainable buildings.
to 747 (2022) suppliers meeting our
smaller suppliers understand the
expectations. Our ambition is to have
complexity of the sustainability agenda.
48
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
49
Sustainability
Sustainable solutions
VALUE
CHAIN
Sustainability and risk management
with our suppliers
During the year, more product
management teams were trained on the
use of the SPPA. We also expanded the
coverage of our SPPA versus 2021, with
the remainder extrapolated based on
the sustainable solutions’ percentage of
the relevant business unit. The reporting
period for sustainable solutions is
November 2021 to October 2022.
We continue to
infl uence the
growing acceptance
of more sustain-
able solutions.
We continued our cross-functional
Raw Material Sustainability Group
(RMSG). The RMSG steers and provides
governance to sustainability aspects
concerning raw materials. Several
subject matter experts are part of this
group, for example in the area of product
stewardship. Product stewardship is our
approach to ensuring product safety and
its sustainability aspects are considered
throughout the value chain – from raw
material extraction, R&D, manufacturing,
transport, marketing and application,
through to end-of-life. We monitor and
drive continuous improvement with
our Product Stewardship Continuous
Improvement Tool. Our Priority
Substance Program, which we use to
identify and control the use of hazardous
substances, is embedded in our
processes to comply with regulations.
The development and implementation
of more sustainable solutions in the built
environment was a specifi c focus in
2022. To enhance the capabilities of our
technical and sales teams, we organized
company-wide training on green building
certifi cations and the customer benefi ts of
our sustainable solutions in realizing more
sustainable buildings.
In 2022, we held a webcast for our
top 200 suppliers as part of our
collaborative approach to limiting climate
change. Wijnand Bruinsma (Director
of Sustainability), Jan Paul van der
Velde (Chief Procurement Offi cer) and
Petra Lehmann (Global Procurement
Sustainability Manager) kicked off the
discussion about working together
to fi nd solutions that contribute to
our ambition of halving our carbon
emissions.
We work with our suppliers to create
value and continuously improve our
sustainability and theirs. As 46% of
our carbon emissions come from our
upstream activities, this is an area where
we can make a big impact through
collaboration and innovation with
our suppliers.
Together for Sustainability
(TfS)
In addition to the joint ideas we’re
working on with key suppliers, in 2022
we continued to shape, assess and
improve our suppliers’ sustainability
practices by using and building
on Together for Sustainability (TfS)
programs and partnerships. Throughout
the year, we increased the number of
suppliers in our program from 1,028
to 1,432.
We systematically see that it takes
time for suppliers newly brought
into the program to operate at the
sustainability level we require from
them. Therefore, we allocate signifi cant
time to support suppliers to reach our
minimum requirements and thereafter
to continuously improve. Because the
number of suppliers in our program
increased signifi cantly, we see a drop
in the percentage of suppliers meeting
our expectations against this (higher)
baseline. In absolute numbers, we
still see an increase from 582 (2021)
to 747 (2022) suppliers meeting our
expectations. Our ambition is to have
close to a 100% participation rate by
2025 (currently at 77%).
Despite the challenging geopolitical
situation and ongoing COVID-19
lockdowns, we’ve been able to deliver
on our TfS target of conducting 25
audits in risk regions during 2022. Where
needed, we requested corrective action.
Supplier Sustainability
Balanced Scorecard
We continue to use our Supplier
Sustainability Balanced Scorecard
(SSBS) to collect eco-performance
KPIs. In 2022, we brought our SSBS in
line with our SBTi target by requesting
product carbon footprint from our
suppliers, in addition to waste, energy
and greenhouse gas emissions
information, to see if they’re moving
in the right direction when it comes to
meeting their own sustainability goals.
In 2022, we deployed the program
to 50 suppliers, and over the next
few years we intend to reach 100
participating companies, representing
80% of our upstream carbon emissions.
We continue to work together with
our suppliers to achieve our SBTi
targets and will approach the remaining
suppliers through the TfS carbon
emission program.
Building capabilities
We’re able to play a role in helping
smaller suppliers understand the
complexity of the sustainability agenda.
In this section you’ll find
information about:
Our sustainable product portfolio
Sustainability and risk
management with our suppliers
Our approach to managing
Human rights
sustainability
EU taxonomy
Sustainable solutions
us tailor value-selling strategies to
In 2020, we set an ambition to increase
specifi c customer needs. By taking this
revenue from sustainable solutions to
harmonized approach to our portfolio
more than 50% by 2030. We consider
management, we’re able to create
sustainable solutions to be those that
a unique baseline for future portfolio
bring tangible sustainability benefi ts to
ambitions.
our customers, and market demand
for them is growing. By identifying the
Our products fall into one of three
sustainable solutions in our portfolio, we
categories: Sustainable solutions,
can engage in a more collaborative way
Performers or Transitioners. A
with our customers – many of whom
sustainable solution is a product that
have set their own sustainability targets.
meets at least one of the sustainability
By focusing on the sustainability benefi ts
effects throughout the value chain.
criteria pictured below, without adverse
we offer, we continue to infl uence the
growing acceptance of more sustainable
solutions in our markets. We work closely
with our suppliers and customers to
deliver these products and services, while
ensuring economic value at every stage.
The Sustainable Product Portfolio
Assessment (SPPA) framework is what
we use to identify the sustainability
value we bring to our customers. The
SPPA framework is based on the
World Business Council for Sustainable
Health and
well-being
Reduced carbon
and energy
Less
waste
Reduce, reuse
and renew
Longer-lasting
performance
Development’s (WBCSD) Portfolio
In 2022, 40% of our revenue came
Sustainability Assessment, which we
from sustainable solutions. During the
co-developed with other chemical
year, we launched new products with
companies. It’s now the leading
clear sustainability benefi ts and further
sustainable portfolio framework tool
reduced the use of certain chemical
in the chemical industry. The SPPA
substances of concern, in line with
gives a holistic view of the sustainability
our strategy. Several examples of
characteristics of our product portfolio.
sustainable solutions can be found
Together with our customer-focused
throughout this report, including in the
product stewardship process, it helps
Sustainability statements.
Our products fall into one of three categories:
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
48
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
49
Sustainability
Human rights
Suppliers in sustainability
program
Meet expectations
Not assessed/lost validity
Under development
24%
51%
27%
57%
24%
52%
2020: 885
2021: 1,028
2022: 1,432
We invited 170 people representing
our suppliers to attend webinars
we co-hosted in multiple languages
with EcoVadis, and we encourage
our suppliers to use the Together for
Sustainability (TfS) academy, which
opened in early 2022. For our buyers,
we provided dedicated training on
carbon footprint, which was attended
by more than 100 of our product-
related buyers.
Risk in our supply chain
To better understand and manage risks
around the globe from a complex
supply base, we implemented “risk-
methods” in 2022. This tool helps us
efficiently identify and mitigate risk in
our supply chain, for example by using
artificial intelligence and automated
alerts to manage risks, including climate
related risk.
Business Partner Code
of Conduct
Started many years ago, our Business
Partner Code of Conduct remains a
core part of our commercial agreement
with our suppliers to do business based
on our core values of safety, integrity
and sustainability.
Suppliers with an annual spend of more
than €1,000 are requested to sign
our Code of Conduct as part of our
onboarding procedure. This confirms
their compliance with environmental,
social, human rights and governance
requirements. Signatories cover 99%
(2021: 99%) of the product related
spend and 93% (2021: 89%) of the
non-product related spend.
50
Sustainability statements | AkzoNobel Report 2022
Human rights
As part of our core values, we’re
committed to respecting internationally
recognized human rights in all our
operations and throughout our value
chain. We understand that through
our roles as employer, manufacturer,
business partner and member of many
communities, we can potentially 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. In 2021,
we finalized our second in-depth global
salient human rights issues assessment.
While we respect all human rights equally,
we prioritized certain issues based on
their severity and likelihood. This has
resulted in the following salient human
rights issues for us to focus on. In 2022,
we continued to assess and work on our
human rights initiatives.
Health and safety
The safety of our people, those we work
with and those we offer our products to
is of the utmost importance. That’s why
we have policies and programs in place
to identify and assess health and safety
hazards (See Health and safety). As part
of our human rights assessment, we
identified two-wheeler driving as a risk
area. Please refer to the People safety
and health section on mitigation and
implementation in 2022.
Working conditions
We take our commitment to providing
good working conditions seriously, both
for our employees and those visiting our
sites. This year, we introduced our own
Global Working Hours standard in Europe,
Middle East, Africa, Latin America and
North Asia, and are continuing to roll
them out in the remaining regions. This
way we can ensure that we’re working
a safe number of hours everywhere in
the world, even if local laws allow people
to work longer. We’ve conducted an
impact analysis in all of our regions
and started making region-specific
implementation plans to make sure that
we don’t unintentionally cause difficulties
for our people and their livelihoods.
In order to safeguard and further
improve access to safe water, sanitation
and hygiene at our manufacturing sites,
our sites annually perform a WASH self-
assessment using the World Business
Council for Sustainable Development’s
tool for business. Of the manufacturing
locations assigned for 2022, 83%
completed the WASH assessment. No
material deviations to the requirements
based on the assessments were
identified in 2022.
Discrimination and harassment
Everyone should be comfortable and feel
they are treated with dignity and respect.
We believe an inclusive environment
paves the way to a high-performing
organization. So we don’t tolerate any
sort of discrimination and we investigate
allegations of discrimination and
harassment. For further details about
our D&I strategy, please refer to Diversity
and inclusion.
Salient human rights assessment
Upstream supply
chain
Own
operations
Logistics
Health and safety
Working conditions
Discrimination and harassment
Negative impacts on local communities
Modern slavery
l
l
l
l
l
l
l
l
l
l
l
Downstream
(customers,
end users)
l
l
Paint the Future accelerates sustainable startup solutions
three winning startups were
SprayVision’s solution brings a data-driven
SolCold from Israel, Aerones
approach to optimizing spray application
from Latvia and the Czech
of paint, offering customers full control
Republic’s SprayVision.
over the process. It helps to reduce
environmental impact by saving material
SolCold’s solution is a
and improving quality.
sustainable, self-cooling
coating based on anti-Stokes.
“The winning startups joined our go-to-
It uses the sun’s energy to
market acceleration program, which
Three startups have signed letters of intent
keep the inside temperature much cooler,
connected them to a global network of
to continue working with us on sustainable
without having to use any electricity.
people and resources,” explains Menno
business opportunities following our latest
van der Zalm, Director of the AkzoNobel
global Paint the Future challenge.
Aerones brings a robotic solution to wind
Incubator. “We’ve been working closely
The accelerator event was held in March,
allows technicians to safely and efficiently
for our customers and develop a joint
with the 2022 edition attracting a total of
perform inspections, cleaning and repairs
value case.”
turbine maintenance. Their crawling robot
together to validate their solutions
245 submissions from 62 countries. The
at height.
Impact on local communities
smelters in the Res ponsible Minerals
The results gave us further insight
We aim to be a good neighbor and
Assurance Process.
con tribute to the well-being of
into our supply chain complexity and
risks. We can now set up new actions,
communities. To do so, we work closely
At this time, there are no conformant
such as planning mine audits where
with them to manage the social impact
mica processors listed on the
insufficient controls seem to be in place.
of our business activities, address any
Responsible Mineral Initiative platform.
By the end of the year, we had an 85%
concerns about our operations and
However, through our Responsible Mica
response rate on all materials (response
enhance the benefits we’re able to bring.
Initiative membership, we – together with
rate on conflict mineral tin was 89%).
many stakeholders and peer companies
Modern slavery
– commit to:
We have zero tolerance for modern
• Having 100% of processors compliant
slavery, such as child or forced labor, and
with the RMI Global Workplace
conduct due diligence into our high-risk
standard
supply chains. In 2022, we sent 330
• Establishing a fair and responsible
surveys to suppliers that indirectly or
mica supply chain (including fair
directly use barytes, calcium carbonate,
living income) in the Indian states of
cobalt, fluorspar, mica, talcum and tin,
Jharkhand and Bihar
as those materials have a potential
• Eliminating unacceptable working
high impact on human rights based on
conditions and eradicating child labor
our 2021 research on our raw material
in India’s mica supply chains by 2030
portfolio. We paused due diligence on
copper until the Responsible Mineral
All our mica pigment suppliers sourcing
Initiative (RMI) and the Copper Mark
mica in India are members of the
publish their criteria guide in March 2023.
Responsible Mica Initiative and therefore
share the same commitment.
For cobalt, tin and mica, we used
templates from the Responsible Minerals
For the other materials mentioned
Initiative. Of those 104 suppliers who
above and that are not included in
con firmed using tin and/or cobalt
the Responsible Minerals Assurance
necessary for the functionality of the
Process, we sent our own survey to
product, 83% disclosed their smelters.
91 suppliers, over and above the 81
In total, 83% of these smelters were
we surveyed last year, to increase
either listed as active or conformant
transparency of these supply chains.
Stunning street art brightened up four neighborhoods in the
Tunisian district of Jbel Jelloud, thanks to our “Let’s Colour”
program and the amazing talent of 32 graffiti artists. It was
all part of the fifth Chokri Belaid World Forum for Arts
and Culture. They used 900 liters of our Astral paint to
create more than 7,000 square meters of frescoes.
AkzoNobel Report 2022 | Sustainability statements
51
Sustainability
Human rights
Suppliers in sustainability
Human rights
for our employees and those visiting our
program
As part of our core values, we’re
sites. This year, we introduced our own
Meet expectations
Under development
Not assessed/lost validity
24%
51%
27%
57%
2020: 885
2021: 1,028
2022: 1,432
committed to respecting internationally
Global Working Hours standard in Europe,
recognized human rights in all our
Middle East, Africa, Latin America and
operations and throughout our value
North Asia, and are continuing to roll
24%
52%
chain. We understand that through
them out in the remaining regions. This
our roles as employer, manufacturer,
way we can ensure that we’re working
business partner and member of many
a safe number of hours everywhere in
communities, we can potentially impact
the world, even if local laws allow people
the lives of millions of people.
to work longer. We’ve conducted an
While we’re committed to making a
and started making region-specific
impact analysis in all of our regions
We invited 170 people representing
positive impact through our products
implementation plans to make sure that
our suppliers to attend webinars
and programs, we’re also aware of the
we don’t unintentionally cause difficulties
we co-hosted in multiple languages
potential negative impact we may cause,
for our people and their livelihoods.
with EcoVadis, and we encourage
contribute to or be linked to. In 2021,
our suppliers to use the Together for
we finalized our second in-depth global
In order to safeguard and further
Sustainability (TfS) academy, which
salient human rights issues assessment.
improve access to safe water, sanitation
opened in early 2022. For our buyers,
While we respect all human rights equally,
and hygiene at our manufacturing sites,
we provided dedicated training on
we prioritized certain issues based on
our sites annually perform a WASH self-
carbon footprint, which was attended
their severity and likelihood. This has
assessment using the World Business
by more than 100 of our product-
resulted in the following salient human
Council for Sustainable Development’s
related buyers.
rights issues for us to focus on. In 2022,
tool for business. Of the manufacturing
Risk in our supply chain
human rights initiatives.
To better understand and manage risks
around the globe from a complex
Health and safety
completed the WASH assessment. No
material deviations to the requirements
based on the assessments were
we continued to assess and work on our
locations assigned for 2022, 83%
supply base, we implemented “risk-
The safety of our people, those we work
identified in 2022.
methods” in 2022. This tool helps us
with and those we offer our products to
efficiently identify and mitigate risk in
is of the utmost importance. That’s why
Discrimination and harassment
our supply chain, for example by using
we have policies and programs in place
Everyone should be comfortable and feel
artificial intelligence and automated
to identify and assess health and safety
they are treated with dignity and respect.
alerts to manage risks, including climate
hazards (See Health and safety). As part
We believe an inclusive environment
related risk.
of our human rights assessment, we
paves the way to a high-performing
identified two-wheeler driving as a risk
organization. So we don’t tolerate any
Business Partner Code
area. Please refer to the People safety
sort of discrimination and we investigate
of Conduct
and health section on mitigation and
allegations of discrimination and
Started many years ago, our Business
implementation in 2022.
harassment. For further details about
Partner Code of Conduct remains a
our D&I strategy, please refer to Diversity
core part of our commercial agreement
Working conditions
and inclusion.
with our suppliers to do business based
We take our commitment to providing
on our core values of safety, integrity
good working conditions seriously, both
and sustainability.
Suppliers with an annual spend of more
than €1,000 are requested to sign
our Code of Conduct as part of our
onboarding procedure. This confirms
their compliance with environmental,
social, human rights and governance
requirements. Signatories cover 99%
(2021: 99%) of the product related
spend and 93% (2021: 89%) of the
non-product related spend.
50
Sustainability statements | AkzoNobel Report 2022
Salient human rights assessment
Upstream supply
Own
Logistics
chain
operations
Health and safety
Working conditions
Discrimination and harassment
Negative impacts on local communities
Modern slavery
l
l
l
l
l
l
l
l
l
l
l
Downstream
(customers,
end users)
l
l
Paint the Future accelerates sustainable startup solutions
three winning startups were
SolCold from Israel, Aerones
from Latvia and the Czech
Republic’s SprayVision.
SolCold’s solution is a
sustainable, self-cooling
coating based on anti-Stokes.
It uses the sun’s energy to
Three startups have signed letters of intent
to continue working with us on sustainable
business opportunities following our latest
global Paint the Future challenge.
The accelerator event was held in March,
with the 2022 edition attracting a total of
245 submissions from 62 countries. The
keep the inside temperature much cooler,
without having to use any electricity.
Aerones brings a robotic solution to wind
turbine maintenance. Their crawling robot
allows technicians to safely and efficiently
perform inspections, cleaning and repairs
at height.
SprayVision’s solution brings a data-driven
approach to optimizing spray application
of paint, offering customers full control
over the process. It helps to reduce
environmental impact by saving material
and improving quality.
“The winning startups joined our go-to-
market acceleration program, which
connected them to a global network of
people and resources,” explains Menno
van der Zalm, Director of the AkzoNobel
Incubator. “We’ve been working closely
together to validate their solutions
for our customers and develop a joint
value case.”
Impact on local communities
We aim to be a good neighbor and
con tribute to the well-being of
communities. To do so, we work closely
with them to manage the social impact
of our business activities, address any
concerns about our operations and
enhance the benefits we’re able to bring.
Modern slavery
We have zero tolerance for modern
slavery, such as child or forced labor, and
conduct due diligence into our high-risk
supply chains. In 2022, we sent 330
surveys to suppliers that indirectly or
directly use barytes, calcium carbonate,
cobalt, fluorspar, mica, talcum and tin,
as those materials have a potential
high impact on human rights based on
our 2021 research on our raw material
portfolio. We paused due diligence on
copper until the Responsible Mineral
Initiative (RMI) and the Copper Mark
publish their criteria guide in March 2023.
For cobalt, tin and mica, we used
templates from the Responsible Minerals
Initiative. Of those 104 suppliers who
con firmed using tin and/or cobalt
necessary for the functionality of the
product, 83% disclosed their smelters.
In total, 83% of these smelters were
either listed as active or conformant
smelters in the Res ponsible Minerals
Assurance Process.
At this time, there are no conformant
mica processors listed on the
Responsible Mineral Initiative platform.
However, through our Responsible Mica
Initiative membership, we – together with
many stakeholders and peer companies
– commit to:
• Having 100% of processors compliant
with the RMI Global Workplace
standard
• Establishing a fair and responsible
mica supply chain (including fair
living income) in the Indian states of
Jharkhand and Bihar
• Eliminating unacceptable working
conditions and eradicating child labor
in India’s mica supply chains by 2030
All our mica pigment suppliers sourcing
mica in India are members of the
Responsible Mica Initiative and therefore
share the same commitment.
For the other materials mentioned
above and that are not included in
the Responsible Minerals Assurance
Process, we sent our own survey to
91 suppliers, over and above the 81
we surveyed last year, to increase
transparency of these supply chains.
The results gave us further insight
into our supply chain complexity and
risks. We can now set up new actions,
such as planning mine audits where
insufficient controls seem to be in place.
By the end of the year, we had an 85%
response rate on all materials (response
rate on conflict mineral tin was 89%).
Stunning street art brightened up four neighborhoods in the
Tunisian district of Jbel Jelloud, thanks to our “Let’s Colour”
program and the amazing talent of 32 graffiti artists. It was
all part of the fifth Chokri Belaid World Forum for Arts
and Culture. They used 900 liters of our Astral paint to
create more than 7,000 square meters of frescoes.
AkzoNobel Report 2022 | Sustainability statements
51
Sustainability
Managing sustainability
EU taxonomy disclosure
Table of material topics
Topic
Report 2022 section
Climate change adaptation
Climate change adaptation and water risk
Diverse, inclusive and healthy organization
Employees
Emissions and energy (climate change
mitigation)
Carbon emissions in own operations and carbon
emissions in our value chain
Health and safety (employees and customers)
Health and safety
Human rights
Sustainable product portfolio
Community involvement
Materials and waste
Responsible procurement
Human rights
Sustainable solutions
AkzoNobel Cares
Waste and water management and recycled content
in plastic packaging
Sustainability and risk management with
our suppliers
Water and waste water
Waste and water management
Impacts on the economy,
environment and people
Medium
Medium
High
High
Medium
High
Low
High
Medium
Low
The preparation of our Sustainability
statements requires management
to make judgements, estimates and
assumptions that affect reported
amounts, especially for the KPIs
“Sustainable solutions” and “Scope
3 carbon footprint”. 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. More details
on the methodology and significant
assumptions can be found in the
reporting principles on our website.
Sustainability governance
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.
The Sustainability Council advises and
updates the Executive Committee on
new developments, performance and
the integration of sustainability into
our management processes (see the
Corporate governance statement).
Materiality assessment
We use the principle of materiality to
review our strategic priorities and assess
the topics included in this integrated
report. We annually determine the
most material topics for our industry,
based on the material topics as
identified by reporting frameworks (e.g.
Global Reporting Initiative (GRI) and
Sustainability Accounting Standards
Board (SASB)) and sustainability indexes
(e.g. EcoVadis and Sustainalytics). The
significance for each of these material
topics is determined and validated
annually and reported in our annual
report. More details can be found in our
Reporting principles.
Reporting principles and
frameworks
When combining disclosures in this
Report 2022 with disclosures on our
website, we report in accordance with
2021 GRI standards, though we’re still
maturing our materiality process. We
provide an overview of the significance
of our material topics in our reporting
principles, based on a desktop approach
from the Sustainability Team, to align
with the GRI 2021 standards. We’re also
in the process of further implementing
the recommendations of the Task Force
on Climate-Related Financial Disclosures
(TCFD). We provide index tables for GRI,
SASB and TCFD on our website.
While we work towards improving the
maturity of our non-financial information,
a selection of key KPIs is subject to
limited assurance. We use our internally
developed reporting principles to
make our reporting more precise and
aligned with our business operations.
We used the GRI standards to develop
and update our reporting principles.
The complete reporting principles can
be found on our website (Reporting
Principles Sustainability statements
2022: https://www.akzonobel.com/
en/about-us/sustainability-/reporting-
principles-) and a summary is included
in the Appendix of this Report 2022.
Grupo Orbis is not yet included in the
sustainability metrics, except for female
executives and AkzoNobel Cares.
EU taxonomy disclosure
and climate change adaptation.
differs from OpEx as included in our
The Taxonomy Regulation establishes
Companies are required to report on
Consolidated statement of income
the framework for the EU taxonomy
the proportion of turnover (revenues),
by setting out four conditions that an
capital expenditures (CapEx) and
AkzoNobel’s core activity, manufacturing
economic activity must meet in order to
operating expenditures (OpEx) that
paints and coatings, is currently
qualify as environmentally sustainable.
is associated with environmentally
not defined as an eligible activity
A qualifying activity must:
sustainable economic activities, and
for EU taxonomy, and hence no
1. Contribute substantially to one or
to what extent these activities are
technical screening criteria have been
more of six environmental objectives,
aligned (i.e. contributing to one or more
developed to measure alignment to
being:
• Climate change mitigation
• Climate change adaptation
environmental objectives).
the environmental objectives. As a
consequence, eligible activities are
The key performance indicators relevant
limited in 2022 and mainly related
• Sustainable use and protection of
under EU taxonomy are Turnover,
to supporting CapEx on sustainable
water and marine resources
CapEx and OpEx. For the purpose of
solutions for production sites, consisting
• Transition to a circular economy
the calculation of eligible activities, the
of investments in green electricity
• Pollution prevention and control
following financial information has been
solutions, on-site waste water treatment
• Protection and restoration of
derived from AkzoNobel’s Consolidated
systems and construction of production
biodiversity and ecosystems
financial statements:
buildings and warehouses.
2. Do no significant harm to any of the
• Turnover under EU taxonomy is equal
other environmental objectives
to consolidated external revenues
For the determination of eligible CapEx
3. Be carried out in compliance with
as reported in our Consolidated
and OpEx, we’ve performed the
minimum (social) safeguards
statement of income, amounting to
following activities in 2022:
4. Comply with technical screening
€10,846 million
• Reviewed AkzoNobel’s activities
criteria. The technical screening
• CapEx under EU taxonomy is the
and pre-identified potential eligible
criteria specify the performance
sum of additions in property, plant
activities
requirements for any economic activity
and equipment, intangible assets
• Provided trainings to personnel
that determine under what conditions
and right-of-use assets from both
involved in data-gathering, explaining
that activity makes a substantial
investments and acquisitions
key characteristics of the EU
contribution to a given environmental
resulting from business combinations,
taxonomy guidelines and potential
objective and does not significantly
amounting to €1,053 million. CapEx
eligible activities
harm the other objectives
as included in the Consolidated
• Performed a detailed analysis of the
financial statements excludes the
individual taxonomy-eligible economic
For the financial year 2022, equal to
impact from right-of-use assets, as
activities in cooperation with key
the financial year 2021, two of the
well as the impact from acquisitions
Finance and Sustainability personnel
six objectives listed above have been
resulting from business combinations.
• Set up a multi-disciplinary team in
further detailed out and are applicable
Additions to right-of-use assets are
charge of supporting and answering
for reporting: climate change mitigation
included in the movement schedule
questions from personnel involved in
EU taxonomy CapEx
Amount in €
Additions to property, plant
and equipment from capital
expenditures and acquisitions
Additions to intangible assets
from capital expenditures and
acquisitions
Additions to right-of-use
assets from additions and
acquisitions
Total
RD&I expenses
Short-term lease costs
Maintenance and repair costs
Total
1,053 mln
258 mln
11 mln
102 mln
371 mln
on right-of-use assets as included
data-gathering, as well as reviewing
in Note 13 of the Consolidated
the reported data at a central level
financial statements. The impact
• Consulted with external experts
387 mln
from acquisitions is included in the
and peers to ensure a correct and
movement schedules on Intangibles
consistent interpretation of the legal
568 mln
and Property, plant and equipment
requirements
as included in Note 11 and Note 12
98 mln
respectively
The outcomes of the EU taxonomy
• OpEx is calculated in accordance
assessment for 2022 in relation to
with the EU taxonomy as direct
eligibility to the climate change mitigation
non-capitalized costs incurred
for the day-to-day servicing of
and climate change adaptation
environmental objectives resulted in no
development costs, short-term
amount for CapEx (and related OpEx)
leases, maintenance and repair costs
related to investments in waste water
and other similar costs, amounting
treatment systems and solar panels.
to €371 million. This definition
The reported amount for CapEx is
EU taxonomy OpEx
Amount in €
assets, consisting of research and
eligible Turnover and an insignificant
52
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
53
Sustainability
Managing sustainability
Table of material topics
Topic
Report 2022 section
Climate change adaptation
Climate change adaptation and water risk
Diverse, inclusive and healthy organization
Employees
Emissions and energy (climate change
Carbon emissions in own operations and carbon
High
mitigation)
emissions in our value chain
Health and safety (employees and customers)
Health and safety
Human rights
Sustainable product portfolio
Community involvement
Materials and waste
Human rights
Sustainable solutions
AkzoNobel Cares
in plastic packaging
our suppliers
Waste and water management and recycled content
High
Responsible procurement
Sustainability and risk management with
Medium
Water and waste water
Waste and water management
Low
Impacts on the economy,
environment and people
Medium
Medium
High
Medium
High
Low
Sustainability governance
Reporting principles and
The Executive Committee is responsible
frameworks
The preparation of our Sustainability
statements requires management
for incorporating our sustainability
When combining disclosures in this
to make judgements, estimates and
agenda into the company strategy
Report 2022 with disclosures on our
assumptions that affect reported
and monitoring the performance of
website, we report in accordance with
amounts, especially for the KPIs
each business through the Operational
2021 GRI standards, though we’re still
“Sustainable solutions” and “Scope
Control Cycle. Given our focus on
maturing our materiality process. We
3 carbon footprint”. The estimates
sustainability, overall ownership of
provide an overview of the significance
and assumptions are based on
sustainability is with the CEO.
of our material topics in our reporting
experience and various other factors
principles, based on a desktop approach
believed to be reasonable under the
The Sustainability Council advises and
from the Sustainability Team, to align
circumstances. The estimates and
updates the Executive Committee on
with the GRI 2021 standards. We’re also
underlying assumptions are reviewed
new developments, performance and
in the process of further implementing
on an ongoing basis. More details
the integration of sustainability into
the recommendations of the Task Force
on the methodology and significant
our management processes (see the
on Climate-Related Financial Disclosures
assumptions can be found in the
Corporate governance statement).
(TCFD). We provide index tables for GRI,
reporting principles on our website.
SASB and TCFD on our website.
Materiality assessment
We use the principle of materiality to
While we work towards improving the
review our strategic priorities and assess
maturity of our non-financial information,
the topics included in this integrated
a selection of key KPIs is subject to
report. We annually determine the
limited assurance. We use our internally
most material topics for our industry,
developed reporting principles to
based on the material topics as
make our reporting more precise and
identified by reporting frameworks (e.g.
aligned with our business operations.
Global Reporting Initiative (GRI) and
We used the GRI standards to develop
Sustainability Accounting Standards
and update our reporting principles.
Board (SASB)) and sustainability indexes
The complete reporting principles can
(e.g. EcoVadis and Sustainalytics). The
be found on our website (Reporting
significance for each of these material
Principles Sustainability statements
topics is determined and validated
2022: https://www.akzonobel.com/
annually and reported in our annual
en/about-us/sustainability-/reporting-
report. More details can be found in our
principles-) and a summary is included
Reporting principles.
in the Appendix of this Report 2022.
Grupo Orbis is not yet included in the
sustainability metrics, except for female
executives and AkzoNobel Cares.
52
Sustainability statements | AkzoNobel Report 2022
EU taxonomy disclosure
EU taxonomy disclosure
The Taxonomy Regulation establishes
the framework for the EU taxonomy
by setting out four conditions that an
economic activity must meet in order to
qualify as environmentally sustainable.
A qualifying activity must:
1. Contribute substantially to one or
more of six environmental objectives,
being:
• Climate change mitigation
• Climate change adaptation
• Sustainable use and protection of
water and marine resources
• Transition to a circular economy
• Pollution prevention and control
• Protection and restoration of
biodiversity and ecosystems
2. Do no significant harm to any of the
other environmental objectives
3. Be carried out in compliance with
minimum (social) safeguards
4. Comply with technical screening
criteria. The technical screening
criteria specify the performance
requirements for any economic activity
that determine under what conditions
that activity makes a substantial
contribution to a given environmental
objective and does not significantly
harm the other objectives
For the financial year 2022, equal to
the financial year 2021, two of the
six objectives listed above have been
further detailed out and are applicable
for reporting: climate change mitigation
EU taxonomy CapEx
Amount in €
Additions to property, plant
and equipment from capital
expenditures and acquisitions
Additions to intangible assets
from capital expenditures and
acquisitions
Additions to right-of-use
assets from additions and
acquisitions
387 mln
568 mln
98 mln
Total
1,053 mln
EU taxonomy OpEx
Amount in €
RD&I expenses
Short-term lease costs
Maintenance and repair costs
Total
258 mln
11 mln
102 mln
371 mln
and climate change adaptation.
Companies are required to report on
the proportion of turnover (revenues),
capital expenditures (CapEx) and
operating expenditures (OpEx) that
is associated with environmentally
sustainable economic activities, and
to what extent these activities are
aligned (i.e. contributing to one or more
environmental objectives).
The key performance indicators relevant
under EU taxonomy are Turnover,
CapEx and OpEx. For the purpose of
the calculation of eligible activities, the
following financial information has been
derived from AkzoNobel’s Consolidated
financial statements:
• Turnover under EU taxonomy is equal
to consolidated external revenues
as reported in our Consolidated
statement of income, amounting to
€10,846 million
• CapEx under EU taxonomy is the
sum of additions in property, plant
and equipment, intangible assets
and right-of-use assets from both
investments and acquisitions
resulting from business combinations,
amounting to €1,053 million. CapEx
as included in the Consolidated
financial statements excludes the
impact from right-of-use assets, as
well as the impact from acquisitions
resulting from business combinations.
Additions to right-of-use assets are
included in the movement schedule
on right-of-use assets as included
in Note 13 of the Consolidated
financial statements. The impact
from acquisitions is included in the
movement schedules on Intangibles
and Property, plant and equipment
as included in Note 11 and Note 12
respectively
• OpEx is calculated in accordance
with the EU taxonomy as direct
non-capitalized costs incurred
for the day-to-day servicing of
assets, consisting of research and
development costs, short-term
leases, maintenance and repair costs
and other similar costs, amounting
to €371 million. This definition
differs from OpEx as included in our
Consolidated statement of income
AkzoNobel’s core activity, manufacturing
paints and coatings, is currently
not defined as an eligible activity
for EU taxonomy, and hence no
technical screening criteria have been
developed to measure alignment to
the environmental objectives. As a
consequence, eligible activities are
limited in 2022 and mainly related
to supporting CapEx on sustainable
solutions for production sites, consisting
of investments in green electricity
solutions, on-site waste water treatment
systems and construction of production
buildings and warehouses.
For the determination of eligible CapEx
and OpEx, we’ve performed the
following activities in 2022:
• Reviewed AkzoNobel’s activities
and pre-identified potential eligible
activities
• Provided trainings to personnel
involved in data-gathering, explaining
key characteristics of the EU
taxonomy guidelines and potential
eligible activities
• Performed a detailed analysis of the
individual taxonomy-eligible economic
activities in cooperation with key
Finance and Sustainability personnel
• Set up a multi-disciplinary team in
charge of supporting and answering
questions from personnel involved in
data-gathering, as well as reviewing
the reported data at a central level
• Consulted with external experts
and peers to ensure a correct and
consistent interpretation of the legal
requirements
The outcomes of the EU taxonomy
assessment for 2022 in relation to
eligibility to the climate change mitigation
and climate change adaptation
environmental objectives resulted in no
eligible Turnover and an insignificant
amount for CapEx (and related OpEx)
related to investments in waste water
treatment systems and solar panels.
The reported amount for CapEx is
AkzoNobel Report 2022 | Sustainability statements
53
eligible in relation to the climate change
mitigation objective. Considering
the insignificance of eligible CapEx,
alignment of CapEx to environmental
objectives has not been further
assessed. Please find below the
template disclosure table as included in
Annex II of the Delegated Act.
The non-eligibility of our activities is
determined by the limited scope of
the EU taxonomy for 2022 and
2021. Despite this inherent non-
eligibility, we continue to focus our efforts
towards sustainable solutions (see
Sustainable solutions) and we’ve made
progress towards our ambition of
50% carbon emission reduction by 2030
(see Climate change).
Eligible Turnover (A)
Description of
activity
Not applicable, no
eligible Turnover
identified
Taxonomy
code
N/A
Related
Turnover
€nil
% of total
Turnover
0%
Substantial
contribution
criteria
Do no significant
harm (DNSH)
criteria
Minimum
social safe-
guards
N/A
N/A
N/A
Taxonomy
aligned
Turnover
N/A
Taxonomy
non-aligned
Turnover
N/A
Non-eligible Turnover (B)
Taxonomy non-eligible
Turnover
Total (A+B)
Eligible CapEx (A)
Description of
activity
Production of
electricity from
solar PV
Water collection,
treatment and supply
Construction of new
buildings
Sub-total (A)
€10,846 mln
100%
€10,846 mln
100%
Taxonomy
code
4.1
5.1
8.1
Related
CapEx
€1 mln
% of total
CapEx
<1%
€1 mln
€13 mln
€15 mln
<1%
1%
1%
Substantial
contribution
criteria(%)*
Do no significant
harm (DNSH)
criteria (Y/N)*
Minimum
social safe-
guards (Y/N)*
Taxonomy
aligned
CapEx*
0%
0%
0%
N
N
N
N
N
N
€nil
€nil
€nil
Taxonomy
non-aligned
CapEx
€1 mln
€1 mln
€13 mln
€nil
€15 mln
Non-eligible CapEx (B)
Taxonomy non-eligible
CapEx
Total (A+B)
Eligible OpEx (A)
€1,038 mln
99%
€1,053 mln
100%
Taxonomy
code
N/A
Related
OpEx
€nil
% of
total OpEx
0%
Substantial
contribution
criteria
Do no significant
harm (DNSH)
criteria
Minimum
social safe-
guards
N/A
N/A
N/A
Taxonomy
aligned
OpEx
N/A
Taxonomy
non-aligned
OpEx
N/A
Not applicable,
no eligible OpEx
identified
Non-eligible OpEx (B)
Taxonomy non-eligible
OpEx
Total (A+B)
€371 mln
100%
€371 mln
100%
* As eligible CapEx is insignificant in absolute amounts and as a percentage of total CapEx, no further assessment has been performed
regarding alignment. As a result, a condensed view of the substantial contribution criteria and DNSH criteria is shown, not separating out the
six environmental objectives as included in the template disclosure of Annex II of the Delegated Act.
54
Sustainability statements | AkzoNobel Report 2022
Sustainability performance summary
Unit
2018
2019
2020
2021
2022
Ambition 2025
Social
Area
Employees
Organizational health score
Female executives2
People and process safety
Fatalities employees
number
%
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
/200,000 hours
Fatalities contractors (temporary workers
plus independent)
Total reportable injury rate contractors
Lost time injury rate contractors
Life-changing injuries
Loss of primary containment – Level 1
Loss of primary containment – Level 2
Regulatory actions – Level 4
Security incidents – Level 3
HSE management
number
/200,000 hours
/200,000 hours
number
number
number
number
number
Management audits plus reassurance audits
number
AkzoNobel Cares
Members of local communities empowered
with new skills
Projects
number
number
Environmental
Area
Energy use and emissions
Energy use3
– 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
Total greenhouse gas emissions – Scope 1 and
Scope 2 combined CO2(e) emissions
– per ton of production
Volatile organic compounds
– per ton of production
Unit
1000TJ
GJ/ton
%
%
kiloton
kg/ton
kiloton
kg/ton
kiloton
kg/ton
kiloton
kg/ton
58
20
0
0.20
0.09
0.012
0
0.18
0.07
3
6
63
1
0
25
61
18
2
0.24
0.08
0.003
0
0.19
0.09
3
3
64
0
0
32
69
21
0
0.23
0.09
0.010
0
0.17
0.11
2
6
52
0
0
28
72
22
1
0.21
0.11
0.003
0
0.12
0.08
2
5
67
0
4
29
72
26
Top quartile 761
30
0
0.24
0.13
0.003
0
0.21
0.06
1
2
51
0
0
33
–
–
–
–
–
–
–
–
–
4,276
4,078
2,669
11,193
24,225
2020-2030
100,000+
126
225
170
182
239
2,000+
2018
2019
2020
2021
2022
Ambition 2030
6.20
1.91
31
38
62.9
19.42
226.0
69.77
288.9
89.19
1.57
0.49
6.02
1.88
31
37
58.3
18.18
183.1
57.13
241.4
75.31
1.19
0.37
5.69
1.83
33
40
57.2
18.42
168.2
54.22
225.4
72.64
0.95
0.31
6.33
1.89
37
45
64.5
19.27
172.1
51.41
236.6
70.68
0.96
0.29
5.91
1.90
41
50
60.1
19.35
147.5
47.45
207.6
66.80
0.83
0.27
–
30% less4
–
100
–
–
–
–
50% less4
–
–
54
Sustainability statements | AkzoNobel Report 2022
AkzoNobel Report 2022 | Sustainability statements
55
1 Since we’re striving to achieve top quartile on an ongoing basis, the OHI ambition is not tied to the 2025 time frame.
2 We’ve updated our definition for female executives in 2022. Previous years are calculated with the old methodology. The restated number for 2021 would have been 23%.
3 2021 number includes a baseline shift of 199 TJ, or 3.5%, due to central procurement of electricity, elevating part of the stores organization above the materiality level.
4 Versus 2018 baseline.
The indicators that fall within the scope of limited assurance of the external auditor are marked with the following symbol:
A summary of our reporting principles can be found in the Appendix.
The full reporting principles are available on https://www.akzonobel.com/en/about-us/sustainability-/reporting-principles-
eligible in relation to the climate change
The non-eligibility of our activities is
50% carbon emission reduction by 2030
mitigation objective. Considering
determined by the limited scope of
(see Climate change).
the insignificance of eligible CapEx,
the EU taxonomy for 2022 and
alignment of CapEx to environmental
2021. Despite this inherent non-
objectives has not been further
eligibility, we continue to focus our efforts
assessed. Please find below the
towards sustainable solutions (see
template disclosure table as included in
Sustainable solutions) and we’ve made
Annex II of the Delegated Act.
progress towards our ambition of
Taxonomy
code
N/A
Related
Turnover
€nil
% of total
Turnover
0%
Substantial
Do no significant
Minimum
contribution
harm (DNSH)
social safe-
criteria
N/A
criteria
N/A
guards
N/A
Taxonomy
aligned
Turnover
N/A
Taxonomy
non-aligned
Turnover
N/A
Taxonomy non-eligible
€10,846 mln
100%
€10,846 mln
100%
Taxonomy
code
4.1
Related
CapEx
€1 mln
% of total
CapEx
<1%
5.1
8.1
€1 mln
€13 mln
€15 mln
<1%
1%
1%
Substantial
Do no significant
Minimum
Taxonomy
contribution
criteria(%)*
harm (DNSH)
social safe-
criteria (Y/N)*
guards (Y/N)*
aligned
CapEx*
0%
0%
0%
N
N
N
N
N
N
Taxonomy
non-aligned
CapEx
€1 mln
€1 mln
€13 mln
€nil
€nil
€nil
€nil
€15 mln
Taxonomy non-eligible
€1,038 mln
99%
€1,053 mln
100%
Taxonomy
code
N/A
Related
OpEx
€nil
% of
contribution
harm (DNSH)
social safe-
total OpEx
0%
criteria
N/A
criteria
N/A
guards
N/A
Substantial
Do no significant
Minimum
Taxonomy
aligned
OpEx
N/A
Taxonomy
non-aligned
OpEx
N/A
Eligible Turnover (A)
Description of
activity
Not applicable, no
eligible Turnover
identified
Non-eligible Turnover (B)
Turnover
Total (A+B)
Eligible CapEx (A)
Description of
activity
Production of
electricity from
solar PV
Water collection,
treatment and supply
Construction of new
buildings
Sub-total (A)
Non-eligible CapEx (B)
CapEx
Total (A+B)
Eligible OpEx (A)
Not applicable,
no eligible OpEx
identified
Non-eligible OpEx (B)
OpEx
Total (A+B)
Taxonomy non-eligible
€371 mln
100%
* As eligible CapEx is insignificant in absolute amounts and as a percentage of total CapEx, no further assessment has been performed
regarding alignment. As a result, a condensed view of the substantial contribution criteria and DNSH criteria is shown, not separating out the
six environmental objectives as included in the template disclosure of Annex II of the Delegated Act.
€371 mln
100%
Sustainability performance summary
Environmental
Area
Resource efficiency
Total waste
– per ton of production
Circular use of materials1
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
Total waste to landfill
Hazardous waste to landfill
Hazardous waste to landfill per ton of production
Non-hazardous waste to landfill
Total fresh water use
– per ton of production
Unit
kiloton
kg/ton
%
kiloton
kiloton
kg/ton
kiloton
kg/ton
kiloton
kg/ton
kiloton
kiloton
kg/ton
kiloton
million m3
m3/ton
Total fresh water consumption (excluding water
million m3
related to product)
– per ton of production
Supplier management
m3/ton
Business Partner Code of Conduct product related % of spend
Business Partner Code of Conduct non-product
related
% of spend
Suppliers participating in sustainability program % against baseline
Suppliers in sustainability program – under
development
Suppliers in sustainability program – in line with
our expectations
% against
baseline
% against
baseline
2018
2019
2020
2021
2022
Ambition 2030
67
20.97
52
33
34
10.63
30
9.13
15
4.59
11.6
0.69
0.21
10.93
9.27
2.86
–
–
98
83
60
22
38
67
21.00
55
34
33
10.28
29
9.07
14
4.46
9.8
0.45
0.14
9.40
8.05
2.51
–
–
98
84
65
18
47
62
19.96
67
19.87
59
18.95
57
32
30
9.57
28
8.93
15
4.70
6.5
0.23
0.07
6.22
9.12
2.94
–
–
98
89
75
24
51
58
35
31
9.39
31
9.19
17
4.95
1.5
0.11
0.03
1.39
9.56
2.86
1.27
0.38
99
89
84
27
57
56
29
30
9.68
28
9.15
17
5.36
1.3
0.14
0.05
1.12
8.63
2.78
1.14
0.37
99
93
77
24
52
–
100
–
–
–
–
–
–
–
–
–
–
–
–
–
Product portfolio
Area
Unit
2018
2019
2020
2021
2022
Ambition 2030
Sustainable product portfolio and product
safety
Sustainable solutions2
Eco-premium solutions2
Value chain emission
Cradle-to-grave carbon footprint
(Scope 1, 2 and 3) – selected Scope 3
Scope 3 upstream3
Scope 3 downstream4
% of revenue
% of revenue
million tons
million tons
million tons
Scope 3 upstream and downstream combined million tons
–
22
14.3
6.5
7.5
14.0
–
22
13.8
6.3
7.3
13.6
–
21
12.8
5.9
6.7
12.6
39
–
14.7
6.8
7.7
14.5
40
–
13.4
6.2
7.0
13.2
>50
–
–
–
–
50% less5
1 The 2020 and 2021 figures for circular use of materials have been restated, reflecting an incorrect
classification of by-product for one of our production sites.
3 Category 1: purchased goods and services. The reporting period is October-September.
4 Category 10: processing of sold products; Category 11: use of sold products; Category 12: end-of-life
2 As of 2021, we report on sustainable solutions instead of eco-premium solutions. The reporting period
treatment of sold products; VOC. The reporting period is October-September.
for both eco-premium as well as sustainable solutions is November-October.
5 Versus 2018 baseline.
The indicators that fall within the scope of limited assurance of the external auditor are marked with the following symbol:
A summary of our reporting principles can be found in the Appendix.
The full reporting principles are available on https://www.akzonobel.com/en/about-us/sustainability-/reporting-principles-
56
Sustainability statements | AkzoNobel Report 2022
57AkzoNobel Report 2022 | LeadershipLEADERSHIP AND GOVERNANCEAn overview of our leadership and its activities during the year, along with details of our corporate governance structure, risk management, executive remuneration, integrity and compliance management, and AkzoNobel and the capital markets.Our Board of Management and Executive Committee 58Statement of the Board of Management 60Statement of Chair of Supervisory Board 61Our Supervisory Board 62Report of the Supervisory Board 62Corporate governance statement 70Risk management 78Integrity and compliance management 81Remuneration report 85AkzoNobel and the capital markets 96JUICY RED™Color of the Year 2012 57AkzoNobel Report 2022 | LeadershipLEADERSHIP AND GOVERNANCEAn overview of our leadership and its activities during the year, along with details of our corporate governance structure, risk management, executive remuneration, integrity and compliance management, and AkzoNobel and the capital markets.Our Board of Management and Executive Committee 58Statement of the Board of Management 60Statement of Chair of Supervisory Board 61Our Supervisory Board 62Report of the Supervisory Board 62Corporate governance statement 70Risk management 78Integrity and compliance management 81Remuneration report 85AkzoNobel and the capital markets 96JUICY RED™Color of the Year 2012 GREG POUX-GUILLAUMEKAREN-MARIE KATHOLMMICHAEL FRIEDELeadership | AkzoNobel Report 202258Grégoire (Greg) Poux-Guillaume • CEO and Chair of the Board of Management and Executive Committee (1970, FR) – Greg joined AkzoNobel in November 2022 as CEO and Chair of the Board of Management, bringing with him 30 years of experience in various industrial businesses and private equity. He was previously CEO of Sulzer (2015 to 2022) and before that, CEO of GE Grid Solutions. Greg is Chair of the Board of Directors of medmix Ltd., a publicly listed MedTech company in Switzerland. He’ll step down as Chair as per the Annual General Meeting of medmix Ltd. in April 2023, but may stand for re-election as a non-executive member of the Board of Directors.Karen-Marie Katholm • Chief Integrated Supply Chain Offi cer and member of the Executive Committee (1967, DK) – Karen-Marie joined AkzoNobel in September 2021, having held various global leadership roles across sourcing, supply chain and operations. Before moving to AkzoNobel, she was Integrated Operations Leader for DuPont Nutrition & Biosciences – having joined Danisco A/S (later DuPont) in 2009. Karen-Marie has more than 20 years of experience working at various large and international food manufacturers, such as Orkla, United Biscuits and Arla Foods. She’s also a non-executive member of the Boards of Directors of NTG Nordic Transport Group A/S and Chr. Augustinus Fabrikker.Michael Friede • Chief Commercial Offi cer – Performance Coatings and member of the Executive Committee* (1980, DE) – Michael joined AkzoNobel in July 2021 as Chief Commercial Offi cer – Performance Coatings. Before that, he worked in various countries within the chemical industry for companies such as Covestro and Bayer AG. He held roles in general management, sales and marketing, procurement and within corporate functions. In September 2021, Michael was appointed to the Board of Pearl Polyurethane Systems LLC as a non-executive member. * Until March 1, 2023ImageDR. HILKA SCHNEIDERMAARTEN DE VRIESMICHAEL FRIEDEJOËLLE BOXUS 59AkzoNobel Report 2022 | LeadershipOur Board of Management and Executive CommitteeJoëlle Boxus • Chief Human Resources Offi cer and member of the Executive Committee (1971, BE) – Joëlle rejoined AkzoNobel as Chief Human Resources Offi cer 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 Offi cer at Etex N.V. before rejoining AkzoNobel. Dr. Hilka Schneider • General Counsel and member of the Executive Committee (1970, DE) – Hilka joined AkzoNobel in January 2022. With expertise in M&A, corporate law and governance, she worked for various industries as an external lawyer, and then in-house at DHL and Demag Cranes (now Konecranes). Before joining AkzoNobel, Hilka was Group Director Legal, Compliance and Board Offi ce and a member of the Group Executive Committee at travel company TUI.Maarten de Vries • CFO and member of the Board of Management and Executive Committee (1962, NL) – 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. GREG POUX-GUILLAUMEKAREN-MARIE KATHOLMMICHAEL FRIEDELeadership | AkzoNobel Report 202258Grégoire (Greg) Poux-Guillaume • CEO and Chair of the Board of Management and Executive Committee (1970, FR) – Greg joined AkzoNobel in November 2022 as CEO and Chair of the Board of Management, bringing with him 30 years of experience in various industrial businesses and private equity. He was previously CEO of Sulzer (2015 to 2022) and before that, CEO of GE Grid Solutions. Greg is Chair of the Board of Directors of medmix Ltd., a publicly listed MedTech company in Switzerland. He’ll step down as Chair as per the Annual General Meeting of medmix Ltd. in April 2023, but may stand for re-election as a non-executive member of the Board of Directors.Karen-Marie Katholm • Chief Integrated Supply Chain Offi cer and member of the Executive Committee (1967, DK) – Karen-Marie joined AkzoNobel in September 2021, having held various global leadership roles across sourcing, supply chain and operations. Before moving to AkzoNobel, she was Integrated Operations Leader for DuPont Nutrition & Biosciences – having joined Danisco A/S (later DuPont) in 2009. Karen-Marie has more than 20 years of experience working at various large and international food manufacturers, such as Orkla, United Biscuits and Arla Foods. She’s also a non-executive member of the Boards of Directors of NTG Nordic Transport Group A/S and Chr. Augustinus Fabrikker.Michael Friede • Chief Commercial Offi cer – Performance Coatings and member of the Executive Committee* (1980, DE) – Michael joined AkzoNobel in July 2021 as Chief Commercial Offi cer – Performance Coatings. Before that, he worked in various countries within the chemical industry for companies such as Covestro and Bayer AG. He held roles in general management, sales and marketing, procurement and within corporate functions. In September 2021, Michael was appointed to the Board of Pearl Polyurethane Systems LLC as a non-executive member. * Until March 1, 2023ImageDR. HILKA SCHNEIDERMAARTEN DE VRIESMICHAEL FRIEDEJOËLLE BOXUS 59AkzoNobel Report 2022 | LeadershipOur Board of Management and Executive CommitteeJoëlle Boxus • Chief Human Resources Offi cer and member of the Executive Committee (1971, BE) – Joëlle rejoined AkzoNobel as Chief Human Resources Offi cer 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 Offi cer at Etex N.V. before rejoining AkzoNobel. Dr. Hilka Schneider • General Counsel and member of the Executive Committee (1970, DE) – Hilka joined AkzoNobel in January 2022. With expertise in M&A, corporate law and governance, she worked for various industries as an external lawyer, and then in-house at DHL and Demag Cranes (now Konecranes). Before joining AkzoNobel, Hilka was Group Director Legal, Compliance and Board Offi ce and a member of the Group Executive Committee at travel company TUI.Maarten de Vries • CFO and member of the Board of Management and Executive Committee (1962, NL) – 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. Statement of the Board of Management
The Board of Manage ment’s
statement on the financial
statements, the management
report and internal controls.
We prepared this Report 2022 in line
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
2022 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
2022 includes a fair review of the
position at December 31, 2022, the
development and performance during
the financial year 2022 of AkzoNobel,
and the undertakings included in the
consolidation taken as a whole, and
describes our principal risks
The Board of Management is respon-
sible 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 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
60
Leadership | AkzoNobel Report 2022
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.
The Integrity and Compliance function
makes policies, rules and procedures
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!
complaints procedure. For a more
detailed description of the integrity
and compliance framework, please
refer to the Integrity and compliance
management section.
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 – is adequate and
effective. While we routinely work
towards continuous improvement of our
processes and procedures regarding
financial reporting, the Board of
Management confirms that according to
the current state of affairs, to the best of
its knowledge:
• The Report 2022 provides sufficient
insights into any failings in the
effectiveness of the internal risk
management and control systems.
There have been no material failings
in the effectiveness of internal risk
management and control systems
• These systems provide reasonable
assurance that the financial reporting
does not contain material inaccuracies
• It is justified that the financial reporting
is prepared on a going concern basis
• There are no material risks or
uncertainties that could reasonably
be expected to have a material
adverse effect on the continuity
of the company’s operations for
the 12-month period after report
preparation
We have discussed the above opinion
and conclusions with the Audit
Committee, the Supervisory Board and
the external auditor.
Amsterdam, February 27, 2023
The Board of Management
Greg Poux-Guillaume, CEO and Chair of
the Board of Management
Maarten de Vries, CFO and member of
the Board of Management
2022 was an eventful and demanding year for AkzoNobel. In November, we offi cially welcomedour new CEO, Greg Poux-Guillaume, and said goodbye to Thierry Vanlancker. Thierry led the company through a period of signifi cant change.He took over in 2017, when the company was under attack from shareholders due to years of underperformance, which culminated in a hostile takeover bid from a competitor. During Thierry’s fi ve years as CEO, AkzoNobel was transformed. The Specialty Chemicals business was sold – with the proceeds being distributed to shareholders – and we became a focused paints and coatings company. The new AkzoNobel was organizationally simplifi ed, integrated business processes were installed and employee engagement was lifted to a high level. The company focused on profi tability, and margins were increased to standard industry levels through cost discipline and strong focus on pricing. On behalf of the whole Supervisory Board, I want to thank Thierry for his leadership and wish him every success for the future.We were very pleased to welcome Greg as our new CEO. He’s an experienced business leader with an impressive track record and we’re confi dent we found the best match for the company. In the short term, Greg and his team will focus on lifting both productivity and the competitiveness of the supply chain, and strengthening our market positions. The Supervisory Board is confi dent Greg and the Executive Committee will be successful in leading the company on the next phase of its journey.After three years of strong progress on our fi nancial results, 2022 was very challenging. Markets contracted from Q2 onwards, as the end of COVID-19 restrictions in Europe impacted the do-it-yourself sector, and continued lockdowns in China caused additional pressure. The war in Ukraine also sent energy prices soaring and signifi cantly reduced economic activity in our main markets. Like other companies in our industry, we’d benefi ted from strong demand for decorative paints during COVID-19. However, global supply chain challenges forced us to increase stocks of raw materials, fi nished products and staffi ng to secure stable supplies to customers. As a result of the macro-economic turmoil and sudden market down turn, major efforts were made during the second half of 2022 to adjust working capital and costs to the new realities. Unfortunately, these challenges weren’t fully resolved before year-end and we couldn’t avoid a signifi cant negative impact on profi tability.Nevertheless, our teams were able to defend AkzoNobel’s market positions, whileimplementing the necessary price increases. The company also continued to move forward and remained focused on its strategic ambitions. Despite the global uncertainty, AkzoNobel is investing in its long-term growth potential, evidenced by two acquisitions completed during the year – Grupo Orbis in Latin America and the wheel liquid coatings business of Lankwitzer Lackfabrik GmbH. We also signed an agreement to acquire the African paints and coatings activities of Kansai Paint (expected to be completed in 2023, pending the relevant approvals).These acquisitions represent signifi cant undertakings, especially during a period of global economic uncertainty. They’ll require additional investments in the short to medium term, but will also boost AkzoNobel’s leading positions, offering important long-term growth opportunities. The Supervisory Board was pleased to see the company making continued efforts to further strengthen its global activities. It was also encouraging to see progress being made in sustainability and innovation, which will be key to accelerating growth. During the year, as well as engaging in a thorough process to fi nd Thierry Vanlancker’s successor, we also strengthened the Super visory Board by recruiting two new colleagues with signifi cant chemicals industry insight – Ester Baiget and Hans Van Bylen. They both bring a wealth of knowledge and expertise. We also announced our intention to nominate Ben Noteboom as my successor at the AGM in April 2023. The management team and all our employees should be proud of the results achieved in recent years. Admittedly, the last three quarters of 2022 were diffi cult and we can’t be fully satisfi ed with the fi nancial results. However, the Supervisory Board is convinced the right measures have been taken to prepare for 2023. I’d like to thank my Supervisory Board colleagues, the Board of Management and Executive Committee for all their efforts during a challenging year. Most importantly, I want to thank all our employees for their unwavering support and commitment. Finally, thank you to everyone for supporting me during my tenure. Having joined at a time when the company was under signifi cant external pressure, I’ve had the privilege of working with you to create a strong, focused paints and coatings company with an exciting future. With a new CEO in place, the company is well positioned for the next stage of its journey. I’m therefore happy to step down at the 2023 AGM and hand over to Ben Noteboom, who will lead the organization with the new CEO. I’m confi dent that with your support, they’ll successfully take the company forward. Amsterdam, February 27, 2023Nils Smedegaard Andersen, Chair of the Supervisory BoardStatement of Chair of Supervisory BoardNILS SMEDEGAARD ANDERSEN61Chair 1958, DKInitial appointment: 2018 Term of offi ce: 2022-2026*Chair of the Board of Directors of Unilever plc.* As announced on November 22, 2022, Nils Smedegaard Andersen will step down after the 2023 AGM Statement of the Board of Management
The Board of Manage ment’s
statement on the financial
statements, the management
report and internal controls.
We prepared this Report 2022 in line
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
2022 give a true and fair view of the
we meet our operational and financial
Management confirms that according to
assets and liabilities; financial position
objectives in compliance with applicable
the current state of affairs, to the best of
and profit or loss of our company
laws and regulations. For a detailed
its knowledge:
and the undertakings included in the
description of the company’s internal risk
• The Report 2022 provides sufficient
consolidation taken as a whole
management, please refer to the Risk
insights into any failings in the
• The management report in this Report
management section.
2022 includes a fair review of the
effectiveness of the internal risk
management and control systems.
position at December 31, 2022, the
The Integrity and Compliance function
There have been no material failings
development and performance during
makes policies, rules and procedures
in the effectiveness of internal risk
the financial year 2022 of AkzoNobel,
available through the Policy portal,
management and control systems
and the undertakings included in the
manages the online and face-to-face
• These systems provide reasonable
consolidation taken as a whole, and
compliance training program, provides
assurance that the financial reporting
describes our principal risks
legal expert support and manages
does not contain material inaccuracies
investigations related to our SpeakUp!
• It is justified that the financial reporting
The Board of Management is respon-
complaints procedure. For a more
is prepared on a going concern basis
sible for the establishment and
detailed description of the integrity
• There are no material risks or
adequate functioning of a system of
and compliance framework, please
uncertainties that could reasonably
governance, risk management and
refer to the Integrity and compliance
be expected to have a material
internal controls within our company.
management section.
Consequently, a broad range of
adverse effect on the continuity
of the company’s operations for
processes and procedures has been
The Internal Control function maintains
the 12-month period after report
implemented, designed to provide
AkzoNobel’s Internal Control Framework,
preparation
control by the Board of Management
monitors the compliance and includes
over the company’s operations.
updates regarding the emergence of
We have discussed the above opinion
These include measures regarding
new risks. They support the annual
and conclusions with the Audit
the general control environment, such
review of the effectiveness of the system
Committee, the Supervisory Board and
as a Code of Conduct, policies and
of governance, risk management
the external auditor.
procedures and authority rules, as
and internal controls of the Board of
well as specific measures, such as a
Management. Internal Audit provides
risk management system, a system
comfort to the Board of Management, as
of controls and a system of letters of
well as the Supervisory Board, that our
Amsterdam, February 27, 2023
financial representation by responsible
system of risk management and internal
The Board of Management
management at various levels within
controls – as designed and represented
our company. All these processes and
by management – is adequate and
Greg Poux-Guillaume, CEO and Chair of
procedures are aimed at providing
effective. While we routinely work
the Board of Management
a reasonable level of assurance that
towards continuous improvement of our
we have identified and managed the
processes and procedures regarding
Maarten de Vries, CFO and member of
significant risks of our company, and that
financial reporting, the Board of
the Board of Management
60
Leadership | AkzoNobel Report 2022
2022 was an eventful and demanding year for AkzoNobel. In November, we offi cially welcomedour new CEO, Greg Poux-Guillaume, and said goodbye to Thierry Vanlancker. Thierry led the company through a period of signifi cant change.He took over in 2017, when the company was under attack from shareholders due to years of underperformance, which culminated in a hostile takeover bid from a competitor. During Thierry’s fi ve years as CEO, AkzoNobel was transformed. The Specialty Chemicals business was sold – with the proceeds being distributed to shareholders – and we became a focused paints and coatings company. The new AkzoNobel was organizationally simplifi ed, integrated business processes were installed and employee engagement was lifted to a high level. The company focused on profi tability, and margins were increased to standard industry levels through cost discipline and strong focus on pricing. On behalf of the whole Supervisory Board, I want to thank Thierry for his leadership and wish him every success for the future.We were very pleased to welcome Greg as our new CEO. He’s an experienced business leader with an impressive track record and we’re confi dent we found the best match for the company. In the short term, Greg and his team will focus on lifting both productivity and the competitiveness of the supply chain, and strengthening our market positions. The Supervisory Board is confi dent Greg and the Executive Committee will be successful in leading the company on the next phase of its journey.After three years of strong progress on our fi nancial results, 2022 was very challenging. Markets contracted from Q2 onwards, as the end of COVID-19 restrictions in Europe impacted the do-it-yourself sector, and continued lockdowns in China caused additional pressure. The war in Ukraine also sent energy prices soaring and signifi cantly reduced economic activity in our main markets. Like other companies in our industry, we’d benefi ted from strong demand for decorative paints during COVID-19. However, global supply chain challenges forced us to increase stocks of raw materials, fi nished products and staffi ng to secure stable supplies to customers. As a result of the macro-economic turmoil and sudden market down turn, major efforts were made during the second half of 2022 to adjust working capital and costs to the new realities. Unfortunately, these challenges weren’t fully resolved before year-end and we couldn’t avoid a signifi cant negative impact on profi tability.Nevertheless, our teams were able to defend AkzoNobel’s market positions, whileimplementing the necessary price increases. The company also continued to move forward and remained focused on its strategic ambitions. Despite the global uncertainty, AkzoNobel is investing in its long-term growth potential, evidenced by two acquisitions completed during the year – Grupo Orbis in Latin America and the wheel liquid coatings business of Lankwitzer Lackfabrik GmbH. We also signed an agreement to acquire the African paints and coatings activities of Kansai Paint (expected to be completed in 2023, pending the relevant approvals).These acquisitions represent signifi cant undertakings, especially during a period of global economic uncertainty. They’ll require additional investments in the short to medium term, but will also boost AkzoNobel’s leading positions, offering important long-term growth opportunities. The Supervisory Board was pleased to see the company making continued efforts to further strengthen its global activities. It was also encouraging to see progress being made in sustainability and innovation, which will be key to accelerating growth. During the year, as well as engaging in a thorough process to fi nd Thierry Vanlancker’s successor, we also strengthened the Super visory Board by recruiting two new colleagues with signifi cant chemicals industry insight – Ester Baiget and Hans Van Bylen. They both bring a wealth of knowledge and expertise. We also announced our intention to nominate Ben Noteboom as my successor at the AGM in April 2023. The management team and all our employees should be proud of the results achieved in recent years. Admittedly, the last three quarters of 2022 were diffi cult and we can’t be fully satisfi ed with the fi nancial results. However, the Supervisory Board is convinced the right measures have been taken to prepare for 2023. I’d like to thank my Supervisory Board colleagues, the Board of Management and Executive Committee for all their efforts during a challenging year. Most importantly, I want to thank all our employees for their unwavering support and commitment. Finally, thank you to everyone for supporting me during my tenure. Having joined at a time when the company was under signifi cant external pressure, I’ve had the privilege of working with you to create a strong, focused paints and coatings company with an exciting future. With a new CEO in place, the company is well positioned for the next stage of its journey. I’m therefore happy to step down at the 2023 AGM and hand over to Ben Noteboom, who will lead the organization with the new CEO. I’m confi dent that with your support, they’ll successfully take the company forward. Amsterdam, February 27, 2023Nils Smedegaard Andersen, Chair of the Supervisory BoardStatement of Chair of Supervisory BoardNILS SMEDEGAARD ANDERSEN61Chair 1958, DKInitial appointment: 2018 Term of offi ce: 2022-2026*Chair of the Board of Directors of Unilever plc.* As announced on November 22, 2022, Nils Smedegaard Andersen will step down after the 2023 AGM Report of the Supervisory Board
company’s response to climate change,
Supervisory Board attendance record
focusing on efforts to reduce emissions
across the whole value chain (including
Nils Smedegaard Andersen
Scope 1, 2 and 3). It received updates
Ester Baiget1
Regular SB Additional SB
on the multiple programs initiated,
as well as on the company’s efforts
to further strengthen sustainability
governance internally.
The company’s sustainability ambitions
and progress are further considered as
part of the functional updates, and as
part of the Supervisory Board’s review
of the company’s innovation efforts and
Jolanda Poots-Bijl
Hans Van Bylen2
Byron Grote
Pamela Kirby
Dick Sluimers
Patrick Thomas
programs. Further details are included in
acted as Chair during these meetings.
the Sustainability statements.
9/9
5/5
8/9
5/5
9/9
9/9
9/9
9/9
3/43
3/4
3/4
3/4
4/4
3/4
2/4
4/4
AC
3/3
7/8
8/8
8/8
RC
7/7
4/4
7/7
7/7
NC
7/83
4/4
1/13
8/8
8/8
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 nine regular, scheduled meetings and the four
additional meetings of the Supervisory Board. Additional meetings were scheduled ad hoc when needed to ensure the Supervisory Board was
sufficiently informed and could make considered decisions regarding (potential) acquisitions, the CEO succession and the Chair succession.
1 Appointed to the Supervisory Board as per April 22, 2022, and appointed to the Audit Committee as per September 1, 2022.
2 Appointed to the Supervisory Board, Remuneration Committee and Nomination Committee as per April 22, 2022.
3 Nils Smedegaard Andersen did not take part in the deliberation and decision-making regarding his succession. Byron Grote, as Deputy Chair,
Performance and management
in light of these reviews, and both the
The nature of this performance and the
planning
proposed budget and operating plan
company’s capital allocation priorities
Individual Board of Management and
for 2023 were diligently reviewed by
were all considered in the Supervisory
Executive Committee performance
the Supervisory Board in Q4, taking
Board’s approval of the share buyback
was addressed in Supervisory Board
into account the macro-economic
program and the dividend proposal
meetings, following recommendations
uncertainty. Following this assessment,
(further details on the 2022 dividend
from the Remuneration Committee.
the Supervisory Board has approved
proposal can be found in the Financial
For more details, see the report of the
the proposed budget and operating plan
information).
Remuneration Committee.
for 2023.
Risk management
Discussions on corporate performance
During the year, the Supervisory Board
The Supervisory Board views risk
were held at each regular Supervisory
was pleased to see the company
management as an essential mechanism
Board meeting and included business
continuing to benefit from management’s
to safeguard the business and assets of
reviews and performance updates
strategic initiatives, including its focus on
the company, and to secure long-term
from corporate functions. Forward-
strong margin management when facing
performance and value creation. As the
looking targets were also addressed
continued raw material cost inflation.
Supervisory Board sought to assure
Supervisory Board activities 2022
Q1
Q2
Q3
Q4
• Review Q4 2021 financials and
• Review Q1 2022 financials and
• Review Q2 2022 financials and
• Review Q3 2022 financials and
performance
performance
• 2021 financial statements, annual report
• Share buyback program
performance
• Investor Relations update
• Grow & Deliver update
• Growth plan (Coatings)
• Business updates
• M&A strategy update
• Integrated Supply Chain strategy
update
• Innovation/Research and
Development update
performance
• Interim dividend 2022
• Dividend policy
• Review capital allocation priorities
• Budget 2023
• Investor Relations update
• Grow & Deliver update
• Business updates
• M&A strategy update
• HSE and security update
• Sustainability strategy/ESG update
• Supervisory Board succession
planning
• Sustainability strategy/ESG update
• HSE and security update
• Investor Relations update
• Grow & Deliver update
• Growth plan (Paints)
• Business updates
• M&A strategy update
• HSE and security update
• Russia/Ukraine update
• Commercial excellence update
• Human Resources update
(incl. Operational Health Index)
• CEO succession planning
and profit allocation
• Assurance report sustainability
statements 2021
• 2021 external audit report
• Final 2021 dividend
• Share buyback program
• Investor Relations update
• Grow & Deliver update
• Business updates
• M&A strategy update
• Risk management: Risk session
outcomes
• HSE full-year report
• Review Remuneration Policy for Board
of Management
• Supervisory Board succession planning
• CEO succession planning
• CFO reappointment
AkzoNobel Report 2022 | Leadership
63
Leadership | AkzoNobel Report 202262DICK SLUIMERSJOLANDA POOTS-BIJL1969, NLInitial appointment: 2019 Term of offi ce: 2019-2023 MEETINGS AND ATTENDANCEThe 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 specifi c meeting, allowing them to offer input and discuss any agenda items with the relevant Chair. In 2022, 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 and without the CEO in attendance. The Chair had regular one-on-one calls with all Supervisory Board members to discuss individual impressions on the functio-ning of the Supervisory Board and items covered. The Supervisory Board aims for all (regular) meetings to be held physically. However, during 2022, some meetings were held virtually due to COVID-19 related measures. The virtual meetings were held with video conference capabilities, enabling Supervisory Board members to perform their role appropriately. Strategy updates During 2022, the Supervisory Board continued to allocate adequate time to discuss strategic activities. It received regular updates from the Executive Committee on the progress made towards the ambitions of the Grow & Deliver strategy, as well as on the underlying programs supporting the strategy. The Supervisory Board continued the discussion and advised on the strategic action items that were defi ned in the two-day strategy meeting held in December 2021. These discussions included reviews of the growth plans for Decorative Paints and Performance Coatings and deep dives on other strategic opportunities. The Supervisory Board further reviewed and advised on AkzoNobel’s acquisition of the African paints and coatings activities from Kansai Paint. With a focus on long-term value creation, the Supervisory Board also reviewed and advised on the internal Focus 2 initiatives that were launched mid-year to mitigate the macro-economic uncertainty.Russia/UkraineRegular updates were also received regarding the situation in Ukraine and Russia and the impact on AkzoNobel and its employees. The Supervisory Board reviewed the actions taken to implement the EU sanctions, including the suspension of the majority of the coatings business in Russia, as well as the localization of the residual Russian business. Functional updatesThroughout the year, the Supervisory Board reviewed and discussed functional updates, including Finance, Integrated Supply Chain, Human Resources, Innovation, and Health, Safety, Environment and Security. The Supervisory Board received comprehensive market updates and advised on contingency plans. Additionally, the Supervisory Board reviewed the outcomes and developments of the Organization Health Index survey.Sustainability The Supervisory Board views sustainability as an intrinsic value driver in the work of all businesses and functions. During 2022, the Supervisory Board continued to assess sustainability as part of strategy and targets and advised on further embedding related considerations in the decision-making. During the semi-annual progress updates on sustainability, the Supervisory Board reviewed and advised on the progress made towards the company’s sustainability ambitions. The Supervisory Board reviewed the Deputy Chair1948, US and UKInitial appointment: 2014 Term of offi ce: 2022-2024BYRON GROTEESTER BAIGET1961, BEInitial appointment: 2022Term of offi ce: 2022-2026 HANS VAN BYLENIndependent Director and Chair of the Board of Directors at Ontex Group N.V.; member of the Supervisory Board at Lanxess AG; non-executive member of the Board of Directors at Etex N.V.DR. PAMELA KIRBY CFO of Royal van Oord; member of the Supervisory Board of Pon Holdings B.V.Deputy Chair of Supervisory Board of Euronext N.V.; Chair of the Supervisory Boards of Euronext Amsterdam and NIBC Bank N.V.; member of Boards of Directors of FWD Group Limited and State Academy of Finance and Economics; Trustee of Erasmus University Trust Fund; Senior Advisor to Bank of America Europe DAC.PATRICK THOMASChair of Johnson Matthey plc.; member of the Supervisory Board of Covestro A.G.1957, UKInitial appointment: 2017Term of offi ce: 2021-20251953, NLInitial appointment: 2015 Term of offi ce: 2019-2023Non-executive Director at Reckitt Benckiser plc. and Bunzl Plc.1953, UKInitial appointment: 2016Term of offi ce: 2020-2024 1969, NLInitial appointment: 2019 Term of offi ce: 2019-2023 CFO of Royal van Oord; member of the Supervisory Board of Pon Holdings B.V.1961, BEInitial appointment: 2022Term of offi ce: 2022-2026 Independent Director and Chair of the Board of Directors at Ontex Group N.V.; member of the Supervisory Board at Lanxess AG; non-executive member of the Board of Directors at Etex N.V.Deputy Chair1948, US and UKInitial appointment: 2014 Term of offi ce: 2022-2024Non-executive Director of Tesco plc., IHG International Hotel Group and Inchcape plc.CEO and President of Novozymes A/S; member of Business Council for United Nations, Board of Trustees and Sustainability Champion of US Council for International Business; Chair of Climate Partnership for Life Science and Biotech Ministry of Industry; Board member of B tech. 1971, ESInitial appointment: 2022Term of offi ce: 2022-2026
Report of the Supervisory Board
company’s response to climate change,
focusing on efforts to reduce emissions
across the whole value chain (including
Scope 1, 2 and 3). It received updates
on the multiple programs initiated,
as well as on the company’s efforts
to further strengthen sustainability
governance internally.
The company’s sustainability ambitions
and progress are further considered as
part of the functional updates, and as
part of the Supervisory Board’s review
of the company’s innovation efforts and
programs. Further details are included in
the Sustainability statements.
Supervisory Board attendance record
Regular SB Additional SB
Nils Smedegaard Andersen
Ester Baiget1
Jolanda Poots-Bijl
Hans Van Bylen2
Byron Grote
Pamela Kirby
Dick Sluimers
Patrick Thomas
9/9
5/5
8/9
5/5
9/9
9/9
9/9
9/9
3/43
3/4
3/4
3/4
4/4
3/4
2/4
4/4
AC
3/3
7/8
8/8
8/8
RC
7/7
4/4
7/7
7/7
NC
7/83
4/4
1/13
8/8
8/8
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 nine regular, scheduled meetings and the four
additional meetings of the Supervisory Board. Additional meetings were scheduled ad hoc when needed to ensure the Supervisory Board was
sufficiently informed and could make considered decisions regarding (potential) acquisitions, the CEO succession and the Chair succession.
1 Appointed to the Supervisory Board as per April 22, 2022, and appointed to the Audit Committee as per September 1, 2022.
2 Appointed to the Supervisory Board, Remuneration Committee and Nomination Committee as per April 22, 2022.
3 Nils Smedegaard Andersen did not take part in the deliberation and decision-making regarding his succession. Byron Grote, as Deputy Chair,
acted as Chair during these meetings.
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.
in light of these reviews, and both the
proposed budget and operating plan
for 2023 were diligently reviewed by
the Supervisory Board in Q4, taking
into account the macro-economic
uncertainty. Following this assessment,
the Supervisory Board has approved
the proposed budget and operating plan
for 2023.
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
During the year, the Supervisory Board
was pleased to see the company
continuing to benefit from management’s
strategic initiatives, including its focus on
strong margin management when facing
continued raw material cost inflation.
The nature of this performance and the
company’s capital allocation priorities
were all considered in the Supervisory
Board’s approval of the share buyback
program and the dividend proposal
(further details on the 2022 dividend
proposal can be found in the Financial
information).
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
Supervisory Board activities 2022
Q1
Q2
Q3
Q4
• Review Q1 2022 financials and
performance
• Share buyback program
• Investor Relations update
• Grow & Deliver update
• Growth plan (Paints)
• Business updates
• M&A strategy update
• HSE and security update
• Russia/Ukraine update
• Commercial excellence update
• Sustainability strategy/ESG update
• Human Resources update
(incl. Operational Health Index)
• CEO succession planning
• Review Q2 2022 financials and
performance
• Investor Relations update
• Grow & Deliver update
• Growth plan (Coatings)
• Business updates
• M&A strategy update
• Integrated Supply Chain strategy
update
• Innovation/Research and
Development update
• HSE and security update
• Review Q3 2022 financials and
performance
• Interim dividend 2022
• Dividend policy
• Review capital allocation priorities
• Budget 2023
• Investor Relations update
• Grow & Deliver update
• Business updates
• M&A strategy update
• HSE and security update
• Sustainability strategy/ESG update
• Supervisory Board succession
planning
• Review Q4 2021 financials and
performance
• 2021 financial statements, annual report
and profit allocation
• Assurance report sustainability
statements 2021
• 2021 external audit report
• Final 2021 dividend
• Share buyback program
• Investor Relations update
• Grow & Deliver update
• Business updates
• M&A strategy update
• Risk management: Risk session
outcomes
• HSE full-year report
• Review Remuneration Policy for Board
of Management
• Supervisory Board succession planning
• CEO succession planning
• CFO reappointment
AkzoNobel Report 2022 | Leadership
63
Leadership | AkzoNobel Report 202262DICK SLUIMERSJOLANDA POOTS-BIJL1969, NLInitial appointment: 2019 Term of offi ce: 2019-2023 MEETINGS AND ATTENDANCEThe 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 specifi c meeting, allowing them to offer input and discuss any agenda items with the relevant Chair. In 2022, 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 and without the CEO in attendance. The Chair had regular one-on-one calls with all Supervisory Board members to discuss individual impressions on the functio-ning of the Supervisory Board and items covered. The Supervisory Board aims for all (regular) meetings to be held physically. However, during 2022, some meetings were held virtually due to COVID-19 related measures. The virtual meetings were held with video conference capabilities, enabling Supervisory Board members to perform their role appropriately. Strategy updates During 2022, the Supervisory Board continued to allocate adequate time to discuss strategic activities. It received regular updates from the Executive Committee on the progress made towards the ambitions of the Grow & Deliver strategy, as well as on the underlying programs supporting the strategy. The Supervisory Board continued the discussion and advised on the strategic action items that were defi ned in the two-day strategy meeting held in December 2021. These discussions included reviews of the growth plans for Decorative Paints and Performance Coatings and deep dives on other strategic opportunities. The Supervisory Board further reviewed and advised on AkzoNobel’s acquisition of the African paints and coatings activities from Kansai Paint. With a focus on long-term value creation, the Supervisory Board also reviewed and advised on the internal Focus 2 initiatives that were launched mid-year to mitigate the macro-economic uncertainty.Russia/UkraineRegular updates were also received regarding the situation in Ukraine and Russia and the impact on AkzoNobel and its employees. The Supervisory Board reviewed the actions taken to implement the EU sanctions, including the suspension of the majority of the coatings business in Russia, as well as the localization of the residual Russian business. Functional updatesThroughout the year, the Supervisory Board reviewed and discussed functional updates, including Finance, Integrated Supply Chain, Human Resources, Innovation, and Health, Safety, Environment and Security. The Supervisory Board received comprehensive market updates and advised on contingency plans. Additionally, the Supervisory Board reviewed the outcomes and developments of the Organization Health Index survey.Sustainability The Supervisory Board views sustainability as an intrinsic value driver in the work of all businesses and functions. During 2022, the Supervisory Board continued to assess sustainability as part of strategy and targets and advised on further embedding related considerations in the decision-making. During the semi-annual progress updates on sustainability, the Supervisory Board reviewed and advised on the progress made towards the company’s sustainability ambitions. The Supervisory Board reviewed the Deputy Chair1948, US and UKInitial appointment: 2014 Term of offi ce: 2022-2024BYRON GROTEESTER BAIGET1961, BEInitial appointment: 2022Term of offi ce: 2022-2026 HANS VAN BYLENIndependent Director and Chair of the Board of Directors at Ontex Group N.V.; member of the Supervisory Board at Lanxess AG; non-executive member of the Board of Directors at Etex N.V.DR. PAMELA KIRBY CFO of Royal van Oord; member of the Supervisory Board of Pon Holdings B.V.Deputy Chair of Supervisory Board of Euronext N.V.; Chair of the Supervisory Boards of Euronext Amsterdam and NIBC Bank N.V.; member of Boards of Directors of FWD Group Limited and State Academy of Finance and Economics; Trustee of Erasmus University Trust Fund; Senior Advisor to Bank of America Europe DAC.PATRICK THOMASChair of Johnson Matthey plc.; member of the Supervisory Board of Covestro A.G.1957, UKInitial appointment: 2017Term of offi ce: 2021-20251953, NLInitial appointment: 2015 Term of offi ce: 2019-2023Non-executive Director at Reckitt Benckiser plc. and Bunzl Plc.1953, UKInitial appointment: 2016Term of offi ce: 2020-2024 1969, NLInitial appointment: 2019 Term of offi ce: 2019-2023 CFO of Royal van Oord; member of the Supervisory Board of Pon Holdings B.V.1961, BEInitial appointment: 2022Term of offi ce: 2022-2026 Independent Director and Chair of the Board of Directors at Ontex Group N.V.; member of the Supervisory Board at Lanxess AG; non-executive member of the Board of Directors at Etex N.V.Deputy Chair1948, US and UKInitial appointment: 2014 Term of offi ce: 2022-2024Non-executive Director of Tesco plc., IHG International Hotel Group and Inchcape plc.CEO and President of Novozymes A/S; member of Business Council for United Nations, Board of Trustees and Sustainability Champion of US Council for International Business; Chair of Climate Partnership for Life Science and Biotech Ministry of Industry; Board member of B tech. 1971, ESInitial appointment: 2022Term of offi ce: 2022-2026
Report of the Supervisory Board
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
Succession planning was an important
topic for the Supervisory Board in
2022. With Thierry Vanlancker’s second
term as CEO coming to an end at
the AGM in 2023, the Supervisory
Board initiated a thorough internal and
external search to find a successor.
The search and selection process was
led by the Nomination Committee, with
the assistance of an independent and
renowned search firm.
On the recommendation of the
Nomination Committee, the Supervisory
Board nominated Greg Poux-Guillaume
to be appointed as member of the
Board of Management and CEO with
effect from November 1, 2022, for
an extended four-year term, which
was approved at the EGM held on
September 6, 2022. Further information
can be found in the report of the
Nomination Committee.
During 2022, the Supervisory Board
also nominated Maarten de Vries to be
reappointed as member of the Board
of Management for a second four-year
64
Leadership | AkzoNobel Report 2022
term, which was approved at the AGM
held on April 22, 2022.
The Supervisory Board also took the
time to discuss its own composition
and succession plan in order to ensure
its continued effectiveness. These
discussions led to the nominations of
Ester Baiget and Hans Van Bylen to
be appointed as additional members
of the Supervisory Board, following a
search and selection process managed
by the Nomination Committee, and with
the assistance of an independent and
renowned search firm.
The Supervisory Board further
nominated Nils Smedegaard Andersen
and Byron Grote to be reappointed as
members of the Supervisory Board.
Byron Grote was initially appointed as
a member of the Supervisory Board in
2014, and reappointed for a second
four-year term in 2018. He has been
Chair of the Audit Committee since
April 2015 and Deputy Chair of the
Supervisory Board since October
2016. Given his extensive experience
with AkzoNobel – and to ensure
the continuity and effectiveness
of the Supervisory Board and the
Audit Committee while allowing for
appropriate succession planning – the
Supervisory Board nominated Byron
Grote to be reappointed as a member
of the Supervisory Board for a third
term of two years. Nils Smedegaard
Andersen and Byron Grote did not take
part in the deliberations and voting
regarding their own reappointments.
The aforementioned appointments and
reappointments were approved at the
AGM held on April 22, 2022.
With Nils Smedegaard Andersen
stepping down after the 2023 AGM, the
Supervisory Board further announced
the nomination of Ben Noteboom to be
appointed as member of the Supervisory
Board for a four-year term as of the
2023 AGM, with the intention to
subsequently elect him as Chair.
A thorough search and selection process
was conducted by the Nomination
Committee, led by Deputy Chair
Byron Grote, with the assistance of an
independent and renowned search firm.
Nils Smedegaard Andersen did not take
part in the deliberation and decision-
making regarding his succession. Byron
Grote, as Deputy Chair, acted as Chair
during these meetings.
The requirements of the Dutch
Corporate Governance Code, the
Supervisory Board’s profile and the skills
matrix were considered throughout
these processes. Further information can
be found in the report of the Nomination
Committee.
The Supervisory Board further
discussed and supported changes
to the composition of the Executive
Committee. With David Prinselaar
stepping down as Chief Manufacturing
Officer per March 1, 2022, Karen-Marie
Katholm took on the role for both
Committees of the Supervisory Board
Nils Smedegaard Andersen (Chair)
Byron Grote (Deputy Chair)
Ester Baiget1
Jolanda Poots-Bijl
Hans Van Bylen2
Pamela Kirby
Dick Sluimers
Patrick Thomas
1 Per September 1, 2022.
2 Per April 22, 2022.
Audit
Committee
Chair
Member
Member
Member
Remuneration
Committee
Member
Nomination
Committee
Chair
Member
Member
Chair
Member
Member
Member
Q1
Q2
Q3
Q4
• Review Q4 2021 financial statements
• Review Q1 2022 financial statements
• Review Q2 2022 financial statements
• Review Q3 2022 financial statements
• Internal Audit Q2 2022 report
• Investor Relations update
• Interim dividend 2022
• Dividend Policy
• Review year-to-date audit findings
• Internal Audit Q3 2022 report
Audit Committee activities 2022
and annual results
• Investor Relations update
• Review 2021 annual report and accounts
• Integrity and compliance
• External audit report
mid-year report
• Assurance report sustainability
• Review evaluation external auditor
statements 2021
• Final dividend 2021
• Share buyback program
• Audit fee 2022
• Review year-to-date audit findings
• Review and approval PwC audit plan
• Review risk management and internal
• Internal Audit Q1 2022 report
control, including 2021 report
• HSE audit findings
• Internal Audit strategy update
• IT/cybersecurity update
• Integrity and compliance report 2021
• Treasury update
• Share buyback program
• Exposure report
• IT/cybersecurity update
• Pension update
• Sustainability reporting update
• Internal Audit Q4 2021 report
• Tax strategy update
• Integrity and compliance Q3 2022 report
• Internal Control framework update
• Finance transformation update
• Review budget 2023 and outlook
• Hard close audit report
• Internal Audit plan 2023
• Sustainability reporting update
• Review capital allocation priorities
the Supply Chain and Manufacturing
Supervisory Board evaluation
involvement of all Supervisory Board
Operations under the title of Chief
To assess its effectiveness, the
members. Sufficient time was allocated
Integrated Supply Chain Officer.
Supervisory Board carried out an
to discuss the topics that reflected
internal performance evaluation of
the future strategic priorities for the
The Supervisory Board also discussed
itself, its individual members, its
company. Focus items going forward
an update to the organizational
Audit, Remuneration and Nomination
included the transition to a new Chair in
structure taking effect in 2023. With
Committees, the Chair, as well as
2023, as well as continued attention for
Michael Friede stepping down as Chief
the relationship with the Board of
executive succession planning and talent
Commercial Officer – Performance
Management and the Executive
management.
Coatings as of March 1, 2023, Jan-Piet
Committee. The process consisted of
van Kesteren and Daniel Campos were
Supervisory Board members completing
Financial statements and
appointed to the Executive Committee
a confidential questionnaire.
profit allocation
to jointly represent the Decorative Paints
The Board of Management submitted
businesses, and Simon Parker and
The Chair had one-on-one calls with all
the report and financial statements,
Patrick Bourguignon were appointed
Supervisory Board members to discuss
including the report of the Board of
to the Executive Committee to jointly
individual impressions on the functioning
Management, to the Supervisory Board
represent the Performance Coatings
of the Supervisory Board and items
for review and approval. The financial
businesses. Their appointments to the
covered in 2022. In a separate meeting
statements of Akzo Nobel N.V. for
Executive Committee took effect per
without the Board of Management,
the financial year 2022 were audited
February 1, 2023.
the Supervisory Board discussed the
by PricewaterhouseCoopers
Independence of the
Supervisory Board
results of the evaluation questionnaires.
Accountants N.V. (PwC).
The Supervisory Board also discussed
the functioning of the Board of
The financial statements and the report
Supervisory Board members are requi-
Management, the performance of its
were extensively discussed by the Audit
red to act critically and independently of
individual members and reflected on the
Committee with the external auditors,
one another, the Board of Management,
improvement areas agreed during last
in the presence of the CFO, and by the
the Executive Committee and the
year’s evaluation.
company’s stakeholders. Each member
full Supervisory Board with the Board
of Management and the Executive
of the Supervisory Board meets the
The evaluation concluded that the
Committee. Based on these discussions,
independence requirements of the
Supervisory Board and its committees
the Supervisory Board is of the opinion
Corporate Governance Code and
continue to operate proficiently. The
that the 2022 financial statements of
completed the annual independence
search and selection processes
Akzo Nobel N.\/. form an adequate basis
questionnaire addressing the relevant
relating to the Board of Management
to account for the supervision provided
requirements for independence.
and Supervisory Board succession
(see the Financial information). The Audit
matters were professionally organized,
Committee monitors the follow-up by
with positive outcomes and close
management on the recommendations
AkzoNobel Report 2022 | Leadership
65
Report of the Supervisory Board
risk mitigation and internal controls,
held on April 22, 2022.
it received multiple risk management
The aforementioned appointments and
reappointments were approved at the
updates during the year.
The Supervisory Board also took the
AGM held on April 22, 2022.
time to discuss its own composition
The Board of Management and
and succession plan in order to ensure
With Nils Smedegaard Andersen
Executive Committee maintain the risk
its continued effectiveness. These
stepping down after the 2023 AGM, the
management framework and system
discussions led to the nominations of
Supervisory Board further announced
of internal controls. The Supervisory
Ester Baiget and Hans Van Bylen to
the nomination of Ben Noteboom to be
Board and the Audit Committee monitor
be appointed as additional members
appointed as member of the Supervisory
the implementation of risk mitigating
of the Supervisory Board, following a
Board for a four-year term as of the
measures for the key risks, as identified
search and selection process managed
2023 AGM, with the intention to
by the Board of Management and the
by the Nomination Committee, and with
subsequently elect him as Chair.
Executive Committee during the year
the assistance of an independent and
A thorough search and selection process
by means of risk updates and reviews.
renowned search firm.
Further details are included in the Risk
was conducted by the Nomination
Committee, led by Deputy Chair
management chapter.
The Supervisory Board further
Byron Grote, with the assistance of an
nominated Nils Smedegaard Andersen
independent and renowned search firm.
Corporate governance
and Byron Grote to be reappointed as
Nils Smedegaard Andersen did not take
The Supervisory Board continuously
members of the Supervisory Board.
part in the deliberation and decision-
reviews the company’s corporate
Byron Grote was initially appointed as
making regarding his succession. Byron
governance and its compliance with the
a member of the Supervisory Board in
Grote, as Deputy Chair, acted as Chair
Dutch Corporate Governance Code.
2014, and reappointed for a second
during these meetings.
four-year term in 2018. He has been
Talent management and
succession planning
Chair of the Audit Committee since
The requirements of the Dutch
April 2015 and Deputy Chair of the
Corporate Governance Code, the
Succession planning was an important
Supervisory Board since October
Supervisory Board’s profile and the skills
topic for the Supervisory Board in
2016. Given his extensive experience
matrix were considered throughout
2022. With Thierry Vanlancker’s second
with AkzoNobel – and to ensure
these processes. Further information can
term as CEO coming to an end at
the continuity and effectiveness
be found in the report of the Nomination
the AGM in 2023, the Supervisory
of the Supervisory Board and the
Committee.
Board initiated a thorough internal and
Audit Committee while allowing for
external search to find a successor.
appropriate succession planning – the
The Supervisory Board further
The search and selection process was
Supervisory Board nominated Byron
discussed and supported changes
led by the Nomination Committee, with
Grote to be reappointed as a member
to the composition of the Executive
the assistance of an independent and
of the Supervisory Board for a third
Committee. With David Prinselaar
renowned search firm.
term of two years. Nils Smedegaard
stepping down as Chief Manufacturing
Andersen and Byron Grote did not take
Officer per March 1, 2022, Karen-Marie
On the recommendation of the
part in the deliberations and voting
Katholm took on the role for both
Board of Management and CEO with
Committees of the Supervisory Board
September 6, 2022. Further information
Byron Grote (Deputy Chair)
Nils Smedegaard Andersen (Chair)
Nomination Committee, the Supervisory
Board nominated Greg Poux-Guillaume
to be appointed as member of the
effect from November 1, 2022, for
an extended four-year term, which
was approved at the EGM held on
can be found in the report of the
Nomination Committee.
During 2022, the Supervisory Board
also nominated Maarten de Vries to be
reappointed as member of the Board
of Management for a second four-year
64
Leadership | AkzoNobel Report 2022
Ester Baiget1
Jolanda Poots-Bijl
Hans Van Bylen2
Pamela Kirby
Dick Sluimers
Patrick Thomas
1 Per September 1, 2022.
2 Per April 22, 2022.
Audit
Committee
Chair
Member
Member
Member
Remuneration
Committee
Member
Nomination
Committee
Chair
Member
Member
Chair
Member
Member
Member
itself of the robustness of the company’s
term, which was approved at the AGM
regarding their own reappointments.
Audit Committee activities 2022
Q1
Q2
Q3
Q4
• Review Q4 2021 financial statements
and annual results
• Review 2021 annual report and accounts
• External audit report
• Assurance report sustainability
statements 2021
• Final dividend 2021
• Share buyback program
• Review risk management and internal
control, including 2021 report
• HSE audit findings
• Integrity and compliance report 2021
• Exposure report
• IT/cybersecurity update
• Pension update
• Sustainability reporting update
• Internal Audit Q4 2021 report
• Review Q1 2022 financial statements
• Investor Relations update
• Integrity and compliance
mid-year report
• Review evaluation external auditor
• Audit fee 2022
• Review year-to-date audit findings
• Review and approval PwC audit plan
• Internal Audit Q1 2022 report
• Internal Audit strategy update
• IT/cybersecurity update
• Treasury update
• Share buyback program
• Review Q2 2022 financial statements
• Internal Audit Q2 2022 report
• Investor Relations update
• Review year-to-date audit findings
• Review Q3 2022 financial statements
• Interim dividend 2022
• Dividend Policy
• Internal Audit Q3 2022 report
• Tax strategy update
• Integrity and compliance Q3 2022 report
• Internal Control framework update
• Finance transformation update
• Review budget 2023 and outlook
• Hard close audit report
• Internal Audit plan 2023
• Sustainability reporting update
• Review capital allocation priorities
the Supply Chain and Manufacturing
Operations under the title of Chief
Integrated Supply Chain Officer.
The Supervisory Board also discussed
an update to the organizational
structure taking effect in 2023. With
Michael Friede stepping down as Chief
Commercial Officer – Performance
Coatings as of March 1, 2023, Jan-Piet
van Kesteren and Daniel Campos were
appointed to the Executive Committee
to jointly represent the Decorative Paints
businesses, and Simon Parker and
Patrick Bourguignon were appointed
to the Executive Committee to jointly
represent the Performance Coatings
businesses. Their appointments to the
Executive Committee took effect per
February 1, 2023.
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
Corporate Governance 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
internal performance evaluation of
itself, its individual members, its
Audit, Remuneration and Nomination
Committees, the Chair, 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.
The Chair had one-on-one calls with all
Supervisory Board members to discuss
individual impressions on the functioning
of the Supervisory Board and items
covered in 2022. 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, the performance of its
individual members and reflected on the
improvement areas agreed during last
year’s evaluation.
The evaluation concluded that the
Supervisory Board and its committees
continue to operate proficiently. The
search and selection processes
relating to the Board of Management
and Supervisory Board succession
matters were professionally organized,
with positive outcomes and close
involvement of all Supervisory Board
members. Sufficient time was allocated
to discuss the topics that reflected
the future strategic priorities for the
company. Focus items going forward
included the transition to a new Chair in
2023, as well as continued attention for
executive succession planning and talent
management.
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 2022 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 2022 financial statements of
Akzo Nobel N.\/. form an adequate basis
to account for the supervision provided
(see the Financial information). The Audit
Committee monitors the follow-up by
management on the recommendations
AkzoNobel Report 2022 | Leadership
65
Report of the Supervisory Board
made by the external auditors. The
Supervisory Board recommends that the
AGM adopts the financial statements as
presented in this Report 2022 and, as
proposed by the Board of Management,
the proposed total dividend for 2022
of €1.98 (2021: €1.98), including a final
dividend of €1.54 per share. An interim
dividend of €0.44 (2021: €0.44) per
share was paid in November 2022.
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
Management from their responsibility for
the conduct of business in 2022 and the
members of the Supervisory Board for
their supervision in 2022.
AUDIT COMMITTEE
All Audit Committee members 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 independent external
auditor, 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 related notes,
as well as on the scope and outcome of
the limited assurance engagement on
the selected non-financial indicators, as
included in the Sustainability statements,
to provide limited assurance. The
Audit Committee held independent
meetings with the external auditor and
critically reviewed and constructively
challenged their audit approach, fees,
risk assessment and audit plan for the
year ahead.
The Audit Committee performed an
annual review of the services of the
66
Leadership | AkzoNobel Report 2022
external auditor, and at each meeting
considered and assessed the status
of the auditor’s independence. Further
details on the external auditor can
be found in the Corporate governance
statement.
Risk management and internal
control systems
The Audit Committee reviewed the
company’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 and was
provided with comprehensive risk and
internal control reports during the year,
including an annual in-depth update on
the Internal Control Framework. In its
review, the Audit Committee considered
the impact of changes to systems and
processes, such as the centralization of
the Accounting Operations processes
in the GBS centers and the localization
of the residual business in Russia. The
Audit Committee also met regularly with
senior executives.
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. In addition, the
Audit Committee reviewed the annual
operating plan (including budget) and
AkzoNobel’s dividend proposals. During
2022, the Audit Committee received
several updates on the IT security
framework, including the corporate
security program and the security
program for the manufacturing sites.
The Audit Committee received an
update on sustainability reporting and
advised on the company’s roadmap
and internal governance in anticipation
of the upcoming sustainability reporting
frameworks.
and ensuring an effective integrity
and compliance program and control
framework. Part of these responsibilities
are delegated to specific committees
and the Integrity and Compliance
team. The Supervisory Board’s Audit
Committee oversees this responsibility
and reviews the regular integrity and
compliance reports.
Internal audit
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 2022, the Audit Committee
was satisfied with the effectiveness of
the Internal Audit function.
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 share
price sensitive information. Based on
these discussions, the Audit Committee
advised the Supervisory Board on the
publications and disclosures, as well
as on proposals regarding the share
buyback program and the interim
and final dividends. All quarterly and
annual releases of financial results were
approved by the full Supervisory Board
prior to publication and release.
Integrity and compliance
The Executive Committee is responsible
for maintaining a culture of integrity
To ensure its effectiveness and
expertise, the Audit Committee was
provided with regular updates on IFRS
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Supervisory Board skills and profiles
Independent
Consumer goods key end-user segment
Industrial key end-user segment
Buildings and infrastructure key end-user segment
Transportation key 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
Four or less external directorships
(ESG)
Finance expert
Dutch/EU national
Non-EU national
Pensions experience
R&D experience
Legal experience
Risk management
Consulting
(f) = female, (m) = male
Business-to-business sales experience
Industrial/employment relations
N.S.
E.
H. Van
J.
B.
P.
D.
P.
Andersen (m)
Baiget (f)
Bylen (m)
Poots-Bijl (f)
Grote (m)
Kirby (f)
Sluimers (m)
Thomas (m)
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developments and the anticipated
impact of these developments on the
financial statements. In addition, the
REMUNERATION
COMMITTEE
Board regarding the main elements of
his management agreement.
Audit Committee reviewed and assessed
Management performance
2021 Remuneration report
management assertions made in regard
review
The 2021 Remuneration report was
to relevant accounting treatments. The
The work of the Remuneration
sub mitted to the AGM held on April 22,
external auditor, as required by auditing
Committee during Q1 focused on 2021
2022, for its advisory vote. There was
standards, also considers the risk of
performance, individual performance
no majority in favor. The Remuneration
management override of controls.
reviews of Board of Management
Committee and the Supervisory Board
Nothing has come to the attention of the
members and the Executive Committee.
took this feedback into account.
Audit Committee to suggest any material
The Remuneration Committee also
The learnings are addressed in the
misstatement related to suspected or
reviewed various incentive plans, the
Remuneration report of this Report 2022.
actual fraud involving management
economic circumstances and the relative
override of controls.
performance compared with top peers.
Remuneration Policy review
Ahead of the nomination of Greg Poux-
In 2022, the Remuneration Committee
Guillaume as member of the Board
and Supervisory Board reviewed the
of Management, the Remuneration
remuneration policies for the Board of
Committee assessed and made
Management and the Supervisory Board
recommendations to the Supervisory
to assess whether these were still in
AkzoNobel Report 2022 | Leadership
67
Report of the Supervisory Board
Supervisory Board recommends that the
considered and assessed the status
and compliance program and control
AGM adopts the financial statements as
of the auditor’s independence. Further
framework. Part of these responsibilities
presented in this Report 2022 and, as
details on the external auditor can
are delegated to specific committees
proposed by the Board of Management,
be found in the Corporate governance
and the Integrity and Compliance
the proposed total dividend for 2022
statement.
of €1.98 (2021: €1.98), including a final
team. The Supervisory Board’s Audit
Committee oversees this responsibility
dividend of €1.54 per share. An interim
Risk management and internal
and reviews the regular integrity and
dividend of €0.44 (2021: €0.44) per
control systems
compliance reports.
share was paid in November 2022.
The Audit Committee reviewed the
This reflects the continued commitment
company’s overall approach to
Internal audit
to providing a stable to rising dividend.
governance, risk management and
The Internal Auditor presented all main
The dividend will be paid in cash.
internal controls, its processes,
audit findings to the Audit Committee
outcomes, financial reporting and
and discussed the progress of the
In addition, it is requested that the AGM
disclosures. It received regular updates
audit plan. During the year, the Audit
discharges the members of the Board of
from auditors and functions and was
Committee approved Internal Audit’s
Management from their responsibility for
provided with comprehensive risk and
plan and strategy, and also agreed on
the conduct of business in 2022 and the
internal control reports during the year,
the budget and resource requirements
members of the Supervisory Board for
including an annual in-depth update on
for the function. The Audit Committee
their supervision in 2022.
the Internal Control Framework. In its
also met separately with the Internal
AUDIT COMMITTEE
review, the Audit Committee considered
Auditor during the year to discuss the
the impact of changes to systems and
results of the audits performed and the
processes, such as the centralization of
status of the follow-up on action plans
the Accounting Operations processes
identified. In 2022, the Audit Committee
All Audit Committee members have
in the GBS centers and the localization
was satisfied with the effectiveness of
extensive accounting and financial
of the residual business in Russia. The
the Internal Audit function.
management expertise. Issues
discussed in Audit Committee
meetings were reported back to the
Audit Committee also met regularly with
senior executives.
Results and financial
statements
full Supervisory Board in subsequent
In fulfilling its oversight responsibilities
Before each publication of the quarterly
meetings.
in relation to risk management and
results and the financial statements,
External audit
internal control systems, the Audit
the Audit Committee reviewed the
Committee also received updates from
financial results. In addition, the Audit
PwC, AkzoNobel’s independent external
functions such as Finance, Treasury,
Committee reviewed and commented on
auditor, reported in-depth to the Audit
Information Management and Tax
the interim and final dividend proposals
Committee on the scope and outcome
throughout the year. In addition, the
and on reports and press releases to
of the annual audit of the financial
Audit Committee reviewed the annual
be published. This was in addition to
statements, including the Consolidated
operating plan (including budget) and
the work undertaken by the company’s
financial statements and the Company
AkzoNobel’s dividend proposals. During
Disclosure Committee in reviewing the
financial statements and related notes,
2022, the Audit Committee received
company’s disclosure of potentially share
as well as on the scope and outcome of
several updates on the IT security
price sensitive information. Based on
the limited assurance engagement on
framework, including the corporate
these discussions, the Audit Committee
the selected non-financial indicators, as
security program and the security
advised the Supervisory Board on the
included in the Sustainability statements,
program for the manufacturing sites.
publications and disclosures, as well
to provide limited assurance. The
The Audit Committee received an
as on proposals regarding the share
Audit Committee held independent
update on sustainability reporting and
buyback program and the interim
meetings with the external auditor and
advised on the company’s roadmap
and final dividends. All quarterly and
critically reviewed and constructively
and internal governance in anticipation
annual releases of financial results were
challenged their audit approach, fees,
of the upcoming sustainability reporting
approved by the full Supervisory Board
risk assessment and audit plan for the
frameworks.
prior to publication and release.
year ahead.
The Audit Committee performed an
The Executive Committee is responsible
expertise, the Audit Committee was
annual review of the services of the
for maintaining a culture of integrity
provided with regular updates on IFRS
Integrity and compliance
To ensure its effectiveness and
made by the external auditors. The
external auditor, and at each meeting
and ensuring an effective integrity
Supervisory Board skills and profiles
Independent
Consumer goods key end-user segment
Industrial key end-user segment
Buildings and infrastructure key end-user segment
Transportation key 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
(ESG)
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
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. The
external auditor, as required by auditing
standards, also considers the risk of
management override of controls.
Nothing has come to the attention of the
Audit Committee to suggest any material
misstatement related to suspected or
actual fraud involving management
override of controls.
N.S.
Andersen (m)
E.
Baiget (f)
H. Van
Bylen (m)
J.
Poots-Bijl (f)
B.
Grote (m)
P.
Kirby (f)
D.
Sluimers (m)
P.
Thomas (m)
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REMUNERATION
COMMITTEE
Management performance
review
The work of the Remuneration
Committee during Q1 focused on 2021
performance, individual performance
reviews of Board of Management
members and the Executive Committee.
The Remuneration Committee also
reviewed various incentive plans, the
economic circumstances and the relative
performance compared with top peers.
Ahead of the nomination of Greg Poux-
Guillaume as member of the Board
of Management, the Remuneration
Committee assessed and made
recommendations to the Supervisory
Board regarding the main elements of
his management agreement.
2021 Remuneration report
The 2021 Remuneration report was
sub mitted to the AGM held on April 22,
2022, for its advisory vote. There was
no majority in favor. The Remuneration
Committee and the Supervisory Board
took this feedback into account.
The learnings are addressed in the
Remuneration report of this Report 2022.
Remuneration Policy review
In 2022, the Remuneration Committee
and Supervisory Board reviewed the
remuneration policies for the Board of
Management and the Supervisory Board
to assess whether these were still in
66
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67
Report of the Supervisory Board
Remuneration Committee activities 2022
Nomination Committee activities 2022
Q1
Q2 & Q3
Q4
Q1
Q2, Q3 and Q4
• Review of management performance 2021
• Approval of 2021 pay-out under Short-Term Incentive
Plan and vesting of shares under Long-Term
Incentive Plan
• CEO succession
• Review of feedback Annual General Meeting 2022
• Review of Long-term Incentive Plan and Share-
Matching Plan
• Preparation of 2022 Remuneration report
• Review of 2022 (preliminary) performance outlook
• 2021 Remuneration report
• Review Remuneration Policy for Board of Management
• Review of management base salaries for 2022
• Target setting 2022
• CFO reappointment
• Supervisory Board succession planning
• Supervisory Board succession planning
• Review (re)appointment scheme
• Update skills matrix
• Board of Management and Executive Committee
• CEO succession
succession planning and talent management
• Board of Management and Executive Committee
succession planning and talent management
• Review (re)appointment scheme
line with the company’s strategy and
financial targets, taking into account
the input received from stakeholders.
Following such review, the Supervisory
Board, based on the recommendation of
the Remuneration Committee, proposed
to replace Operating Cash Flow by Free
Cash Flow as one of the applied metrics
for the Short-Term Incentive. This
change was approved at the AGM held
on April 22, 2022. Further information
can be found in the Remuneration
report.
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.
Further information can be found in the
Remuneration report.
NOMINATION COMMITTEE
Board of Management and
executive succession
During 2022, the Nomination Committee
recommended the reappointment of
Maarten de Vries as member of the
Board of Management and CFO for
consideration by shareholders at the
AGM of April 22, 2022.
Board of Management for consideration
by shareholders at the EGM held on
September 6, 2022.
Furthermore, the Nomination Committee
was consulted and gave its advice
regarding executive succession
planning, talent management and the
company’s diversity ambitions.
With Thierry Vanlancker’s second
term as CEO coming to an end
at the AGM in 2023, a thorough
internal and external search was
initiated. After meeting several
reputable executive search firms,
a firm was selected, and various
meetings were held to discuss
and agree on the profile and
the search process. The Supervisory
Board was looking for an experienced
CEO with B2B knowledge who played
a pivotal role in listed companies and
with global experience. A diverse
range of candidates, including internal
candidates, was considered. Following
extensive review, the long list of
candidates was shortened and several
interviews were held by the Nomination
Committee and the other members of
the Supervisory Board.
Upon completion of these interviews,
the Nomination Committee felt that
Greg Poux-Guillaume was the best
candidate for the role and made its
recommendation. After discussion,
the Supervisory Board supported the
recommendation to nominate Greg
Poux-Guillaume as a member of the
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.
Supervisory Board succession
During 2022, the Nomination Committee
continued to discuss the size, structure
and composition of the Supervisory
Board. A thorough external search
was conducted, taking into account
the Supervisory Board’s skills matrix,
profile, Diversity Policy and succession
plan. The process was supported by an
independent and renowned search firm.
A list of candidates was presented for
consideration. Following review, the list
was shortened, and several candidates
were interviewed by the Nomination
Committee and other members of the
Supervisory Board. Upon completion
of these interviews, the Nomination
Committee made its recommendation.
After discussion, the Supervisory Board
renowned search firm. Nils Smedegaard
supported the recommendation to
Andersen did not take part in the
nominate Ester Baiget and Hans Van
deliberation and decision-making
Bylen for appointment as additional
regarding his succession. Byron Grote,
members of the Supervisory Board.
as Deputy Chair, acted as Chair during
The Nomination Committee further
these meetings. The Supervisory Board
recommended the reappointments of
has updated its skills matrix, as shown
Nils Smedegaard Andersen and Byron
on page 67. It contains full details of the
Grote as members of the Supervisory
current Supervisory Board composition.
Board. Upon the appointment of the two
The schedule of Supervisory Board
new members at the AGM held on April
succession and the profiles of the
22, 2022, the number of Supervisory
Supervisory Board members can also be
Board members was increased to
found on our website.
eight. With Nils Smedegaard Andersen
stepping down after the 2023 AGM,
the Nomination Committee further
recommended the nomination of
ADDITIONAL REMARKS
Ben Noteboom as member of the
All Supervisory Board members would
Supervisory Board as per the 2023
like to express their appreciation to the
AGM, with the intention to subsequently
Board of Management and Executive
elect him as Chair. A thorough search
Committee, and to all the company’s
and selection process, led by Deputy
employees around the world, for their
Chair Byron Grote, was conducted with
outstanding dedication and hard work
the assistance of an independent and
during the year.
68
Leadership | AkzoNobel Report 2022
AkzoNobel Report 2022 | Leadership
69
Report of the Supervisory Board
Remuneration Committee activities 2022
Nomination Committee activities 2022
Q1
Q2 & Q3
Q4
Q1
Q2, Q3 and Q4
• Review of management performance 2021
• CEO succession
• Preparation of 2022 Remuneration report
• Approval of 2021 pay-out under Short-Term Incentive
• Review of feedback Annual General Meeting 2022
• Review of 2022 (preliminary) performance outlook
Plan and vesting of shares under Long-Term
• Review of Long-term Incentive Plan and Share-
Incentive Plan
• 2021 Remuneration report
• Review Remuneration Policy for Board of Management
• Review of management base salaries for 2022
Matching Plan
• Target setting 2022
• CFO reappointment
• Supervisory Board succession planning
• Review (re)appointment scheme
• Board of Management and Executive Committee
succession planning and talent management
• Supervisory Board succession planning
• Update skills matrix
• CEO succession
• Board of Management and Executive Committee
succession planning and talent management
• Review (re)appointment scheme
line with the company’s strategy and
financial targets, taking into account
NOMINATION COMMITTEE
Board of Management for consideration
by shareholders at the EGM held on
the input received from stakeholders.
Board of Management and
September 6, 2022.
Following such review, the Supervisory
executive succession
Board, based on the recommendation of
During 2022, the Nomination Committee
Furthermore, the Nomination Committee
the Remuneration Committee, proposed
recommended the reappointment of
was consulted and gave its advice
to replace Operating Cash Flow by Free
Maarten de Vries as member of the
regarding executive succession
Cash Flow as one of the applied metrics
Board of Management and CFO for
planning, talent management and the
for the Short-Term Incentive. This
consideration by shareholders at the
company’s diversity ambitions.
change was approved at the AGM held
AGM of April 22, 2022.
on April 22, 2022. Further information
can be found in the Remuneration
With Thierry Vanlancker’s second
report.
term as CEO coming to an end
at the AGM in 2023, a thorough
Related information
Management salary
review
internal and external search was
Further details about the remuneration of members of the
initiated. After meeting several
Board of Management and Executive Committee can be
The Remuneration Committee reviewed
reputable executive search firms,
found in the Remuneration report and in Note 26 of the
the base salaries and established
a firm was selected, and various
Consolidated financial statements.
relevant forward-looking target ranges
meetings were held to discuss
for variable remuneration of Board
and agree on the profile and
of Management members and other
the search process. The Supervisory
members of the Executive Committee.
Board was looking for an experienced
Supervisory Board succession
The base salaries will continue to be
CEO with B2B knowledge who played
During 2022, the Nomination Committee
assessed in light of market conditions,
a pivotal role in listed companies and
continued to discuss the size, structure
the reward structures of peer group
with global experience. A diverse
and composition of the Supervisory
companies and performance. The
range of candidates, including internal
Board. A thorough external search
Remuneration Committee considered
candidates, was considered. Following
was conducted, taking into account
the pay ratios within the company and
extensive review, the long list of
the Supervisory Board’s skills matrix,
how these compare with peer group
candidates was shortened and several
profile, Diversity Policy and succession
companies. Forward-looking target
interviews were held by the Nomination
plan. The process was supported by an
ranges for variable remuneration of the
Committee and the other members of
independent and renowned search firm.
Board of Management were discussed.
the Supervisory Board.
Further information can be found in the
A list of candidates was presented for
consideration. Following review, the list
Remuneration report.
Upon completion of these interviews,
was shortened, and several candidates
the Nomination Committee felt that
were interviewed by the Nomination
Greg Poux-Guillaume was the best
Committee and other members of the
candidate for the role and made its
Supervisory Board. Upon completion
recommendation. After discussion,
of these interviews, the Nomination
the Supervisory Board supported the
Committee made its recommendation.
recommendation to nominate Greg
Poux-Guillaume as a member of the
After discussion, the Supervisory Board
supported the recommendation to
nominate Ester Baiget and Hans Van
Bylen for appointment as additional
members of the Supervisory Board.
The Nomination Committee further
recommended the reappointments of
Nils Smedegaard Andersen and Byron
Grote as members of the Supervisory
Board. Upon the appointment of the two
new members at the AGM held on April
22, 2022, the number of Supervisory
Board members was increased to
eight. With Nils Smedegaard Andersen
stepping down after the 2023 AGM,
the Nomination Committee further
recommended the nomination of
Ben Noteboom as member of the
Supervisory Board as per the 2023
AGM, with the intention to subsequently
elect him as Chair. A thorough search
and selection process, led by Deputy
Chair Byron Grote, was conducted with
the assistance of an independent and
renowned search firm. Nils Smedegaard
Andersen did not take part in the
deliberation and decision-making
regarding his succession. Byron Grote,
as Deputy Chair, acted as Chair during
these meetings. The Supervisory Board
has updated its skills matrix, as shown
on page 67. It contains 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.
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 the year.
68
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AkzoNobel Report 2022 | Leadership
69
Leadership and governance | AkzoNobel Report 202270Akzo 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 General 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.nlWith 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.The company also subscribes to the principles of the VNO-NCW Tax Governance Code. Further information on this is available on our website. For the full version of the Tax Governance Code, visit www.vno-ncw.nl/taxgovernancecodeBOARD OF MANAGEMENT AND EXECUTIVE COMMITTEEThe 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. In 2022, the Executive Committee was comprised of the members of the Board of Management (the Chief Executive Offi cer (CEO) and the Chief Financial Offi cer (CFO)), the Chief Integrated Supply Chain Offi cer, Chief Commercial Offi cer – Performance Coatings, the General Counsel and the Chief Human Resources Offi cer. 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 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 Corporate governance statementSupervisoryBoardShare-holdersCommercialIntegrated Supply ChainSupportfunctionsBoard ofManagement ExecutiveCommitteeAkzoNobel 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.37.5%Female25%25%12.5%12.5%12.5%12.5%62.5%Male8-105-80-471AkzoNobel Report 2022 | Leadership and governancethe company at the AGM. The Executive Committee members who are not also members of the Board of Management report to the CEO. 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 with the Supervisory Board. The CFO is responsible for overseeing AkzoNobel’s fi nances, 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 members of the Executive Committee. The list of authorized signatories is fi led with, and available from, the Dutch Chamber of Commerce. The Directors of the company’s business units and the Corporate Directors in charge of the different functions report to individual Executive Committee members with specifi c responsibility for their activities and performance.AppointmentBoard of Management members are appointed and removed from offi ce by the AGM. The current Board of Management members were fi rst appointed by EGMs (Extraordinary General Meetings) held in 2022 and 2017, with the CFO having been reappointed for another four-year term at the AGM in 2022. The other members of the Executive Committee are appointed by the CEO, after consultation with the Supervisory Board. Board of Management members are in principle appointed for a term not exceeding four years, with the possibility of reappointment. 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 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 specifi ed 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). DiversityAkzoNobel 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.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. It is believed that due to the size of the Board of Management (being only two male members), this divergence is justifi ed and has ensured the best candidates for the roles were nominated by the Supervisory Board and appointed by shareholders. Following the resignation of David Prinselaar, AkzoNobel had a 50/50 male/female diversity ratio at Executive Committee level in 2022. More information on our overall diversity and inclusion efforts, including our plans and initiatives to reach the gender balance targets for our Board of Management and our sub-top, can be found in the Sustainability statements. CultureThe Board of Management and Executive Committee promote openness and engagement through a SpeakUp! grievance mechanism and have SUPERVISORY BOARDTenure in years Leadership and governance | AkzoNobel Report 202270Akzo 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 General 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.nlWith 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.The company also subscribes to the principles of the VNO-NCW Tax Governance Code. Further information on this is available on our website. For the full version of the Tax Governance Code, visit www.vno-ncw.nl/taxgovernancecodeBOARD OF MANAGEMENT AND EXECUTIVE COMMITTEEThe 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. In 2022, the Executive Committee was comprised of the members of the Board of Management (the Chief Executive Offi cer (CEO) and the Chief Financial Offi cer (CFO)), the Chief Integrated Supply Chain Offi cer, Chief Commercial Offi cer – Performance Coatings, the General Counsel and the Chief Human Resources Offi cer. 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 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 Corporate governance statementSupervisoryBoardShare-holdersCommercialIntegrated Supply ChainSupportfunctionsBoard ofManagement ExecutiveCommitteeAkzoNobel 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.37.5%Female25%25%12.5%12.5%12.5%12.5%62.5%Male8-105-80-471AkzoNobel Report 2022 | Leadership and governancethe company at the AGM. The Executive Committee members who are not also members of the Board of Management report to the CEO. 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 with the Supervisory Board. The CFO is responsible for overseeing AkzoNobel’s fi nances, 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 members of the Executive Committee. The list of authorized signatories is fi led with, and available from, the Dutch Chamber of Commerce. The Directors of the company’s business units and the Corporate Directors in charge of the different functions report to individual Executive Committee members with specifi c responsibility for their activities and performance.AppointmentBoard of Management members are appointed and removed from offi ce by the AGM. The current Board of Management members were fi rst appointed by EGMs (Extraordinary General Meetings) held in 2022 and 2017, with the CFO having been reappointed for another four-year term at the AGM in 2022. The other members of the Executive Committee are appointed by the CEO, after consultation with the Supervisory Board. Board of Management members are in principle appointed for a term not exceeding four years, with the possibility of reappointment. 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 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 specifi ed 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). DiversityAkzoNobel 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.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. It is believed that due to the size of the Board of Management (being only two male members), this divergence is justifi ed and has ensured the best candidates for the roles were nominated by the Supervisory Board and appointed by shareholders. Following the resignation of David Prinselaar, AkzoNobel had a 50/50 male/female diversity ratio at Executive Committee level in 2022. More information on our overall diversity and inclusion efforts, including our plans and initiatives to reach the gender balance targets for our Board of Management and our sub-top, can be found in the Sustainability statements. CultureThe Board of Management and Executive Committee promote openness and engagement through a SpeakUp! grievance mechanism and have SUPERVISORY BOARDTenure in years Corporate governance statement
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 on long-term value
creation and actively encourages these
values through leading by example.
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 2022, no transactions were
reported under which a member of the
Board of Management or Executive
Committee had a conflict of interest
Early in the year, our Swedish colleague, Almida de Val, won a bronze medal in the mixed doubles curling event at the Beijing Winter Olympics.
She was given special permission to spend time away from her day job as an automation and software engineer for our Adhesives business in
Årsta. Almida proudly brought her medal to work so colleagues could share in her success.
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. Our company culture forms an
important part of discussions involving
internal organizational changes and
Human Resources strategy updates,
as well as any functional updates.
Since 2018, Insight surveys have been
conducted involving all employees,
focused on our wider organizational
health (see 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.
which was of material significance to the
company and to the relevant member.
Remuneration
The current Remuneration Policy for
the Board of Management was last
amended in full following approval by
the AGM held on April 22, 2021. The
proposal to replace Operating Cash
Flow with Free Cash Flow as one of
the applied metrics for the short-term
incentive was approved by the general
meeting at the AGM held on April 22,
2022. 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 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.
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, an Integrated
Business Planning (IBP) process is in
place 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
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 establi-
shed 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 performance. It further
ensures the alignment of sustainability
activities across functions and
businesses. The council, which meets on
Integrity and Compliance gover nance
The Supervisory Board advises the
a quarterly basis, consists of business
committees can be found on page 81.
Board of Management and Executive
unit and functional directors, the Chair of
Committee, while taking into account
the NextGen Council, as well as the CEO.
Executive Pensions Committee
the interests of the company and
The Executive Pensions Committee
its stakeholders. Major investments,
During 2022, a Sustainability Reporting
oversees the general pension policies
acquisitions and functional initiatives are
Steering Committee was set up to
of AkzoNobel’s various pension plans
subject to Supervisory Board approval.
oversee sustainability reporting. This
and their financial consequences for
committee aligns different functions
the company. The committee is chaired
The Supervisory Board is governed
within the organization with the aim
by the CFO and includes the Chief
by its Rules of Procedure (available on
of harmonizing and implementing
Human Resources Officer and Corporate
our website). The Rules of Procedure
upcoming legislation. The Sustainability
Directors of Legal, Treasury, Pensions
include the profile and charters of the
Reporting Steering Committee reports
and Rewards.
into the Sustainability Council as an
advisory body. Due to the increased
Disclosure Committee
importance of sustainability reporting,
The Board of Management has
Committees, which set out the tasks
and responsibilities of the Supervisory
Board, and its operational processes.
the topic will be embedded into the
established a Disclosure Committee,
Composition
Sustainability Council in 2023.
which consists of senior executives
In compliance with the Dutch Civil Code,
with a background in corporate
the Supervisory Board has a balanced
Significant sustainability aspects material
law, finance and investor relations. The
composition reflecting the nature and
to the company are reviewed annually,
task of the Disclosure Committee is to
variety of the company’s businesses,
with input from internal and external
establish and maintain disclosure controls
their international spread and expertise
stakeholders. The Sustainability Council
and procedures, and to advise the
in fields such as finance, economics,
focuses on topics with the biggest
CEO, CFO and General Counsel on the
information technology, societal,
impact on accelerating AkzoNobel’s
accurate and timely disclosure of material
environmental and legal aspects of
strategy to create shared value, building
financial and non-financial information.
business, government and public
administration.
on our core values of safety, integrity
and sustainability. Progress regarding
sustainability objectives, development,
target setting and implementation is
SUPERVISORY BOARD
The Supervisory Board maintains a skills
matrix, which provides an overview of
reviewed quarterly by the Executive
This section provides an overview
the skills and experience of the individual
Committee, and semi-annually by the
of the responsibilities and governance
members. The skills matrix can be found
Supervisory Board.
of the Supervisory Board. For an
on page 67.
understanding of the activities of the
The Audit Committee takes an active
Supervisory Board over the past year,
In addition, in accordance with the
role in assessing the quality and reliability
refer to the Statement of the Chair
Code, a Diversity Policy has been
of sustainable performance reporting
of the Supervisory Board and the
adopted for the composition of the
and external auditor PwC has been
Report of the Supervisory Board. The
Supervisory Board in its Rules of
engaged to perform a limited assurance
responsibility of the Supervisory Board
Procedure. The objec tive of this policy
engagement on specific indicators
is to supervise the policies adopted
is to ensure a balanced composition,
included in the Sustainability statements.
by the Board of Management and the
taking account of nationality, age,
Their report can be found in the Financial
Executive Committee and to oversee
gender, education and work
information.
the general conduct of the business of
background. For 2022, there are no
Integrity and Compliance
governance committees
the company. In practice, this means
divergences to report. With five male
supervising:
and three female members, the
• The corporate strategy
Supervisory Board complies with the
The Executive Committee is responsible
• The achievement of the company’s
requirements pur- suant to the Dutch
for maintaining a culture of integrity and
operational and financial objectives
Gender Diversity Bill.
ensuring an effective Integrity and
• The design and effectiveness of
Compliance program and framework and
internal risk management and control
When nominating and selecting new
has delegated part of the responsi bilities
systems
candidates for the Supervisory Board,
to specific committees. The Supervisory
• The main financial parameters,
account is taken of the Supervisory
Board’s Audit Committee oversees
compliance with applicable laws and
Board profile and skills matrix, the
this responsibility. More details on the
regulations and risk factors
requirements of the Act on Management
72
Leadership and governance | AkzoNobel Report 2022
AkzoNobel Report 2022 | Leadership and governance
73
Corporate governance statement
established a Code of Conduct, policies,
Outside directorships
financial statements. The service
rules and procedures incorporated in the
Specific rules on outside board
contracts of the Board of Management
company’s Policy framework, in order
positions of members of the Executive
are compliant with the Code. The main
to drive a culture of good governance,
Committee – which are more stringent
elements of these contracts are available
consistency and functional excellence. The
than the requirements of the Dutch Civil
on our website.
values of good governance, sustainability
Code – can be found in the Rules of
and teamwork adopted by the Board of
Procedure.
Management are incorporated in these
documents. The Board of Management
Conflicts of interest
Operational Control Cycle
The Executive Committee holds regular
meetings to discuss the implementation
believes these values contribute to a
During 2022, no transactions were
of the company’s strategy and functional
culture focused on long-term value
reported under which a member of the
agendas. Additional meetings are held to
creation and actively encourages these
Board of Management or Executive
discuss specific topics as required. The
values through leading by example.
Committee had a conflict of interest
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, an Integrated
Business Planning (IBP) process is in
place 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
Early in the year, our Swedish colleague, Almida de Val, won a bronze medal in the mixed doubles curling event at the Beijing Winter Olympics.
She was given special permission to spend time away from her day job as an automation and software engineer for our Adhesives business in
Årsta. Almida proudly brought her medal to work so colleagues could share in her success.
A strong company culture fostering
which was of material significance to the
it reviews the consolidated long-term
a solid and well-embedded balance
company and to the relevant member.
company perspective, including risks
between performance and organizational
health is highly valued by the Board of
Remuneration
and opportunities, decides on escalation
and possible scenarios and supervises
Management and Supervisory Board,
The current Remuneration Policy for
the key performance indicators with
and is fundamental to AkzoNobel’s
the Board of Management was last
corrective actions, if applicable.
strategy. Our company culture forms an
amended in full following approval by
important part of discussions involving
the AGM held on April 22, 2021. The
internal organizational changes and
proposal to replace Operating Cash
Human Resources strategy updates,
Flow with Free Cash Flow as one of
COMMITTEES
as well as any functional updates.
the applied metrics for the short-term
Sustainability Council
Since 2018, Insight surveys have been
incentive was approved by the general
The Executive Committee has establi-
conducted involving all employees,
meeting at the AGM held on April 22,
shed a Sustainability Council to advise on
focused on our wider organizational
2022. The details of this policy can be
sustainability developments. The council
health (see the Sustainability
found in the Remuneration report. The
monitors the integration of sustainability
statements). The Executive Committee
service contracts of the members of the
into management processes and
and Supervisory Board regularly
Board of Management contain change
oversees the company’s sustainability
discuss the results of the survey, the
of control provisions. Further details can
targets and performance. It further
targets and the actions taken to
be found in the Remuneration report
ensures the alignment of sustainability
achieve such targets.
and Note 26 of the Consolidated
activities across functions and
businesses. The council, which meets on
a quarterly basis, consists of business
unit and functional directors, the Chair of
the NextGen Council, as well as the CEO.
During 2022, a Sustainability Reporting
Steering Committee was set up to
oversee sustainability reporting. This
committee aligns different functions
within the organization with the aim
of harmonizing and implementing
upcoming legislation. The Sustainability
Reporting Steering Committee reports
into the Sustainability Council as an
advisory body. Due to the increased
importance of sustainability reporting,
the topic will be embedded into the
Sustainability Council in 2023.
Significant sustainability aspects material
to the company are reviewed annually,
with input from internal and external
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. 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 external auditor PwC has been
engaged to perform a limited assurance
engagement on specific indicators
included in the Sustainability statements.
Their report can be found in the Financial
information.
Integrity and Compliance
governance committees
The Executive Committee is responsible
for maintaining a culture of integrity and
ensuring an effective Integrity and
Compliance program and framework and
has delegated part of the responsi bilities
to specific committees. The Supervisory
Board’s Audit Committee oversees
this responsibility. More details on the
Integrity and Compliance gover nance
committees can be found on page 81.
Executive Pensions Committee
The Executive Pensions Committee
oversees the general pension policies
of AkzoNobel’s various pension plans
and their financial consequences for
the company. The committee is chaired
by the CFO and includes the Chief
Human Resources Officer and Corporate
Directors of Legal, 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, finance and investor relations. The
task of the 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
financial and non-financial information.
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,
refer to the Statement of the Chair
of the Supervisory Board 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 financial objectives
• The design and effectiveness of
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 profile and charters of the
Committees, which set out the tasks
and responsibilities of the Supervisory
Board, and its operational processes.
Composition
In compliance with the Dutch Civil Code,
the Supervisory Board has a balanced
composition reflecting the nature and
variety of the company’s businesses,
their international spread and expertise
in fields such as finance, economics,
information technology, 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
on page 67.
In addition, in accordance with the
Code, a Diversity Policy has been
adopted for the composition of the
Supervisory Board in its Rules of
Procedure. The objec tive of this policy
is to ensure a balanced composition,
taking account of nationality, age,
gender, education and work
background. For 2022, there are no
divergences to report. With five male
and three female members, the
Supervisory Board complies with the
requirements pur- suant to the Dutch
Gender Diversity Bill.
internal risk management and control
systems
• The main financial parameters,
compliance with applicable laws and
regulations and risk factors
When nominating and selecting new
candidates for the Supervisory Board,
account is taken of the Supervisory
Board profile and skills matrix, the
requirements of the Act on Management
72
Leadership and governance | AkzoNobel Report 2022
AkzoNobel Report 2022 | Leadership and governance
73
Corporate governance statement
This is Wat Arun (The Temple of Dawn) in Bangkok, Thailand. Built in the early
19th century, it was restored with products supplied by our Dulux brand. The
“Let’s Colour” project – carried out together with Bangkok’s Fine Arts Department
– saw volunteers from AkzoNobel team up with around 50 people from the local
community. They repainted the chapel and the fence surrounding the main stupa,
applying the same white and gold shades that were originally used.
and Supervision, the principles and
provisions of the Code, as well as the
Diversity Policy.
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. 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 2022, two appointments
and two reappointments to the
74
Leadership and governance | AkzoNobel Report 2022
Supervisory Board were proposed to,
and approved by, the AGM held on April
22, 2022.
Induction and training
Following appointment to the Super-
visory Board, new members receive a
comprehensive induction tailored to their
individual needs. 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
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 Chair 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
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
2022, 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. An amendment
to the Remuneration Policy for the
Supervisory Board was approved at
the AGM held on April 22, 2021. 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 – the 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
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 and
(re)appointment of members of the
Supervisory Board and Board
of Management. The AGM is convened
N.V., representing a value of at least
Akzo Nobel N.V. It is noted that, as a
by public notice and the agenda, notes
€50 million, may submit proposals
result of Dutch legislation which became
to the agenda and the procedure for
for the AGM agenda. Such proposals
effective as of July 2019, the relevant
attendance and voting at the meeting
must be adequately substantiated and
shares were registered in the name
are published in advance and posted
submitted in writing, or electronically, to
of Akzo Nobel N.V. by operation of
on our website. Matters proposed
the company at least 60 calendar days
law as per January 1, 2021. Pursuant
for consideration, approval or adoption
in advance of the meeting. Draft minutes
to this legislation, owners of Bearer
are tabled as separate agenda items
of the AGM are made available on the
Certificates will continue to be entitled
and explained in writing in advance of
company website within three months of
to a corresponding number of shares in
the meeting.
the meeting date. The final minutes are
Akzo Nobel N.V. until January 2, 2026.
made available online within six months
On that date, their entitlement will expire
These proposals include, where relevant:
of the meeting date.
by operation of law.
• Adoption of the financial statements
• Dividend proposal
Share classes
• Discharge of members of the
AkzoNobel has three classes
Supervisory Board and Board of
of shares: common shares,
Related information
Management
cumulative preferred shares and
For more details about AkzoNobel shares and Bearer
• (Re-)election of members of the Board
priority shares. Common shares
Certificates, contact Investor Relations:
of Management and Supervisory
are traded on the Euronext
Board
Amsterdam stock exchange.
investor.relations@akzonobel.com
• Advisory vote on Remuneration report
Common shares are also traded
• Other important matters, such as
over-the-counter on OTCQX in
major acquisitions or the sale or
the US in the form of American
demerger of a substantial part of the
Depositary Receipts (each American
The priority shares are held by the
company, as required by law
Depositary Receipt representing
Foundation Akzo Nobel (Stichting Akzo
• Authorization of the Board of
one-third of a common share). On
Nobel). The priority shares are limited
Management to issue new shares
December 31, 2022, a total of 174.4
in transferability and profit entitlement
• Authorization of the Board of
million common shares and
(see Note F of the Company financial
Management to repurchase shares
48 priority shares had been issued. This
statements). The Foundation’s Board
• Remuneration of members of the
includes shares held in treasury which
consists of members of AkzoNobel’s
Supervisory Board
cannot be voted on and which are
Supervisory Board who are not
• Material changes to the Remuneration
not eligible for dividend. Shareholders
Policy of the Board of Management
owning 3% or more of the issued capital
• Amendments to the Articles of
and/or voting rights must report this
Association (for more details see
to the Dutch Authority for the Financial
art. 57 of the Articles of Association,
Markets (AFM) as soon as the threshold
available on our website)
is reached or exceeded. Relevant
reporting by shareholders can be found
The company provides remote voting
in the “Register of substantial holdings
possibilities to its shareholders. Holding
and gross short positions” at
shares in the company on the record
www.afm.nl
date determines the right to exercise
voting rights and other rights relating to
The majority of shares in AkzoNobel N.V.
the AGM. All resolutions are made on
are included in a global certificate and
the basis of the “one share, one vote”
held through the system maintained by
principle (assuming an equal par value
the Dutch Central Securities Depository
for each class of shares). All resolutions
(Euroclear Nederland). In the past, Akzo
are adopted by absolute majority, unless
Nobel N.V. also issued (physical) bearer
the law or the company’s Articles of
share certificates (Bearer Certificates).
Association stipulate otherwise.
A limited number of Bearer Certificates
Holders of common shares in aggregate
have not yet been surrendered to
representing at least 1% of the total
Akzo Nobel N.V., although holders of
issued capital, or, according to the
Bearer Certificates are entitled to a
Official List of Euronext Amsterdam
corresponding number of shares in
whole wall being repainted in a single day.
Prague’s world famous Lennon Wall was repainted by 27 artists as part of an
international cultural project. Filled with Lennon-inspired graffiti, the wall is a
symbol of love, peace and freedom and is regarded as a highlight of the city’s
tourist trail. Our Dulux brand donated 150 liters of paint for the project, with the
AkzoNobel Report 2022 | Leadership and governance
75
Corporate governance statement
Supervisory Board were proposed to,
Remuneration of the
and approved by, the AGM held on April
Supervisory Board
22, 2022.
Induction and training
Supervisory Board members receive
a fixed annual remuneration and
attendance fee, which is determined
Following appointment to the Super-
by the AGM. According to the Code,
visory Board, new members receive a
it is not possible for members to be
comprehensive induction tailored to their
remunerated in shares. An amendment
individual needs. This includes extensive
to the Remuneration Policy for the
briefings about all major business and
Supervisory Board was approved at
functional aspects of the company
the AGM held on April 22, 2021. More
and its corporate governance and
information on the remuneration of the
compliance requirements. The induction
members of the Supervisory Board
includes meetings with the CEO,
and the Remuneration Policy of the
CFO, all other Executive Committee
Supervisory Board can be found in the
members and relevant members of
Remuneration report and Note 26 of the
senior management, as well as site
Consolidated financial statements.
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
SUPERVISORY BOARD
COMMITTEES
faces. In addition, the Chair ensures
The Supervisory Board has established
the Supervisory Board is provided with
three permanent committees – the Audit
regular updates, attends business
Committee, Nomination Committee and
unit deep dives and ensures that the
Remuneration Committee. Information
Supervisory Board undertakes training,
on the activities, composition and
for example in the area of compliance
attendance of the Supervisory Board
and ethics.
members at the meetings of the
committees during the year is set
out in the Report of the Supervisory
This is Wat Arun (The Temple of Dawn) in Bangkok, Thailand. Built in the early
19th century, it was restored with products supplied by our Dulux brand. The
“Let’s Colour” project – carried out together with Bangkok’s Fine Arts Department
– saw volunteers from AkzoNobel team up with around 50 people from the local
community. They repainted the chapel and the fence surrounding the main stupa,
applying the same white and gold shades that were originally used.
and Supervision, the principles and
Conflict of interest
provisions of the Code, as well as the
Members of the Supervisory Board
Board. Each committee has a charter
Diversity Policy.
shall not participate in the discussions
describing its role and responsibilities,
and decision-making on a subject
as well as the manner in which it
Appointment
or transaction in relation to which
discharges its duties and reports to the
Members of the Supervisory Board are
they have a conflict of interest with
full Supervisory Board. These charters
nominated, appointed and dismissed
the company. Decisions to enter into
are included in the Supervisory Board
in accordance with procedures
transactions under which Supervisory
Rules of Procedure. The committees
identical to those previously outlined
Board members have conflicts of
report on their deliberations and findings
for the members of the Board of
interest that are of material significance
to the full Supervisory Board.
Management. In accordance with the
to the company, and to the relevant
Code, Supervisory Board members are
Supervisory Board member, require
eligible for re-election once for a period
the approval of the Supervisory Board.
not exceeding four years. Members
Any such decisions will be recorded
may be re-elected a second time for a
in the annual report for the relevant year,
SHAREHOLDERS AND THE
ANNUAL GENERAL MEETING
period of two years. This period may be
with reference to the conflict of interest
The AGM is an integral part of the
extended by two years at the most. In
and a declaration that the relevant
governance of the company and
the event of a reappointment after an
best practice provisions of the Code
its system of checks and balances.
eight-year period, reasons must be given
have been complied with. During
The AGM reviews the annual report
in the Report of the Supervisory Board.
2022, no transactions were reported
and decides on the adoption of the
Terms of appointment are based on a
under which a member had a conflict
financial statements and the dividend
reappointment scheme, available on our
of interest which was of material
proposal, as well as the discharge and
website. In 2022, two appointments
significance to the company and to the
(re)appointment of members of the
and two reappointments to the
relevant member.
Supervisory Board and Board
74
Leadership and governance | AkzoNobel Report 2022
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
• 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
• Remuneration of members of the
Supervisory Board
• Material changes to the Remuneration
Policy of the Board of Management
• 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 website within three months of
the meeting date. The final minutes are
made available online within six months
of the meeting date.
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.
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
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, 2022, a total of 174.4
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 be found
in the “Register of substantial holdings
and gross short positions” at
www.afm.nl
The majority of shares in AkzoNobel 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
have not yet been surrendered to
Akzo Nobel N.V., although holders of
Bearer Certificates are entitled to a
corresponding number of shares in
Prague’s world famous Lennon Wall was repainted by 27 artists as part of an
international cultural project. Filled with Lennon-inspired graffiti, the wall is a
symbol of love, peace and freedom and is regarded as a highlight of the city’s
tourist trail. Our Dulux brand donated 150 liters of paint for the project, with the
whole wall being repainted in a single day.
AkzoNobel Report 2022 | Leadership and governance
75
Corporate governance statement
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.
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 22, 2022,
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 measu-
res, and to indicate in what circumstan-
ces 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 Foun-
Our Nordsjö paint brand and family-owned Danish furniture company, Montana, devised a colorful way to celebrate 40 years
of working together. We supplied the products for a makeover of their factory in the village of Haarby. It was turned into
an eye-catching landmark by famous artist, Camille Walala, whose bold and playful patterns reflect the colorful, modular
furniture for which Montana is renowned.
dation, 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
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 meetings
76
Leadership and governance | AkzoNobel Report 2022
77AkzoNobel Report 2022 | Leadership and governanceof the Audit Committee, 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 infor-mation. 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 assurance 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 Procedure 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, 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 adequate processes and procedures for internal controls. The Board of Management and Executive Committee have established several Risk, Control and Compliance Committees, which are explained on page 81. In 2022, we continued to invest in enhancing our Internal Control Framework and processes, including further leveraging system embedded and system enabled controls, standard role design and segregation of duties monitoring, helping us to prevent fraud and reputational damage. 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 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 frameworkControl environmentSetting objectivesResponding to riskControl activitiesMonitoring activitiesInformation and communication Corporate governance statement
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.
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 22, 2022,
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
Our Nordsjö paint brand and family-owned Danish furniture company, Montana, devised a colorful way to celebrate 40 years
of working together. We supplied the products for a makeover of their factory in the village of Haarby. It was turned into
an eye-catching landmark by famous artist, Camille Walala, whose bold and playful patterns reflect the colorful, modular
furniture for which Montana is renowned.
– to issue shares in the capital of the
dation, the continuity of the company’s
of its binding nomination rights for
company free from preemptive rights,
management and policies is at stake.
the appointment of members of the
up to a maximum of 10% of the issued
Supervisory Board and of the Board of
share capital. The Board of Management
This may be the case if a public bid for
Management in such circumstances.
was also given a mandate to acquire
the common shares of the company
Although a deviation from provision 4.3.3
and to cancel held or acquired common
has been announced, or has been
of the Code, the Supervisory Board
shares in the company’s share capital.
made, or the justified expectation
and the Board of Management are of
The maximum number of shares that
exists that such a bid will be made,
the opinion that these provisions will
the company will hold in its own share
without any agreement having been
enhance the continuity of the company’s
capital at any time shall not exceed 10%
reached in relation to such a bid with
management and policies. In the event
of its issued share capital.
the company. The same shall apply if
of a hostile takeover bid, or other action
one shareholder, or more shareholders
which the Board of Management and
Anti-takeover provisions and
acting in a concerted way, hold a
Supervisory Board consider adverse to
control
substantial percentage of the issued
the company’s interests, the two Boards
According to the Code, the company is
common shares of the company
reserve the right to use all available
required to provide an overview of its
without making an offer. Or if, in the
powers (including the right to invoke
actual or potential anti-takeover measu-
opinion of the Board of the Foundation
a response time in accordance with
res, and to indicate in what circumstan-
Akzo Nobel, the exercise of the voting
provisions 4.1.6 and 4.1.7 of the Code),
ces it is expected that they may be used.
rights by one shareholder or more
while taking into account the relevant
The priority shares may be considered
shareholders, acting in a concerted way,
interests of the company and its affiliate
to constitute a form of anti-takeover
is materially in conflict with the interests
enterprises and stakeholders.
measure, in relation to the right of
of the company. In such cases, the
the Meeting of Holders of Priority
Supervisory Board and the Board of
Shares to make binding nominations
Management, in accordance with their
for appointments to the Board of
statutory responsibility, will evaluate all
AUDITORS
Management and the Supervisory Board.
available options with a view to serving
The external auditor is appointed by the
The Foundation Akzo Nobel has confirmed
the best interests of the company, its
AGM on proposal of the Supervisory
that it intends to make use of such rights
shareholders and other stakeholders.
Board. The appointment is reviewed every
in exceptional circumstances only. These
four years and the results of this review
circumstances include situations where,
The Board of the Foundation Akzo Nobel
and assessment are reported to the AGM.
in the opinion of the Board of the Foun-
has reserved the right to make use
The external auditor attends all meetings
76
Leadership and governance | AkzoNobel Report 2022
77AkzoNobel Report 2022 | Leadership and governanceof the Audit Committee, 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 infor-mation. 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 assurance 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 Procedure 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, 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 adequate processes and procedures for internal controls. The Board of Management and Executive Committee have established several Risk, Control and Compliance Committees, which are explained on page 81. In 2022, we continued to invest in enhancing our Internal Control Framework and processes, including further leveraging system embedded and system enabled controls, standard role design and segregation of duties monitoring, helping us to prevent fraud and reputational damage. 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 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 frameworkControl environmentSetting objectivesResponding to riskControl activitiesMonitoring activitiesInformation and communication Leadership and governance | AkzoNobel Report 202278Risk managementVision and governance Doing business involves taking risks. We strive to be a successful and respected company and seek to take a balanced risk approach. 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. AkzoNobel complies with the risk management requirements of the Dutch Corporate Governance Code 2016. The Board of Management and Executive Committee are responsible for managing the risks associated with our strategic objectives 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 in line with the Enterprise Risk Management – Integrated Framework of COSO and the Dutch Corporate Governance Code. It is an embedded, company-wide activity, focused on the areas of main risk exposure and provides reasonable assurance that our business objectives can be achieved and our obligations to customers, shareholders, employees and society can be met. The process consists of risk appetite setting by the Executive Committee to serve as input for our strategy and general risk management approach, followed by structured risk assessments applying a top-down and bottom-up approach, and the management and monitoring of identifi ed risks. The risk management framework is discussed twice a year with the Supervisory Board. For more information on our risk management framework, visit the Risk management section on our website. Risk management in 2022 AkzoNobel’s risk appetite differs depending on the type of risk, ranging from a “risk averse” to a “risk-taking” approach. We believe we must operate within the dynamics of the paints and coatings industry and take the risks needed to ensure our relevance in the market. At the same time, topics related to our core values and company purpose require a different risk appetite. During 2022, we held a signifi cant number of enterprise risk workshops across the organization, as well as one workshop focused on fraud risk. Risks were identifi ed by responsible management teams and functional experts, followed by the defi nition of adequate mitigating actions. 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. The symbols alongside the risk descriptions opposite represent management’s assessment of risk development, compared with 2021.For information related to fi nancial risk management, see Note 27 of the Consolidated fi nancial statements. For (longer term) risks related to climate change, refer to the Sustain-ability statements.Risk identificationand assessmentRisk profilesRisk responseper risk profileActionsRisk profiles and risk responsesEnterpriseRiskManagementreportingEnterpriseRiskManagementprocessSupervisoryBoardExecutiveCommittee top 10 risksand risk responses Functions and business units top 10 risks and risk responsesAreas of major risk exposure (projects) top 10 risks and risk responses Risk consolidationRisktransparency79AkzoNobel Report 2022 | Leadership and governanceWe’re prepared to take risks when pursuing our strategic ambitions to achieve our performance, innovation and sustainability objectives, while not compromising on our values. We take a disciplined approach to conducting accretive acquisitions. Return on investment in the development of innovative products and sustainable solutions is never certain. However, considerable funds and effort are spent on research, development and innovation in a controlled way, even in less certain economic circumstances. We have a prudent financing strategy, a balanced cash management policy and clear capital allocation priorities to be able to grow responsibly and profitably. We’re committed to maintaining a strong investment grade credit rating. Our financial risk management and risk appetite are explained in more detail in the Consolidated financial statements.We take well balanced risk decisions when executing our operational processes and chosen strategy, to be able to grow responsibly. We manage the downside risk from the impact of unforeseen operational failures, including IT infrastructure, to ensure the best service to our customers. This lowers the overall operational risk appetite within our businesses. However, we’re prepared to take risks commercially. We take preventive measures and reduce risk-taking activities to be compliant with applicable laws and regulations. Integrity is one of our core values; we do not accept any type of fraud, corruption or bribery.Safety and sustainability are our other two core values. We take extra preventive measures and minimize risk-taking activities to ensure a healthy and safe working environment for our people. With our products, we strive to protect assets, people and the planet to pave the way for a sustainable future and accept a low level of risk when it comes to the well-being of our people and environment, as this is in the DNA of our company. StrategicFinancialOperationalComplianceHealth, safety andsustainabilityVery low(Averse)Low(Minimalist)Medium(Cautious)High(Open)Very high(Risk-taking)We’re prepared to take risks when pursuing our strategic ambitions to achieve our performance, innovation and sustainability objectives, while not compromising on our values. We take a disciplined approach to conducting accretive acquisitions. Return on investment in the development of innovative products and sustainable solutions is never certain. However, considerable funds and effort are spent on research, development and innovation in a controlled way, even in less certain economic circumstances. We have a prudent financing strategy, a balanced cash management policy and clear capital allocation priorities to be able to grow responsibly and profitably. We’re committed to maintaining a strong investment grade credit rating. Our financial risk management and risk appetite are explained in more detail in the Consolidated financial statements.We take well balanced risk decisions when executing our operational processes and chosen strategy, to be able to grow responsibly. We manage the downside risk from the impact of unforeseen operational failures, including IT infrastructure, to ensure the best service to our customers. This lowers the overall operational risk appetite within our businesses. However, we’re prepared to take risks commercially. We take preventive measures and reduce risk-taking activities to be compliant with applicable laws and regulations. Integrity is one of our core values; we do not accept any type of fraud, corruption or bribery.Safety and sustainability are our other two core values. We strive to protect assets, people and the planet to pave the Risk-taking preferences 2022 Cybersecurity The risk of signifi cant business disruption and/or inadequate recovery following a cybersecurity attack, leading to potential loss of sensitive information, intellectual property, hard cash or reputational damage.Mitigating actions• Continually reinforcing a cybersecurity culture (intensifi ed training, awareness creation)• Renewing and upgrading legacy systems and increasing security • Increasing collaboration with suppliers on various detection and response activities and measures• Introduction of the updated Information and Cybersecurity Policies framework• Introduction of new detection and automatic response security solutions• Defi nition of short-term operational technology cybersecurity governance established in our factories• Site factory segregation: measures for improving the network segregation of our factories • Establishment of a new Security function within the companyMacro-economic crisis The risk of a prolonged macro- economic downturn, leading to local currency devaluation, high infl ation, customer de-stocking and a reduction in volume and margin.Mitigating actions• Balanced geographic presence with revenue generated from all regions and continued investment focus on higher growth markets to optimize geographic spread• Continued focus on operational cost, complexity reduction and margin management, and deployment of commercial and procurement excellence programs• Continue to drive BU strategic mandates underpinning the company strategyIntegrated Business Planning maturity The risk that we do not reach the required service levels due to inadequate end-to-end planning processes and Leadership and governance | AkzoNobel Report 202278Risk managementVision and governance Doing business involves taking risks. We strive to be a successful and respected company and seek to take a balanced risk approach. 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. AkzoNobel complies with the risk management requirements of the Dutch Corporate Governance Code 2016. The Board of Management and Executive Committee are responsible for managing the risks associated with our strategic objectives 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 in line with the Enterprise Risk Management – Integrated Framework of COSO and the Dutch Corporate Governance Code. It is an embedded, company-wide activity, focused on the areas of main risk exposure and provides reasonable assurance that our business objectives can be achieved and our obligations to customers, shareholders, employees and society can be met. The process consists of risk appetite setting by the Executive Committee to serve as input for our strategy and general risk management approach, followed by structured risk assessments applying a top-down and bottom-up approach, and the management and monitoring of identifi ed risks. The risk management framework is discussed twice a year with the Supervisory Board. For more information on our risk management framework, visit the Risk management section on our website. Risk management in 2022 AkzoNobel’s risk appetite differs depending on the type of risk, ranging from a “risk averse” to a “risk-taking” approach. We believe we must operate within the dynamics of the paints and coatings industry and take the risks needed to ensure our relevance in the market. At the same time, topics related to our core values and company purpose require a different risk appetite. During 2022, we held a signifi cant number of enterprise risk workshops across the organization, as well as one workshop focused on fraud risk. Risks were identifi ed by responsible management teams and functional experts, followed by the defi nition of adequate mitigating actions. 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. The symbols alongside the risk descriptions opposite represent management’s assessment of risk development, compared with 2021.For information related to fi nancial risk management, see Note 27 of the Consolidated fi nancial statements. For (longer term) risks related to climate change, refer to the Sustain-ability statements.Risk identificationand assessmentRisk profilesRisk responseper risk profileActionsRisk profiles and risk responsesEnterpriseRiskManagementreportingEnterpriseRiskManagementprocessSupervisoryBoardExecutiveCommittee top 10 risksand risk responses Functions and business units top 10 risks and risk responsesAreas of major risk exposure (projects) top 10 risks and risk responses Risk consolidationRisktransparency79AkzoNobel Report 2022 | Leadership and governanceWe’re prepared to take risks when pursuing our strategic ambitions to achieve our performance, innovation and sustainability objectives, while not compromising on our values. We take a disciplined approach to conducting accretive acquisitions. Return on investment in the development of innovative products and sustainable solutions is never certain. However, considerable funds and effort are spent on research, development and innovation in a controlled way, even in less certain economic circumstances. We have a prudent financing strategy, a balanced cash management policy and clear capital allocation priorities to be able to grow responsibly and profitably. We’re committed to maintaining a strong investment grade credit rating. Our financial risk management and risk appetite are explained in more detail in the Consolidated financial statements.We take well balanced risk decisions when executing our operational processes and chosen strategy, to be able to grow responsibly. We manage the downside risk from the impact of unforeseen operational failures, including IT infrastructure, to ensure the best service to our customers. This lowers the overall operational risk appetite within our businesses. However, we’re prepared to take risks commercially. We take preventive measures and reduce risk-taking activities to be compliant with applicable laws and regulations. Integrity is one of our core values; we do not accept any type of fraud, corruption or bribery.Safety and sustainability are our other two core values. We take extra preventive measures and minimize risk-taking activities to ensure a healthy and safe working environment for our people. With our products, we strive to protect assets, people and the planet to pave the way for a sustainable future and accept a low level of risk when it comes to the well-being of our people and environment, as this is in the DNA of our company. StrategicFinancialOperationalComplianceHealth, safety andsustainabilityVery low(Averse)Low(Minimalist)Medium(Cautious)High(Open)Very high(Risk-taking)We’re prepared to take risks when pursuing our strategic ambitions to achieve our performance, innovation and sustainability objectives, while not compromising on our values. We take a disciplined approach to conducting accretive acquisitions. Return on investment in the development of innovative products and sustainable solutions is never certain. However, considerable funds and effort are spent on research, development and innovation in a controlled way, even in less certain economic circumstances. We have a prudent financing strategy, a balanced cash management policy and clear capital allocation priorities to be able to grow responsibly and profitably. We’re committed to maintaining a strong investment grade credit rating. Our financial risk management and risk appetite are explained in more detail in the Consolidated financial statements.We take well balanced risk decisions when executing our operational processes and chosen strategy, to be able to grow responsibly. We manage the downside risk from the impact of unforeseen operational failures, including IT infrastructure, to ensure the best service to our customers. This lowers the overall operational risk appetite within our businesses. However, we’re prepared to take risks commercially. We take preventive measures and reduce risk-taking activities to be compliant with applicable laws and regulations. Integrity is one of our core values; we do not accept any type of fraud, corruption or bribery.Safety and sustainability are our other two core values. We strive to protect assets, people and the planet to pave the Risk-taking preferences 2022 Cybersecurity The risk of signifi cant business disruption and/or inadequate recovery following a cybersecurity attack, leading to potential loss of sensitive information, intellectual property, hard cash or reputational damage.Mitigating actions• Continually reinforcing a cybersecurity culture (intensifi ed training, awareness creation)• Renewing and upgrading legacy systems and increasing security • Increasing collaboration with suppliers on various detection and response activities and measures• Introduction of the updated Information and Cybersecurity Policies framework• Introduction of new detection and automatic response security solutions• Defi nition of short-term operational technology cybersecurity governance established in our factories• Site factory segregation: measures for improving the network segregation of our factories • Establishment of a new Security function within the companyMacro-economic crisis The risk of a prolonged macro- economic downturn, leading to local currency devaluation, high infl ation, customer de-stocking and a reduction in volume and margin.Mitigating actions• Balanced geographic presence with revenue generated from all regions and continued investment focus on higher growth markets to optimize geographic spread• Continued focus on operational cost, complexity reduction and margin management, and deployment of commercial and procurement excellence programs• Continue to drive BU strategic mandates underpinning the company strategyIntegrated Business Planning maturity The risk that we do not reach the required service levels due to inadequate end-to-end planning processes and Risk management
Integrity and compliance management
supply chain infrastructure (forecasting,
manufacturing capability, logistic
network, IBP process, footprint changes,
technology product transfer), leading to
loss of existing business and inability to
win new business.
Mitigating actions
• Increase agility and velocity in
the end-to-end process through
simplification, cross-company
initiatives, digitization and data-
driven modeling
• Roll-out of complexity reduction
programs and improving efficiency of
the product portfolio and supply chain
process
Supply shortages
The risk of supply shortages of key raw
materials, packaging and/or spare parts,
resulting in production interruptions,
additional cost and muted organic
growth.
Mitigating actions
• Maintain and further improve strong
industry and market intelligence
analysis of suppliers and raw material
markets
• Drive supply chain network design,
end-to-end from supplier to end
customer
• Assess climate change impact and
develop mitigation plans for own
operations, key suppliers’ locations
and logistics (see the Sustainability
statements)
Attract, retain and
develop talent
The risk that we are unable to attract,
retain or develop talent (in an overheated
labor market) to ensure a fit for future
workforce with the right capabilities,
resulting in a threat to the organization’s
competitive advantage and ability to
achieve our strategic objectives.
Mitigating actions
• Strengthen AkzoNobel’s value
proposition, based on our
commitment to employee growth and
the company’s purpose
• Focus on talent acquisition, talent
development, talent retention and
succession planning in several
ongoing programs
• Continuation of employee well-being
programs and embedding the Talent
Management Framework to drive
talent and leadership development
Geo-political instability
The risk that increasing geo-political
turbulence results in declining customer
and industry confidence, as well as a
decline in key markets and significant
losses to our sales and profitability.
Mitigating actions
• Balanced geographic presence with
revenue generated from all regions
and continued investment focus on
higher growth markets to optimize
geographic spread
• Geo-political assessment as part of
investment decisions and medium-
term operational planning (e.g.
taskforce for Russia/Ukraine war)
• Continue to drive BU strategic
mandates underpinning the company
strategy
• Driving demand planning through
Integrated Business Planning
Pricing and margin
management
The risk of lower margins resulting from
higher raw material prices and inflation
(including freight and energy) and in-
creased competitive pressure, combined
with insufficient margin management.
Mitigating actions
• Continue to drive BU strategic
mandates underpinning the company
strategy and increase collaboration
between BUs to enable agility
• Investment in sales capability and
deployment of commercial excellence
programs
• Continuation of close monitoring of
raw material prices and availability
versus long term, leading to inability to
support and drive the business agenda
and growth plans, resulting in not
delivering on our strategy.
Mitigating actions
• Global process organization in place
to increase common competencies
and align on key end-to-end process
improvements, as well as increased
collaboration between relevant
functions in IBP
• Changing the leadership team:
flattening the organization,
increasing business representation
in the Executive Committee and
consolidation of Commercial and
Strategic functions
Business continuity
The risk of being unable to respond
adequately to a significant business
interruption (e.g. system outage, fire,
shipping issues, supply disruption)
leading to financial and reputational
damage.
Mitigating actions
• Continue to enhance our business
continuity processes and plans,
supported by taking Integrated
Business Planning to a next maturity
level and increasing cross-functional
and business collaboration
Product portfolio
The risk of lacking a fit for purpose
product portfolio, leading to a cost
base that’s too high and an inability to
compete in the market.
Mitigating actions
• Continue to reduce the complexity
of our product portfolio and further
increase integrated decision-making
• Continue to deploy our sustainable
product portfolio management to
further develop low carbon and
more circular solutions (see the
Sustainability statements)
Ability to execute
The risk of misalignment between the
business and functions and short term
Symbols indicate the following:
Risk assessed to increase.
Risk assessed to remain fairly stable.
Risk assessed to decrease.
We’re committed to leading with
integrity in our industry. It’s one
of our three core values for doing
business. We continue to further
advance and expand our Integrity
and Compliance program to help
ensure compliance with laws
and regulations, empower and
enable our employees to make fair
and honest decisions and bring
integrity to life.
corporate function leaders, including the
as progress on improvement actions.
Integrity and Compliance managers. The
There are eight business unit RCCs and
committees drive the operationalization
seven functional RCCs, in addition to
of the Integrity and Compliance program
a group RCC. They each met quarterly
into the organization, with a strong focus
in 2022.
on prevention. The committees discuss
trends, identify and address risks and
Human Rights Committee
share learnings from investigations in
Responsible for supervising the
order to drive continuous improvement.
company’s human rights framework
The committees meet at least on a
and driving the further expansion of the
quarterly basis.
Integrity and Compliance
SpeakUp! Committee
human rights program. We reconfirmed,
and continued to address, the issues
identified during our second in-depth
salient human rights issues assessment
This committee reviews investigations
in 2021. For more information on our
into SpeakUp! reports involving alleged
human rights framework and program,
violations of our Code of Conduct
see the Sustainability statements.
and applicable laws. The committee
Below is a summary of the 2022
also decides on discipline and control
Privacy Committee
priorities and key activities, and the
improvement actions, as well as
Responsible for supervising the
outcomes thereof, as required pursuant
monitoring and responding to any trends
company’s privacy framework and
to the Dutch Decree on the publication
identified in investigations. The Integrity
driving the further improvement of the
of non-financial information.
and Compliance SpeakUp! Committee
privacy program. For more information
GOVERNANCE AND
ORGANIZATION
refers for decision to the Executive
on our key privacy activities, see the
Committee all cases that involve senior
Privacy program paragraph.
management, that are over a specific
monetary value, or otherwise, as
Integrity and Compliance
identified by the Director of Integrity and
team
The Executive Committee is responsible
Compliance. The centrally established
The Integrity and Compliance team
for maintaining a culture of integrity
Integrity and Compliance SpeakUp!
is led by the Director of Integrity and
and ensuring an effective Integrity
Committee ensures transparency and
Compliance, who reports to the
and Compliance program and control
consistency of disciplinary actions
General Counsel. The team includes
framework. The Supervisory Board’s
throughout the organization. In 2022,
experts in integrity and compliance
Audit Committee oversees this
there were no individual matters or
program design, legal experts in the
responsibility. The Executive Committee
disciplinary actions discussed with the
field of competition law, anti-bribery
has delegated certain responsibilities to
committee that would warrant separate
and anti-corruption, data privacy and
the following working committees and
disclosure in the annual report. Should
human rights, as well as our Integrity
Integrity and Compliance team:
there be material compliance matters,
and Compliance managers in all regions
Integrity and Compliance
governance committees
The Integrity and Compliance
or material internal control weaknesses
driving the implementation of
or improvements in the future, these
the program.
will be addressed through the Risk,
Control and Compliance Committees
To ensure the company maintains
governance committees are at the
(see below) and discussed with the
and strengthens its culture of integrity,
core of our Integrity and Compliance
Audit Committee and external auditor,
the Integrity and Compliance team –
governance model. We assess the
and where appropriate disclosed
together with various other functions and
need for committees depending on
in accordance with the applicable
stakeholders across the organization
organizational changes, changes in
legal requirements.
– focuses its efforts on the following key
the risk profile of business units and
areas:
regulatory and legislative changes. In
Risk, Control and Compliance
• Help leaders set a strong tone at the
2022, we had committees in place in
Committees (RCC)
top and lead by example
all eight business units, the Integrated
The RCCs are responsible for
• Drive awareness and ownership
Supply Chain organization and our
supervising the effectiveness of the
of all employees through effective
key countries. The committees consist
control environment and reviewing
policy management, training and
of business unit leadership and key
weaknesses in this environment, as well
communication
80
Leadership and governance | AkzoNobel Report 2022
AkzoNobel Report 2022 | Leadership and governance
81
Risk management
Integrity and compliance management
supply chain infrastructure (forecasting,
• Focus on talent acquisition, talent
versus long term, leading to inability to
manufacturing capability, logistic
development, talent retention and
support and drive the business agenda
network, IBP process, footprint changes,
succession planning in several
and growth plans, resulting in not
technology product transfer), leading to
ongoing programs
delivering on our strategy.
loss of existing business and inability to
• Continuation of employee well-being
win new business.
programs and embedding the Talent
Mitigating actions
Mitigating actions
• Increase agility and velocity in
Management Framework to drive
• Global process organization in place
talent and leadership development
to increase common competencies
and align on key end-to-end process
improvements, as well as increased
the end-to-end process through
Geo-political instability
simplification, cross-company
The risk that increasing geo-political
collaboration between relevant
initiatives, digitization and data-
turbulence results in declining customer
functions in IBP
driven modeling
and industry confidence, as well as a
• Changing the leadership team:
• Roll-out of complexity reduction
decline in key markets and significant
flattening the organization,
programs and improving efficiency of
losses to our sales and profitability.
increasing business representation
the product portfolio and supply chain
process
Mitigating actions
in the Executive Committee and
consolidation of Commercial and
• Balanced geographic presence with
Strategic functions
Supply shortages
revenue generated from all regions
The risk of supply shortages of key raw
and continued investment focus on
Business continuity
materials, packaging and/or spare parts,
higher growth markets to optimize
The risk of being unable to respond
resulting in production interruptions,
geographic spread
adequately to a significant business
additional cost and muted organic
• Geo-political assessment as part of
interruption (e.g. system outage, fire,
growth.
investment decisions and medium-
shipping issues, supply disruption)
term operational planning (e.g.
leading to financial and reputational
Mitigating actions
taskforce for Russia/Ukraine war)
damage.
• Maintain and further improve strong
• Continue to drive BU strategic
industry and market intelligence
mandates underpinning the company
Mitigating actions
analysis of suppliers and raw material
strategy
• Continue to enhance our business
• Driving demand planning through
continuity processes and plans,
• Drive supply chain network design,
Integrated Business Planning
supported by taking Integrated
markets
customer
end-to-end from supplier to end
• Assess climate change impact and
management
develop mitigation plans for own
The risk of lower margins resulting from
Pricing and margin
Business Planning to a next maturity
level and increasing cross-functional
and business collaboration
operations, key suppliers’ locations
higher raw material prices and inflation
Product portfolio
and logistics (see the Sustainability
(including freight and energy) and in-
The risk of lacking a fit for purpose
statements)
creased competitive pressure, combined
product portfolio, leading to a cost
with insufficient margin management.
base that’s too high and an inability to
Attract, retain and
develop talent
Mitigating actions
compete in the market.
The risk that we are unable to attract,
• Continue to drive BU strategic
Mitigating actions
retain or develop talent (in an overheated
mandates underpinning the company
• Continue to reduce the complexity
labor market) to ensure a fit for future
strategy and increase collaboration
of our product portfolio and further
workforce with the right capabilities,
between BUs to enable agility
increase integrated decision-making
resulting in a threat to the organization’s
• Investment in sales capability and
• Continue to deploy our sustainable
competitive advantage and ability to
deployment of commercial excellence
product portfolio management to
achieve our strategic objectives.
programs
further develop low carbon and
• Continuation of close monitoring of
more circular solutions (see the
raw material prices and availability
Sustainability statements)
Mitigating actions
• Strengthen AkzoNobel’s value
proposition, based on our
commitment to employee growth and
The risk of misalignment between the
the company’s purpose
business and functions and short term
Ability to execute
Symbols indicate the following:
Risk assessed to increase.
Risk assessed to remain fairly stable.
Risk assessed to decrease.
We’re committed to leading with
integrity in our industry. It’s one
of our three core values for doing
business. We continue to further
advance and expand our Integrity
and Compliance program to help
ensure compliance with laws
and regulations, empower and
enable our employees to make fair
and honest decisions and bring
integrity to life.
Below is a summary of the 2022
priorities and key 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 Integrity
and Compliance program and control
framework. The Supervisory Board’s
Audit Committee oversees this
responsibility. The Executive Committee
has delegated certain responsibilities to
the following working committees and
Integrity and Compliance team:
Integrity and Compliance
governance committees
The Integrity and Compliance
governance committees are at the
core of our Integrity and Compliance
governance model. We assess the
need for committees depending on
organizational changes, changes in
the risk profile of business units and
regulatory and legislative changes. In
2022, we had committees in place in
all eight business units, the Integrated
Supply Chain organization and our
key countries. The committees consist
of business unit leadership and key
corporate function leaders, including the
Integrity and Compliance managers. The
committees drive the operationalization
of the Integrity and Compliance program
into the organization, with a strong focus
on prevention. The committees discuss
trends, identify and address risks and
share learnings from investigations in
order to drive continuous improvement.
The committees meet at least on a
quarterly basis.
Integrity and Compliance
SpeakUp! Committee
This committee reviews investigations
into SpeakUp! reports involving alleged
violations of our Code of Conduct
and applicable laws. The committee
also decides on discipline and control
improvement actions, as well as
monitoring and responding to any trends
identified in investigations. The Integrity
and Compliance SpeakUp! Committee
refers for decision to the Executive
Committee all cases that involve senior
management, that are over a specific
monetary value, or otherwise, as
identified by the Director of Integrity and
Compliance. The centrally established
Integrity and Compliance SpeakUp!
Committee ensures transparency and
consistency of disciplinary actions
throughout the organization. In 2022,
there were no individual matters or
disciplinary actions discussed with the
committee that would warrant separate
disclosure in the annual report. Should
there be material compliance matters,
or material internal control weaknesses
or improvements in the future, these
will be addressed through the Risk,
Control and Compliance Committees
(see below) and discussed with the
Audit Committee and external auditor,
and where appropriate disclosed
in accordance with the applicable
legal requirements.
Risk, Control and Compliance
Committees (RCC)
The RCCs are responsible for
supervising the effectiveness of the
control environment and reviewing
weaknesses in this environment, as well
as progress on improvement actions.
There are eight business unit RCCs and
seven functional RCCs, in addition to
a group RCC. They each met quarterly
in 2022.
Human Rights Committee
Responsible for supervising the
company’s human rights framework
and driving the further expansion of the
human rights program. We reconfirmed,
and continued to address, the issues
identified during our second in-depth
salient human rights issues assessment
in 2021. For more information on our
human rights framework and program,
see the Sustainability statements.
Privacy Committee
Responsible for supervising the
company’s privacy framework and
driving the further improvement of the
privacy program. For more information
on our key privacy activities, see the
Privacy program paragraph.
Integrity and Compliance
team
The Integrity and Compliance team
is led by the Director of Integrity and
Compliance, who reports to the
General Counsel. The team includes
experts in integrity and compliance
program design, legal experts in the
field of competition law, anti-bribery
and anti-corruption, data privacy and
human rights, as well as our Integrity
and Compliance managers in all regions
driving the implementation of
the program.
To ensure the company maintains
and strengthens its culture of integrity,
the Integrity and Compliance team –
together with various other functions and
stakeholders across the organization
– focuses its efforts on the following key
areas:
• Help leaders set a strong tone at the
top and lead by example
• Drive awareness and ownership
of all employees through effective
policy management, training and
communication
80
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Integrity and compliance management
• Design and implement effective
COMMUNICATION
COMPETITION LAW PROGRAM
controls
• Risk management
• Investigations of SpeakUp! matters
with a focus on identifying control
action items and sharing lessons
learned
The regional Integrity and Compliance
managers contribute to further
strengthening the culture of integrity. This
includes identifying and addressing local
risks and cooperating with the business
and functional teams to tailor the
program to local needs and follow-up
on internal audit findings and SpeakUp!
cases. In 2022, the heads of Integrity
and Compliance, Internal Control and
Internal Audit met at least quarterly to
discuss findings and trends, and to align
actions. The Director of Integrity and
Compliance also met at least quarterly
with the Export Control and Sanctions
team to discuss the priorities in this
area and the impact of the geo-political
developments.
We have reshaped our communication
program by simplifying and shortening
our messages to reach more colleagues
and raise greater awareness. To
continuously ensure a strong tone
from the top, we initiated a core values
update in our regular CEO webcast to
highlight key integrity topics. Although
no major risks or issues were identified
in the SpeakUp! cases, we launched
SpeakUp! Insights, a quarterly case-
sharing program through which we ask
our leaders to discuss the learnings with
their teams and encourage speaking up.
Focusing on the same theme, we also
introduced a monthly SpeakUp! story
program, where we use a storytelling
approach to share cases with the
broader organization through various
communication channels. In addition,
a focused SpeakUp! campaign was
launched to encourage employees to
speak up if they see any wrongdoing
around them.
RISK MANAGEMENT
TRAINING AND
EDUCATION
We have redefined our risk management
approach to enable the Integrity and
Compliance governance committees
to play a key role in integrity and
compliance risk assessments moving
forward. A new integrity and compliance
risk assessment process will be rolled
out in 2023, whereby the Integrity and
Compliance governance committees will
be asked to identify and prioritize key
risks and define action plans and owners
to mitigate these risks.
POLICY MANAGEMENT
The Policy portal is our one-stop-shop
for key policies, rules and procedures
relating to our global processes and
key topic areas. Maintenance of the
portal and improvement of the user-
friendliness, as well as the quality of the
documents hosted on the Policy portal,
is an ongoing process.
Dedicated training on key integrity and
compliance topics continued to be
delivered on a largely remote/virtual
basis, although we’re slowly moving
back to more face-to-face trainings.
The training we offered covered various
topics, including our Code of Conduct,
anti-bribery and anti-corruption,
operating a diverse and respectful
workplace, competition law, export
control, and information security and
data privacy. As part of the integration
of Grupo Orbis, we conducted
Code of Conduct training for all their
employees, as well as specific training
on key risks to targeted audiences. We
also updated our mandatory compliance
training curriculum and focused on
improving the deployment process
of mandatory training and audience
selection to ensure employees are
trained on topics of special relevance
to them.
82
Leadership and governance | AkzoNobel Report 2022
Compliance with competition law
and competing fairly remains a
key topic within the company. A
particular focus has been business-
facing communications relating to
fair competition, aspects of pricing
initiatives and risks around information
exchange. Proposed strategic initiatives
and commercial developments,
especially in key markets, have been
carefully reviewed from a competition
perspective. The competition law
aspects of M&A activity, and subsequent
integrations, continue to be a focus area.
PRIVACY PROGRAM
Digital privacy compliance remains
a key topic, with special focus on
privacy compliance on websites and
customer consent. In 2022, a new
(and partly automated) process
for handling customer data subject
requests was piloted.
ANTI-BRIBERY AND ANTI-
CORRUPTION PROGRAM
We don’t make, offer, or authorize bribes
or conduct any other form of unethical
business practice. We developed special
training and guidance materials, as
well as redesigning and piloting our
gift and conflict of interest tool (inclu-
ding a pre-approval workflow), to
strengthen controls, data gathering
and data analysis.
MONITORING
We have several processes to monitor
compliance with our rules and
procedures by employees and business
partners. Employees are informed about
this through the Employee Privacy
Statement. Managers are also required
to self-assess and confirm compliance
with company rules and procedures
as part of the internal control self-
assessment. Our supplier performance
compliance with our Code of Conduct
is monitored through the EcoVadis
and violations of applicable laws and
REPORTING
self-assessments and on-site third-party
regulations.
audits that we carry out via the Together
During 2022, the Director of Integrity and
Compliance reported four times to the
for Sustainability initiative. From a
Our dedicated investigation team follows
Executive Committee and three times to
competition law perspective, we also ran
an investigation protocol which adheres
the Audit Committee of the Supervisory
amnesty programs for newly acquired
to strict principles of confidentiality,
Board on the status of the Integrity
businesses as part of the integration
respect for anonymity, non-retaliation,
and Compliance program, material
process into the wider group.
objectivity and the right to be heard.
developments and initiatives, as well as
The Internal Audit function performs
been updated to reflect the EU Whistle-
matters, if any, are also discussed with
numerous audits on our operations.
blower Directive, as transposed
our external auditor on a quarterly basis.
The investigation program has
material cases. Material investigation
Their audit plan is risk-based and takes
into national laws. In 2022,
account of prior compliance and internal
the total number of reports
control findings. Internal audits were also
across all channels increased
Visit the SpeakUp! website
held or covered specific risks – at the
slightly. This was driven by several
https://akzo.no/SpeakUp
request of the Integrity and Compliance
factors, including increased
function – to validate compliance with
communication on the SpeakUp!
our rules and procedures in certain units,
process, and use of the system
There were no individual matters or
or on certain risk areas.
to report concerns or general enquiries
disciplinary actions discussed with the
GRIEVANCE AND
INVESTIGATION
unrelated to the Code of Conduct,
Integrity and Compliance SpeakUp!
which are referred to the appropriate
Committee that would warrant separate
subject matter expert. All reports
disclosure in the annual report. Should
and alerts led to 25 dismissals
there be material compliance matters
and various other disciplinary measures
or material internal control weaknesses
Our SpeakUp! grievance mechanism
and control improvements, con-
or improvements in the future, these will
offers employees and third parties a
firming the value of the company’s
be addressed through the RCCs and
means to raise concerns relating to
grievance framework.
discussed with the Audit Committee
– as well as with the external auditor
– and, where appropriate, disclosed in
accordance with the applicable legal
requirements.
SpeakUp! reports
Total reports and alerts registered
Reports received through SpeakUp!
Dismissals resulting from SpeakUp! reports
Conclusions to SpeakUp! reports closed in
Integrity
Safety
Sustainability
calendar year:
Substantiated
Unsubstantiated
Other (e.g. referred)
been reported.
2020
2021
2022
250
180
61
21
98
6
27
70
46
305
232
94
17
121
6
33
50
106
350
251
72
23
156
6
36
63
119
In 2022, 99 reports were received outside our SpeakUp! mechanism, leading to 19 dismissals. Grupo Orbis cases are not
reported through our SpeakUp! system and are not included in the cases reported in this Report 2022. Groupo Orbis cases
are reported to AkzoNobel on a quarterly basis and material cases, if any, will be escalated. To date, no material cases have
AkzoNobel Report 2022 | Leadership and governance
83
Integrity and compliance management
• Design and implement effective
COMMUNICATION
COMPETITION LAW PROGRAM
controls
• Risk management
We have reshaped our communication
Compliance with competition law
• Investigations of SpeakUp! matters
program by simplifying and shortening
and competing fairly remains a
with a focus on identifying control
our messages to reach more colleagues
key topic within the company. A
action items and sharing lessons
and raise greater awareness. To
particular focus has been business-
learned
continuously ensure a strong tone
facing communications relating to
from the top, we initiated a core values
fair competition, aspects of pricing
The regional Integrity and Compliance
update in our regular CEO webcast to
initiatives and risks around information
managers contribute to further
highlight key integrity topics. Although
exchange. Proposed strategic initiatives
strengthening the culture of integrity. This
no major risks or issues were identified
and commercial developments,
includes identifying and addressing local
in the SpeakUp! cases, we launched
especially in key markets, have been
risks and cooperating with the business
SpeakUp! Insights, a quarterly case-
carefully reviewed from a competition
and functional teams to tailor the
sharing program through which we ask
perspective. The competition law
program to local needs and follow-up
our leaders to discuss the learnings with
aspects of M&A activity, and subsequent
on internal audit findings and SpeakUp!
their teams and encourage speaking up.
integrations, continue to be a focus area.
cases. In 2022, the heads of Integrity
Focusing on the same theme, we also
and Compliance, Internal Control and
introduced a monthly SpeakUp! story
Internal Audit met at least quarterly to
program, where we use a storytelling
discuss findings and trends, and to align
approach to share cases with the
PRIVACY PROGRAM
actions. The Director of Integrity and
broader organization through various
Digital privacy compliance remains
Compliance also met at least quarterly
communication channels. In addition,
a key topic, with special focus on
with the Export Control and Sanctions
a focused SpeakUp! campaign was
privacy compliance on websites and
team to discuss the priorities in this
launched to encourage employees to
customer consent. In 2022, a new
area and the impact of the geo-political
speak up if they see any wrongdoing
(and partly automated) process
developments.
around them.
for handling customer data subject
requests was piloted.
ANTI-BRIBERY AND ANTI-
CORRUPTION PROGRAM
RISK MANAGEMENT
TRAINING AND
EDUCATION
We have redefined our risk management
approach to enable the Integrity and
Dedicated training on key integrity and
Compliance governance committees
compliance topics continued to be
We don’t make, offer, or authorize bribes
to play a key role in integrity and
delivered on a largely remote/virtual
or conduct any other form of unethical
compliance risk assessments moving
basis, although we’re slowly moving
business practice. We developed special
forward. A new integrity and compliance
back to more face-to-face trainings.
training and guidance materials, as
risk assessment process will be rolled
The training we offered covered various
well as redesigning and piloting our
out in 2023, whereby the Integrity and
topics, including our Code of Conduct,
gift and conflict of interest tool (inclu-
Compliance governance committees will
anti-bribery and anti-corruption,
ding a pre-approval workflow), to
be asked to identify and prioritize key
operating a diverse and respectful
strengthen controls, data gathering
risks and define action plans and owners
workplace, competition law, export
and data analysis.
to mitigate these risks.
POLICY MANAGEMENT
control, and information security and
data privacy. As part of the integration
of Grupo Orbis, we conducted
Code of Conduct training for all their
MONITORING
employees, as well as specific training
We have several processes to monitor
The Policy portal is our one-stop-shop
on key risks to targeted audiences. We
compliance with our rules and
for key policies, rules and procedures
also updated our mandatory compliance
procedures by employees and business
relating to our global processes and
training curriculum and focused on
partners. Employees are informed about
key topic areas. Maintenance of the
improving the deployment process
this through the Employee Privacy
portal and improvement of the user-
of mandatory training and audience
Statement. Managers are also required
friendliness, as well as the quality of the
selection to ensure employees are
to self-assess and confirm compliance
documents hosted on the Policy portal,
trained on topics of special relevance
with company rules and procedures
is an ongoing process.
to them.
as part of the internal control self-
assessment. Our supplier performance
is monitored through the EcoVadis
self-assessments and on-site third-party
audits that we carry out via the Together
for Sustainability initiative. From a
competition law perspective, we also ran
amnesty programs for newly acquired
businesses as part of the integration
process into the wider group.
The Internal Audit function performs
numerous audits on our operations.
Their audit plan is risk-based and takes
account of prior compliance and internal
control findings. Internal audits were also
held or covered specific risks – at the
request of the Integrity and Compliance
function – to validate compliance with
our rules and procedures in certain units,
or on certain risk areas.
GRIEVANCE AND
INVESTIGATION
Our SpeakUp! grievance mechanism
offers employees and third parties a
means to raise concerns relating to
SpeakUp! reports
Total reports and alerts registered
Reports received through SpeakUp!
Integrity
Safety
Sustainability
Dismissals resulting from SpeakUp! reports
Conclusions to SpeakUp! reports closed in
calendar year:
Substantiated
Unsubstantiated
Other (e.g. referred)
compliance with our Code of Conduct
and violations of applicable laws and
regulations.
Our dedicated investigation team follows
an investigation protocol which adheres
to strict principles of confidentiality,
respect for anonymity, non-retaliation,
objectivity and the right to be heard.
The investigation program has
been updated to reflect the EU Whistle-
blower Directive, as transposed
into national laws. In 2022,
the total number of reports
across all channels increased
slightly. This was driven by several
factors, including increased
communication on the SpeakUp!
process, and use of the system
to report concerns or general enquiries
unrelated to the Code of Conduct,
which are referred to the appropriate
subject matter expert. All reports
and alerts led to 25 dismissals
and various other disciplinary measures
and control improvements, con-
firming the value of the company’s
grievance framework.
REPORTING
During 2022, the Director of Integrity and
Compliance reported four times to the
Executive Committee and three times to
the Audit Committee of the Supervisory
Board on the status of the Integrity
and Compliance program, material
developments and initiatives, as well as
material cases. Material investigation
matters, if any, are also discussed with
our external auditor on a quarterly basis.
Visit the SpeakUp! website
https://akzo.no/SpeakUp
There were no individual matters or
disciplinary actions discussed with the
Integrity and Compliance SpeakUp!
Committee that would warrant separate
disclosure in the annual report. Should
there be 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
– as well as with the external auditor
– and, where appropriate, disclosed in
accordance with the applicable legal
requirements.
2020
2021
2022
250
180
61
21
98
6
27
70
46
305
232
94
17
121
6
33
50
106
350
251
72
23
156
6
36
63
119
In 2022, 99 reports were received outside our SpeakUp! mechanism, leading to 19 dismissals. Grupo Orbis cases are not
reported through our SpeakUp! system and are not included in the cases reported in this Report 2022. Groupo Orbis cases
are reported to AkzoNobel on a quarterly basis and material cases, if any, will be escalated. To date, no material cases have
been reported.
82
Leadership and governance | AkzoNobel Report 2022
AkzoNobel Report 2022 | Leadership and governance
83
Case study
Remuneration report
Promoting gender equality
Our ongoing efforts to promote
gender equality and boost career
opportunities gained extra
momentum in 2022, thanks to the
Women in Color (Mulheres na Cor)
program we launched in Brazil.
from the Brazilian Association
of Professional Painters, women
represent only 10.5% of their
members, clearly indicating that it’s a
market where women are still looking
for greater representation.
The vocational course is dedicated to
empowering women to build careers
in the decorative paints and vehicle
refinishes industries – which are
traditionally male-dominated – and we
were delighted to see 14 participants
graduate as decorative painters before
the end of the year.
Launched in 2021, when women
were initially offered training in vehicle
refinishing, the latest edition of the
program built on that success and
switched the focus to decorative
painting. According to a survey
During the ten-week course, the
women received comprehensive 360º
tuition totaling more than 200 hours.
The training was provided by SENAI,
one of the five largest professional
education organizations in the world
and the largest in Latin America. An
additional 30 hours of training was
conducted by our own Coral Academy.
One of the graduates, Júlia dos Santos
Silva, explained that she saw the
program not just as an opportunity to
learn a new profession, but a chance
to obtain the necessary skills to paint
and beautify her own house, without
relying on anyone else. “I want to earn
my own money and I learned that it is
possible to take care of the house, my
children and also work,” she said.
Following the graduation, one of the
program’s partners – a company that
provides professional painting services
for buildings – hired seven of the
women. Some of the other graduates
have also started work as independent
professionals offering house painting
services and have been included on
“Colored Pages”, Coral’s online portal
designed to help people find a painter.
In addition, Coral has launched the
campaign “Renovate with them”,
which aims to encourage society to
hire women as painters and rethink
how to support gender equality.
84
Graduates from
our Women in
Color program
assisted artist Mari
Pavanelli when she
painted a special
mural onto a
community center
in São Paulo.
Dear stakeholders
On behalf of the Remuneration
Committee, I’m pleased to
introduce our 2022 Remuneration
report. We received feedback
from shareholders and proxy
voting agencies on the voted
down Remuneration report of
2021 at the AGM in 2022, which
listed specific concerns and
suggestions for what AkzoNobel
can improve.
2022 presented us with a volatile
business climate, with the continued
impact of the COVID-19 pandemic,
the geo-political consequences of the
war in Ukraine, shortages and signi-
and freight.
Amendment regarding the
Board of Management
Remuneration Policy, following
stakeholder feedback
held on April 22, 2022, an amendment
to the STI metrics in the Remuneration
ficant price increases in raw materials
At the Annual General Meeting (AGM)
After a strong first quarter, this climate
Policy was approved with a majority
had a severe impact on the results
of 91.94% of the votes. The amended
of the company, with profit warnings
Policy became effective (retroactively)
in the second and third financial
from January 1, 2022, and will remain
quarters of the year. Therefore, we could
effective until a new Policy is approved,
not deliver on objectives set in more
which will be proposed to shareholders
auspicious times.
no later than at the 2025 AGM.
All components of the financial metrics
In 2021, in favor of transparency and
of the 2022 STI for the Board of
strategy alignment, the AGM approved
Management ended well below the 0%
the adjusted OPI and operating
threshold and delivered no pay-out on
cash flow (OCF) metrics as the two
The feedback we received included the
the financial metrics of the plan for the
financial STI metrics that are applicable
following:
CEO and CFO.
• The performance on Short-Term
throughout the effective period of the
Policy. Taking into account external (e.g.
Incentive (STI) metrics was not
In 2022, STI compensation was limited
shareholder) feedback, OCF has been
sufficiently detailed
to only the non-financial objectives,
replaced by free cash flow (FCF) in the
• More details were requested regarding
with details provided in the section
amended Policy that was approved at
the non-financial metrics in the
on STI, keeping in mind that some
the 2022 AGM. The reason being that
incentive plans
of these objectives will be directional
OCF is an internal metric which is not
• For the 2019-2021 Long-Term
(“improve significantly”), as they address
externally published, and focuses only on
Incentive (LTI) plan, the Supervisory
components (for example, pricing and
adjusted EBITDA, CapEx and working
Board used discretionary power to
cost actions) that can only be evaluated
capital. Therefore, OCF is viewed as
evaluate performance against the
in the context of evolving market
what the Board of Management can
ROI target of 20%, as communicated
conditions.
in early 2020 in context of the
“operationally control directly”. Feedback
was also received from shareholders
Grow & Deliver strategy, whereas
The achievement on the Long-Term
who favor FCF over OCF, because FCF
the ROI target communicated at
Incentive metrics was below threshold
is an externally published metric, and is
the start of the performance period
for both applicable metrics – TSR
therefore well recognized by investors.
was 25%
and ROI – and, as a result, no shares
Ultimately, the Board of Management
We’ve taken this feedback into
under the 2020-2022 Long-Term
includes elements such as interest, tax
account by detailing the information
Incentive plan will vest for the Board of
and cash out from provisions.
that had been conditionally granted
is expected to steer on FCF as it also
on Short-Term Incentives, by providing
Management.
more information on the non-financial
The annual report on
objectives and by applying no discretion
For 2023, we have set challenging, but
remuneration
in 2022. This was despite unforeseeable
realistic, targets in order to strike a better
This report includes a summary of the
events, such as the war in Ukraine,
balance between our commitment to
Remuneration Policy (the Policy) for our
which rapidly impacted the likeliness of
stakeholders and our ability to reward
Board of Management and Supervisory
realizing these targets.
and retain.
Board, as well as our annual report on
remuneration, which sets out how our
Policy was applied in 2022 – and how it
will be applied in 2023.
Dick Sluimers
Committee
Chair of the Remuneration
On April 22, 2021, the Board of
Management Policy and the Supervisory
AkzoNobel Report 2022 | Leadership and governance
85
Case study
Remuneration report
Promoting gender equality
Our ongoing efforts to promote
gender equality and boost career
opportunities gained extra
momentum in 2022, thanks to the
Women in Color (Mulheres na Cor)
program we launched in Brazil.
from the Brazilian Association
and beautify her own house, without
of Professional Painters, women
relying on anyone else. “I want to earn
represent only 10.5% of their
my own money and I learned that it is
members, clearly indicating that it’s a
possible to take care of the house, my
market where women are still looking
children and also work,” she said.
for greater representation.
Following the graduation, one of the
The vocational course is dedicated to
During the ten-week course, the
program’s partners – a company that
empowering women to build careers
women received comprehensive 360º
provides professional painting services
in the decorative paints and vehicle
tuition totaling more than 200 hours.
for buildings – hired seven of the
refinishes industries – which are
The training was provided by SENAI,
women. Some of the other graduates
traditionally male-dominated – and we
one of the five largest professional
have also started work as independent
were delighted to see 14 participants
education organizations in the world
professionals offering house painting
graduate as decorative painters before
and the largest in Latin America. An
services and have been included on
the end of the year.
additional 30 hours of training was
“Colored Pages”, Coral’s online portal
conducted by our own Coral Academy.
designed to help people find a painter.
Launched in 2021, when women
In addition, Coral has launched the
were initially offered training in vehicle
One of the graduates, Júlia dos Santos
campaign “Renovate with them”,
refinishing, the latest edition of the
Silva, explained that she saw the
which aims to encourage society to
program built on that success and
program not just as an opportunity to
hire women as painters and rethink
switched the focus to decorative
learn a new profession, but a chance
how to support gender equality.
painting. According to a survey
to obtain the necessary skills to paint
Dear stakeholders
On behalf of the Remuneration
Committee, I’m pleased to
introduce our 2022 Remuneration
report. We received feedback
from shareholders and proxy
voting agencies on the voted
down Remuneration report of
2021 at the AGM in 2022, which
listed specific concerns and
suggestions for what AkzoNobel
can improve.
The feedback we received included the
following:
• The performance on Short-Term
Incentive (STI) metrics was not
sufficiently detailed
• More details were requested regarding
the non-financial metrics in the
incentive plans
• For the 2019-2021 Long-Term
Incentive (LTI) plan, the Supervisory
Board used discretionary power to
evaluate performance against the
ROI target of 20%, as communicated
in early 2020 in context of the
Grow & Deliver strategy, whereas
the ROI target communicated at
the start of the performance period
was 25%
We’ve taken this feedback into
account by detailing the information
on Short-Term Incentives, by providing
more information on the non-financial
objectives and by applying no discretion
in 2022. This was despite unforeseeable
events, such as the war in Ukraine,
which rapidly impacted the likeliness of
realizing these targets.
2022 presented us with a volatile
business climate, with the continued
impact of the COVID-19 pandemic,
the geo-political consequences of the
war in Ukraine, shortages and signi-
ficant price increases in raw materials
and freight.
After a strong first quarter, this climate
had a severe impact on the results
of the company, with profit warnings
in the second and third financial
quarters of the year. Therefore, we could
not deliver on objectives set in more
auspicious times.
All components of the financial metrics
of the 2022 STI for the Board of
Management ended well below the 0%
threshold and delivered no pay-out on
the financial metrics of the plan for the
CEO and CFO.
In 2022, STI compensation was limited
to only the non-financial objectives,
with details provided in the section
on STI, keeping in mind that some
of these objectives will be directional
(“improve significantly”), as they address
components (for example, pricing and
cost actions) that can only be evaluated
in the context of evolving market
conditions.
The achievement on the Long-Term
Incentive metrics was below threshold
for both applicable metrics – TSR
and ROI – and, as a result, no shares
that had been conditionally granted
under the 2020-2022 Long-Term
Incentive plan will vest for the Board of
Management.
For 2023, we have set challenging, but
realistic, targets in order to strike a better
balance between our commitment to
stakeholders and our ability to reward
and retain.
Dick Sluimers
Chair of the Remuneration
Committee
Amendment regarding the
Board of Management
Remuneration Policy, following
stakeholder feedback
At the Annual General Meeting (AGM)
held on April 22, 2022, an amendment
to the STI metrics in the Remuneration
Policy was approved with a majority
of 91.94% of the votes. The amended
Policy became effective (retroactively)
from January 1, 2022, and will remain
effective until a new Policy is approved,
which will be proposed to shareholders
no later than at the 2025 AGM.
In 2021, in favor of transparency and
strategy alignment, the AGM approved
the adjusted OPI and operating
cash flow (OCF) metrics as the two
financial STI metrics that are applicable
throughout the effective period of the
Policy. Taking into account external (e.g.
shareholder) feedback, OCF has been
replaced by free cash flow (FCF) in the
amended Policy that was approved at
the 2022 AGM. The reason being that
OCF is an internal metric which is not
externally published, and focuses only on
adjusted EBITDA, CapEx and working
capital. Therefore, OCF is viewed as
what the Board of Management can
“operationally control directly”. Feedback
was also received from shareholders
who favor FCF over OCF, because FCF
is an externally published metric, and is
therefore well recognized by investors.
Ultimately, the Board of Management
is expected to steer on FCF as it also
includes elements such as interest, tax
and cash out from provisions.
The annual report on
remuneration
This report includes a summary of the
Remuneration Policy (the Policy) for our
Board of Management and Supervisory
Board, as well as our annual report on
remuneration, which sets out how our
Policy was applied in 2022 – and how it
will be applied in 2023.
On April 22, 2021, the Board of
Management Policy and the Supervisory
Graduates from
our Women in
Color program
assisted artist Mari
Pavanelli when she
painted a special
mural onto a
community center
in São Paulo.
84
AkzoNobel Report 2022 | Leadership and governance
85
Remuneration report
Board Policy were approved by the
AGM, with a majority of 86.3% and
99.0% of the votes respectively.
The 2021 Remuneration report received
42.7% of favorable votes at the AGM
(advisory vote). In communication
between AkzoNobel, investors and
other stakeholders, the main concern
expressed was related to the disclosure
of the financial and non-financial STI
targets, as well as a discretionary
decision to evaluate performance
against the ROI target of 20%, as
communicated in early 2020 in context
of the Grow & Deliver strategy.
This Report 2022 includes
improvements in transparency on the
relevant STI me trics, as requested, and
no discretionary power has been used
to adjust performance. This document is
subject to an advisory vote at the AGM
in 2023.
Visit our website for a full description of
the Remuneration Policy for the Board of
Management and Supervisory Board.
Remuneration for the Board
of Management
Summary of the Remuneration
Policy for the Board of
Management
The Remuneration Policy is designed to
incentivize the Board of Management
to achieve the company’s objectives,
while considering market competitive
standards, ratio between fixed and
variable pay, the perspectives of
shareholders and other key stakeholders
and environmental, social and
governance (ESG) related contributions
of the company.
The focus on pay-for-performance is
achieved by including both short and
long-term incentives that are aligned with
the company strategy to realize long-
term sustainable value creation. Variable
remuneration provides an incentive 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 contribute to building
sustainable long-term value creation,
with targets for return on invested
capital, adjusted EBITDA, revenue
growth and specific ESG goals.
Goal setting is crucial to drive pay for
performance in alignment with the
company’s strategy, and to ensure
that decisions made – and results
delivered – are aligned with the interests
of AkzoNobel’s stakeholders. The
Supervisory Board sets goals, their
respective weight and targets (i.e.
metrics) for the respective performance
year under the STI and LTI scheme,
considering: (1) Company strategy;
CEO pay-mix 2022 in %
CFO pay-mix 2022 in %
Base salary
LTI
STI
Share-matching
Base salary
LTI
STI
Share-matching
100
6
46
24
24
6
51
26
17
100
6
42
23
29
6
48
25
21
Threshold
and below
Target
Maximum
Threshold
and below
Target
Maximum
86
Leadership and governance | AkzoNobel Report 2022
(2) Focus on long-term value creation;
(3) Historical performance, business
future outlook and circumstances and
priorities; (4) Stakeholder expectations.
Goals must be stretching yet achievable.
The Remuneration Committee
conducts scenario analyses of the
possible financial outcomes of meeting
different performance levels (threshold
and below, at target and maximum),
and how it affects the structure and
value of the Board of Management’s
total remuneration. Unintended
consequences of providing incentives
that are too attractive and support
inappropriate risk-taking are avoided by
selecting a total direct compensation pay
mix at target consisting of around 25%
of base salary and defining maximum
opportunities and targets which closely
reflect AkzoNobel’s overall performance.
When implementing the Policy, the
Remuneration Committee consults
external remuneration professionals to
obtain appropriate benchmark data,
and on other matters where it requires
independent advice. 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.
Labor market peer group
As an international company, AkzoNobel
must remain attractive to high caliber
members of the Board of Management.
The reference group consists of
companies of similar scale, complexity
and geographic reach to AkzoNobel.
Despite being a global company, only
companies headquartered in Europe
(consisting of AEX-listed companies and
industry peers) are included to reflect
local pay practices.
The labor market peer group against
which remuneration levels are compared
consists of the following European-only
companies:
Purpose
Design and link to strategy
Value
Total direct compensation
Base salary and variable income. Variable income concerns the performance-
Value of each respective item is specified in
Is the basis for benchmark efforts (i.e. the
related Short-Term Incentive (STI), the Long-Term Incentive plan (LTI) and the
more detail below.
reference to the labor market peer group).
Share-Matching Plan. In addition, Board of Management members are entitled to
Base salary
Basic pay for the job.
certain benefits.
caliber leaders
• Aims to provide a fair and competitive basis for the total pay level to attract high
• Annualized amounts, effective as of
• In-depth benchmark at least every three years
• Remuneration increases above the median market level are reserved for Board
• CFO: €727,750
of Management members who consistently outperform their targets
January 1, 2022
• CEO: €1,225,000
Short-Term Incentive (STI)
• The Supervisory Board sets strategically important operational targets for the
• On-target performance: 100% of annual
Aligning short-term business objectives and
respective performance year and determines the extent to which they have
base salary for CEO and 80% for CFO
business drivers towards long-term value
been achieved
• Maximum opportunity of 150% of target, i.e.
creation. Driving pay for performance.
• By ensuring that long-term value creation is properly reflected in stretched yet
CEO capped at 150% and CFO at 120% of
achievable targets, the realization of strategic business objectives is addressed
annual base salary
• For on-target STI, 70% is linked to financial objectives and 30% is related to
• Threshold: no STI pay-out below threshold
quantifiable non-financial objectives
Long-Term Incentive (LTI)
• Performance shares are awarded every year, to be converted into shares upon
• The on-target grant equals 200% of base
Encouraging long-term, sustainable economic
realization of pre-defined targets, observing a three-year vesting period. Perfor-
salary for the CEO and 150% for the CFO
and shareholder value creation – both abso-
mance is measured over three financial years, starting with the year of grant
• Maximum vesting opportunity is 150% of
lute and relative to competitors – and to align
• Performance targets are based on company strategy, driving long-term value
the number of performance shares granted,
Board of Management interests with those of
creation. 80% of LTI targets are linked to financial goals and 20% are linked to
which equals 300% for the CEO and 225%
shareholders, as well as ensuring retention of
environmental, social and governance (ESG) goals
the members of the Board of Management.
• An additional two-year holding period after vesting applies
• Threshold: no vesting if performance
Shareholding requirement
• Members of the Board of Management are expected to build up a shareholding
The minimum share-holding requirement is
Aligning reward to the interests of stakehold-
in the company; the minimum shareholding requirement must be accrued in
300% of annual base salary for the CEO and
ers and emphasizing confidence in perfor-
five years
mance and strategy.
• Considered are shares privately purchased and vested shares granted under
AkzoNobel share-based compensation plans
Share-Matching Plan
• The Share-Matching Plan awards shares to members for shares they have
• Board members are required to invest 25%
Aligning reward to the interests of stakehold-
invested in from their STI proceeds and held over a three-year period
of their STI proceeds (net after tax and other
ers and emphasizing confidence in perfor-
• When they retain these shares for three years, the company will match such
deductions)
mance and strategy.
shares one on one, subject to continued employment
• They may invest up to an additional 25%
(maximum investment is 50% of total net STI)
Pension and other benefits
• A company paid contribution, based on age, to allow participation in a private
Pension contributions for the CEO equal
Post-retirement remuneration and other bene-
pension plan, as applicable to Netherlands-based employees
16.7% of base salary and for the CFO equal
fits, creates alignment with market practice.
• Other benefits include sick pay (aligned with Netherlands-based employees)
22.9% of base salary.
for the CFO
below threshold
150% for the CFO.
and a monthly transportation allowance of €2,000
• Greg Poux-Guillaume is also eligible for certain transitional benefits (temporary
housing and travel reimbursements) to facilitate his transfer from Switzerland to
the Netherlands
AEX-listed
European industry
between median and third quartile of
• ASML
• DSM
• Philips
• Randstad
• RELX
• Signify
• Air Liquide
• Arkema
• Clariant
• Covestro
• Evonik Industries
• Givaudan
the labor market peer group (around the
median of the labor market peer group
Remuneration for the Board
of Management in 2022
for base salary and STI, and between
Actual remuneration for the reported
median and third quartile for LTI).
financial year is aligned with the Policy.
Overview of the Remuneration
responsibilities as CEO and Chair of the
Thierry Vanlancker handed over his
• Wolters Kluwer
• Henkel
Policy elements
Board of Management to Greg Poux-
• Holcim Group
The table above specifies the elements
Guillaume on November 1, 2022. Greg
• Sika
• Solvay
of the Remuneration Policy, describing
Poux-Guillaume joined AkzoNobel on
purpose, design, the link to our
October 1, 2022, to ensure a smooth
company strategy and (potential) value.
transition.
As AkzoNobel aims to outperform its
sector peers and attract high caliber
members of the Board of Management,
the competitive reference point for
total remuneration is set at a total
remuneration package that positions
The table on the next page gives an
overview of the actual remuneration
of the members of the Board of
Management who were in office in 2022.
A split between the proportions fixed
AkzoNobel Report 2022 | Leadership and governance
87
Remuneration report
Board Policy were approved by the
while considering market competitive
(2) Focus on long-term value creation;
AGM, with a majority of 86.3% and
standards, ratio between fixed and
(3) Historical performance, business
99.0% of the votes respectively.
variable pay, the perspectives of
future outlook and circumstances and
shareholders and other key stakeholders
priorities; (4) Stakeholder expectations.
The 2021 Remuneration report received
and environmental, social and
Goals must be stretching yet achievable.
42.7% of favorable votes at the AGM
governance (ESG) related contributions
(advisory vote). In communication
of the company.
between AkzoNobel, investors and
The Remuneration Committee
conducts scenario analyses of the
other stakeholders, the main concern
The focus on pay-for-performance is
possible financial outcomes of meeting
expressed was related to the disclosure
achieved by including both short and
different performance levels (threshold
of the financial and non-financial STI
long-term incentives that are aligned with
and below, at target and maximum),
targets, as well as a discretionary
the company strategy to realize long-
and how it affects the structure and
decision to evaluate performance
term sustainable value creation. Variable
value of the Board of Management’s
against the ROI target of 20%, as
remuneration provides an incentive to
total remuneration. Unintended
communicated in early 2020 in context
realize long-term value creation. For
consequences of providing incentives
of the Grow & Deliver strategy.
the short term, the Supervisory Board
that are too attractive and support
sets operational targets over a one-year
inappropriate risk-taking are avoided by
This Report 2022 includes
period that are crucial to the company
selecting a total direct compensation pay
improvements in transparency on the
and are pre-conditions to value creation.
mix at target consisting of around 25%
relevant STI me trics, as requested, and
The biggest portion of the remuneration
of base salary and defining maximum
no discretionary power has been used
packages of Board of Management
opportunities and targets which closely
to adjust performance. This document is
members is directly aimed at strategic
reflect AkzoNobel’s overall performance.
subject to an advisory vote at the AGM
priorities that contribute to building
in 2023.
sustainable long-term value creation,
When implementing the Policy, the
with targets for return on invested
Remuneration Committee consults
Visit our website for a full description of
capital, adjusted EBITDA, revenue
external remuneration professionals to
the Remuneration Policy for the Board of
growth and specific ESG goals.
obtain appropriate benchmark data,
Management and Supervisory Board.
and on other matters where it requires
Remuneration for the Board
of Management
Goal setting is crucial to drive pay for
independent advice. The remuneration
performance in alignment with the
principles that apply for the Board of
company’s strategy, and to ensure
Management are aligned with those
that decisions made – and results
applied more broadly in the company.
delivered – are aligned with the interests
This provides a shared sense of purpose
Summary of the Remuneration
of AkzoNobel’s stakeholders. The
and direction at different management
Policy for the Board of
Management
Supervisory Board sets goals, their
levels and a shared reward when
respective weight and targets (i.e.
success is achieved.
The Remuneration Policy is designed to
metrics) for the respective performance
incentivize the Board of Management
year under the STI and LTI scheme,
Labor market peer group
to achieve the company’s objectives,
considering: (1) Company strategy;
As an international company, AkzoNobel
CEO pay-mix 2022 in %
CFO pay-mix 2022 in %
companies of similar scale, complexity
Base salary
STI
LTI
Share-matching
Base salary
STI
LTI
Share-matching
must remain attractive to high caliber
members of the Board of Management.
The reference group consists of
and geographic reach to AkzoNobel.
Despite being a global company, only
companies headquartered in Europe
(consisting of AEX-listed companies and
industry peers) are included to reflect
local pay practices.
The labor market peer group against
which remuneration levels are compared
consists of the following European-only
100
100
6
46
24
24
6
51
26
17
6
42
23
29
6
48
25
21
Threshold
and below
Target
Maximum
Target
Maximum
Threshold
and below
companies:
86
Leadership and governance | AkzoNobel Report 2022
Purpose
Design and link to strategy
Value
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), the Long-Term Incentive plan (LTI) and the
Share-Matching Plan. In addition, Board of Management members are entitled to
certain benefits.
Value of each respective item is specified in
more detail below.
Base salary
Basic pay for the job.
Short-Term Incentive (STI)
Aligning short-term business objectives and
business drivers towards long-term value
creation. Driving pay for performance.
• Aims to provide a fair and competitive basis for the total pay level to attract high
• Annualized amounts, effective as of
caliber leaders
• In-depth benchmark at least every three years
• Remuneration increases above the median market level are reserved for Board
of Management members who consistently outperform their targets
January 1, 2022
• CEO: €1,225,000
• CFO: €727,750
• The Supervisory Board sets strategically important 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
• On-target performance: 100% of annual
base salary for CEO and 80% for CFO
• Maximum opportunity of 150% of target, i.e.
CEO capped at 150% and CFO at 120% of
annual base salary
• For on-target STI, 70% is linked to financial objectives and 30% is related to
• Threshold: no STI pay-out below threshold
quantifiable non-financial objectives
Long-Term Incentive (LTI)
Encouraging long-term, sustainable economic
and shareholder value creation – both abso-
lute 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 pre-defined targets, observing a three-year vesting period. Perfor-
mance is measured over three financial years, starting with the year of grant
• Performance targets are based on company strategy, driving long-term value
creation. 80% of LTI targets are linked to financial goals and 20% are linked to
environmental, social and governance (ESG) goals
• An additional two-year holding period after vesting applies
• The on-target grant equals 200% of base
salary for the CEO and 150% for the CFO
• Maximum vesting opportunity is 150% of
the number of performance shares granted,
which equals 300% for the CEO and 225%
for the CFO
• Threshold: no vesting if performance
below threshold
Shareholding requirement
Aligning reward to the interests of stakehold-
ers and emphasizing confidence in perfor-
mance 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
The minimum share-holding requirement is
300% of annual base salary for the CEO and
150% for the CFO.
• Considered are shares privately purchased and vested shares granted under
AkzoNobel share-based compensation plans
Share-Matching Plan
Aligning reward to the interests of stakehold-
ers and emphasizing confidence in perfor-
mance and strategy.
• The Share-Matching Plan awards shares to members for shares they have
invested in from their STI proceeds and held over a three-year period
• When they retain these shares for three years, the company will match such
shares one on one, subject to continued employment
• Board members are required to invest 25%
of their STI proceeds (net after tax and other
deductions)
• They may invest up to an additional 25%
(maximum investment is 50% of total net STI)
Pension and other benefits
Post-retirement remuneration and other bene-
fits, creates alignment with market practice.
• A company paid contribution, based on age, to allow participation in a private
pension plan, as applicable to Netherlands-based employees
• Other benefits include sick pay (aligned with Netherlands-based employees)
Pension contributions for the CEO equal
16.7% of base salary and for the CFO equal
22.9% of base salary.
and a monthly transportation allowance of €2,000
• Greg Poux-Guillaume is also eligible for certain transitional benefits (temporary
housing and travel reimbursements) to facilitate his transfer from Switzerland to
the Netherlands
AEX-listed
• ASML
• DSM
• Philips
• Randstad
• RELX
• Signify
• Wolters Kluwer
European industry
• Air Liquide
• Arkema
• Clariant
• Covestro
• Evonik Industries
• Givaudan
• Henkel
• Holcim Group
• Sika
• Solvay
between median and third quartile of
the labor market peer group (around the
median of the labor market peer group
for base salary and STI, and between
median and third quartile for LTI).
Overview of the Remuneration
Policy elements
The table above specifies the elements
of the Remuneration Policy, describing
purpose, design, the link to our
company strategy and (potential) value.
Remuneration for the Board
of Management in 2022
Actual remuneration for the reported
financial year is aligned with the Policy.
Thierry Vanlancker handed over his
responsibilities as CEO and Chair of the
Board of Management to Greg Poux-
Guillaume on November 1, 2022. Greg
Poux-Guillaume joined AkzoNobel on
October 1, 2022, to ensure a smooth
transition.
As AkzoNobel aims to outperform its
sector peers and attract high caliber
members of the Board of Management,
the competitive reference point for
total remuneration is set at a total
remuneration package that positions
The table on the next page gives an
overview of the actual remuneration
of the members of the Board of
Management who were in office in 2022.
A split between the proportions fixed
AkzoNobel Report 2022 | Leadership and governance
87
Remuneration report
Remuneration of Board of Management for the reported financial year
Fixed
remuneration
Variable
remuneration
Post-contract
compensation
Base
salary
Fringe
benefits
One-year
variable
Multi-year
variable LTI
Total
remuneration
Termina-
tion and
other
benefits7
in €
Greg Poux-
Guillaume
(CEO)1
Thierry
Vanlancker
(former
CEO)2
Maarten
de Vries
(CFO)
LTI value
based on
IFRS 2
expenses5
Market value
at year-end6
IFRS 2
expenses5
Market value
at year-end6
IFRS 2
expenses5
Market value
at year-end6
2021
2022
2021
2022
2021
20223,4
2021
2022
2021
2022
2022
2021
2022
N/A
204,167
N/A 25,400
N/A 204,167
N/A
88,425
N/A
34,067
N/A
204,167
N/A 25,400
N/A 204,167
N/A
N/A
N/A
34,067
–
–
N/A
556,225
N/A
467,800
Thierry
Vanlancker
(former CEO)
1,150,000 1,178,750 33,500 33,200
888,950
469,260 3,973,511 1,644,454
225,400
231,000 1,619,598 6,271,361 5,176,262
ANS2022
2022 – 2024
January 1,
—
25,578
660
26,238
1,150,000 1,178,750 33,500 33,200
888,950
469,260 3,216,345
– 225,400
231,000
– 5,514,195 1,912,210
710,000
727,750 33,500 33,200
439,064
231,788 1,261,556
(30,316) 139,200
166,700
– 2,583,320 1,129,122
710,000
727,750 33,500 33,200
439,064
231,788
916,268
– 139,200
166,700
– 2,238,032 1,159,438
1 Appointed per November 1, 2022.
2 Stepped down per November 1, 2022.
3 In 2023, the Board members will invest 50% of their STI proceeds (net after tax)
under the Share-Matching Plan.
5 Costs relating to share awards include non-cash expenses of performance-related share plan and Share-Matching Plan.
6 Market value at year-end for multi-year variable LTI is based on the number of shares that became unconditional during the
year, multiplied by the share price of €62.56 at December 30, 2022 (December 31, 2021: €96.50).
7 No excessive tax levies are applicable on this payment. Termination and other benefits for Thierry Vanlancker refers to the
4 As approved by the EGM on September 6, 2022, Greg Poux-Guillaume would be
entitled to an at target, pro-rated bonus pay-out for the performance year 2022.
amounts which will be paid in 2023 (severance payment, salary and fringe benefits until April 21, 2023). The actual amount
paid in 2022 is €1,912,210, which is 65% lower than the amount received in 2021.
versus variable remuneration paid is
shown below. Fringe benefits consist
of social security contributions and
car arrangements. For Greg Poux-
Guillaume, fringe benefits also include
temporary housing contributions.
Post-contract compensation is intended
for build-up of retirement benefits
instead of pension contributions. IFRS
2 expenses relating to share awards
include non-cash expenses of the
performance-related share plan and
Share-Matching Plan. The values
stated in the table for the market value
at year-end for multi-year variable LTI
are based on the number of shares
that became unconditional during the
year, multiplied by the share price. This
share price was €62.56 on December
31, 2022, for the shares that became
unconditional in 2022. As no shares
became unconditional in 2022, the value
in the table is zero.
End of service terms Thierry
Vanlancker as CEO and Chair of
the Board of Management
Thierry Vanlancker was reappointed at
the AGM in 2021 until the AGM in 2023.
As his successor was found sooner,
the Supervisory Board agreed with
Thierry Vanlancker that he would step
down as CEO and Chair of the Board of
Management as of November 1, 2022.
He continues as advisor until the end
of his management agreement at the
2023 AGM. The termination of his
management agreement, of which the
key elements were published upon
his reappointment at the AGM in April
2021, is executed in accordance with
the management agreement and
AkzoNobel’s Remuneration Policy for
the Board of Management. This means
that Thierry Vanlancker continues to
be entitled to his base salary until the
end of the management agreement.
Thierry Vanlancker’s entitlements to the
short and long-term incentives over the
financial year 2022 are further described
below. The 2021 and 2022 long-term
CEO fixed vs performance-linked
in %
Fixed 47.4
Performance-linked 52.6
Short-term 84.1
Long-term 15.9
Base salary
Fringe benefits
Post-contract compensation
One-year variable
Multi-year variable
CFO fixed vs performance-linked
in %
Fixed 80.0
Performance-linked 20.0
Short-term 100
Long-term 0.0
2022 number of performance-related shares
for Thierry Vanlancker
Performance/
performance
holding
January 1
Awarded
Vested
Forfeited
Dividend
December
End of
End of
Balance at
Balance at
Plan
Vesting period Award date
ANS2019
2019 – 2021
January 1,
20221
in 2022
in 2022
in 2022
in 2022
31, 2022
14,110
—
(14,110)
—
—
ANS2020
2020 – 2022
January 1,
February
February
19,615
—
(20,121)
506
ANS2021
2021 – 2023
January 1,
February
27,226
702
27,928
—
—
—
—
—
—
period
March
2022
period
March
2024
2023
2025
February
2024
February
2025
2026
February
2027
2019
2020
2021
2022
—
—
1 The balance of shares at January 1, 2022, includes cumulative dividend. For ANS2020, the cumulative dividend over 2020 and
2021 of 4.63% has been added to the original grant of 18,747 shares, and for ANS2021 the 2021 dividend yield of 2.58% has
been added to the original grant of 26,713 shares.
incentive grants will vest on a pro-rata
management agreement, to respectively
personal objectives are directional in
basis, calculated over the period until the
20,777 (28/36 of 26,713) and 11,368
nature, a number of these objectives
end date of the management agreement.
(16/36 of 25,578) conditional shares.
for 2022 are quantified and therefore
Thierry Vanlancker is not entitled to the
After vesting, an additional two-year
allowed for an objective evaluation
short-term incentive over the financial year
holding period applies.
of progress achieved towards
2023, is not entitled to participate in the
targets, which resulted in a weighted
share-matching related to the 2022 STI
The 2,708 potential matching shares
performance score of 132.7%:
payment, and will not receive a conditio-
will be pro-rated as well, resulting in 903
• The Board of Management had
nal share grant in 2023. In compliance
potential matching shares. These shares
the objective to focus on margin
with the Dutch Corporate Governance
will be matched upon termination of the
management by keeping pricing
Code and the management agreement,
management agreement in April 2023.
ahead of raw material and logistics
the severance payment upon termination
of the management agreement will not
Base salary
cost inflation. In 2022, the company
managed to offset raw material
exceed one annual base salary.
The base salary of the CEO, Greg Poux-
and freight increases through price
Guillaume, was presented at the EGM
increases and margin expansion of
Based on performance against the
on September 6, 2022, and effective
€186 million (target: €100 million),
financial and non-financial targets as
from his start date in the company on
with actual performance on pricing
further described in this Remuneration
October 1, 2022. The 2022 base salary
strategy ending up at 143%
report, Thierry Vanlancker receives
for the CFO, Maarten de Vries, was
• The Board of Management executed
a short-term incentive payment of
presented at the AGM on April 22, 2022,
disciplined cost control and reduced
€469,260 (39.81% of salary).
and made retroactively effective from
inventories. In the second half of
The existing LTI grants (2020-2022,
• Greg Poux-Guillaume, CEO:
2021-2023 and 2022-2024 LTI plans)
€1,225,000
January 1, 2022:
2022, the additional reduction in
operating expenses amounted to €31
million (target: €25 million). Reduction
will vest time pro-rated at the regular
• Maarten de Vries, CFO: €727,750
of inventories amounted to €263
vesting dates, subject to achieved
million (target: €200 million), resulting
performance at the end of the respective
Short-Term Incentives (STI)
in an actual performance of 122%
performance period. Shares that may
In 2022, the financial objectives of the
• In 2022, gender targets were set
vest under these plans will be subject
short-term incentives were adjusted
for all businesses and functions to
to the holding period of two years. In
operating income (OPI) and free cash
increase female representation as part
2020, 18,747 shares were granted
flow (FCF). The non-financial objectives
of leadership accountability, with the
conditionally. After applying the final
encompassed initiatives central to the
goal of having 30% female executives
vesting percentage of 0%, the entire
company’s transformation plan, such as
by 2025. In 2022, the company
2020 conditional grant has been
price and working capital management.
landed above its annual target of
forfeited. The 26,713 shares that were
25% with 26% female executives. A
conditionally granted in 2021 and the
They also anticipated a CEO transition
global engagement survey among
25,578 shares conditionally granted
later in the year, for which a smooth
employees was conducted, similar to
in 2022 will be pro-rated, calculated
handover is essential to maintaining
previous years. In 2022, the overall
over the period until the end date of the
AkzoNobel’s momentum. Although the
OHI score was 72 (target: 72), with
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AkzoNobel Report 2022 | Leadership and governance
89
—
(20,121)
506
14,110
—
(14,110)
—
—
Balance at
December
31, 2022
—
—
19,615
27,226
—
—
—
25,578
—
—
—
—
702
27,928
660
26,238
Thierry
Vanlancker
(former CEO)
ANS2019
2019 – 2021
ANS2020
2020 – 2022
ANS2021
2021 – 2023
ANS2022
2022 – 2024
January 1,
2019
January 1,
2020
January 1,
2021
January 1,
2022
March
2022
February
2023
February
2024
February
2025
March
2024
February
2025
February
2026
February
2027
2022 number of performance-related shares
for Thierry Vanlancker
Performance/
Vesting period Award date
Plan
End of
performance
period
End of
holding
period
Balance at
January 1
20221
Awarded
in 2022
Vested
in 2022
Forfeited
in 2022
Dividend
in 2022
Remuneration report
Remuneration of Board of Management for the reported financial year
Fixed
remuneration
Variable
remuneration
Post-contract
compensation
Total
remuneration
Base
salary
Fringe
benefits
One-year
variable
Multi-year
variable LTI
2021
2022
2021
2022
2021
20223,4
2021
2022
2021
2022
2022
2021
2022
N/A
204,167
N/A 25,400
N/A 204,167
N/A
88,425
N/A
34,067
N/A
556,225
N/A
204,167
N/A 25,400
N/A 204,167
N/A
N/A
N/A
34,067
N/A
467,800
Termina-
tion and
other
benefits7
–
–
Thierry
IFRS 2
1,150,000 1,178,750 33,500 33,200
888,950
469,260 3,973,511 1,644,454
225,400
231,000 1,619,598 6,271,361 5,176,262
Market value
1,150,000 1,178,750 33,500 33,200
888,950
469,260 3,216,345
– 225,400
231,000
– 5,514,195 1,912,210
IFRS 2
710,000
727,750 33,500 33,200
439,064
231,788 1,261,556
(30,316) 139,200
166,700
– 2,583,320 1,129,122
Market value
710,000
727,750 33,500 33,200
439,064
231,788
916,268
– 139,200
166,700
– 2,238,032 1,159,438
1 Appointed per November 1, 2022.
2 Stepped down per November 1, 2022.
5 Costs relating to share awards include non-cash expenses of performance-related share plan and Share-Matching Plan.
6 Market value at year-end for multi-year variable LTI is based on the number of shares that became unconditional during the
3 In 2023, the Board members will invest 50% of their STI proceeds (net after tax)
year, multiplied by the share price of €62.56 at December 30, 2022 (December 31, 2021: €96.50).
under the Share-Matching Plan.
7 No excessive tax levies are applicable on this payment. Termination and other benefits for Thierry Vanlancker refers to the
4 As approved by the EGM on September 6, 2022, Greg Poux-Guillaume would be
amounts which will be paid in 2023 (severance payment, salary and fringe benefits until April 21, 2023). The actual amount
entitled to an at target, pro-rated bonus pay-out for the performance year 2022.
paid in 2022 is €1,912,210, which is 65% lower than the amount received in 2021.
in €
Greg Poux-
Guillaume
(CEO)1
LTI value
based on
IFRS 2
expenses5
Market value
at year-end6
Vanlancker
expenses5
(former
CEO)2
Maarten
de Vries
(CFO)
at year-end6
expenses5
at year-end6
versus variable remuneration paid is
year, multiplied by the share price. This
He continues as advisor until the end
shown below. Fringe benefits consist
share price was €62.56 on December
of his management agreement at the
of social security contributions and
31, 2022, for the shares that became
2023 AGM. The termination of his
car arrangements. For Greg Poux-
unconditional in 2022. As no shares
management agreement, of which the
Guillaume, fringe benefits also include
became unconditional in 2022, the value
key elements were published upon
temporary housing contributions.
in the table is zero.
Post-contract compensation is intended
his reappointment at the AGM in April
2021, is executed in accordance with
for build-up of retirement benefits
End of service terms Thierry
the management agreement and
instead of pension contributions. IFRS
Vanlancker as CEO and Chair of
AkzoNobel’s Remuneration Policy for
2 expenses relating to share awards
the Board of Management
the Board of Management. This means
include non-cash expenses of the
Thierry Vanlancker was reappointed at
that Thierry Vanlancker continues to
performance-related share plan and
the AGM in 2021 until the AGM in 2023.
be entitled to his base salary until the
Share-Matching Plan. The values
As his successor was found sooner,
end of the management agreement.
stated in the table for the market value
the Supervisory Board agreed with
Thierry Vanlancker’s entitlements to the
at year-end for multi-year variable LTI
Thierry Vanlancker that he would step
short and long-term incentives over the
are based on the number of shares
down as CEO and Chair of the Board of
financial year 2022 are further described
that became unconditional during the
Management as of November 1, 2022.
below. The 2021 and 2022 long-term
Fixed 47.4
Performance-linked 52.6
Short-term 84.1
Long-term 15.9
Base salary
Fringe benefits
Post-contract compensation
One-year variable
Multi-year variable
CEO fixed vs performance-linked
in %
in %
CFO fixed vs performance-linked
Fixed 80.0
Performance-linked 20.0
Short-term 100
Long-term 0.0
1 The balance of shares at January 1, 2022, includes cumulative dividend. For ANS2020, the cumulative dividend over 2020 and
2021 of 4.63% has been added to the original grant of 18,747 shares, and for ANS2021 the 2021 dividend yield of 2.58% has
been added to the original grant of 26,713 shares.
incentive grants will vest on a pro-rata
basis, calculated over the period until the
end date of the management agreement.
Thierry Vanlancker is not entitled to the
short-term incentive over the financial year
2023, is not entitled to participate in the
share-matching related to the 2022 STI
payment, and will not receive a conditio-
nal share grant in 2023. In compliance
with the Dutch Corporate Governance
Code and the management agreement,
the severance payment upon termination
of the management agreement will not
exceed one annual base salary.
Based on performance against the
financial and non-financial targets as
further described in this Remuneration
report, Thierry Vanlancker receives
a short-term incentive payment of
€469,260 (39.81% of salary).
The existing LTI grants (2020-2022,
2021-2023 and 2022-2024 LTI plans)
will vest time pro-rated at the regular
vesting dates, subject to achieved
performance at the end of the respective
performance period. Shares that may
vest under these plans will be subject
to the holding period of two years. In
2020, 18,747 shares were granted
conditionally. After applying the final
vesting percentage of 0%, the entire
2020 conditional grant has been
forfeited. The 26,713 shares that were
conditionally granted in 2021 and the
25,578 shares conditionally granted
in 2022 will be pro-rated, calculated
over the period until the end date of the
management agreement, to respectively
20,777 (28/36 of 26,713) and 11,368
(16/36 of 25,578) conditional shares.
After vesting, an additional two-year
holding period applies.
The 2,708 potential matching shares
will be pro-rated as well, resulting in 903
potential matching shares. These shares
will be matched upon termination of the
management agreement in April 2023.
Base salary
The base salary of the CEO, Greg Poux-
Guillaume, was presented at the EGM
on September 6, 2022, and effective
from his start date in the company on
October 1, 2022. The 2022 base salary
for the CFO, Maarten de Vries, was
presented at the AGM on April 22, 2022,
and made retroactively effective from
January 1, 2022:
• Greg Poux-Guillaume, CEO:
€1,225,000
• Maarten de Vries, CFO: €727,750
Short-Term Incentives (STI)
In 2022, the financial objectives of the
short-term incentives were adjusted
operating income (OPI) and free cash
flow (FCF). The non-financial objectives
encompassed initiatives central to the
company’s transformation plan, such as
price and working capital management.
They also anticipated a CEO transition
later in the year, for which a smooth
handover is essential to maintaining
AkzoNobel’s momentum. Although the
personal objectives are directional in
nature, a number of these objectives
for 2022 are quantified and therefore
allowed for an objective evaluation
of progress achieved towards
targets, which resulted in a weighted
performance score of 132.7%:
• The Board of Management had
the objective to focus on margin
management by keeping pricing
ahead of raw material and logistics
cost inflation. In 2022, the company
managed to offset raw material
and freight increases through price
increases and margin expansion of
€186 million (target: €100 million),
with actual performance on pricing
strategy ending up at 143%
• The Board of Management executed
disciplined cost control and reduced
inventories. In the second half of
2022, the additional reduction in
operating expenses amounted to €31
million (target: €25 million). Reduction
of inventories amounted to €263
million (target: €200 million), resulting
in an actual performance of 122%
• In 2022, gender targets were set
for all businesses and functions to
increase female representation as part
of leadership accountability, with the
goal of having 30% female executives
by 2025. In 2022, the company
landed above its annual target of
25% with 26% female executives. A
global engagement survey among
employees was conducted, similar to
previous years. In 2022, the overall
OHI score was 72 (target: 72), with
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89
Remuneration report
STI on financial objectives
Performance metric
Adjusted OPI (in € mln)
40%
Corresponding target
Corresponding award
Weighting
Threshold
Maximum
Performance
Pay-out
FCF (in € mln)
30%
Corresponding target
Corresponding award
Total
Actual performance on FCF and Adj. OPI, incl. and excl. Grupo Orbis, is below threshold.
The actual performance shown here is including Grupo Orbis.
STI on personal objectives
Personal objective Description
Performance
1,000
0%
350
0%
1,400
150%
975
150%
789
0.0%
(29)
0.0%
0.0%
0.0%
0.0%
Realiza-
tion
Weighted pay-
out (former) CEO
Weighted
pay-out CFO
Pricing dynamics
Taking the required
pricing actions to offset
high raw material prices,
based on market oppor-
tunities and behavior of
competition.
AkzoNobel is perceived as outperforming the competition by
industry analysts. The actions taken by the Board of Manage-
ment resulted in AkzoNobel achieving more than its ambition
by realizing €186 million in pricing increases throughout 2022.
143%
Cost and inventory
actions
Implementation of a
various range of cost
measures to respond to
market circumstances
and raw material scarcity.
AkzoNobel has realized €31 million in cost savings through
several interventions in 2022. Inventory, while up, was mitigat-
ed by a number of successful corrective actions resulting in
significant reduction in both OpEx costs and inventories (both
above target).
Organizational
health
Average perfor-
mance score
The Board of Manage-
ment is expected to drive
a healthy and engaged
workforce and to foster
a culture of diversity and
inclusion.
The engagement of the workforce is reflected in a 2022 OHI
score (Organizational Health Index) of 72 (second quartile
position versus global database) for the overall organiza-
tion and is in the top decile for the senior executive group.
Results have been improving steadily quarter by quarter and
are now stabilizing. The number of female executives in the
organization at the end of 2022 was 26%. This is a significant
improvement from 2021 (22%) and above target for 2022 to
achieve our goal of having 30% female executives by 2025.
122%
133%
132.7%
Resulting in
pay-out of
39.81%
Resulting in
pay-out of
31.85%
the senior executive population
scoring in the top decile. Finally, the
Supervisory Board wanted to ensure
a proper and complete handover of
responsibilities to the new CEO. On
November 1, the Supervisory Board
concluded that the handover was
completed successfully and that the
Board of Management had put in
significant effort to ensure a proper
induction of the new CEO. This brings
the overall weighted performance on
the organizational health objectives to
133%
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. The 132.7% achieved
on personal objectives by the Board
of Management contrasts with the
0% payout on financial objectives, a
discrepancy which could leave the
impression of excessively lenient personal
targets, but the Supervisory Board does
not believe this is the case here.
It’s important to note that all targets
for 2022 were finalized a few weeks
before the start of the war in Ukraine,
which severely impacted the wider
economy and Europe in particular. Even
though the assumptions made at the
beginning of 2022 did not foresee the
drastic macro-economic developments
which impacted the performance of
the company, the Supervisory Board
took the feedback received from
shareholders, and the commitment
made following shareholder outreach
to not make changes after the fact,
to heart. As such, it neither adjusted
the targets nor did it apply discretion
to the evaluation of those targets.
While this had a limited impact on
personal objectives – which are largely
independent of the economic context
and measure performance on a given
metric versus that metric’s baseline
– it had a drastic effect on financial
objectives, which are measured against
a performance baseline extremely
sensitive to the macro-economic
context. In other words, while there was
strong realization of personal targets
which had a positive impact on the
financial performance, that impact was
diminished by the deterioration of the
economic environment very early in
the year, which rendered our budget
obsolete, but for which we did not adjust
our evaluation of performance.
The Supervisory Board recognizes
the efforts made by the Board of
Management to counter the difficulties
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91
Performance metrics LTI share plan 2022-2024
Weight
• 11,844 shares were conditionally
AkzoNobel adjusted EBITDA (in € million)
AkzoNobel return on investment (in %)
AkzoNobel revenue growth (in %)
Environmental, social and governance (ESG)
ESG performance metrics Measurement
Total reportable injury rate (TRR)
A three-year average, measured per 200,000 hours
0.23
Total waste – circular
Energy use (GJ/ton)
over all employees, including temporary workers
As the percentage circular waste of total waste
GJ per ton of production
Renewable electricity
Use of renewable electricity (own operations) as a
percentage of total electricity use
40%
20%
20%
20%
65%
1.73
50%
Target
(100%)
granted to Maarten de Vries, CFO
Vesting of the conditional grant is linked
to four performance metrics shown (see
the first table on the left).
Revenue growth as weighted average
is compared with a defined industry
peer group, consisting of the following
companies in the paints and coatings
sector: Sherwin-Williams, Nippon
Paint, PPG, Axalta and BASF Coatings.
Organic growth rates to calculate the
performance take into consideration
price, mix, volume growth and exclude
the effects of exchange rates and
presented by the macro-economic
underpins alignment over the long term.
mergers and acquisitions. For Axalta
environment and realizes that the impact
In addition to the required investment of
and Sherwin-Williams, only organic
on financial performance would have
25% of STI proceeds (net after tax and
growth percentage of the Performance
been more severe without their efforts
other deductions), both the CEO and the
Coatings business growth is taken into
and contributions through their personal
CFO decided to invest another 25% –
consideration.
performance. Despite the below
totaling the maximum investment of 50%
threshold performance on the financial
of total net STI proceeds for 2022.
The ESG targets consist of four equally
objectives, the Supervisory Board is of the
weighted targets related to our approach
opinion that the Board of Management
The Share-Matching Plan was suspen-
to sustainability (see the second table on
is deserving of its 132.7% payout on its
ded for STI payments made in the years
the left).
personal objectives which, for context
2019, 2020 and 2021. For this reason, no
given the zero pay-out on financial
matching shares have been received by
In the course of 2022, the Supervisory
objectives, results in a total STI 2022
Board of Management members in 2022.
Board determined for each target: (i)
pay-out of slightly below 40% of target.
the performance level below which no
Long-Term Incentives (LTI)
shares vest; (ii) the performance level at
As included in the summary of the main
Conditional grant LTI share plan
which the target number of shares vest;
elements of the management contract
2022-2024
and (iii) the performance level at which
of Greg Poux-Guillaume, which was
The Remuneration Committee
the maximum number of shares vest.
published upon his nomination for ap-
determines the grant levels to be made
pointment at the EGM on September 6,
in respect of members of the Board
Vesting of the LTI share
2022, Greg Poux-Guillaume is entitled to
of Management, within the limits and
plan 2020-2022
an at target, pro-rated bonus pay-out for
plans that have been approved by
Under the LTI share plan 2020-2022, a
the performance year 2022.
shareholders. In 2022, Greg Poux-
conditional grant of 12,616 shares was
Guillaume received a conditional grant
made to the CFO. As the CEO joined
The Remuneration Committee sub se-
of shares equivalent to 27/36th of the
AkzoNobel on October 1, 2022, no
quently determined that bonus payments
face value of 200% of his annual base
conditional grant was made in 2020 to
for the Board of Management would be:
salary (pro-rated) as approved by the
the CEO under this LTI share plan.
• Thierry Vanlancker, former CEO
EGM, while Maarten de Vries received
€469,260 (39.81% of salary)
a conditional grant of shares equivalent
In line with the Remuneration Policy,
• Maarten de Vries, CFO: €231,788
to the face value of 150% of his annual
vesting of 50% of the shares conditionally
(31.85% of salary)
base salary. The grant price was
granted in 2020 was linked to
• Greg Poux-Guillaume, CEO: €306,250
determined based on the average share
AkzoNobel’s ROI performance, which
(100% of salary)
price of an AkzoNobel common share in
was reviewed at the end of the perfor-
the two weeks following publication of
mance period by the Supervisory Board.
Share-Matching Plan
the annual results on February 22, 2022:
The Share-Matching Plan reiterates the
• 19,936 shares were conditionally
The Supervisory Board set the threshold
importance of share ownership, which
granted to Greg Poux-Guillaume, CEO
for ROI, excluding unallocated cost,
Remuneration report
STI on financial objectives
Performance metric
Adjusted OPI (in € mln)
Weighting
Threshold
Maximum
Performance
Pay-out
FCF (in € mln)
30%
Corresponding target
40%
Corresponding target
Corresponding award
Corresponding award
1,000
0%
350
0%
1,400
150%
975
150%
789
0.0%
(29)
0.0%
0.0%
0.0%
0.0%
Total
Actual performance on FCF and Adj. OPI, incl. and excl. Grupo Orbis, is below threshold.
The actual performance shown here is including Grupo Orbis.
STI on personal objectives
Realiza-
Weighted pay-
Weighted
tion
out (former) CEO
pay-out CFO
Personal objective Description
Performance
Pricing dynamics
Taking the required
AkzoNobel is perceived as outperforming the competition by
143%
pricing actions to offset
industry analysts. The actions taken by the Board of Manage-
high raw material prices,
ment resulted in AkzoNobel achieving more than its ambition
based on market oppor-
by realizing €186 million in pricing increases throughout 2022.
tunities and behavior of
competition.
Cost and inventory
Implementation of a
AkzoNobel has realized €31 million in cost savings through
122%
actions
various range of cost
several interventions in 2022. Inventory, while up, was mitigat-
measures to respond to
ed by a number of successful corrective actions resulting in
market circumstances
significant reduction in both OpEx costs and inventories (both
and raw material scarcity.
above target).
Resulting in
pay-out of
39.81%
Resulting in
pay-out of
31.85%
Organizational
The Board of Manage-
The engagement of the workforce is reflected in a 2022 OHI
133%
health
ment is expected to drive
score (Organizational Health Index) of 72 (second quartile
a healthy and engaged
position versus global database) for the overall organiza-
workforce and to foster
tion and is in the top decile for the senior executive group.
a culture of diversity and
Results have been improving steadily quarter by quarter and
inclusion.
are now stabilizing. The number of female executives in the
organization at the end of 2022 was 26%. This is a significant
improvement from 2021 (22%) and above target for 2022 to
achieve our goal of having 30% female executives by 2025.
Average perfor-
mance score
132.7%
the senior executive population
of Management contrasts with the
to the evaluation of those targets.
scoring in the top decile. Finally, the
0% payout on financial objectives, a
While this had a limited impact on
Supervisory Board wanted to ensure
discrepancy which could leave the
personal objectives – which are largely
a proper and complete handover of
impression of excessively lenient personal
independent of the economic context
responsibilities to the new CEO. On
targets, but the Supervisory Board does
and measure performance on a given
November 1, the Supervisory Board
not believe this is the case here.
metric versus that metric’s baseline
concluded that the handover was
– it had a drastic effect on financial
completed successfully and that the
It’s important to note that all targets
objectives, which are measured against
Board of Management had put in
for 2022 were finalized a few weeks
a performance baseline extremely
significant effort to ensure a proper
before the start of the war in Ukraine,
sensitive to the macro-economic
induction of the new CEO. This brings
which severely impacted the wider
context. In other words, while there was
the overall weighted performance on
economy and Europe in particular. Even
strong realization of personal targets
the organizational health objectives to
though the assumptions made at the
which had a positive impact on the
133%
beginning of 2022 did not foresee the
financial performance, that impact was
drastic macro-economic developments
diminished by the deterioration of the
In determining the outcome of the STI
which impacted the performance of
economic environment very early in
Performance metrics LTI share plan 2022-2024
Weight
AkzoNobel adjusted EBITDA (in € million)
AkzoNobel return on investment (in %)
AkzoNobel revenue growth (in %)
Environmental, social and governance (ESG)
ESG performance metrics Measurement
Total reportable injury rate (TRR)
Total waste – circular
Energy use (GJ/ton)
Renewable electricity
A three-year average, measured per 200,000 hours
over all employees, including temporary workers
As the percentage circular waste of total waste
GJ per ton of production
Use of renewable electricity (own operations) as a
percentage of total electricity use
40%
20%
20%
20%
Target
(100%)
0.23
65%
1.73
50%
presented by the macro-economic
environment and realizes that the impact
on financial performance would have
been more severe without their efforts
and contributions through their personal
performance. Despite the below
threshold performance on the financial
objectives, the Supervisory Board is of the
opinion that the Board of Management
is deserving of its 132.7% payout on its
personal objectives which, for context
given the zero pay-out on financial
objectives, results in a total STI 2022
pay-out of slightly below 40% of target.
As included in the summary of the main
elements of the management contract
of Greg Poux-Guillaume, which was
published upon his nomination for ap-
pointment at the EGM on September 6,
2022, Greg Poux-Guillaume is entitled to
an at target, pro-rated bonus pay-out for
the performance year 2022.
The Remuneration Committee sub se-
quently determined that bonus payments
for the Board of Management would be:
• Thierry Vanlancker, former CEO
€469,260 (39.81% of salary)
• Maarten de Vries, CFO: €231,788
elements, the Remuneration Committee
the company, the Supervisory Board
the year, which rendered our budget
(31.85% of salary)
applied a reasonableness test in which
took the feedback received from
obsolete, but for which we did not adjust
• Greg Poux-Guillaume, CEO: €306,250
the actual level of the performance
shareholders, and the commitment
our evaluation of performance.
(100% of salary)
was critically assessed in light of the
made following shareholder outreach
assumptions made at the beginning
to not make changes after the fact,
The Supervisory Board recognizes
of the year. The 132.7% achieved
to heart. As such, it neither adjusted
the efforts made by the Board of
on personal objectives by the Board
the targets nor did it apply discretion
Management to counter the difficulties
Share-Matching Plan
The Share-Matching Plan reiterates the
importance of share ownership, which
underpins alignment over the long term.
In addition to the required investment of
25% of STI proceeds (net after tax and
other deductions), both the CEO and the
CFO decided to invest another 25% –
totaling the maximum investment of 50%
of total net STI proceeds for 2022.
The Share-Matching Plan was suspen-
ded for STI payments made in the years
2019, 2020 and 2021. For this reason, no
matching shares have been received by
Board of Management members in 2022.
Long-Term Incentives (LTI)
Conditional grant LTI share plan
2022-2024
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 2022, Greg Poux-
Guillaume received a conditional grant
of shares equivalent to 27/36th of the
face value of 200% of his annual base
salary (pro-rated) as approved by the
EGM, while Maarten de Vries received
a conditional grant of shares equivalent
to the face value of 150% of his annual
base salary. 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 22, 2022:
• 19,936 shares were conditionally
granted to Greg Poux-Guillaume, CEO
• 11,844 shares were conditionally
granted to Maarten de Vries, CFO
Vesting of the conditional grant is linked
to four performance metrics shown (see
the first table on the left).
Revenue growth as weighted average
is compared with a defined industry
peer group, consisting of the following
companies in the paints and coatings
sector: Sherwin-Williams, Nippon
Paint, PPG, Axalta and BASF Coatings.
Organic growth rates to calculate the
performance take into consideration
price, mix, volume growth and exclude
the effects of exchange rates and
mergers and acquisitions. For Axalta
and Sherwin-Williams, only organic
growth percentage of the Performance
Coatings business growth is taken into
consideration.
The ESG targets consist of four equally
weighted targets related to our approach
to sustainability (see the second table on
the left).
In the course of 2022, the Supervisory
Board determined for each target: (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.
Vesting of the LTI share
plan 2020-2022
Under the LTI share plan 2020-2022, a
conditional grant of 12,616 shares was
made to the CFO. As the CEO joined
AkzoNobel on October 1, 2022, no
conditional grant was made in 2020 to
the CEO under this LTI share plan.
In line with the Remuneration Policy,
vesting of 50% of the shares conditionally
granted in 2020 was linked to
AkzoNobel’s ROI performance, which
was reviewed at the end of the perfor-
mance period by the Supervisory Board.
The Supervisory Board set the threshold
for ROI, excluding unallocated cost,
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91
Remuneration report
2022 remuneration of the Board of Management –
Number of performance-related shares
—
—
—
(13,541)
341
9,495
—
(9,495)
—
—
Greg Poux-
Guillaume
(CEO)
Maarten
de Vries
(CFO)
13,200
12,606
—
—
—
11,844
ANS2019
2019 – 2021
ANS2020
2020 – 2022
ANS2021
2021 – 2023
ANS2022
2022 – 2024
January 1,
2019
January 1,
2020
January 1,
2021
January 1,
2022
March
2022
February
2023
February
2024
February
2025
March
2024
February
2025
February
2026
February
2027
Performance/
Vesting period Award date
Plan
End of
perfptmance
period
End of
holding
period
Balance at
January 1,
20221
Awarded
in 2022
Vested
in 2022
Forfeited
in 2022
Dividend
in 2022
Balance at
December
31, 2022
ANS2022
2022 – 2024
October 1,
2022
February
2025
February
2027
—
19,936
—
—
514
20,450
—
—
—
—
325
12,931
306
12,150
Total rewards (incl. benefits, excl. one-off special payments)
One-off special payments
Total rewards (incl. benefits and one-off special payments)
1,515,816
1,843,977
2,583,320
1,129,122
1 The balance of shares at January 1, 2022, includes cumulative dividend. For ANS2020, the cumulative dividend over 2020 and
2021 of 4.63% applies, and for ANS2021, the 2021 dividend yield of 2.58% applies.
at 17% and the maximum at 25%. As
ROI performance was below threshold
in 2022, the corresponding vesting
percentage for this specific part of the
long-term incentive is 0%.
The other 50% of the conditional grant
was linked to AkzoNobel’s relative total
shareholder return (TSR) performance
compared with the companies in the
following defined industry peer group:
• Asian Paints
• Axalta
• Masco Corp
• Nippon Paint
• Tikkurilla
• PPG
• RPM
International
• Sherwin-Williams
• Kansai Paint
In line with last year, following the
acquisition of Tikkurilla by PPG, the
Remuneration Committee decided to
freeze Tikkurilla’s share price at €14.23.
This share price was calculated as
the average closing share price in
the four weeks before the acquisition
was publicly announced. Independent
external experts conducted an analysis
to calculate the number of shares
that would 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 2020 to 2022 resulted in the
eighth position within the ranking of the
peer group companies. This ranking
resulted in a vesting of 0% for this part
of the long-term incentive, as shown in
the table below.
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
Based on the company’s combined ROI
and TSR performance, the final vesting
percentage of the 2020 conditional grant
is zero. The Remuneration Committee
determined that based on this
performance, no shares would vest for
Thierry Vanlancker and Maarten de Vries.
Overview – number of
performance-related shares
An overview of shares awarded, or due
to, Board of Management members is
shown above.
Claw back, value adjustment
and loans
In 2022, there was no cause for a
claw back or value adjustment by
the Remuneration Committee. The
company does not grant loans, advance
payments or guarantees to members
of the Supervisory Board, members of
the Board of Management or any family
member of such persons.
Shareholding requirements and
share-matching
Board of Management members are
expected to build up a shareholding
requirement in the company. The
minimum shareholding requirement
must be accrued within five years. This
includes privately purchased shares 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% of annual base salary
for the CFO.
As of December 31, 2022, CEO Greg
Poux-Guillaume held zero shares. CFO
Maarten de Vries held 21,766 shares.
Shares acquired by the CFO during
2022 contribute towards his required
shareholding. On December 31, 2022,
he fulfilled this requirement by holding
the equivalent of 187% of his annual
base salary.
Shares obtained by Board of Manage-
ment members under the performance-
related share plan are taken into account
for share ownership purposes once they
become unconditional. This includes
vested shares to be retained during the
two-year blocking period after vesting.
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93
in €
Remuneration CEO
Fixed compensation
% change fixed compensation
% change total compensation
Remuneration CFO
Fixed compensation
% change fixed compensation
% change total compensation
Company performance
Net profit number
Net profit % change
ROI number (excl. unallocated cost)
ROI % change
Adjusted OPI number
Adjusted OPI % change
Average salary per employee2
% change average remuneration
CEO pay ratio
Comparative table of remuneration and company performance over last five reported financial years
2018
2019
2020
2021
2022
Thierry Vanlancker
Greg Poux-Guillaume1
Total rewards (incl. benefits, excl. one-off special payments)
One-off special payments
Total rewards (incl. benefits and one-off special payments)
2,899,883
3,561,212
1,151,900
2,899,883
1,186,500
3,561,212
Maarten de Vries
797,600
1,515,816
n/a
819,800
1,843,977
n/a
1%
3%
12%
(30%)
702%
16.6
(8%)
(12%)
6%
56.4
56.4
1,245,800
3,494,689
2,067,000
5,561,689
5%
56%
865,500
2,168,658
1,391,000
3,559,658
6%
93%
17%
20.6
20%
11%
2%
99.2
62.3
1,408,900
4,465,361
1,806,000
6,271,361
13%
13%
882,700
2,583,320
n/a
2%
(27%)
32%
19.5
(5%)
(1%)
(3%)
115.7
82.4
n/a
3%
23%
n/a
3%
22%
(92%)
17.2
4%
24%
(3%)
65.0
65.0
1,581,800
3,337,352
n/a
3,337,352
12%
(47%)
927,650
1,129,122
n/a
5%
(56%)
(58%)
11.3
(42%)
(28%)
3%
59.8
59.8
6,674,000,000
539,000,000
630,000,000
829,000,000
352,000,000
Average remuneration on a full-time equivalent basis of employees
56,619
54,825
56,061
54,220
55,840
798,000,000
991,000,000
1,099,000,000
1,092,000,000
789,000,000
CEO pay ratio (incl. benefits, excl. one-off special payments)
1 In years of transition, the compensation for the newly appointed Board of Management member has been annualized.
2 Calculated as employee benefits over average number of employees.
Number of potential matching shares
Maarten de
2022
Vries
shares
1,338
Year of share
investment
Potential
matching
Matched in
Forfeited in
Balance at
2022
2022
year-end 2022
-
-
1,338
retire in the year they reach legal
be made, equal to the annual gross
base salary in force at the time of the
agreement’s termination. Members of
the Board of Management normally
retirement age.
Comparative information
There were no shares that qualified
supported with 99.96% of the votes.
Internal pay ratios are a relevant
for share-matching under the Share-
At the 2022 EGM, CEO Greg Poux-
input factor for determining the
Matching Plan in 2022. Reference is
Guillaume was appointed for a period
appropriateness of the implementation of
made to the table above on outstanding
ending at the AGM to be held in 2027.
the Remuneration Policy, as recognized
potential matching shares.
His appointment was supported with
in the Dutch Corporate Governance
Board contracts
99.37% of the votes.
Code. In 2022, the ratio between the
annual total compensation for the CEO
Agreements for Board of Management
The notice period by the Board member,
and the average annual compensation
members are in principle concluded for
and by the company, shall be subject
for an employee was 59.8 (2021: 115.7).
a period not exceeding four years. After
to a six-month term. In the event that a
Further details on the development of
the initial term, reappointments may take
Board member is not reappointed, or
these amounts and ratios over time can
place for consecutive periods of up to
the agreement ends for other reasons
be found above.
four years each. At the 2022 AGM, CFO
than urgent cause or serious culpable
Maarten de Vries was reappointed for a
acts or omissions by the Board member,
four-year period. His reappointment was
a one-off gross severance payment will
Comparative table of remuneration and company performance over last five reported financial years
2018
2019
2020
2021
2022
Thierry Vanlancker
Greg Poux-Guillaume1
in €
Remuneration CEO
Fixed compensation
Total rewards (incl. benefits, excl. one-off special payments)
One-off special payments
1,151,900
2,899,883
n/a
1,186,500
3,561,212
n/a
Total rewards (incl. benefits and one-off special payments)
2,899,883
3,561,212
% change fixed compensation
% change total compensation
Remuneration CFO
Fixed compensation
Total rewards (incl. benefits, excl. one-off special payments)
One-off special payments
1%
3%
Maarten de Vries
797,600
1,515,816
n/a
3%
23%
819,800
1,843,977
n/a
Total rewards (incl. benefits and one-off special payments)
1,515,816
1,843,977
12%
(30%)
3%
22%
1,245,800
3,494,689
2,067,000
5,561,689
5%
56%
865,500
2,168,658
1,391,000
3,559,658
6%
93%
1,408,900
4,465,361
1,806,000
6,271,361
13%
13%
882,700
2,583,320
n/a
1,581,800
3,337,352
n/a
3,337,352
12%
(47%)
927,650
1,129,122
n/a
2,583,320
1,129,122
2%
(27%)
5%
(56%)
Remuneration report
2022 remuneration of the Board of Management –
Number of performance-related shares
Performance/
perfptmance
holding
January 1,
Awarded
Vested
Forfeited
Dividend
December
Plan
Vesting period Award date
period
20221
in 2022
in 2022
in 2022
in 2022
31, 2022
End of
End of
Balance at
Balance at
ANS2022
2022 – 2024
October 1,
—
19,936
—
—
514
20,450
period
February
2025
March
2022
February
2023
February
2024
February
2025
February
2027
March
2024
2025
2026
February
2027
2022
2019
2020
2021
2022
ANS2019
2019 – 2021
January 1,
9,495
—
(9,495)
—
—
ANS2020
2020 – 2022
January 1,
February
13,200
—
(13,541)
341
—
—
ANS2021
2021 – 2023
January 1,
February
12,606
ANS2022
2022 – 2024
January 1,
—
11,844
—
—
—
—
325
12,931
306
12,150
Greg Poux-
Guillaume
(CEO)
Maarten
de Vries
(CFO)
1 The balance of shares at January 1, 2022, includes cumulative dividend. For ANS2020, the cumulative dividend over 2020 and
2021 of 4.63% applies, and for ANS2021, the 2021 dividend yield of 2.58% applies.
at 17% and the maximum at 25%. As
resulted in a vesting of 0% for this part
payments or guarantees to members
ROI performance was below threshold
of the long-term incentive, as shown in
of the Supervisory Board, members of
in 2022, the corresponding vesting
the table below.
the Board of Management or any family
percentage for this specific part of the
member of such persons.
long-term incentive is 0%.
Relative TSR vesting scheme for the
The other 50% of the conditional grant
was linked to AkzoNobel’s relative total
Rank
Vesting (as % of 50%
of conditional grant)
shareholder return (TSR) performance
compared with the companies in the
following defined industry peer group:
• Asian Paints
• Axalta
• PPG
• RPM
• Masco Corp
International
• Nippon Paint
• Sherwin-Williams
• Tikkurilla
• Kansai Paint
1
2
3
4
5
6
7
8-10
share-matching
Board of Management members are
expected to build up a shareholding
requirement in the company. The
minimum shareholding requirement
must be accrued within five years. This
includes privately purchased shares and
vested shares granted under AkzoNobel
share-based compensation plans. The
minimum shareholding requirement
is 300% of annual base salary for the
—
—
150
135
120
100
75
50
25
0
Based on the company’s combined ROI
CEO and 150% of annual base salary
In line with last year, following the
and TSR performance, the final vesting
for the CFO.
acquisition of Tikkurilla by PPG, the
percentage of the 2020 conditional grant
Remuneration Committee decided to
is zero. The Remuneration Committee
As of December 31, 2022, CEO Greg
freeze Tikkurilla’s share price at €14.23.
determined that based on this
Poux-Guillaume held zero shares. CFO
This share price was calculated as
performance, no shares would vest for
Maarten de Vries held 21,766 shares.
the average closing share price in
Thierry Vanlancker and Maarten de Vries.
Shares acquired by the CFO during
the four weeks before the acquisition
was publicly announced. Independent
Overview – number of
2022 contribute towards his required
shareholding. On December 31, 2022,
external experts conducted an analysis
performance-related shares
he fulfilled this requirement by holding
to calculate the number of shares
An overview of shares awarded, or due
the equivalent of 187% of his annual
that would vest according to the TSR
to, Board of Management members is
base salary.
ranking. In order to adjust for changes in
shown above.
exchange rates, all local currencies were
Shares obtained by Board of Manage-
converted into euros.
Claw back, value adjustment
ment members under the performance-
and loans
related share plan are taken into account
AkzoNobel’s TSR performance during
In 2022, there was no cause for a
for share ownership purposes once they
the period 2020 to 2022 resulted in the
claw back or value adjustment by
become unconditional. This includes
eighth position within the ranking of the
the Remuneration Committee. The
vested shares to be retained during the
peer group companies. This ranking
company does not grant loans, advance
two-year blocking period after vesting.
conditional grants
Shareholding requirements and
Average remuneration on a full-time equivalent basis of employees
Average salary per employee2
% change average remuneration
CEO pay ratio
CEO pay ratio (incl. benefits, excl. one-off special payments)
56,619
54,825
56,061
54,220
55,840
6%
56.4
56.4
(3%)
65.0
65.0
2%
99.2
62.3
(3%)
115.7
82.4
3%
59.8
59.8
1 In years of transition, the compensation for the newly appointed Board of Management member has been annualized.
2 Calculated as employee benefits over average number of employees.
Number of potential matching shares
Year of share
investment
Maarten de
Vries
2022
Potential
matching
shares
1,338
Matched in
2022
Forfeited in
2022
Balance at
year-end 2022
-
-
1,338
There were no shares that qualified
for share-matching under the Share-
Matching Plan in 2022. Reference is
made to the table above on outstanding
potential matching shares.
Board contracts
Agreements for Board of Management
members are in principle concluded for
a period not exceeding four years. After
the initial term, reappointments may take
place for consecutive periods of up to
four years each. At the 2022 AGM, CFO
Maarten de Vries was reappointed for a
four-year period. His reappointment was
supported with 99.96% of the votes.
At the 2022 EGM, CEO Greg Poux-
Guillaume was appointed for a period
ending at the AGM to be held in 2027.
His appointment was supported with
99.37% of the votes.
The notice period by the Board member,
and by the company, shall be subject
to a six-month term. In the event that a
Board member is not reappointed, or
the agreement ends for other reasons
than urgent cause or serious culpable
acts or omissions by the Board member,
a one-off gross severance payment will
be made, equal to the annual gross
base salary in force at the time of the
agreement’s termination. Members of
the Board of Management normally
retire in the year they reach legal
retirement age.
Comparative information
Internal pay ratios are a relevant
input factor for determining the
appropriateness of the implementation of
the Remuneration Policy, as recognized
in the Dutch Corporate Governance
Code. In 2022, the ratio between the
annual total compensation for the CEO
and the average annual compensation
for an employee was 59.8 (2021: 115.7).
Further details on the development of
these amounts and ratios over time can
be found above.
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93
6,674,000,000
539,000,000
630,000,000
829,000,000
352,000,000
702%
16.6
(8%)
(92%)
17.2
4%
17%
20.6
20%
32%
19.5
(5%)
(58%)
11.3
(42%)
798,000,000
991,000,000
1,099,000,000
1,092,000,000
789,000,000
(12%)
24%
11%
(1%)
(28%)
% change fixed compensation
% change total compensation
Company performance
Net profit number
Net profit % change
ROI number (excl. unallocated cost)
ROI % change
Adjusted OPI number
Adjusted OPI % change
Remuneration report
Over the years of transition, between
2018 and 2020 the company’s financial
performance fluctuated significantly
as the table on this page shows. In
2018, net profits were exceptionally
high, 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. In 2018, the increase
in average salary was influenced by the
inclusion of a one-off €57 million pension
cost for the UK guaranteed minimum
pension equalizations.
In 2020, total rewards (including
benefits) for the Board of Management
included a one-off special payment for
the 2020 Performance Incentive Plan,
which incentivized improvement on the
company’s return on sales (ROS). The
plan was put in place and approved by
the AGM following the divestment of
Specialty Chemicals.
2022 presented us with the continued
impact of the COVID-19 pandemic, the
geo-political consequences of the war
in Ukraine, shortages and significant
price increases in raw materials and
transportation. This volatile business
climate had a severe impact on the
results of the company. Consequently, all
financial components of the Short and
Long-Term Incentives did not meet the
threshold and delivered no pay-out. This
reduced performance linked payments in
the current financial year.
The annualized total compensation for
Thierry Vanlancker reduced by 65%
compared with 2021, to €1,912,210
versus €5,514,195 in the previous year.
This reflects the fact that his Short-
Term Incentive paid out around half and
no shares granted under the LTI plan
2020 vested. Compared with 2021,
the annualized total compensation for
Maarten de Vries reduced by 48%.
In 2021, total rewards (including
benefits) for the CEO included a one-off
special share grant to compensate for
the loss of shares due to the two-year
reappointment and the fact that shares
granted as from 2021 will only vest on a
pro-rated basis.
AkzoNobel aims to attract and retain
high caliber members of the Board
of Management. Competitive and
motivating remuneration packages are
an important element of such attraction
and retention. The significant reduction
in compensation of the CFO in 2022,
coupled with the projected limited
vesting of the 2021 Long-Term Incentive
plan – which vests at the end of 2023
and was based on the abandoned
€2 billion EBITDA target – is a cause
for concern. The Supervisory Board
decided not to apply any discretion to
mitigate this impact in 2022 and does
not intend to apply discretion to the
2021 Long-Term Incentive plan,
in line with last year’s feedback from
our stakeholders. Specific reten-
tion measures for the CFO may there-
fore be proposed for shareholder
consideration.
Remuneration for the
Supervisory Board
Supervisory Board members receive a
fixed annual fee for their membership
and one or more fixed committee fee(s).
In addition, Supervisory Board members
receive an attendance fee for any Super-
visory Board or committee meetings
they attend outside their country of
residence (€2,500 for continental
meetings and €5,000 for intercontinental
meetings). Travel expenses and facilities
are borne by the company and reviewed
by the Audit Committee.
Fixed base fee
Audit Committee fee
Remuneration Committee/
Nomination Committee fee
Chair
Deputy Chair
Member
€150,000
€93,000
€80,000
Chair
€25,000
Member
€20,000
Chair
€20,000
Member
€15,000
2022 Remuneration of the Supervisory Board
in €
Remuneration
Attendance fee
Committee
allowance fees
Total remuneration
Nils Smedegaard Andersen, Chair
Byron Grote, Deputy Chair
Pamela Kirby
Dick Sluimers
Ester Baiget1
Patrick Thomas
Hans Van Bylen1
Jolanda Poots-Bijl
Total 2022
Total 2021
1 As of April 23, 2022.
150,000
93,000
80,000
80,000
55,165
80,000
55,165
80,000
673,330
612,670
12,500
12,500
10,000
—
5,000
5,000
5,000
—
50,000
7,500
20,000
25,000
15,000
20,000
13,791
20,000
10,343
20,000
144,135
130,866
182,500
130,500
105,000
100,000
73,956
105,000
70,508
100,000
867,465
751,036
The table on the previous page pro-
Operating cash flow (OCF) has been
– Greg Poux-Guillaume, CEO:
vides insights into the fixed base fees
replaced by free cash flow (FCF). The
€1,225,000
and committee fees for the Supervisory
amended Policy became effective (retro-
– Maarten de Vries, CFO:
Board members. Fees are bench-
actively) from January 1, 2022, and will
€749,600
marked versus AEX companies and
remain effective until a new Policy
• Metrics applied for STI in 2022 were
AkzoNobel’s European remuneration
is approved, which will be proposed
adjusted OPI and FCF, as per the
peer group. Implementation of the
to shareholders no later than the
Remuneration Policy, to support the
Remuneration Policy for the Supervisory
AGM in 2025.
company’s strategy and will continue
ration of the Supervisory Board is
The Supervisory Board has concluded
Board in 2022 resulted in the pay-out
shown in the second table opposite.
In accordance with the Code, members
are not remunerated in shares.
A five-year overview of the total remune-
presented below.
Remuneration Policy
for 2023
Remuneration Policy for the
Board of Management
to apply in 2023
• Metrics applied for LTI will remain
the same, in line with the strategic
direction of the company, and will
continue to include ESG metrics
the Remuneration Policy for the Board
of Management, last approved at the
2022 AGM, is in line with the company’s
objectives. The remuneration it provides
Remuneration Policy for the
Supervisory Board
is balanced and adequate and will
The Supervisory Board has concluded
remain unchanged. The disclosure on
that the Remuneration Policy for the
The remuneration policies for the Board
the Policy has been extended to provide
Supervisory Board – approved at the
of Management and Supervisory Board
additional insight to comply with SRD
AGM on April 22, 2021 – is in line with
were reviewed by the Supervisory Board
II. For implementation in 2023, the
the objectives of the company. The
in 2020/2021 and approved at the AGM
Supervisory Board has decided that:
remuneration it provides is balanced and
in 2021, taking into consideration input
• The base salary of the CEO was
adequate and will remain unchanged.
from stakeholders, the requirements of
agreed upon when he was hired on
The disclosure on the Policy has been
the EU Directive on the encouragement
October 1, 2022, and will remain in
extended to provide additional insight in
of long-term shareholder engagement
force until January 1, 2024. The base
compliance with SRD II.
(SRD II) and the Dutch regulation
salary of the CFO will be increased by
implementing this Directive. At the AGM
3%, in line with the salary adjustments
in 2022, an amendment regarding the
applied for AkzoNobel employees in
STI metrics in the Policy was approved.
the Netherlands
Comparative table of remuneration of the Supervisory Board over last five reported financial years
in €
Nils Smedegaard Andersen, Chair2
Anthony Burgmans3
Peggy Bruzelius4
Byron Grote, Deputy Chair1
Louis Hughes3
Pamela Kirby
Dick Sluimers
Ben Verwaayen6
Sue Clark7
Patrick Thomas
Michiel Jaski7
Jolanda Poots-Bijl5
Ester Baiget8
Hans Van Bylen8
Total remuneration
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
2021
172,500
2022
182,500
114,250
120,500
130,500
—
—
—
95,000
100,000
—
29,492
102,500
31,044
100,000
—
—
751,036
(9.73)
—
—
—
—
—
—
105,000
100,000
105,000
100,000
73,956
70,508
867,465
15.50
—
—
—
87,500
90,000
32,775
87,500
92,500
85,000
85,000
—
—
832,025
(13.32)
% change total remuneration
1 Deputy Chair as of
October 18, 2016.
2 As of May 1, 2018.
3 Until April 30, 2018.
4 Until April 30, 2019.
5 As of May 1, 2019.
6 Until April 24, 2020.
7 Until April 22, 2021.
8 As of April 23, 2022.
94
Leadership and governance | AkzoNobel Report 2022
AkzoNobel Report 2022 | Leadership and governance
95
Remuneration report
Over the years of transition, between
2022 presented us with the continued
coupled with the projected limited
2018 and 2020 the company’s financial
impact of the COVID-19 pandemic, the
vesting of the 2021 Long-Term Incentive
performance fluctuated significantly
geo-political consequences of the war
plan – which vests at the end of 2023
as the table on this page shows. In
in Ukraine, shortages and significant
and was based on the abandoned
2018, net profits were exceptionally
price increases in raw materials and
€2 billion EBITDA target – is a cause
high, mainly due to the divestment of
transportation. This volatile business
for concern. The Supervisory Board
Specialty Chemicals, with a deal result
climate had a severe impact on the
decided not to apply any discretion to
of €5,811 million after tax. The transition
results of the company. Consequently, all
mitigate this impact in 2022 and does
was also reflected in the development
financial components of the Short and
not intend to apply discretion to the
of remuneration. In 2018, the increase
Long-Term Incentives did not meet the
2021 Long-Term Incentive plan,
in average salary was influenced by the
threshold and delivered no pay-out. This
in line with last year’s feedback from
inclusion of a one-off €57 million pension
reduced performance linked payments in
our stakeholders. Specific reten-
cost for the UK guaranteed minimum
the current financial year.
pension equalizations.
tion measures for the CFO may there-
fore be proposed for shareholder
The annualized total compensation for
consideration.
In 2020, total rewards (including
Thierry Vanlancker reduced by 65%
benefits) for the Board of Management
compared with 2021, to €1,912,210
included a one-off special payment for
versus €5,514,195 in the previous year.
the 2020 Performance Incentive Plan,
This reflects the fact that his Short-
which incentivized improvement on the
Term Incentive paid out around half and
Remuneration for the
Supervisory Board
company’s return on sales (ROS). The
no shares granted under the LTI plan
Supervisory Board members receive a
plan was put in place and approved by
2020 vested. Compared with 2021,
fixed annual fee for their membership
the AGM following the divestment of
the annualized total compensation for
and one or more fixed committee fee(s).
Specialty Chemicals.
Maarten de Vries reduced by 48%.
In addition, Supervisory Board members
In 2021, total rewards (including
AkzoNobel aims to attract and retain
visory Board or committee meetings
benefits) for the CEO included a one-off
high caliber members of the Board
they attend outside their country of
special share grant to compensate for
of Management. Competitive and
residence (€2,500 for continental
the loss of shares due to the two-year
motivating remuneration packages are
meetings and €5,000 for intercontinental
reappointment and the fact that shares
an important element of such attraction
meetings). Travel expenses and facilities
granted as from 2021 will only vest on a
and retention. The significant reduction
are borne by the company and reviewed
pro-rated basis.
in compensation of the CFO in 2022,
by the Audit Committee.
receive an attendance fee for any Super-
The table on the previous page pro-
vides insights into the fixed base fees
and committee fees for the Supervisory
Board members. Fees are bench-
marked versus AEX companies and
AkzoNobel’s European remuneration
peer group. Implementation of the
Remuneration Policy for the Supervisory
Board in 2022 resulted in the pay-out
shown in the second table opposite.
In accordance with the Code, members
are not remunerated in shares.
A five-year overview of the total remune-
ration of the Supervisory Board is
presented below.
Remuneration Policy
for 2023
The remuneration policies for the Board
of Management and Supervisory Board
were reviewed by the Supervisory Board
in 2020/2021 and approved at the AGM
in 2021, taking into consideration 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. At the AGM
in 2022, an amendment regarding the
STI metrics in the Policy was approved.
Operating cash flow (OCF) has been
replaced by free cash flow (FCF). The
amended Policy became effective (retro-
actively) from January 1, 2022, and will
remain effective until a new Policy
is approved, which will be proposed
to shareholders no later than the
AGM in 2025.
Remuneration Policy for the
Board of Management
The Supervisory Board has concluded
the Remuneration Policy for the Board
of Management, last approved at the
2022 AGM, is in line with the company’s
objectives. The remuneration it provides
is balanced and adequate and will
remain unchanged. The disclosure on
the Policy has been extended to provide
additional insight to comply with SRD
II. For implementation in 2023, the
Supervisory Board has decided that:
• The base salary of the CEO was
agreed upon when he was hired on
October 1, 2022, and will remain in
force until January 1, 2024. The base
salary of the CFO will be increased by
3%, in line with the salary adjustments
applied for AkzoNobel employees in
the Netherlands
– Greg Poux-Guillaume, CEO:
€1,225,000
– Maarten de Vries, CFO:
€749,600
• Metrics applied for STI in 2022 were
adjusted OPI and FCF, as per the
Remuneration Policy, to support the
company’s strategy and will continue
to apply in 2023
• Metrics applied for LTI will remain
the same, in line with the strategic
direction of the company, and will
continue to include ESG metrics
Remuneration Policy for the
Supervisory Board
The Supervisory Board has concluded
that the Remuneration Policy for the
Supervisory Board – approved at the
AGM on April 22, 2021 – is in line with
the objectives of the company. The
remuneration it provides is balanced and
adequate and will remain unchanged.
The disclosure on the Policy has been
extended to provide additional insight in
compliance with SRD II.
Fixed base fee
Audit Committee fee
Comparative table of remuneration of the Supervisory Board over last five reported financial years
Remuneration Committee/
Nomination Committee fee
Chair
Deputy Chair
Member
€150,000
€93,000
€80,000
Chair
€25,000
Member
€20,000
Chair
€20,000
Member
€15,000
2022 Remuneration of the Supervisory Board
in €
Remuneration
Attendance fee
allowance fees
Total remuneration
Nils Smedegaard Andersen, Chair
Byron Grote, Deputy Chair
Pamela Kirby
Dick Sluimers
Ester Baiget1
Patrick Thomas
Hans Van Bylen1
Jolanda Poots-Bijl
Total 2022
Total 2021
1 As of April 23, 2022.
150,000
93,000
80,000
80,000
55,165
80,000
55,165
80,000
673,330
612,670
12,500
12,500
10,000
—
5,000
5,000
5,000
—
50,000
7,500
Committee
20,000
25,000
15,000
20,000
13,791
20,000
10,343
20,000
144,135
130,866
182,500
130,500
105,000
100,000
73,956
105,000
70,508
100,000
867,465
751,036
in €
Nils Smedegaard Andersen, Chair2
Anthony Burgmans3
Peggy Bruzelius4
Byron Grote, Deputy Chair1
Louis Hughes3
Pamela Kirby
Dick Sluimers
Ben Verwaayen6
Sue Clark7
Patrick Thomas
Michiel Jaski7
Jolanda Poots-Bijl5
Ester Baiget8
Hans Van Bylen8
Total remuneration
% change total remuneration
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)
2021
172,500
—
—
120,500
—
95,000
100,000
—
29,492
102,500
31,044
100,000
—
—
751,036
(9.73)
2022
182,500
—
—
130,500
—
105,000
100,000
—
—
105,000
—
100,000
73,956
70,508
867,465
15.50
1 Deputy Chair as of
October 18, 2016.
2 As of May 1, 2018.
3 Until April 30, 2018.
4 Until April 30, 2019.
5 As of May 1, 2019.
6 Until April 24, 2020.
7 Until April 22, 2021.
8 As of April 23, 2022.
94
Leadership and governance | AkzoNobel Report 2022
AkzoNobel Report 2022 | Leadership and governance
95
Capital markets
AkzoNobel and the
capital markets
Shares
AkzoNobel’s common shares are listed
on Euronext Amsterdam. We’re included
in the AEX Index, which consists of
the top 25 listed companies in the
Netherlands, ranked on the basis of
stock market turnover and free float.
During 2022, 159 million AkzoNobel
shares were traded on Euronext
Amsterdam, with €11.6 billion turnover
(2021: volume of 136 million, turnover of
€13.2 billion).
We have a sponsored level 1 American
Depositary Receipt (ADR) program and
ADRs can be traded on the international
OTCQX platform in the US. During 2022,
51 million ADRs were traded, with $1.2
billion total turnover (2021: volume of
19 million, turnover of $735 million).
See 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 institutional
shares chart shows the geographical
spread of institutional shareholders,
of which the majority are based in the
1 As calculated by Nasdaq, according to their
methodology, which is to include the sum of:
(1) Core sustainable and responsible investor
firms where 100% of equity assets are managed
with an environmental, social and governance
(ESG) approach; (2) Sustainable and responsible
investor themed funds managed by a broad
range of sustainable and responsible investors.
2 As calculated by Nasdaq and includes
investment funds that take into account the
impact companies they invest in have on the
environment, their stakeholders and society,
alongside potential financial returns.
96
Leadership and governance | AkzoNobel Report 2022
Benchmark performance indexed to AkzoNobel share price
as of December 31, 2021 AkzoNobel share price in €
AkzoNobel
AEX index
Bloomberg Europe Chemicals Index
Bloomberg Global Chemicals Index
100
90
80
70
60
50
40
1
2
,
1
3
c
e
D
2
2
n
a
J
2
2
b
e
F
2
2
r
a
M
2
2
r
p
A
2
2
y
a
M
2
2
n
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J
2
2
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J
2
2
g
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A
2
2
t
p
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2
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c
O
2
2
v
o
N
2
2
,
1
3
c
e
D
US (61%) and the UK (13%). Around
6% 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
institutional shareholder base was
represented by ESG investors1, while
13% of the share capital was held by
ESG funds2 at year-end 2022.
buybacks. In January 2022, we finalized
the €1 billion share buyback announced
on February 17, 2021. During 2022, we
completed another €500 million share
buyback program. In total, €632 million
worth of shares was repurchased during
the year and 7.5 million shares were
canceled.
Delivering on our capital allocation
priorities, we continued returning cash
to our shareholders in the form of share
The AkzoNobel share price was down
35% at year-end 2022, compared with
year-end 2021. The Bloomberg Global
Chemicals Index was down 22%,
Key share data3
Year-end (share price in €)
Year-high (share price in €)4
Year-low (share price in €)4
Number of shares outstanding at year-end (in millions)
Market capitalization at year-end (in € billions)
Dividend per share (in €)
Dividend yield (in %)
3 Based on Bloomberg share data.
4 Based on close value.
2020
87.86
91.60
48.50
191
16.7
1.95
2.2
2021
96.50
107.80
83.50
182
17.5
1.98
2.1
2022
62.56
98.50
56.22
174
10.9
1.98
3.2
Distribution of institutional shares
Analyst recommendations
Dividend
in 2022 in %
C
C
B
B
A US
B UK
C Rest of Europe
D Rest of world
D
D
C
A
A
B
A
A Buy
B Hold
C Sell
61
13
21
5
Our dividend policy is to pay a stable
to rising dividend. In 2022, an interim
dividend of €0.44 per share (2021:
€0.44) was paid. The Board of
Management proposes a 2022 final
dividend of €1.54 per share, which
would equal a total 2022 dividend of
€1.98 (2021: €1.98) per share.
16
6
2
The dividend proposed to the 2023
Annual General Meeting of shareholders,
following adoption, will be payable as
of May 5, 2023. AkzoNobel’s shares
will be trading ex-dividend as of April
25, 2023. In compliance with the listing
requirements of Euronext Amsterdam,
the record date for the final dividend will
be April 26, 2023.
Bloomberg Europe Chemical Index
and governance (ESG) practices –
was down by 14%, and the AEX lost
giving investors the opportunity to
14% at year-end 2022 (see Share price
invest in the most sustainable listed
Dividend in € per share
performance graph on previous page).
companies. Our inclusion is based
on the assessment performed by
Interim dividend
Final dividend
Analyst recommendations
Sustainalytics.
At year-end 2022, AkzoNobel was
covered by 24 equity research analysts.
Following 2022 reviews, our ESG
An overview of analyst recommendations
performance was reaffirmed by external
is shown in the graph above.
rating agencies. For example, AkzoNobel
1.49
External benchmarks
maintained the highest possible rating
(AAA) from MSCI for the seventh
In 2022, AkzoNobel was included as
consecutive year, and the company is
one of the 25 best-in-class companies
considered “low risk” by Sustainalytics
Total
1.95
1.98
1.98
1.52
1.54
1.54*
in the new AEX® ESG Index on
– and ESG top rated in our industry. For
Euronext Amsterdam. The index
a full overview, please refer to the ESG
identifies companies that are demon-
rating agencies and benchmarks in the
0.41
2019
0.43
2020
0.44
2021
0.44
2022
strating the best environmental, social
Sustainability statements.
* Proposed.
Rating agency
Moody’s1
Standard & Poor’s2
Long-term rating
Baa1
BBB
Outlook
Negative
Stable
1 Rating affirmed on October 11, 2022.
2 Rating updated on November 22, 2022.
Bonds maturity in € millions (nominal amounts)
500
500
750
600
600
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Credit rating and bonds
AkzoNobel is committed to retaining a
strong investment grade credit rating.
Regular review meetings are held
between rating agencies and AkzoNobel
senior management. See the table on
the left for the credit ratings and outlook
at year-end 2022.
The maturity schedule of outstanding
bonds is shown on the left.
For further information please
visit our website:
akzonobel.com/en/investors
AkzoNobel Report 2022 | Leadership and governance
97
Capital markets
AkzoNobel and the
capital markets
Shares
Benchmark performance indexed to AkzoNobel share price
AkzoNobel’s common shares are listed
as of December 31, 2021 AkzoNobel share price in €
on Euronext Amsterdam. We’re included
AkzoNobel
AEX index
Bloomberg Europe Chemicals Index
Bloomberg Global Chemicals Index
in the AEX Index, which consists of
the top 25 listed companies in the
Netherlands, ranked on the basis of
stock market turnover and free float.
During 2022, 159 million AkzoNobel
shares were traded on Euronext
Amsterdam, with €11.6 billion turnover
(2021: volume of 136 million, turnover of
€13.2 billion).
We have a sponsored level 1 American
Depositary Receipt (ADR) program and
ADRs can be traded on the international
OTCQX platform in the US. During 2022,
51 million ADRs were traded, with $1.2
billion total turnover (2021: volume of
19 million, turnover of $735 million).
100
90
80
70
60
50
40
1
2
,
1
3
c
e
D
2
2
n
a
J
2
2
b
e
F
2
2
r
a
M
2
2
r
p
A
2
2
y
a
M
2
2
n
u
J
2
2
l
u
J
2
2
g
u
A
2
2
t
p
e
S
2
2
t
c
O
2
2
v
o
N
2
2
,
1
3
c
e
D
See the table below for stock codes and
US (61%) and the UK (13%). Around
buybacks. In January 2022, we finalized
ticker symbols.
6% of the company’s share capital
the €1 billion share buyback announced
is held by private investors, many of
on February 17, 2021. During 2022, we
Euronext ticker symbol AKZA
whom are resident in the Netherlands.
completed another €500 million share
ISIN common share
NL0013267909
Approximately 41% of the company’s
buyback program. In total, €632 million
OTC ticker symbol
AKZOY
institutional shareholder base was
worth of shares was repurchased during
ISIN ADR
US0101995035
represented by ESG investors1, while
the year and 7.5 million shares were
13% of the share capital was held by
canceled.
AkzoNobel has 100% free float and a
ESG funds2 at year-end 2022.
broad base of international shareholders.
The AkzoNobel share price was down
Based on an independent shareholder
Delivering on our capital allocation
35% at year-end 2022, compared with
analysis, the Distribution of institutional
priorities, we continued returning cash
year-end 2021. The Bloomberg Global
shares chart shows the geographical
to our shareholders in the form of share
Chemicals Index was down 22%,
spread of institutional shareholders,
of which the majority are based in the
1 As calculated by Nasdaq, according to their
methodology, which is to include the sum of:
(1) Core sustainable and responsible investor
firms where 100% of equity assets are managed
with an environmental, social and governance
(ESG) approach; (2) Sustainable and responsible
investor themed funds managed by a broad
range of sustainable and responsible investors.
2 As calculated by Nasdaq and includes
investment funds that take into account the
impact companies they invest in have on the
environment, their stakeholders and society,
alongside potential financial returns.
Key share data3
Year-end (share price in €)
Year-high (share price in €)4
Year-low (share price in €)4
Dividend per share (in €)
Dividend yield (in %)
3 Based on Bloomberg share data.
4 Based on close value.
Number of shares outstanding at year-end (in millions)
Market capitalization at year-end (in € billions)
2020
87.86
91.60
48.50
191
16.7
1.95
2.2
2021
96.50
107.80
83.50
182
17.5
1.98
2.1
2022
62.56
98.50
56.22
174
10.9
1.98
3.2
96
Leadership and governance | AkzoNobel Report 2022
Distribution of institutional shares
in 2022 in %
Analyst recommendations
D
D
C
C
C
B
B
A
A
B
A
A US
B UK
C Rest of Europe
D Rest of world
A Buy
B Hold
C Sell
61
13
21
5
Dividend
Our dividend policy is to pay a stable
to rising dividend. In 2022, an interim
dividend of €0.44 per share (2021:
€0.44) was paid. The Board of
Management proposes a 2022 final
dividend of €1.54 per share, which
would equal a total 2022 dividend of
€1.98 (2021: €1.98) per share.
16
6
2
The dividend proposed to the 2023
Annual General Meeting of shareholders,
following adoption, will be payable as
of May 5, 2023. AkzoNobel’s shares
will be trading ex-dividend as of April
25, 2023. In compliance with the listing
requirements of Euronext Amsterdam,
the record date for the final dividend will
be April 26, 2023.
Bloomberg Europe Chemical Index
was down by 14%, and the AEX lost
14% at year-end 2022 (see Share price
performance graph on previous page).
Analyst recommendations
At year-end 2022, AkzoNobel was
covered by 24 equity research analysts.
An overview of analyst recommendations
is shown in the graph above.
External benchmarks
In 2022, AkzoNobel was included as
one of the 25 best-in-class companies
in the new AEX® ESG Index on
Euronext Amsterdam. The index
identifies companies that are demon-
strating the best environmental, social
and governance (ESG) practices –
giving investors the opportunity to
invest in the most sustainable listed
companies. Our inclusion is based
on the assessment performed by
Sustainalytics.
Following 2022 reviews, our ESG
performance was reaffirmed by external
rating agencies. For example, AkzoNobel
1.49
maintained the highest possible rating
(AAA) from MSCI for the seventh
consecutive year, and the company is
considered “low risk” by Sustainalytics
– and ESG top rated in our industry. For
0.41
a full overview, please refer to the ESG
rating agencies and benchmarks in the
Sustainability statements.
2019
Rating agency
Moody’s1
Standard & Poor’s2
Long-term rating
Baa1
BBB
Outlook
Negative
Stable
1 Rating affirmed on October 11, 2022.
2 Rating updated on November 22, 2022.
Bonds maturity in € millions (nominal amounts)
500
500
750
600
600
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Dividend in € per share
Interim dividend
Final dividend
Total
1.95
1.98
1.98
1.52
1.54
1.54*
0.43
2020
0.44
2021
0.44
2022
* Proposed.
Credit rating and bonds
AkzoNobel is committed to retaining a
strong investment grade credit rating.
Regular review meetings are held
between rating agencies and AkzoNobel
senior management. See the table on
the left for the credit ratings and outlook
at year-end 2022.
The maturity schedule of outstanding
bonds is shown on the left.
For further information please
visit our website:
akzonobel.com/en/investors
AkzoNobel Report 2022 | Leadership and governance
97
FINANCIAL STATEMENTS
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
99
99
100
101
102
Note 26 Remuneration of the Supervisory Board
134
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 103
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
109
110
111
113
114
114
116
116
119
120
121
123
Note B Financing income and expenses
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
Independent auditor’s fees
Other information
Note 14 Investments in associates and joint ventures 123
Other information
Profit allocation and distributions
Independent auditor’s report
134
137
138
138
139
139
139
140
140
140
142
142
143
143
143
144
144
145
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
124
124
124
125
126
130
132
133
133
133
133
Limited assurance report of the independent auditor 152
Financial summary
Glossary
Index
Appendix
154
158
160
161
AkzoNobel Report 2022 | Financial statements
98
CONSOLIDATED STATEMENT
OF INCOME
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
2021
865
2022
378
(13)
(13)
(26)
373
(19)
6
360
334
1,199
1,164
35
1,199
(375)
86
(289)
(163)
(15)
2
(176)
(465)
(87)
(115)
28
(87)
In € millions, for the year ended December 31
Note
2021
2022
In € millions, for the year ended December 31
10,846
(6,923)
(2,308)
(649)
(258)
—
(124)
18
Continuing operations
Revenue
Cost of sales*
Gross profit
Selling and distribution 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
5
6
6
6
6
6
8
14
9
10
10
10
10
10
10
9,587
(5,683)
(2,041)
(582)
(230)
67
(39)
26
3,904
(2,786)
1,118
1,105
(246)
859
6
865
829
36
865
4.45
4.43
0.03
0.03
4.48
4.46
Profit for the period
Other comprehensive income / (expense)
Items that will not be reclassified to the statement of income:
3,923
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
Cash flow hedges
Income tax
Net effect
Other comprehensive income / (expense) for the period
Comprehensive income / (expense) for the period
Comprehensive income attributable to
Shareholders of the company
Non-controlling interests
Comprehensive income / (expense) for the period
(3,215)
708
602
(214)
388
(10)
378
352
26
378
2.07
2.06
(0.06)
(0.05)
2.01
2.01
* Cost of sales and selling and distribution expenses for 2021 have been updated to reflect changes in the financial reporting structure
related to changes in the organizational set-up and governance structure, leading to a reclassification between cost of sales
(decrease) and selling and distribution expenses (increase) of €49 million.
AkzoNobel Report 2022 | Financial statements
99
CONSOLIDATED BALANCE SHEET, BEFORE
ALLOCATION OF PROFIT
In € millions, at December 31
Note
2021
2022
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
3,690
1,800
304
482
178
2,076
1,650
149
2,339
58
1,152
5,425
211
578
234
567
1,994
1,556
216
2,948
149
4,072
1,968
291
498
193
1,475
1,843
168
2,447
336
1,450
4,333
215
387
167
561
3,332
2,543
236
2,801
166
8,497
6,244
14,741
4,548
4,447
5,746
14,741
8,530
5,348
13,878
5,636
3,373
4,869
13,878
AkzoNobel Report 2022 | Financial statements
100
CONSOLIDATED STATEMENT OF CASH FLOWS
In € millions, for the year ended December 31
Profit for the period from continuing operations
Adjustments to reconcile profit for the period 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, net of cash acquired
Investments in short-term investments
Repayments of short-term investments
Proceeds from divestments, net of cash divested
Other changes
Net cash generated from / (used for) investing activities
Proceeds from borrowings
Borrowings repaid
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
2021
2022
859
351
3
39
(26)
(14)
246
(405)
23
(55)
(94)
(77)
(222)
(23)
(288)
10
5
(73)
(56)
247
22
(1)
1,143
(590)
(1,135)
(391)
(1)
11, 12, 13
11, 12, 13
8
14
2
9
23
19
19
20
11, 12
2
21
21
21
21
18
18
2
21
388
368
6
124
(18)
(21)
214
(509)
47
(31)
(33)
(78)
(224)
30
(292)
14
14
(588)
(1,361)
1,084
36
(2)
9,511
(7,322)
(669)
(379)
—
605
(134)
(974)
(503)
(1)
(504)
1,581
35
1,112
263
(1,095)
1,141
309
(9)
300
1,112
(14)
1,398
* Capital expenditures include investments in intangible assets (refer to Note 11) and investments in property, plant and equipment (refer to Note 12).
AkzoNobel Report 2022 | Financial statements
101
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of the company
In € millions
Balance at January 1, 2021
Profit for the period
Other comprehensive income / (expense)
Tax on other comprehensive income
Comprehensive income for the period
Dividend
Share buyback1
Equity-settled transactions2
Acquisition of non-controlling interests
Balance at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye3
Balance at January 1, 2022
Profit for the period
Other comprehensive income / (expense)
Tax on other comprehensive income
Comprehensive income for the period
Dividend
Share buyback1
Equity-settled transactions2
Acquisition of non-controlling interests
Balance at December 31, 2022
Subscribed share
capital
Cash flow
hedge reserve
Cumulative
translation reserve
Other (legal) reserves
and undistributed
profit
Shareholders’
equity
Non-controlling
interests
Group equity
95
—
—
—
—
—
(4)
—
—
91
—
91
—
—
—
—
—
(4)
—
—
87
—
—
(19)
—
(19)
—
—
—
—
(19)
—
(19)
—
(15)
—
(15)
—
—
—
—
(34)
(873)
—
374
6
380
—
—
—
—
(493)
—
(493)
—
(165)
2
(163)
—
—
—
—
6,524
829
(13)
(13)
803
(365)
(1,131)
16
(1)
5,846
16
5,862
352
(375)
86
63
(347)
(656)
14
—
(656)
4,936
5,746
829
342
(7)
1,164
(365)
(1,135)
16
(1)
5,425
16
5,441
352
(555)
88
(115)
(347)
(660)
14
—
4,333
204
36
(1)
—
35
(27)
—
—
(1)
211
2
213
26
2
—
28
(29)
—
—
3
215
5,950
865
341
(7)
1,199
(392)
(1,135)
16
(2)
5,636
18
5,654
378
(553)
88
(87)
(376)
(660)
14
3
4,548
1 Includes a tax credit of €2 million (2021: €nil).
2 Includes a tax charge of €2 million (2021: €2 million tax charge).
3 As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29 “Financial Reporting in Hyperinflationary Economies” has been applied for our activities in
Türkiye as from January 1, 2022. Refer to Note 8 for details on the financial impact from applying IAS 29. The opening balance adjustment includes a tax charge of €4 million.
AkzoNobel Report 2022 | Financial statements
102
NOTES TO THE CON
SOLIDATED FINANCIAL
STATEMENTS
Note 1 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
• Leadership and governance: Remuneration report
• Financial information: Note 6 Operating income
• Financial information: Note 27 Financial risk management
On February 27, 2023, 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 21, 2023.
GENERAL INFORMATION
GOING CONCERN
Akzo Nobel N.V. is a public limited liability company
headquartered in the Netherlands. The address of our
registered office is Christian Neefestraat 2, Amsterdam;
the Chamber of Commerce number is 09007809. We
have attached a list of subsidiaries, 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. The principal activity of
AkzoNobel is the production and selling of paints
and coatings.
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. The Consolidated financial statements also
comply with the financial reporting requirements included
in Title 9 of Book 2 of the Dutch Civil Code.
The Management report within the meaning of Article 391
of Book 2 of the Dutch Civil Code consists of the following
parts of the annual report:
• 2022 results at a glance
• CEO statement
• How we created value
• Strategy and operations
• Sustainability statements
• 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
The Consolidated financial statements have been prepared
on a going concern basis, resulting from management’s
assessment of the ability of AkzoNobel to continue its
operations for the foreseeable future.
Management has assessed the ability of AkzoNobel to
continue as a going concern based on an evaluation of,
amongst others, the financial position, expected future
cash flows and market developments.
At December 31, 2022, cash and cash equivalents were
€1.5 billion. We also assessed the ability of the company
to obtain financing, taking into account the company’s
external credit rating which we are committed to retain at
strong investment grade.
Expected future cash flows are based on the latest
forecasts. These forecasts take into account internal and
external developments relevant in the assessment of
the ability of AkzoNobel to continue as a going concern,
including but not limited to market developments (see
disclosure on e.g. impact from the war in Ukraine and the
sanctions on Russia in this Note), developments in the
macro-economic environment (e.g. inflation, see disclosure
on inflation in this Note) and climate-related developments
(see disclosure on climate change in this Note).
Management’s assessment did not lead to uncertainties
in relation to AkzoNobel’s ability to continue as a
going concern.
IMPACT OF CLIMATE CHANGE
The potential effects on the financial statements of climate
change have been assessed. This includes the impact
of physical risks, such as those associated with water
scarcity, flooding and weather events and transitional risks
that can lead to changes in technology, market dynam-
ics and regulations. Also considered were AkzoNobel’s
commitments to reduce carbon emissions as approved
by the Science Based Targets initiative (SBTi), and related
estimates as to investments and the timing thereof.
The resulting impact on the financial statements, including
in the areas of fixed assets depreciation and recoverability
assessments, was not material to AkzoNobel’s financial
position and results of operations as of and for the year
ended December 31, 2022.
IMPACT FROM THE WAR IN UKRAINE
AND SANCTIONS ON RUSSIA
Our business in Ukraine and Russia combined represents
about 2% of our revenue (2021: 2%), of which the vast
majority concerned Russia.
Following the EU sanctions, the majority of our Perfor-
mance Coatings activities in Russia was suspended
and the residual Russian business is locally operated.
AkzoNobel has assessed the potential accounting impact
from the localization of the Russian business. Taking into
account the applicable IFRS standards, we have conclud-
ed that our Russian business can still be included in our
scope of consolidation.
No significant impairments of assets occurred in Russia; in
Ukraine, the value of the assets is immaterial.
IMPACT OF INFLATION
The financial year 2022 was a year of significant inflation
due to geopolitical and macro-economic developments.
The impacts from rising inflation have been considered
in the financial statements where relevant. Reference is
made to Note 6 Operating income on financial develop-
ments in the year, Note 11 Intangible assets on the annual
impairment testing process, Note 16 on the impact of raw
material increases, Note 19 Post-retirement benefit provi-
AkzoNobel Report 2022 | Financial statements
103
sions on the impact of inflation rate on the DBO and Note
27 Financial Risk Management on sensitivities in relation to
changes in interest rate.
CONSOLIDATION
The Consolidated financial statements include the accounts
of Akzo Nobel N.V. and its subsidiaries. Subsidiaries are com-
panies over which Akzo Nobel N.V. has control, because it
is exposed, or has rights, to variable returns from its involve-
ment with the subsidiary and has the ability to affect returns
through its power over the subsidiary. Non-controlling inter-
ests in equity and in results are presented separately.
CHANGES IN ACCOUNTING POLICIES
AND FIRST TIME APPLICATION
Accounting pronouncements with potential relevance for
AkzoNobel, which became effective for 2022 (amend-
ments to IFRS 3 “Reference to the Conceptual Frame-
work”, amendments to IAS 16 “Property, Plant and
Equipment: Proceeds before Intended Use”, amendments
to IAS 37 ”Onerous Contracts – Costs of Fulfilling a
Contract” and “Annual Improvements to IFRS Standards
2018-2020”) had no material impact on our Consolidated
financial statements.
DISCONTINUED OPERATIONS
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 reclassify-
ing 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.
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, including purchase price
allocations for business combinations (Note 2)
• Income tax and deferred tax assets, including uncertain
tax positions (Note 9)
• 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)
BUSINESS COMBINATIONS (NOTE 2)
In business combinations, identifiable assets and liabilities,
and contingent liabilities are recognized at their fair values
at the acquisition date. Determining the fair value requires
significant judgments on future cash flows to be generated.
Goodwill in a business combination represents the excess
of the consideration paid over the net fair value of the
acquired identifiable assets, liabilities and contingent liabili-
ties. 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 fair value of brands, customer relationships and
know-how acquired in a business combination is estimated
using generally accepted valuation methods. These include
the relief-from-royalty method, the incremental cash flow
method and the multi-period excess earnings method.
The fair value of property, plant and equipment acquired
in a business combination is based on estimated
market values.
The fair value of inventories acquired in a business combi-
nation is determined based on estimated selling prices
in the ordinary course of business less the estimated
costs of completion and sale and a reasonable profit
margin, based on the effort required to complete and sell
the inventories.
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.
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 2022, 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
mainly comprise 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 denomi-
nated in foreign currencies are translated into the function-
al currency using the exchange rates at the balance sheet
date. Resulting foreign currency differences are included
in the statement of income in financing income and
expenses. Non-monetary assets and liabilities denominat-
AkzoNobel Report 2022 | Financial statements
104
ed in foreign currencies are translated into the functional
currency at the exchange rate at acquisition date.
EXCHANGE RATES OF KEY
CURRENCIES
The assets and liabilities of entities with other func-
tional 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 enti-
ties with other functional currencies are translated into the
functional currency, using the exchange rates at transac-
tion 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 report-
ing period. Hyperinflation accounting is applied for Argen-
tina and Türkiye based on the historical cost approach and
using the Consumer Price Index (CPI).
CPI rate developments for Argentina and Türkiye are
included in the table “CPI rates at December 31”.
CPI rates at December 31
Country
Argentina
Türkiye
2020
386
505
2021
582
687
2022
1,135
1,128
For a consolidated overview of financial impacts from
hyperinflation accounting, refer to Note 8.
Foreign exchange rate differences resulting from trans-
lation 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 component (cumulative translation reserve) within
other comprehensive 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 invest-
ment or the intercompany loan with a permanent nature
relates. Foreign currency differences arising on the transla-
tion of a financial liability designated as an effective hedge
of a net investment in a foreign operation are recognized
in the cumulative translation reserve (in other comprehen-
sive income).
The principal exchange rates against the euro used in
preparing the balance sheet and the statement of income
are (table shows foreign currency equivalents of 1 euro):
Balance sheet
Statement of income
2021
2022
% 2021
2022
%
US dollar
1.131
1.067
(5.7)
1.182
1.053
(10.9)
Pound sterling
0.837
0.884
Chinese yuan
7.197
7.426
5.6
3.2
0.860
0.853
7.626
7.086
(0.8)
(7.1)
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 allow-
ances, 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)
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.
Remeasurement 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 settle-
AkzoNobel Report 2022 | Financial statements
105
ment 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 comprehen-
sive 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.
SHARE-BASED COMPENSATION
(NOTE 7)
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 corresponding increase in shareholders’ equity.
Amortization is accelerated in the event of earlier vesting
or settlement.
INCOME TAX (NOTE 9)
Income tax expense comprises both current and deferred
tax, including effects of changes in tax rates. In determin-
ing the amount of current and deferred tax we also take
into account the impact of uncertain tax positions and
whether additional taxes may be due. Income tax is recog-
nized in the statement of income, unless it relates to items
recognized in other comprehensive income or equity.
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
difference. Deferred tax assets are recognized for unused
tax losses, tax credits and deductible temporary differ-
ences, 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
rates expected to apply to taxable income in the years in
which temporary differences are expected to be reversed.
Deferred tax positions are not discounted.
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 repur-
chased 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
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.
Government grants related to costs are deducted from
the relevant costs to be compensated in the same period.
Government 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 annu-
ally using the value-in-use method.
Intangible assets with a finite useful life, such as licenses,
know-how, certain brands, customer relationships, intellec-
tual property rights, emission rights, software expenditures
(in as far as AkzoNobel controls the software configured or
customized) and capitalized development costs, are capital-
ized 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 relationships and 3 to 15 years
for other intangibles. Amortization methods, useful lives and
residual values are reassessed annually. Research expendi-
tures 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
AkzoNobel Report 2022 | Financial statements
106
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)
As a lessee, 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.
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 price. 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.
For deferred taxes associated with lease accounting under
IFRS 16, AkzoNobel determines the temporary differences
between the book basis and tax basis of the right-of-
use asset and the lease liability on a net basis. It is the
company’s view that these are integrally linked. As a result,
a deferred tax position is reported on the net temporary
differences of the right-of-use assets and lease liabilities.
The right-of-use assets are 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 remeasurements 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 it
is reasonably certain that we will exercise an option to
extend the lease, or that we will not 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; and
• Amounts expected to be payable under residual value
guarantees
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 determined, 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 commencement dates,
we assess whether it is reasonably certain that we will
exercise the extension options. We reassess whether it is
reasonably certain that we will 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 carry-
ing value of an asset may not be recoverable as a result
of e.g. changes in cash flow forecasts, damages, market
developments or environmental and climate change risks.
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 recov-
erable amount, an impairment loss is recognized in the
statement of income on the functional level of the asset
impaired. The assessment for impairment 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 operating segment).
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 further legal or constructive obligations.
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
AkzoNobel Report 2022 | Financial statements
107
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.
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.
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 into 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 is
based on external credit ratings of involved parties or
default rates published by well-known credit risk agencies.
The financial assets included in the general impairment
approach are long-term loans and other long-term receiv-
ables.
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.
Measurement
Regular 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 fair value are recognized in the statement of
income, unless cash flow hedge accounting or net invest-
ment 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 impairment 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
STANDARDS
IFRS standards and interpretations thereof not yet in force,
which may apply to our Consolidated financial state-
ments for 2023 and beyond, have been assessed for their
potential impact.
These include among others IFRS 17 “Insurance
Contracts”, amendments to IAS 1 “Classification of Liabili-
ties as Current or Non-current”, amendments to IAS 8
“Definition of Accounting Estimates”, amendments to IAS
12 “Deferred Tax related to Assets and Liabilities arising
from a Single Transaction”, amendments to IAS 1 and
IFRS Practice Statement 2 “Disclosure of Accounting Poli-
cies”, amendments to IFRS 16 “Lease Liability in a
Sale and Leaseback” and amendments to IFRS 10 and
IAS 28 “Sale or Contribution of Assets between an Inves-
tor and its Associate or Joint Venture”. These changes
are not expected to have a material effect on AkzoNobel’s
Consolidated financial statements.
AkzoNobel Report 2022 | Financial statements
108
Note 2 SCOPE OF
CONSOLIDATION
Material subsidiaries
The Consolidated financial statements comprise the
assets, liabilities, income and expenses of 251 legal enti-
ties. Due to a legal entity reduction program, focusing
on merging entities and liquidating dormant entities, we
expect the number of legal entities to reduce in the coming
years. We consider legal entities material when they repre-
sent, for at least two subsequent years, more than 5% of
either revenue or operating income. Material subsidiaries
included in the table below are fully owned at year-end
2022 except for Akzo Nobel India Limited, refer to Note 18
for an overview of non-controlling interests.
Material subsidiaries related to continuing
operations
Legal entity
Akzo Nobel Coatings Inc.
Akzo Nobel Paints (Shanghai) Co Ltd.
Akzo Nobel India Limited
Imperial Chemical Industries Limited
Principal place of
business/country of
incorporation
US
China
India
UK
Akzo Nobel Decorative Coatings B.V.
The Netherlands
Akzo Nobel Coatings SPA
Italy
Acquisitions
On April 22, 2022, AkzoNobel acquired 100% of the
shares of Colombia based paints and coatings company
Grupo Orbis S.A. (Grupo Orbis) for €566 million. The
acquisition strengthens our position in Latin America. The
transaction includes eight operational manufacturing sites.
Since its acquisition, Grupo Orbis contributed €336 million
to revenue and €29 million to operating income. Based on
financial information received from the acquiree, revenues
for the period January 1, 2022 until the date of acquisition
amounted to €123 million.
Based on the provisional purchase price allocation, the
transaction resulted in €262 million of goodwill (non-
deductible for tax purposes), €259 million of other
intangible assets and €121 million of property, plant and
equipment. The purchase price allocation will be final-
ized before April 21, 2023. No material changes from the
current purchase price allocation are expected.
The purchase price allocation was performed using the
implied internal rate of return on management’s forecasts.
An assessment of the assumptions applied in estimating
such forecasts was made, including potential synergies that
are expected to be realized as a result of the transaction.
The goodwill is mainly attributable to synergies expected
to be achieved from integrating the company into the
group. The paints business of Grupo Orbis is being inte-
grated in business unit Decorative Paints Latin America.
The coatings businesses ultimately will be incorporated
into the respective Performance Coatings business
units in 2023. For the interim period, in 2022, these
businesses are reported in business unit Performance
Coatings Other.
On December 1, 2022, we acquired the wheel liquid
coatings business of Lankwitzer Lackfabrik GmbH for €36
million in an asset deal. The provisional purchase price
allocation resulted in €7 million of goodwill (deductible for
tax purposes), €17 million of other intangible assets and
€14 million other fixed and current assets. The goodwill is
mainly attributable to synergies expected to be achieved
from integrating the acquired business into the group.
The purchase price is provisional due to the limited time
between the date of acquisition and the reporting date.
The contribution of the Lankwitzer business to the 2022
statement of income is not material. This business is being
integrated in business unit Powder Coatings.
On June 1, 2022, AkzoNobel announced the intended
acquisition of Kansai Paint’s African paints and coatings
activities. The intended acquisition is expected to further
strengthen our activities in the region and provide opportu-
nities for future growth. The acquisition is expected to be
completed in the second half of 2023.
On March 1, 2021, AkzoNobel acquired 100% of the
shares of Industrias Titan S.A.U. (Titan Paints) in Spain,
for €83 million. The acquisition strengthens our paints
business and footprint in Spain. The transaction included
three production facilities and seven logistics and service
centers for decorative paints. Based on the final purchase
price allocation, the transaction resulted in €16 million of
goodwill (non-deductible for tax purposes), €20 million of
other intangible assets and €47 million of property, plant
and equipment. The goodwill is mainly attributable to
synergies expected to be achieved from integrating the
company into the group. Titan Paints is being integrated
in business unit Decorative Paints Europe, Middle East
and Africa.
Recognized fair values at acquisition
In € millions
Other intangibles
Property, plant and
equipment
Right-of-use assets
Associates and joint
ventures
Inventories
Trade and other receivables
Cash and cash equivalents
Long-term debt
Provisions
Deferred tax assets/
(liabilities)
Non controlling interests
Trade and other payables
Net identifiable assets
and liabilities
Goodwill
Purchase consideration
Cash and cash equivalents
acquired
To be received in 2023 and
later years
Net cash outflow
Grupo
Orbis S.A.,
Colombia
Lankwitzer
Lackfabrik
GmbH,
Germany Other
Total
2022
259
121
8
5
91
98
14
(79)
(9)
(104)
(3)
(97)
304
262
566
(14)
—
552
17
4
2
—
6
2
—
(2)
—
—
—
—
29
7
36
—
—
36
— 276
— 125
—
—
—
(1)
—
—
—
10
5
97
99
14
(81)
(9)
— (104)
—
—
(1)
(7)
(8)
—
(3)
(97)
332
262
594
(14)
8
8
— 588
Divestments
In 2022 and 2021, no significant divestments occurred.
AkzoNobel Report 2022 | Financial statements
109
Note 3 SEGMENT INFORMATION
Decorative Paints
We provide decorative paints to both the professional and
the do-it-yourself markets. 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 renova-
tion industry.
The business units in the operating segment Decora-
tive Paints are set up regionally, as the paints business is
managed per region. Refer to Note 5 for a disaggregation
of revenues per region.
Performance Coatings
We are a supplier of performance coatings that protect
and enhance ships, cars, aircraft, yachts and architectural
components (structural steel, building products, flooring),
consumer goods (mobile devices, appliances, beverage
cans, furniture) and oil and gas facilities. The business
units in the operating segment Performance Coatings
are set up per product/end market as the segment is
managed based on product/end market combinations.
Refer to Note 5 for a disaggregation of revenues per
product/end market.
The tables in this Note include Alternative Performance
Measures (APMs). Refer to Note 4 for further information
on these APMs.
Information per reportable segment
Revenue (third
parties)
Amortization and
depreciation
Operating
income
Identified
items1
Adjusted
operating income1
EBITDA1
Adjusted
EBITDA1
ROS%1,2
OPI
margin%1,2
In € millions
Decorative Paints
Performance Coatings
Corporate and other
2021
2022
3,979
5,603
5
4,371
6,472
3
Total
9,587
10,846
2021
(154)
(160)
(37)
(351)
2022
(154)
(171)
(43)
(368)
20213
2022
20213
2022
20213
2022
20213
2022
20213
2022
20213
2022
20213
2022
622
616
(120)
1,118
392
444
(128)
708
42
2
(18)
26
(5)
(49)
(27)
(81)
580
614
(102)
1,092
397
493
(101)
789
776
776
(83)
546
615
(85)
727
773
(64)
552
664
(59)
14.6
11.0
9.1
7.6
15.6
11.0
1,469
1,076
1,436
1,157
11.4
7.3
11.7
9.0
6.9
6.5
1 Refer to the glossary for definitions of the APMs.
2 ROS% and OPI margin for Corporate and other is not shown, as this is
not meaningful.
3 Operating income, adjusted operating income, EBITDA and adjusted EBITDA (and related measures)
per segment for 2021 have been updated to reflect changes in the financial reporting structure related
to a narrower definition of corporate activities and corporate costs in corporate and other activities.
Information per reportable segment
In € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
Invested capital
Total assets
Total liabilities
Capital expenditures1
2021
3,022
3,671
428
7,121
2022
3,604
3,950
581
8,135
20213
5,591
5,686
2,601
2022
5,890
6,270
2,581
13,878
14,741
20213
1,862
1,944
4,436
8,242
2022
1,581
2,083
6,529
10,193
2021
108
147
33
288
2022
91
167
34
292
2021
20.2
17.4
16.0
ROI%1,2
2022
10.8
12.7
9.8
1 Refer to the glossary for the definition of capital expenditures and ROI%.
2 ROI% for Corporate and other is not shown, as this is not meaningful.
3 As from 2022, total assets and total liabilities per segment exclude intercompany balances. Total assets
and total liabilities per segment for 2021 have been restated.
Regional information
In € millions
The Netherlands
Other EMEA countries
North Asia
South Asia Pacific
North America
Latin America*
Total
* Previously reported as South America.
Revenue by region of destination
Intangible assets and property,
plant and equipment
Invested capital
Capital expenditures
2021
335
4,473
1,735
1,137
1,163
744
9,587
2022
319
4,714
1,728
1,371
1,416
1,298
10,846
2021
1,206
1,777
1,203
516
602
186
5,490
2022
1,223
1,753
1,162
526
648
728
6,040
2021
1,787
2,555
969
639
809
362
7,121
2022
1,900
2,679
965
677
890
1,024
8,135
2021
45
100
45
46
37
15
288
2022
45
95
40
54
42
16
292
AkzoNobel Report 2022 | Financial statements
110
Note 4 ALTERNATIVE PERFORMANCE
MEASURES
or statistical ratio, this is also considered an alternative
performance measure.
In presenting and discussing AkzoNobel’s (segmental)
operating results, management uses certain alterna-
tive performance measures not defined by IFRS, which
exclude the so-called identified items. 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, envi-
ronmental and tax cases. These alternative performance
measures should not be viewed in isolation as alternatives
to the equivalent IFRS measures and should be used as
supplementary information in conjunction with the most
directly comparable IFRS measures. Alternative perfor-
mance 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
Operating income, adjusted operating income, EBITDA
and adjusted EBITDA (and related measures) per segment
for 2021 have been updated to reflect changes in the
financial reporting structure related to a narrower definition
of corporate activities and corporate costs in corporate
and other activities.
The tables in this note reconcile the alternative perfor-
mance measures used in the segment information (Note 3)
to the nearest IFRS measure.
Restructuring costs
Restructuring costs primarily relate to costs for accruals for
certain employee benefits and for costs which are directly
associated with plans to exit or cease specific activities
and closing down of facilities.
Continuing
operations
Discontinued
operations
Alternative performance measures
In € millions
Operating income
APM adjustments to operating income
- Restructuring costs
- Brazil ICMS case
- UK pensions past service credit
- Acquisition related costs
- Other
Total APM adjustments (identified
items) to operating income
1,118
28
(42)
(23)
11
—
(26)
Adjusted operating income
1,092
Profit for the period attributable to
shareholders of the company
Adjustments to operating income
Adjustments to interest
Adjustments to income tax
Adjustments to discontinued operations
Total APM adjustments
Adjusted profit for the period attribu-
table to shareholders of the company
823
(26)
(29)
(15)
—
(70)
753
2021
Total
1,118
28
(42)
(23)
11
—
(26)
1,092
829
(26)
(29)
(15)
(8)
(78)
751
Continuing
operations
Discontinued
operations
708
80
—
—
9
(8)
81
789
362
81
(10)
(5)
—
66
—
—
—
—
—
—
—
—
(10)
—
—
—
—
—
2022
Total
708
80
—
—
9
(8)
81
789
352
81
(10)
(5)
—
66
428
(10)
418
—
—
—
—
—
—
—
—
6
—
—
—
(8)
(8)
(2)
Brazil ICMS case
In May 2021, the Brazilian Supreme Court (STF) recog-
nized the right to deduct state tax on goods and services
(ICMS) from the calculation basis of the Social Integration
Program-PIS (Programa de Integração Social) and the
Financing of Social Security-COFINS (Contribuição para
Financiamento da Seguridade Social). This STF decision
covers a multi-year period prior to 2018. In 2021, a full-
year net gain of €64 million was recognized in net income,
of which €42 million in Other results (in operating income),
€28 million in interest income, €14 million in income tax
(loss) and (net) €8 million in discontinued operations.
UK pensions past service credit
Following a court decision in April 2021, which allowed the
amendment of the scheme documentation of one of the
company’s UK pension funds, a past service credit (gain)
was recognized in 2021.
APM adjustments to interest
In 2022, interest income of €10 million was recognized
related to the UK ACT case, refer to a description of the
ACT case below. Adjustments to interest in 2021 included
an interest gain of €28 million from the Brazil ICMS case.
APM adjustments to income tax: UK ACT case
In July 2021 the UK Supreme Court issued a further deci-
sion in a group litigation case the company participates in
(“Franked Investment Income”; filed in 2003).
The company assessed the consequences of this judge-
ment in 2021 and performed a further file review which,
taking into account legal advice, resulted in the recognition
of a net tax benefit of €29 million in 2021. In 2022, upon
finalization of the full assessment, a net tax charge of €13
million was recognized.
APM adjustments to income tax: Other items
In 2022, €19 million of tax benefits related to restructuring
costs were recognized (2021: €8 million). The tax benefits
have been partly offset by the €13 million net tax charge
related to the UK ACT case.
In 2021, a gain of €12 million was included for the (net)
re-recognition of deferred tax assets. This gain was partly
offset by the income tax (loss) related to the Brazil ICMS
case (€14 million) and the impact from tax rate changes
(€19 million).
AkzoNobel Report 2022 | Financial statements
111
Operating
income
Depreciation and
amortization
392
444
(128)
708
(154)
(171)
(43)
(368)
Adjusted
operating
income
Depreciation and
amortization exclu-
ding identified items
397
493
(101)
789
(155)
(171)
(42)
(368)
2022
EBITDA
546
615
(85)
1,076
2022
Adjusted
EBITDA
552
664
(59)
1,157
2021
EBITDA
776
776
(83)
1,469
2021
Adjusted
EBITDA
727
773
(64)
1,436
ROI%
In € millions
In € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
Operating
income
Depreciation and
amortization
622
616
(120)
1,118
(154)
(160)
(37)
(351)
* Refer to the glossary for definitions of the APMs.
Adjusted
operating
income
Depreciation and
amortization exclu-
ding identified items
580
614
(102)
1,092
2021
823
(26)
(29)
(15)
753
(147)
(159)
(38)
(344)
2022
362
81
(10)
(5)
428
Adjusted EBITDA*
In € millions
Decorative Paints
Performance Coatings
Corporate and other
Total
* Refer to the glossary for definitions of the APMs.
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 adjustments to interest
APM adjustments 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 €)
* Refer to the glossary for definitions of the APMs.
Adjusted operating income, OPI margin and ROS%
EBITDA*
In € millions
2021
2022
Revenue from third parties
Decorative Paints
Performance Coatings
Corporate and other
Total
Operating income1
Decorative Paints
Performance Coatings
Corporate and other
Total
Total APM adjustments (identified items)1, 2
Decorative Paints
Performance Coatings
Corporate and other
Total
Adjusted operating income1, 2
Decorative Paints
Performance Coatings
Corporate and other
Total
OPI margin%1, 2, 3
Decorative Paints
Performance Coatings
Corporate and other
Total
ROS%1, 2, 3
Decorative Paints
Performance Coatings
Corporate and other
Total
3,979
5,603
5
4,371
6,472
3
9,587
10,846
622
616
(120)
1,118
42
2
(18)
26
580
614
(102)
1,092
15.6
11.0
11.7
14.6
11.0
11.4
392
444
(128)
708
(5)
(49)
(27)
(81)
397
493
(101)
789
9.0
6.9
6.5
9.1
7.6
7.3
1 Operating income, adjusted operating income, EBITDA and adjusted EBITDA (and
related measures) per segment for 2021 have been updated to reflect changes in the
financial reporting structure related to a narrower definition of corporate activities and
corporate costs in corporate and other activities.
2 Refer to the glossary for definitions of the APMs.
3 OPI margin and ROS% for Corporate and other is not shown, as this is not meaningful.
Leverage ratio
Leverage ratio is calculated as net debt/EBITDA. For the
calculation of net debt, refer to Note 21. Leverage ratio
is included in Note 27 in the paragraph on capital risk
management.
Average invested capital1
Decorative Paints
Performance Coatings
Corporate and other
Total
Adjusted operating income1, 2
Decorative Paints
185.0
174.7
Performance Coatings
Corporate and other
4.45
4.07
2.07
2.45
Total
ROI%3
Decorative Paints
Performance Coatings
Corporate and other3
Total
2021
2022
2,872
3,520
437
6,829
580
614
(102)
1,092
20.2
17.4
16.0
3,678
3,894
490
8,062
397
493
(101)
789
10.8
12.7
9.8
1 Refer to the glossary for definitions of the APMs.
2 Operating income, adjusted operating income, EBITDA and adjusted EBITDA (and
related measures) per segment for 2021 have been updated to reflect changes in
the financial reporting structure related to a narrower definition of corporate activities
and corporate costs in corporate and other activities.
3 ROI% for Corporate and other is not shown, as this is not meaningful.
AkzoNobel Report 2022 | Financial statements
112
Note 5 REVENUE
AkzoNobel derives revenue from the transfer of goods
and services at a point in time and over 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, 2022, and at December 31, 2021, no
significant contract assets were recognized.
As at December 31, 2022, the amount of contract
liabilities deferred to be recognized over time in 2023 was
€4 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 2022
(2021: €3 million).
Revenue disaggregation
Decorative Paints
Performance Coatings
In € millions
2021
2022
2021
2022
2021
Primary geographical markets - revenue from third parties
The Netherlands
Other EMEA countries
North Asia
South Asia Pacific
North America
Latin America1
Total
Major goods/service lines - revenue from third parties
Decorative Paints Europe, Middle East and Africa
Decorative Paints Latin America2
Decorative Paints Asia
Powder Coatings
Marine and Protective Coatings
Automotive and Specialty Coatings
Industrial Coatings
Performance Coatings Other2
Corporate and other
Total
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total
231
2,198
560
513
—
477
206
2,199
564
608
—
794
3,979
4,371
2,429
477
1,073
—
—
—
—
—
—
2,405
794
1,172
—
—
—
—
—
—
3,979
4,371
3,923
56
3,979
4,284
87
4,371
99
2,275
1,175
624
1,163
267
5,603
—
—
—
1,315
1,164
1,231
1,893
—
—
5,603
5,405
198
5,603
110
2,515
1,164
763
1,416
504
6,472
—
—
—
1,376
1,374
1,390
2,181
151
—
6,472
6,258
214
6,472
5
—
—
—
—
—
5
—
—
—
—
—
—
—
—
5
5
—
5
5
1 Previously reported as South America.
2 Decorative Paints Latin America includes Grupo Orbis revenues as from April 2022 to the extent these
relate to the Decorative Paints segment. Performance Coatings Other relates to Grupo Orbis revenues
(as from April 2022) to the extent these relate to the Performance Coatings segment.
Other
2022
3
—
—
—
—
—
3
—
—
—
—
—
—
—
—
3
3
—
3
3
Total
2022
319
4,714
1,728
1,371
1,416
1,298
10,846
2,405
794
1,172
1,376
1,374
1,390
2,181
151
3
10,846
10,542
304
10,846
2021
335
4,473
1,735
1,137
1,163
744
9,587
2,429
477
1,073
1,315
1,164
1,231
1,893
—
5
9,587
9,328
259
9,587
AkzoNobel Report 2022 | Financial statements
113
Note 6 OPERATING INCOME
In 2022, operating income was lower at €708 million
(2021: €1,118 million), as a result of lower volumes and
despite pricing initiatives more than compensating for raw
material and freight cost inflation. Operating expenses
increased as a result of higher manufacturing and supply
chain costs. OPI margin at 6.5% (2021: 11.7%).
Costs by nature 2022
In € millions
Cost of sales
Selling and distribution expenses
General and administrative expenses
Research and development expenses
Other results
Total
Costs by nature 2021
In € millions
Cost of sales*
Selling and distribution expenses*
General and administrative expenses
Research and development expenses
Other results
Total
Employee
benefits
Amortization
Depreciation
Purchases and
other costs
(550)
(965)
(263)
(182)
—
(1,960)
(1)
(57)
(24)
(5)
—
(87)
(152)
(93)
(24)
(12)
—
(281)
(6,220)
(1,193)
(338)
(59)
—
(7,810)
Employee
benefits
Amortization
Depreciation
Purchases and
other costs
(529)
(832)
(267)
(168)
23
(1,773)
—
(50)
(16)
(4)
—
(70)
(155)
(90)
(23)
(13)
—
(281)
(4,999)
(1,069)
(276)
(45)
44
(6,345)
Total
(6,923)
(2,308)
(649)
(258)
—
(10,138)
Total
(5,683)
(2,041)
(582)
(230)
67
(8,469)
* Cost of sales and selling and distribution expenses for 2021 have been updated to
reflect changes in the financial reporting structure related to recent changes in the
organizational set-up and related governance structure, leading to a reclassification
between cost of sales (decrease) and selling and distribution expenses (increase)
of €49 million.
Note 7 EMPLOYEE BENEFITS
Salaries, wages and other employee benefits in
operating income
In € millions
Salaries and wages
Post-retirement cost
Other social charges
Total
2021
(1,395)
(115)
(263)
2022
(1,517)
(146)
(297)
(1,773)
(1,960)
Average number of employees of total AkzoNobel
Average number during the year
Decorative Paints
Performance Coatings
Corporate and other
Total
2021
12,500
17,000
3,200
32,700
2022
13,800
18,000
3,300
35,100
Average number of employees in the Netherlands
Average number during the year
Decorative Paints
Performance Coatings
Corporate and other
Total
Number of employees
At year-end
Decorative Paints
Performance Coatings
Corporate and other
Total
2021
600
1,100
700
2,400
2021
12,500
17,200
3,100
32,800
2022
600
1,100
700
2,400
2022
14,000
17,900
3,300
35,200
The average number of employees working outside the
Netherlands was 32,700 (2021: 30,300). In 2022, the
number of employees increased by 7% to 35,200 people
(year-end 2021: 32,800 people). Acquisitions in 2022
added around 3,000 people, mainly relating to Grupo
Orbis employees.
AkzoNobel Report 2022 | Financial statements
114
SHARE-BASED COMPENSATION
Fair value performance-related shares in €
Series
2019 - 2021
2020 - 2022
2021 - 2023
Opening share
price per:
January 2, 2019
April 21, 20201
April 22, 20212
2022 - 2024
February 23, 2022
2022 - 2024
October 3, 20223
Fair Value
Market condi-
tion (TSR)4
61.09
53.42
103.20
88.28
57.70
52.57
42.95
NA
NA
NA
Non-market
based
performance
conditions5
69.60
63.88
103.20
88.28
57.70
Share price
Expected
volatility
Risk free
interest rate
69.60
63.88
103.20
88.28
57.70
20.12%
21.42%
NA
NA
NA
(0.04)%
(0.33)%
NA
NA
NA
1 Date on which the Supervisory Board approved the use of the average share price calculation method to determine the number of shares granted.
2 Date of the AGM at which the new LTI performance criteria for the Board of Management were approved.
3 Date on which Mr. Poux-Guillaume started working for AkzoNobel.
4 50% for the 2019-2021 and 2020-2022 grants, no longer applicable as from the 2021-2023 grant.
5 50% for the 2019-2021 and 2020-2022 grants, 100% as from the 2021-2023 grant.
Share-based compensation relates to the equity-settled
performance-related share plan and the restricted share
plans, as well as the share-matching plan. Charges recog-
nized in the 2022 statement of income for share-based
compensation amounted to €16 million and are included in
salaries and wages (2021: €18 million).
Performance-related and restricted share plans
Under the performance-related share plan and the
restricted share plans, a number of conditional shares are
granted to the members of the Board of Management,
members of the Executive Committee, executives and
certain other employee categories each year. The number
of participants of the performance-related share plan
and the restricted share plans at year-end 2022 was 616
(2021: 479). The shares of the performance-related and
restricted share plan series 2019-2021 have vested and
were delivered to the participants in 2022.
grants for the Board of Management and the Executive
Committee are for 20% linked to revenue growth, for
40% to adjusted EBITDA, for 20% to ROI and for 20% to
performance against Environmental, Social and Gover-
nance (ESG) KPIs. A two-year holding restriction applies.
The performance targets for the conditional grant of
performance-related shares of the 2020-2022 plan for
the Board of Management and the Executive Committee
are 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. The targets for the
2021-2023 and 2022-2024 performance-related share
The plans for the executives and certain non-executive
employee categories are a restricted share plan without
any performance conditions, whereby the conditional
grant of shares will vest upon the condition that they
remain in service with the company during the three-year
vesting period. A one-year holding restriction applies for
the executives.
Share plans of AkzoNobel employees
The conditional shares of the 2020-2022 performance
share plan for the AkzoNobel participants vested for
0% (series 2019-2021: 58.33%), including extraordinary
dividend shares of 7.33% (series 2019-2021: 13.14%),
the final vesting percentage amounted to 0% (series
2019-2021: 66.00%). The reason some shares still vest is
because AkzoNobel is legally bound to an agreement
with a former member of the Executive Committee regard-
ing the vesting of shares for this individual, as well
as a conditional share grant awarded to new Execu-
tive Committee Members at the time of their hiring, who
received these grants as buy-out from the contract at
their previous employer.
Share plan
2019 – 2021 Restricted Share Plan E*
2019 – 2021 Performance Share Plan
2020 – 2022 Restricted Share Plan E*
2020 – 2022 Performance Share Plan
2020 – 2022 Restricted Share Plan NE*
2021 – 2023 Restricted Share Plan E*
2021 – 2023 Performance Share Plan
2021 – 2023 Restricted Share Plan NE*
2022 – 2024 Restricted Share Plan E*
2022 – 2024 Performance Share Plan
2022 – 2024 Restricted Share Plan NE*
Total
* E means executive plan; NE means non-executive plan.
Performance/
Vesting period
Award
date
Vesting
date
End of
holding
period
Balance at
January 1,
2022
Awarded
in 2022
Vested in
2022
Forfeited
in 2022
Dividend in
2022
Subject to
performance
condition
Unvested
in 2022
Subject
to holding
period
Balance at
December
31, 2022
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
1/1/2019
1/1/2022
1/1/2023
157,455
1/1/2019
1/1/2022
1/1/2024
45,830
1/1/2020
1/1/2023
1/1/2024
157,095
1/1/2020
1/1/2023
1/1/2025
4/1/2020
4/1/2023
NA
60,692
5,890
4/1/2021
4/1/2024
4/1/2025
176,947
1/1/2021
1/1/2024
1/1/2026
4/1/2021
4/1/2024
NA
4/1/2022
4/1/2025
4/1/2026
1/1/2022
1/1/2025
1/1/2027
4/1/2022
4/1/2025
NA
63,404
27,140
—
—
—
—
—
—
—
—
509
—
—
(157,455)
(45,830)
(7,567)
—
—
—
—
(13,127)
(51,286)
(210)
(3,600)
(18,906)
—
—
(3,206)
(1,560)
189,797
(1,171)
(17,632)
84,820
49,247
—
—
—
(2,065)
694,453
324,373
(215,623)
(107,992)
—
—
—
1,566
—
—
NA
—
NA
—
NA
NA
1,491
61,689
—
—
2,188
—
5,245
NA
NA
87,008
NA
—
—
157,455
45,830
—
—
136,401
136,401
136,401
10,972
5,680
10,972
—
10,972
5,680
154,950
154,950
154,950
61,689
25,580
61,689
—
61,689
25,580
170,994
170,994
170,994
87,008
47,182
87,008
—
87,008
47,182
148,697
700,456
825,299
700,456
AkzoNobel Report 2022 | Financial statements
115
The share price of a common AkzoNobel share at year
end 2022 amounted to €62.56 (2021: €96.50).
Fair value of restricted and performance-
related shares
The fair value of the restricted shares of the 2022-2024
grant to executives, amounting to €82.47, is based on the
opening share price on February 23, 2022, of €88.28 and
the expected dividend yield of 2.24%. The fair value of the
restricted shares of the 2022-2024 grant to non-execu-
tives, amounting to €76.50, is based on the average of the
opening share prices during the grant period of April 26
until May 9, 2022, of €82.54 and the expected dividend
yield of 2.40%. The fair value of the performance-related
2022-2024 grant, based on the opening share price on
February 23, 2022, amounts to €88.28. The fair value of
the performance-related share grant to Mr. Poux-Guillau-
me of the 2022-2024 series, that was approved in the
EGM on September 6, 2022, based on the opening share
price on October 3, 2022, amounts to €57.70. For the
2022-2024 and 2021-2023 grants of performance-related
shares all conditions are non-market based performance
conditions. The fair value of the 2021-2023 grant is
based on the share price as per April 22, 2021, the date
of the AGM at which the new LTI performance criteria
for the Board of Management were approved. The fair
value of the performance-related shares of the 2020-2022
grant is for 50% based on a market condition (TSR) and
for 50% based on a non-market based performance
conditions (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 plan
The members of the Board of Management and the
members of the Executive Committee are eligible to
participate in the share-matching plan. Under certain
conditions, members who invest part of their short-term
incentive payment in AkzoNobel shares may have such
shares matched by the company one-on-one. During
2022, no potential matching shares were matched as the
members of the Board of Management and the members
of the Executive Committee were not eligible for matching
shares on the 2019 series. In 2022, the members of the
Board of Management and the members of the Executive
Committee invested part of their 2021 short-term incentive
in AkzoNobel shares, leading to 4,877 potential match-
ing shares on December 31, 2022. For an overview of
the matching shares outstanding for the members of the
Board of Management per December 31, 2022, we refer
to the Remuneration report.
Fair value of matching shares
The fair value of the matching shares (€75.61) was based
on the share price on the investment date (April 21, 2022:
€81.40), discounted for expected dividends over the
holding period (dividend yield: 2.43%).
Note 8 FINANCING INCOME
AND EXPENSES
Financing income and expenses
In € millions
Financing income
Financing expenses
Net interest on net debt
Other interest
Financing income related to post-retire-
ment benefits
Interest on provisions
Exchange rate results
Other items
Net other financing credit/(charges)
Total financing income and expenses
2021
12
(74)
(62)
13
3
(21)
28
23
(39)
2022
19
(106)
(87)
18
17
(85)
13
(37)
(124)
Net financing expenses for the year were €124 million
(2021: €39 million). Significant variances are:
• Net interest on net debt increased by €25 million to €87
million (2021: €62 million) mainly as a result of higher
interest cost on debt from bonds issuance, increased
short-term debt and financing related to the Grupo
Orbis acquisition
• Interest income on provisions increased by €14 million
to €17 million (2021: €3 million) due to the impact from
discounting at higher discount rates
• Exchange rate results were €85 million negative (2021:
€21 million negative), and include €20 million expenses
from Argentina and Türkiye hyperinflation accounting
• Other items in 2022 include €10 million interest income
from the UK ACT case (refer to Note 4 for further details
on the UK ACT case). In 2021, an interest income
of €28 million related to the Brazil ICMS case was
included.
The average interest rate used for capitalized interest was
1.7% (2021: 1.9%). Capitalized interest was negligible in
both 2022 and 2021. The average interest rate on total
debt was 2.1% (2021: 2.3%).
Accounting impact hyperinflation accounting
We have applied IAS 29 “Financial Reporting in Hyper-
inflationary Economies” for Türkiye as from January 1,
2022. For Argentina, hyperinflation accounting was already
applied as from January 1, 2018. In addition, and in line
with IAS 21 “The Effect of Changes in Foreign Exchange
Rates”, end of month rates are used to translate both the
balance sheet and the statement of income into euros.
For Türkiye, the revaluation effect on the non-monetary
assets at January 1, 2022, was €16 million positive (after
taxes), recorded as a restatement to opening sharehold-
ers’ equity. In addition, the opening balance of intangible
assets has been restated by €1 million (refer to Note 11)
and the opening balance of property, plant and equip-
ment has been restated by €15 million (refer to Note 12).
Refer to Note 9 Income tax for the related opening balance
impact on deferred taxes.
The application of hyperinflation accounting and the use
of end of month rates to translate the statement of income
into euros resulted in an €5 million positive impact on
revenues, an €46 million negative impact on operating
income and an €63 million negative impact on net income
for the year.
Note 9 INCOME TAX
Pre-tax income from continuing operations for the year
amounted to a profit of €602 million (2021: €1,105 million).
The net tax charges related to continuing operations are
included in the statement of income as shown in this Note
and amount to €214 million (2021: €246 million), leading to
an effective tax rate of 35.5% (2021: 22.3%).
AkzoNobel Report 2022 | Financial statements
116
Classification of current and deferred tax result
Effective tax rate reconciliation
In € millions
2021
2022
in %
Current tax expense for
The year
Adjustments for previous years
Total current tax expense
Deferred tax expense for
Origination and reversal of temporary
differences and tax losses
(Derecognition)/recognition of deferred
tax assets
Changes in tax rates
Total deferred tax expense
Total
(205)
36
(169)
(75)
18
(20)
(77)
(246)
(198)
(24)
(222)
21
(6)
(7)
8
(214)
Classification of current and deferred tax result
A breakdown into current and deferred tax expenses
and a split of the main categories is provided in the table
above. For comparative reasons, this table presents the
income tax expense excluding the impact from discontin-
ued operations. The total deferred tax in the statement of
income including discontinued operations was a credit of
€8 million (2021: €77 million charge). The total tax charge
including discontinued operations was €211 million (2021:
€248 million).
Adjustments for prior years in 2022 is mainly related to a
net tax charge of €13 million for the UK Advanced Corpo-
ration Tax (ACT) case, which is further described in Note 4
on Alternative Performance Measures due to its identified
nature. Origination and reversal of temporary differences
and tax losses is driven, amongst others, by timing differ-
ences between recognition and payments for provisions,
timing differences on depreciation and amortization for tax
purposes versus the consolidated financial statements,
and tax loss carryforwards utilized against profits of the
year or new tax losses incurred. Changes in tax rates
in 2022 mainly relate to the changes in the UK tax rate
(2021: Dutch and UK tax rates).
Effective tax rate reconciliation
In 2022, the effective income tax rate based on the state-
ment of income is 35.5% (2021: 22.3%). A reconciliation
between the effective tax rate and the weighted average
statutory income tax rate is provided in the next table.
For comparative reasons, this table presents the effective
Corporate tax rate in the Netherlands
Effect of tax rates in other countries
Weighted average statutory income tax rate
Non-taxable income
Non-deductible expenses
(Rerecognition)/derecognition of deferred tax assets
Non-refundable withholding taxes
Adjustments for prior years
Deferred tax adjustment due to changes in tax
rates
2021
25.0
0.2
25.2
(3.0)
2.3
(1.6)
0.9
(3.3)
1.8
2022
25.8
(2.2)
23.6
(2.8)
6.1
1.0
2.4
4.0
1.2
Effective tax rate
22.3
35.5
consolidated tax rate excluding the impact from discon-
tinued operations. Including these results, the effective
consolidated tax rate is 35.8% (2021: 22.3%).
Non-taxable income is mainly related to R&D credits and
the tax exemption for investments (2021: interest on tax
credits in Brazil, the Innovation box in the Netherlands,
R&D credits and the tax exemption for investments).
Non-deductible expenses are mainly related to the
effects of Argentina and Türkiye hyperinflation accounting
and certain non-deductible costs in various countries
(2021: non-deductible costs and the effects of Argentina
hyperinflation accounting).
Origination of deferred tax assets and liabilities 2022
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 (liabilities)
Balance at
January 1,
2022*
Changes in
exchange rate
Recognized in
income
Recognized in
equity/Other
comprehensive
income
Acquisitions
Balance at
December 31,
2022
(461)
75
(406)
138
28
96
204
237
(89)
23
2
20
3
—
(2)
(1)
(9)
36
—
(3)
(25)
(12)
(3)
36
3
12
8
—
—
139
(53)
—
—
—
—
86
(83)
(17)
—
—
—
(4)
—
—
(104)
(521)
57
(272)
76
25
126
206
240
(63)
* Property, plant and equipment includes an opening balance adjustment of €3 million and other items of €1 million related to the
application of IAS 29 “Financial Reporting in Hyperinflationary Economies” in Türkiye. Refer to Note 8 for further details.
Origination of deferred tax assets and liabilities 2021
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 (liabilities)
Balance at
January 1, 2021
Changes in
exchange rate
Recognized in
income
Recognized in
equity/Other
comprehensive
income
Acquisitions
Balance at
December 31,
2021
(417)
60
(267)
156
29
68
184
217
30
(23)
6
(24)
4
2
3
—
12
(20)
(17)
20
(138)
(2)
(3)
25
20
18
(77)
—
—
23
(20)
—
(2)
—
(12)
(11)
(4)
(8)
—
—
—
3
—
2
(7)
(461)
78
(406)
138
28
97
204
237
(85)
AkzoNobel Report 2022 | Financial statements
117
10
124
6
79
34
143
207
240
843
(345)
498
Total
3,087
531
68
277
3
9
18
—
—
906
(345)
561
Deferred
tax
779
(539)
Deferred tax assets and liabilities per balance sheet item
Net balance
Assets
Liabilities
Net balance
Assets
Liabilities
December 31, 2021
December 31, 2022
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
Tax assets/liabilities
Set-off of tax
Net deferred tax positions
(461)
78
(406)
138
28
97
204
237
(85)
—
(85)
12
123
25
141
38
113
204
237
893
(411)
482
473
45
431
3
10
16
—
—
978
(411)
567
(521)
56
(271)
76
25
125
207
240
(63)
—
(63)
Expiration year of loss carryforwards 2022
In € millions
Total loss carryforwards
Loss carryforwards not recognized in
deferred tax assets
Total loss carryforwards recognized
2023
2024
2025
2026
2027
Later Unlimited
—
—
—
1
(1)
—
1
(1)
—
2
—
2
13
—
13
56
(10)
46
3,014
(2,120)
(2,132)
894
955
240
Expiration year of loss carryforwards 2021
In € millions
Total loss carryforwards
Loss carryforwards not recognized in
deferred tax assets
Total loss carryforwards recognized
2022
2023
2024
2025
2026
Later Unlimited
1
(1)
—
—
—
—
1
(1)
—
—
—
—
3
—
3
17
(9)
8
3,131
Total
3,153
(2,204)
(2,215)
Deferred
tax
795
(558)
927
938
237
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
dividends. Based on the Dutch tax system there is a
limited credit for such taxes.
Adjustments for prior years in 2022 is mainly related to the
UK Advanced Corporation Tax (ACT) case, which is further
described in Note 4 on Alternative Performance Measures
due to its identified nature.
Changes in tax rates in 2022 mainly relate to the changes
in the UK tax rate (2021: Dutch and UK tax rates).
Origination of deferred tax assets and liabilities
Deferred tax assets and liabilities originate from temporary
differences in various balance sheet line items, as well as
from tax credits and tax loss carryforwards. The tables
on the previous page show the origination of deferred tax
assets and liabilities, and the movements thereof, for the
financial years 2022 and 2021.
Reconciliation deferred tax assets and liabilities to
the balance sheet
The table on the left provides a reconciliation of the total
deferred tax amounts for each of the originating items to
the deferred tax asset and liability positions as included in
the balance sheet.
Deferred tax assets recoverability assessment
In assessing the recognition of 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 against
which the deductible temporary differences, unused tax
losses and unused tax credits can be utilized. Manage-
ment 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 could change
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 and
current taxes will be recovered or settled after more than
12 months.
In 2022 and 2021, deferred tax asset recoverability has
been assessed using taxable profit forecasts. In 2022,
these assessments did not result in a significant net
derecognition or re-recognition of deferred tax assets
(2021: net re-recognition of €18 million).
Both in 2022 and 2021, deferred tax assets not recog-
nized relate to tax loss carryforwards. 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.
From the total amount of recognized net deferred tax
assets, €206 million (2021: €151 million) is related to
entities that have suffered a loss in either the current or
the previous year 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 projec-
tions and tax planning strategies.
A deferred tax liability is recognized for taxable temporary
differences related to investments in subsidiaries, branches
AkzoNobel Report 2022 | Financial statements
118
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
remaining differences for which no deferred tax liabilities
have been recognized is €55 million (2021: €31 million).
Income tax recognized in equity
The following table shows income tax items recognized in
equity by category.
Income tax recognized in equity
In € millions
Currency exchange differences on inter-
company loans of a permanent nature
Share-based compensation
Share buyback
Post-retirement benefits
Changes in tax rates
IAS 29 opening balance adjustment
Total
Current tax
Deferred tax
Total
2021
1
2022
2
(2)
—
3
(11)
—
(9)
2
(11)
(9)
(2)
2
86
—
(4)
84
2
82
84
Impact OECD Pillar Two Framework
AkzoNobel is closely monitoring progress on the OECD
Pillar Two global minimum tax rate legislative framework in
each jurisdiction where the group has operations. At year-
end 2022, the group does not have sufficient information
to determine the potential quantitative impact. The recently
announced safe harbor rules are likely to limit the financial
impact in particular during the 3-year transitional period
during which these safe harbor rules apply.
Note 10 EARNINGS PER SHARE
Earnings per share
in €
2021
2022
Continuing operations
Basic
Diluted
Discontinued operations
Basic
Diluted
Total operations
Basic
Diluted
4.45
4.43
0.03
0.03
4.48
4.46
2.07
2.06
(0.06)
(0.05)
2.01
2.01
Refer to Note 4 for the calculation of adjusted earnings
per share.
Profit for the period attributable to the shareholders of the
company was €352 million (2021: €829 million).
Profit for the period
In € millions
Profit before tax from continuing
operations
Income tax
Profit from continuing opera-
tions
Profit for the period attributable to
non-controlling interests
Profit for the period from
continuing operations attribut-
able to shareholders of the
company
Profit for the period from discon-
tinued operations attributable to
shareholders of the company
2021
1,105
(246)
859
(36)
823
2022
602
(214)
388
(26)
362
6
(10)
Profit for the period attributable
to shareholders of the company
829
352
The number of shares for the earnings per share calcula-
tion decreased as a result of the share buyback programs
of 2021 and 2022.
Weighted average number of common shares
Number of shares
Issued common shares at
January 1
Effect of issued common shares
during the year
2021
2022
190,579,841
181,609,509
225,806
186,077
Effect of share buyback program
(5,845,781)
(7,060,447)
Shares for basic earnings per
share for the year
184,959,866
174,735,139
Effect of dilutive shares
For performance-related and
restricted shares
For share-matching plan
Shares for diluted earnings
per share
714,114
575,108
—
3,251
185,673,980
175,313,498
AkzoNobel Report 2022 | Financial statements
119
Note 11 INTANGIBLE ASSETS
Intangible assets
In € millions
Balance at January 1, 2021
Cost of acquisition
Cost of internally developed intangibles
Accumulated amortization/impairment
Carrying value at January 1, 2021
Movements in 2021
Acquisitions through business combinations
Investments - including internally developed intangibles
Amortization
Changes in exchange rates
Total movements
Balance at December 31, 2021
Cost of acquisition
Cost of internally developed intangibles
Accumulated amortization/impairment
Carrying value at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye*
Carrying value at January 1, 2022
Movements in 2022
Acquisitions through business combinations
Investments - including internally developed intangibles
Amortization
Impairments, including reversals thereof
Changes in exchange rates
Total movements
Balance at December 31, 2022
Cost of acquisition
Cost of internally developed intangibles
Accumulated amortization/impairment
Carrying value at December 31, 2022
Goodwill
Brands
Customer
lists
Other
intangibles
1,123
—
(27)
1,096
18
—
—
41
59
1,182
—
(27)
1,155
—
1,155
262
—
—
—
(40)
222
1,405
—
(28)
1,377
2,134
—
(190)
1,944
8
—
(12)
90
86
2,239
—
(209)
2,030
—
2,030
72
—
(15)
—
(22)
35
2,288
—
(223)
2,065
921
—
(546)
375
10
—
(34)
5
(19)
972
—
(616)
356
—
356
193
—
(40)
—
(36)
117
1,127
—
(654)
473
178
212
(251)
139
—
35
(24)
(1)
10
171
241
(263)
149
1
150
11
30
(32)
(2)
—
7
179
268
(290)
157
Total
4,356
212
(1,014)
3,554
36
35
(70)
135
136
4,564
241
(1,115)
3,690
1
3,691
538
30
(87)
(2)
(98)
381
4,999
268
(1,195)
4,072
* As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29
“Financial Reporting in Hyperinflationary Economies” has been applied for our activities in
Türkiye as from January 1, 2022. Refer to Note 8 for details on the financial impact from
applying IAS 29.
Brands as included in the table on the left comprise of
brands with indefinite useful lives and brands with finite
useful lives. Brands 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
property rights, software and development cost. Both at
year-end 2022 and 2021, there were no material purchase
commitments for individual intangible assets. No intangible
assets were registered as security for bank loans.
Acquisitions through business combinations
The additions from acquisitions in 2022 primarily relate to
the acquisition of Grupo Orbis S.A., Colombia, and of the
wheel liquid coatings business of Lankwitzer Lackfabrik
GmbH, Germany. In 2021, additions from acquisitions
primarily related to the acquisition of Titan Paints in Spain.
Refer to Note 2 for disclosures on acquisitions.
Changes in exchange rates
Changes in exchange rates includes a €15 million posi-
tive adjustment from the IAS 29 hyperinflation impact for
Türkiye and Argentina.
Annual impairment testing
Goodwill and other intangibles with indefinite useful lives
are tested for impairment per business unit (one level
below segment level) annually or whenever an impairment
trigger exists, applying the value-in-use method.
The paints business of recently acquired Grupo Orbis has
been allocated to business unit Decorative Paints Latin
America. The Grupo Orbis coatings businesses ultimately
will be incorporated into the respective Performance
Coatings business units in 2023. For the interim period,
in 2022, these businesses are reported in business unit
Performance Coatings Other.
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 mainly related to high growth/emerging economies,
geo expansion opportunities, introduction of new product
ranges and opportunities from market consolidation.
In 2022, the above exception was applied for Decora-
tive Paints Asia, Decorative Paints Latin America and
Performance Coatings Other (Grupo Orbis), for which the
revenue growth and margin development projections were
AkzoNobel Report 2022 | Financial statements
120
Goodwill and other intangibles per business unit
In € millions, at December 31
Decorative Paints Europe, Middle East
and Africa
Decorative Paints Latin America
Decorative Paints Asia
Powder Coatings
Marine and Protective Coatings
Automotive and Specialty Coatings
Industrial Coatings
Performance Coatings Other
Corporate and other
Goodwill
2022
107
138
8
152
197
290
413
72
–
2021
114
—
9
155
174
288
415
—
—
Brands with indefinite
useful lives
Other intangibles
with finite useful lives
2021
837
87
928
—
—
—
—
—
—
2022
837
102
901
—
—
—
—
—
—
2021
146
2022
136
—
31
32
80
175
120
—
99
683
142
21
19
94
156
110
59
118
855
Total intangibles
2021
1,097
2022
1,080
87
968
187
254
463
535
—
99
382
930
171
291
446
523
131
118
3,690
4,072
Total
1,155
1,377
1,852
1,840
extrapolated beyond the five-year explicit forecast
period for another five years, applying reduced average
growth rates.
Macro economic developments and other relevant vari-
ables (e.g. inflation, the situation with respect to COVID-
19, geopolitical uncertainties, climate risks – refer to
Note 1 for a description of the impact from climate change
on the financial statements) are closely monitored to
ensure that the impact on the estimated future cash flows
is reflected in the models which are used to assess the
value of AkzoNobel’s asset base.
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 expected
market share developments
• 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
Key assumptions 2022
In % per year
Decorative Paints
Performance Coatings
Average revenue
growth 2023-2027
Pre-tax weighted
average cost of
capital 2023-2027
1.8-6.7%
1.3-4.0%
11.1-15.9%
10.8-12.4%
Key assumptions 2021
In % per year
Decorative Paints
Performance Coatings
Average revenue
growth 2022-2026
Pre-tax weighted
average cost of
capital 2022-2026
1.1-5.9%
2.6-4.7%
8.4-12.5%
7.8-8.1%
For all business units, a terminal value was calculated based
on long-term inflation expectations of 2% (2021: 1%). 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 business unit and
range from 10.8% to 15.9% (2021: 7.8% to 12.5%), with a
weighted average of 11.7% (2021: 8.4%).
Sensitivity tests were performed to assess the impact of
changes in the key assumptions revenue growth (50%
lower), margin development (1 percentage point lower) and
the weighted average cost of capital (1 percentage point
higher). These assessments show that these changes in
key assumptions would not cause carrying amounts to
exceed recoverable amounts for any of the business units,
except for the Latin America businesses where the recently
acquired Grupo Orbis business is included.
Given the current uncertainties in the macro-economic
environment and high cost inflation, additional sensitivity
tests have been performed in order to assess the impact
of more severe adverse changes in the key assumptions.
The conclusions from these tests are the same as above.
In 2022 and 2021, no impairment charges were recog-
nized in relation to the annual impairment test.
Specific asset impairments
Periodical evaluations are performed in order to ensure
timely detection of triggers that might indicate impairment
of assets. Whenever such triggers are noted, the related
assets are assessed for impairment as appropriate.
In 2022 and 2021, no significant impairment charges were
recorded in relation to specific assets.
Note 12 PROPERTY, PLANT AND
EQUIPMENT
Acquisitions
The additions from acquisitions in 2022 primarily relate to
the acquisition of Grupo Orbis S.A., Colombia, and of the
wheel liquid coatings business of Lankwitzer Lackfabrik
GmbH, Germany. In 2021, additions from acquisitions
primarily related to the acquisition of Titan Paints in Spain.
Refer to Note 2 for disclosures on acquisitions.
Investments in property, plant and equipment
Large investment projects in 2022 are amongst others
investments at our Highpoint, US, Wood Coatings site,
and the setup of a new powder coatings manufacturing
line at our Hanoi, Vietnam site.
Impairments
Periodical evaluations are performed in order to ensure
timely detection of triggers that might indicate impairment
of assets. Whenever such triggers are noted, the related
assets are assessed for impairment as appropriate.
In 2022 and 2021, no significant impairments were recognized.
Changes in exchange rates
Changes in exchange rates includes a €30 million posi-
tive adjustment from the IAS 29 hyperinflation impact for
Türkiye and Argentina.
AkzoNobel Report 2022 | Financial statements
121
Property, plant and equipment
In € millions
Balance at January 1, 2021
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at January 1, 2021
Movements in 2021
Acquisitions
Divestments
Investments
Transfer between categories
Depreciation
Impairments, including reversals thereof
Changes in exchange rates
Total movements
Balance at December 31, 2021
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye*
Carrying value at January 1, 2022
Movements in 2022
Acquisitions
Divestments
Investments
Transfer between categories
Depreciation
Changes in exchange rates
Total movements
Balance at December 31, 2022
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2022
Land and buildings
Plant equipment and
machinery
Other equipment
Construction in progress
and prepayments on
projects
Assets not used
Total
1,425
(731)
694
36
(5)
10
30
(44)
—
31
58
1,546
(794)
752
10
762
75
(9)
2
53
(46)
(5)
70
1,658
(826)
832
1,937
(1,386)
551
11
(3)
18
112
(102)
(1)
29
64
2,124
(1,509)
615
3
618
45
(4)
11
87
(105)
(29)
5
2,208
(1,585)
623
890
(757)
133
—
(1)
8
28
(41)
—
6
—
919
(786)
133
—
133
5
(2)
6
36
(32)
(7)
6
923
(784)
139
244
(4)
240
—
(1)
217
(170)
—
—
11
57
300
(3)
297
2
299
—
(5)
242
(176)
—
10
71
373
(3)
370
10
(7)
3
—
—
—
—
—
—
—
—
10
(7)
3
—
3
—
—
1
—
—
—
1
11
(7)
4
4,506
(2,885)
1,621
47
(10)
253
—
(187)
(1)
77
179
4,899
(3,099)
1,800
15
1,815
125
(20)
262
—
(183)
(31)
153
5,173
(3,205)
1,968
* As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29
“Financial Reporting in Hyperinflationary Economies” has been applied for our activities in
Türkiye as from January 1, 2022. Refer to Note 8 for details on the financial impact from
applying IAS 29.
AkzoNobel Report 2022 | Financial statements
122
Note 13 LEASES
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 outflow from financing activities related to
leases recognized on the balance sheet was €104 million
(2021: €100 million). Net cash outflow for leases not
recognized on the balance sheet was €19 million (2021:
€17 million).
Refer to Note 27 “Financial risk management” for the
maturities of lease liabilities.
The table “Income/(expenses) recognized in profit and
loss” shows the total impact from leases on our profit and
loss account.
Right-of-use assets
In € millions
Balance at January 1, 2021
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at January 1, 2021
Movements in 2021
Additions/modifications
Disposals
Depreciation
Impairments, including reversals thereof
Changes in exchange rates
Total movements
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2021
Movements in 2022
Acquisitions
Additions/modifications
Disposals
Depreciation
Impairments, including reversals thereof
Changes in exchange rates
Total movements
Cost of acquisition
Accumulated depreciation/impairment
Carrying value at December 31, 2022
Land
Buildings
Other
55
(16)
39
2
—
(3)
—
4
3
61
(19)
42
2
—
—
(3)
—
1
—
64
(22)
42
353
(128)
225
35
(5)
(60)
(2)
9
(23)
372
(170)
202
5
58
(7)
(64)
(3)
(2)
(13)
393
(204)
189
102
(42)
60
32
(2)
(31)
—
1
—
109
(49)
60
3
30
(2)
(31)
—
—
—
117
(57)
60
Total
510
(186)
324
69
(7)
(94)
(2)
14
(20)
542
(238)
304
10
88
(9)
(98)
(3)
(1)
(13)
574
(283)
291
Income/(expenses) recognized in profit and loss
In € millions
Sub lease income
Depreciation right-of-use assets
Impairments for right-of-use assets
Interest expense on lease liabilities
Short-term lease expenses
Expenses relating to low-value assets
Variable lease expenses
Total expenses
2021
3
(94)
(2)
(6)
(7)
(5)
(5)
2022
2
(98)
(3)
(6)
(11)
(4)
(4)
(116)
(124)
Impairments
Periodical evaluations are performed in order to ensure
timely detection of triggers that might indicate impairment
of assets. Whenever such triggers are noted, the related
assets are assessed for impairment as appropriate.
In 2022 and 2021, no significant impairments were
recognized.
Note 14 INVESTMENTS IN ASSOCIATES
AND JOINT VENTURES
The total value of investments in associates and joint
ventures at December 31, 2022 amounted to €193 million
(2021: €178 million) and consisted of our equity share of
€191 million (2021: €176 million) and loans granted of €2
million (2021: €2 million).
Balance sheet information of our share in associates
In € millions, at December 31
Condensed balance sheet
Non-current assets
Current assets
Total assets
Shareholders’ equity
Non-current liabilities
Current liabilities
Total liabilities and equity
2021
Associates
2022
81
141
222
176
5
41
222
97
152
249
191
6
52
249
AkzoNobel Report 2022 | Financial statements
123
Profit and loss of our share in associates
Note 16 INVENTORIES
Ageing of trade receivables
In € millions, at December 31
Performing trade receivables
Past due trade receivables
< 3 months
> 3 months
Allowance for impairment
Total trade receivables
2021
1,849
2022
1,987
102
64
(42)
104
74
(42)
1,973
2,123
Trade receivables are presented net of an allowance for
impairment of €42 million (2021: €42 million). In 2022,
€17 million of impairment losses were recognized in the
statement of income (2021: €11 million) and €8 million
was reversed (2021: €11 million). Since the total amount
of impairment losses under IFRS 9 is not significant, no
separate disclosure was made in the statement of income.
Allowance for impairment of trade receivables
In € millions
Balance at January 1
Additions charged to income
Release of unused amounts
Utilization
Acquisitions
Currency exchange differences
Balance at December 31
2021
2022
58
11
(11)
(17)
—
1
42
42
17
(8)
(9)
2
(2)
42
In € millions
Condensed statement of income
Revenue
Profit before tax
Profit from continuing operations
Profit for the period
2021
Associates
2022
194
35
26
26
218
25
18
18
In 2022, the results from associates amounted to a profit
of €18 million (2021: €26 million). No significant contingent
liabilities exist related to associates. The largest associate
of AkzoNobel is Metlac S.p.a., incorporated in Italy.
None of the associates are considered individually material
to the group.
Note 15 FINANCIAL NON-CURRENT
ASSETS
Financial non-current assets
In € millions, at December 31
Pension assets
Loans and receivables
Other financial non-current assets
Total
2021
1,638
360
78
2,076
2022
1,029
362
84
1,475
Pension assets (€1,029 million) relate to pension plans in
an asset position (2021: €1,638 million). For more informa-
tion on post-retirement benefit plans, refer to Note 19.
Loans and receivables include the subordinated loan of
€89 million (2021: €88 million) granted to the Pension
Fund APF in the Netherlands.
Loans and receivables are considered to have low credit
risk; the impairment provision recognized during the period
was limited to 12 months expected losses.
The total carrying value of inventories as per December
31, 2022 has increased compared to December 31, 2021,
mainly as a result of significant increases in raw material
prices throughout 2022.
Inventories
In € millions, at December 31
Raw materials and supplies
Work in progress
Finished products and goods for resale
Total
2021
611
94
945
1,650
2022
676
104
1,063
1,843
Of the total carrying value of inventories at year-end
2022, €16 million is measured at net realizable value
(2021: €18 million). In 2022, €86 million was recognized
in the statement of income for the write-down of invento-
ries (2021: €67 million), while €30 million of write-downs
were reversed (2021: €32 million). There are no invento-
ries subject to retention of title clauses.
Note 17 TRADE AND OTHER
RECEIVABLES
Trade and other receivables
In € millions, at December 31
Trade receivables
Prepaid expenses
Tax receivables other than income tax
FX contracts
Receivables from associates
Other receivables
Total
2021
1,973
37
145
15
9
160
2,339
2022
2,123
58
156
18
4
88
2,447
Trade and other receivables can be broken down as
per the table above. Other receivables consist of a large
number of individually immaterial items. In 2021, Other
receivables included the current portion of €53 million (£44
million) of the escrow account for the Akzo Nobel (CPS)
Pension Scheme in the UK, that was repaid in 2022.
AkzoNobel Report 2022 | Financial statements
124
Note 18 GROUP EQUITY
Non-controlling interests
Composition of share capital at year-end 2021
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
90,804,755
Total
350,019,200
90,823,955
Composition of share capital at year-end 2022
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
87,187,614
Total
350,019,200
87,206,814
Outstanding common shares
Number of shares
2021
2022
Outstanding at January 1
190,579,841
181,609,509
Issued in connection to perfor-
mance-related share plan and share-
matching plan
Shares cancelled related to share
buyback from previous year
277,517
214,262
(695,776)
(2,744,210)
Shares bought back during the year
(11,296,283)
(8,651,230)
Shares bought back during the year
not yet cancelled
2,744,210
3,946,896
Outstanding at December 31
181,609,509
174,375,227
Weighted average number of common shares
Number of shares
Weighted average number of
common shares
2021
2022
184,959,866
174,735,139
Group entity
Partner at year-end 2022
Akzo Nobel India Limited, Kolkata, India
Privately held, India
PT ICI Paints Indonesia, Jakarta, Indonesia
PT DWI Satrya Utama, Indonesia
Akzo Nobel Kemipol A.S., Izmir, Türkiye
Altan, Eyyüp and other family members
Akzo Nobel Paints (Malaysia) Sdn Bhd, Kuala
Lumpur, Malaysia
Permodalan Nasional Berhad, Malaysia
International Paint of Shanghai Co. Ltd,
Shanghai, China
Shanghai Huayi Fine Chemical Co. Ltd and China
National Shipbuilding Equipment & Materials Corp.
Akzo Nobel Saudi Arabia Ltd, Saudi Arabia
Yousuf Bin Ahmed Kanoo Co. Ltd, Saudi Arabia
Akzo Nobel Oman SAOC, Muscat, Oman
Omar Zawawi Establishment LLC, Oman
Akzo Nobel UAE Paints L.L.C., United Arab
Emirates
Societe Tunisienne de Peintures Astral S.A.,
Megrine, Tunisia
Kanoo Group, United Arab Emirates
Several people
International Paint (Korea) Ltd, Busan, South-Korea Noroo Holdings, South Korea
Akzo Nobel Paints (Guangzhou) Limited,
Guangzhou, China
Guangzhou Hi-tech Investment Group
Corporation Ltd
Others
Total
2021
Equity stake
in € millions
%
2022
Equity stake
in € millions
%
25.24
45.00
49.00
40.05
49.00
40.00
50.00
40.00
40.00
40.00
10.00
56
34
19
21
25.24
45.00
49.00
40.05
15
49.00
40.00
50.00
40.00
40.00
40.00
10.00
12
11
8
7
11
5
12
211
54
31
24
20
16
14
12
8
8
6
5
17
215
Subscribed share capital
For further details on subscribed share capital, refer to
Note F in the Company financial statements.
Cumulative translation reserve
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
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, other executives and certain
non-executive employee categories. For details on share-
based compensation, refer to Note 7.
Dividend
Our dividend policy is to pay a stable to rising dividend.
In 2022, an interim dividend of €0.44 (2021: €0.44) per
common share was paid. We propose a 2022 final divi-
dend of €1.54 (2021: €1.54) per common share, which
would equal a total 2022 dividend of €1.98 (2021: €1.98).
Share buybacks
In February 2021, a €1 billion share buyback program was
announced, which was completed in January 2022.
In February 2022, a €500 million share buyback program was
announced which was completed in 2022. As at December
31, 2022, a total of 7.3 million shares had been acquired
under this program, of which 3.3 million were cancelled.
During 2022, 8,651,230 common shares were repur-
chased (2021: 11,296,283). The total amount of shares
cancelled was 7,448,544; cancelled shares are related
to share buyback in the current and the previous year
(2021: 9,247,849). For further details on weighted average
number of shares, refer to Note 10.
Non-controlling interests
None of the non-controlling interests are considered
individually material to the group. The effects of share
transactions with non-controlling interest shareholders
are recorded in equity insofar these do not lead to
changes in control.
AkzoNobel Report 2022 | Financial statements
125
Note 19 POST-RETIREMENT BENEFIT
PROVISIONS
Post-retirement benefit provisions relate to defined benefit
pension and other post-retirement benefit plans, includ-
ing healthcare or welfare plans. The largest defined benefit
pension plans are the ICI Pension Fund (ICIPF) and the
Akzo Nobel (CPS) Pension Scheme (CPS) in the UK which
together account for 86% of defined benefit obligations
(DBO) and 90% 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 requirements
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 bene-
fits during the service years of the employees. 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 plans
Almost 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 portfo-
lio management and to improve the liability matching
characteristics 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 invest-
ment strategy.
In line with our proactive pension risk management
strategy, we seek to reduce risk in our pension plans over
time. We evaluate potential de-risking opportunities on an
ongoing basis. Future de-risking transactions may have
both cash flow and balance sheet impacts which may be
substantial, as had some of the de-risking actions already
taken. The cost of fully removing risk would exceed esti-
mated funding deficits.
Between 2014 and 2022, 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.
In October 2022, the Trustee of the ICIPF entered into a
further annuity buy-in agreement with Legal and General
Assurance Society Limited. It covers, in aggregate, £54
million (€62 million) of pensioner liabilities (insurer valua-
tion). The buy-in involved the purchase of a bulk annuity
policy under which the insurer will pay to ICIPF amounts
equivalent 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. The accounting impact of the transaction is a lower
valuation of the plan assets giving a reduction in other
comprehensive income of £12 million (€14 million).
In November 2022, the Trustee of the CPS entered into its
first annuity buy-in agreement with Phoenix Life Limited.
It covers, in aggregate, £640 million (€724 million) of
pensioner liabilities (insurer valuation). The buy-in involved
the purchase of a bulk annuity policy under which the
insurer will pay to CPS amounts equivalent to the benefits
payable to a section of its pensioners. The pension
liabilities remain with, and the matching annuity policies are
held within, CPS. The accounting impact of the transaction
is a lower valuation of the plan assets giving a reduction in
other comprehensive income of £54 million (€62 million).
By purchasing bulk annuities, the ICIPF, CPS and ISCPF
Trustees have taken significant steps in actively de-risking
liabilities and reducing the risk that AkzoNobel will be
required to contribute additional cash in the future.
CPS also has an insurance contract to hedge longevity
risk in respect of a portion of its pensioners not impacted
by the recent buy-in transaction.
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)
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 and the CPI inflation assumption,
on which the benefits of some plans are based, is set with
reference to RPI. Until 2030, the CPI inflation assumption
is calculated as 1% below RPI and from 2030 onwards as
0.1% below RPI.
On April 22, 2021, a court ruling resulted in a £20 million
(€23 million) past service credit in one of the UK’s
pension plans, the J.P. McDougall & Co Limited Staff
AkzoNobel Report 2022 | Financial statements
126
Pension & Life Assurance Scheme, booked as an identi-
fied item. The court ruling rectified a deed change with
respect to the retirement ages from which members will
receive benefits.
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.
Reconciliation balance sheet
In € millions
2021
DBO
Plan
assets
Total
DBO
Plan
assets
Balance at the beginning of the period
(14,184)
15,014
830
(14,310)
15,330
Statement of income
Current service cost
Past service cost
Settlements
Net interest (charge)/income on net defined benefit (liability)/asset
Cost recognized in statement of income
Remeasurements recognized in Other comprehensive income
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-ins
Return on plan assets (less than)/greater than discount rate
Remeasurement effects recognized in Other comprehensive income
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
Presentation of Net balance sheet position
Other financial non-current assets
Post-retirement benefit provisions
Current portion of provisions
Net balance sheet position
(32)
22
—
(193)
(203)
(123)
289
56
—
—
222
—
(2)
852
850
1
(996)
(995)
—
—
—
206
206
—
—
—
(30)
(202)
(232)
94
2
(852)
(756)
(1)
1,099
1,098
(32)
22
—
13
3
(123)
289
56
(30)
(202)
(10)
94
—
—
94
—
103
103
(31)
—
18
(254)
(267)
(279)
3,754
18
—
—
3,493
—
(2)
842
840
—
662
662
—
—
(18)
272
254
—
—
—
(76)
(3,784)
(3,860)
70
2
(842)
(770)
(1)
(760)
(761)
(14,310)
15,330
1,020
(9,582)
10,193
(3)
1,017
1,638
(578)
(43)
1,017
2022
Total
1,020
(31)
—
—
18
(13)
(279)
3,754
18
(76)
(3,784)
(367)
70
—
—
70
(1)
(98)
(99)
611
(9)
602
1,029
(387)
(40)
602
The ITP2 plan in Sweden is financed through insurance
with the Alecta Tjänstepension Ömsesidigt (i.e. Alecta
pension insurance, mutual) insurance company (Alecta)
and is classified as a multi-employer defined benefit plan.
As AkzoNobel does not have access to sufficient informa-
tion from Alecta to enable defined benefit accounting
treatment, it is accounted for as a defined contribution
plan. Contributions in 2022 were €2 million (2021: €2
million). Alecta’s funding ratio is normally allowed to vary
between 125% and 175%. The most recently quoted ratio
at December 2022 stood at 172%.
The expenses of all plans accounted for as defined
contribution plans in AkzoNobel totaled €89 million in 2022
(2021: €83 million).
DBO at funded and unfunded pension plans*
In € millions, at December 31
Wholly or partly funded plans
Unfunded plans
Total
* Excludes other post-retirement benefit plans.
2021
14,005
179
14,184
2022
9,229
246
9,475
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 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 €602 million
(2021: €1,017 million) includes the pension plans (€709
million net asset; 2021: €1,143 million net asset) and other
post-retirement plans (€107 million liability; 2021: €126
million liability).
Administrative expenses
In addition to the expenses borne by the funds them-
selves, some expenses are borne directly by AkzoNobel.
Administrative expenses, especially for the UK pension
AkzoNobel Report 2022 | Financial statements
127
funds, of €26 million are included in 2022 operating
income (2021: €22 million). In addition, we directly incurred
asset management expenses of €2 million (2021:
€3 million), which have been included in other compre-
hensive income.
Interest costs
Interest costs on the DBO for both pensions and other
post-retirement benefits, together with the interest income
on plan assets, comprise the financing income related to
post-retirement benefits of €18 million (2021: €13 million),
refer to Note 8.
Plan assets
In € millions, at December 31
Equities
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
Pension plans in asset position
Pension balances recorded under Financial non-current
assets totaled €1,029 million (2021: €1,638 million). The
decrease in 2022 is due to €556 million of net actuarial
losses and €89 million of exchange rate translation losses,
partially offset by €21 million of employer contributions and
net income of €15 million, in the relevant plans.
Cash flows
In € millions
Regular contributions
Top-ups
Total
Total Percentage of total
Total Percentage of total
2021
2022
332
1,444
3,221
1,770
7,698
204
661
2
9
21
12
50
1
5
225
580
1,230
1,394
6,078
166
520
15,330
100
10,193
2
6
12
13
60
2
5
100
Other post-retirement benefits
2022
43
13
56
Pensions
2023
41
8
49
2022
11
—
11
5
—
4
8.7
2023
11
—
11
Total
495
281
498
10.2
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 €6,666 million
(2021: €8,420 million), including the UK buy-in annuity
policies totaling €6,078 million (2021: €7,698 million),
investments in real estate totaling €343 million (2021:
€469 million) and other investments in infrastructure and
insurance policies. 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 instruments, nor any property
occupied by or assets used by the company.
Cash flows
In 2023, we expect to contribute €49 million (2022: €56
million) to our defined benefit pension plans. We expect to
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
274
158
367
9.2
Other
pension plans
Other post-
retirement
benefits
CPS
UK
143
85
86
73
38
41
12.0
11.6
* The sensitivity to price inflation assumption includes corresponding changes to all inflation-related compensation increases,
pensions in payment and pensions in deferment.
pay a further €11 million (2022: €11 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.
Sensitivity of DBO
The actuarially calculated sensitivity effects on DBO shown
allow for an alternative value for each assumption while
the other actuarial assumptions remain unchanged. This
table illustrates the overall impact on DBO for the changes
shown, which management assessed could be reasonably
possible over a longer term from a sensitivity test perspec-
tive. It should be noted, however, that this analysis does
not indicate and probability of such changes occurring,
not does it preclude larger changes in any given period or
longer term. In addition, 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 assump-
tions 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
conditions at the measurement date. Its results, in
principle, cannot be extrapolated due to increasing non-
AkzoNobel Report 2022 | Financial statements
128
linear effects that changes in the key actuarial assump-
tions, when deviating further from the assumptions
presented, may have on the total 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,
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 (2021: 99%) and 88% of total liabilities
(2021: 84%).
At CPS, the annuity buy-in contract covers 42% of
pensioner liabilities (2021: 0%) and 28% of total liabilities
(2021: 0%). Also at CPS, the longevity hedge contract
covers 48% of pensioner liabilities (2021: 48%) and 30%
of total liabilities (2021: 30%)
Future benefit payments
The figures in the table on the right are the estimated
future benefit payments to be paid from the plans to
beneficiaries over the next ten years.
Future benefit payments
In € millions
2023
2024
2025
2026
2027
2028 - 2032
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
61%
(8,702)
9,563
861
—
861
9%
(3)
3
1.8%
1.5%
3.5%
3.2%
26.2
27.7
27.3
28.9
CPS
UK
Other pension
plans
26%
12%
(3,686)
4,353
667
—
667
28%
(9)
37
1.9%
1.4%
3.4%
2.8%
26.2
29.0
27.3
30.2
(1,796)
1,414
(382)
(3)
(385)
63%
(20)
44
1.8%
2.0%
2.3%
2.3%
26.2
28.8
27.6
30.0
Other post-
retirement
benefits
1%
(126)
—
(126)
—
(126)
—
—
10
3.3%
—
—
—
25.8
27.8
26.9
28.8
2021
Total
100%
(14,310)
15,330
1,020
(3)
1,017
100%
(32)
94
1.9%
1.5%
3.3%
3.0%
26.2
28.2
27.3
29.4
ICIPF
UK
61%
(5,875)
6,293
418
—
418
6%
(2)
—
4.9%
1.5%
3.3%
3.1%
26.2
27.8
27.3
29.0
CPS
UK
Other
pension plans
25%
13%
(2,362)
2,895
533
—
533
26%
(8)
13
4.9%
1.4%
3.3%
2.7%
26.2
29.1
27.3
30.2
(1,238)
1,005
(233)
(9)
(242)
68%
(21)
45
4.6%
2.0%
2.3%
2.2%
25.7
28.1
27.0
29.4
Pensions
Other post-
retirement benefits
816
818
826
832
842
4,321
Other post-
retirement
benefits
1%
(107)
—
(107)
—
(107)
—
—
12
5.9%
—
—
—
25.8
27.8
26.8
28.8
11
11
10
10
9
41
2022
Total
100%
(9,582)
10,193
611
(9)
602
100%
(31)
70
4.9%
1.5%
3.2%
2.9%
26.1
28.2
27.3
29.3
AkzoNobel Report 2022 | Financial statements
129
Key plan details for the two largest pension plans1
Type of plan
Benefits
Pension increases (main benefit
section)
Plan structure
Governance
Regulatory framework
Funding basis
ICI Pension Fund, UK
Akzo Nobel (CPS) Pension Scheme, UK
Defined benefit, based upon years of service and final
salary
Defined benefit, based upon years of service and final
salary
Retirement pension for employee Dependents’ pensions
on death of employee/pensioner
Options for ill health early retirement
Retirement pension for employee Dependents’ pensions
on death of employee/pensioner
Options for ill health early retirement
Annually linked to UK RPI with a maximum of 5%
Annually linked to UK CPI with a maximum of 5%
Plans are set up under a trust and are tax approved
Plans are set up under a trust and are tax approved
Trustee directors:
Three member-nominated
Four appointed with the agreement of Law Debenture
One independent (Law Debenture)
Trustee directors:
Three member-nominated
Two company-nominated
One independent (Law Debenture)
The 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 company
A 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 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 liabilities
Frequency of funding reviews
Normally every three years
Latest completed valuation
March 31, 2020
Normally every three years
March 31, 2020
Funding deficit at latest completed
valuation1,2
Recovery plan
£23 million (€27 million) surplus
£62 million (€73 million) deficit
As there were sufficient assets to cover the Fund's
technical provisions, a recovery plan is not required
£26 million (€31 million) in 2021 and £4 million (€5
million) in 2022, paid in March in each year from an
escrow account pre-funded with £142 million (€161
million)3 in February 2019
Next funding review
March 31, 2023 (due to be completed before June 30,
2024)
March 31, 2023 (due to be completed before
June 30, 2024)
Asset allocation at March 31, 2022
Matching:
Return seeking:
99.8%
0.2%
Buy-in annuity contracts cover 99% of pensioner
liabilities and 84% of total liabilities
84%
16%
The longevity hedge contract covers 48% of pensioner
liabilities and 30% of total liabilities
Membership at March 31, 2022
Active
Deferred
Pensioner
Total
71
5,338
35,032
40,441
273
5,427
16,570
22,270
1 Amounts in euro are a convenience translation using the December 31, 2022, exchange rate, unless indicated otherwise.
2 Based on local valuation regulations.
3 Actual rate at time of transfer.
Note 20 OTHER PROVISIONS AND
AND CONTINGENT LIABILITIES
General
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 activities
Provisions 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 liabilities
We 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
countries. 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 3.8% (2021: 1.0%).
AkzoNobel Report 2022 | Financial statements
130
Movements in other provisions
In € millions
Balance at January 1, 2022
Additions made during the year
Utilization
Amounts reversed during the year
Unwind of discount
Acquisitions
Changes in exchange rates
Balance at December 31, 2022
Non-current portion of provisions
Current portion of provisions
Balance at December 31, 2022
Restructuring
of activities
Environmental
costs
Liabilities to
(former)
employees
Sundry
43
49
(41)
(9)
—
—
—
42
1
41
42
66
10
(14)
(6)
(6)
—
1
51
38
13
51
132
15
(14)
(17)
(11)
5
(3)
107
88
19
107
99
66
(62)
(10)
(1)
2
(1)
93
40
53
93
Total
340
140
(131)
(42)
(18)
7
(3)
293
167
126
293
Liabilities to (former) employees
Liabilities to (former) employees consist of employer liability
plans, jubilee plans and other long-term compensation
plans. The majority of the cash outflows related to liabilities
to (former) employees is expected to be after five years.
In calculating the liabilities to (former) employees, a
pre-tax discount rate of on average 5.0% (2021: 1.5%)
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 be
within one to five years. In calculating the sundry provi-
sions, a pre-tax discount rate of on average 5.3% (2021:
1.0%) has been used.
Contingent liabilities
Estimating the impact of environmental liabilities often is
complex and requires significant judgement. It requires
the assessment of many (often interconnected) elements,
which contain varying levels of uncertainty. Environmental
liabilities can change substantially, among others due to
the emergence of additional information on the nature or
extent of the contamination, the geological circumstances,
changes in (the interpretation and enforcement of) environ-
mental regulations, new and evolving analytical and reme-
diation techniques, success or lack of success of currently
anticipated clean-up methods, actions by governmental
agencies or private parties, success in allocating liability to
other potentially responsible parties, the financial viability
of other potentially responsible parties and third-party
indemnitors, and/or other factors.
Especially for some sites for which we are faced with
relatively new legislation, which are in the early stages of
discussions with regulators, and/or where there is limited
information available from earlier experience, there may be
considerable variability between the clean-up activities that
are currently being undertaken or planned and the ultimate
actions that could be required. For such sites, the costs for
the earlier years might be rather reliably estimable, whilst
for later years it is much more difficult, if possible
at all, to estimate the cost of environmental compliance
and remediation. If the level of uncertainty is such that no
reliable estimate can be made for the longer-term costs,
no provision for such costs is recorded. While it is not
feasible to predict the outcome of all pending environmen-
tal exposures, it is reasonably possible that there will
be a need for future (changes to) provisions for environ-
mental 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, many
of which are contested. We are also involved in legal
disputes and disputes with tax authorities in several juris-
dictions. 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. AkzoNo-
bel has received various claims under such indemnities
and guarantees. In some instances, AkzoNobel has been
named as a direct defendant 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 termination of residual liability is still pending and
AkzoNobel, Nouryon and Nobian continue to cooperate
to get this resolved.
Current portion of provisions
The current portion of post-retirement benefit provisions
(€40 million) and the current portion of other provisions
(€126 million) add up to €166 million (2021: €149 million),
as reflected in the balance sheet.
Discount rates
The discount rates used in calculating the provisions
recognized at December 31, 2022 are mentioned in the
paragraphs on provisions for environmental costs, liabilities
to (former) employees and sundry provisions. Changes in
discount rates 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 €6 million on the provisions
recognized at December 31, 2022.
AkzoNobel Report 2022 | Financial statements
131
Note 21 NET DEBT
Net debt
in € millions
Net debt at January 1, 2021
Net cash from operating activities
Acquisitions
Investments in short-term investments
Repayments of short-term investments
Net cash from other investing activities
Buy-out of non-controlling interests
Unwind of discount and amortized cost
Proceeds from borrowings
Borrowings repaid
New/modification/disposal of lease contracts
Transfers from long-term to short-term
Movement bank overdrafts and short-term bank loans
Dividends
Share buyback
Net cash from discontinued operations
Changes in exchange rates
Net debt at December 31, 2021
Net debt at January 1, 2022
Net cash from operating activities
Acquisitions
Investments in short-term investments
Repayments of short-term investments
Net cash from other investing activities
Buy-out of non-controlling interests
Unwind of discount and amortized cost
Proceeds from borrowings
Borrowings repaid
New/modification/disposal of lease contracts
Transfers from long-term to short-term
Movement bank overdrafts and short-term bank loans
Dividends
Share buyback
Net cash from discontinued operations
Changes in exchange rates
Net debt at December 31, 2022
Long-term
borrowings
Short-term
borrowings
Short-term
investments
Cash and cash
equivalents
2,771
119
—
2
—
—
—
—
8
—
—
62
(855)
—
—
—
—
6
—
13
—
—
—
—
—
1,143
(590)
(1)
855
19
—
—
—
(2)
1,994
1,556
1,994
1,556
—
71
—
—
—
—
9
1,359
—
79
(139)
—
—
—
—
(41)
3,332
—
2
—
—
—
—
5
8,152
(7,322)
—
139
16
—
—
—
(5)
2,543
(250)
—
—
(56)
247
—
—
1
—
—
—
—
—
—
—
—
—
(58)
(58)
—
—
(1,361)
1,084
—
—
—
—
—
—
—
—
—
—
—
(1)
(336)
(1,606)
(605)
73
56
(247)
252
1
—
(1,143)
590
—
—
(19)
391
1,135
1
(31)
(1,152)
(1,152)
(263)
588
1,361
(1,084)
230
—
—
(9,511)
7,322
—
—
(16)
379
669
9
18
Net debt
1,034
(605)
88
—
—
252
1
9
—
—
61
—
—
391
1,135
1
(27)
2,340
2,340
(263)
661
—
—
230
—
14
—
—
79
—
—
379
669
9
(29)
(1,450)
4,089
Analysis of net debt by category
In € millions, at December 31
Bonds issued
Lease liabilities
Other long-term borrowings
Long-term borrowings
Current portion of long-term borrowings
Current portion of lease liabilities
Debt to credit institutions
Other short-term borrowings
Short-term borrowings
Total borrowings
Short-term investments
Cash and cash equivalents
Net debt
2021
1,740
212
42
1,994
754
87
711
4
1,556
3,550
(58)
(1,152)
2,340
2022
2,934
198
200
3,332
2
86
2,450
5
2,543
5,875
(336)
(1,450)
4,089
AkzoNobel’s net debt is mainly denominated in euro.
Multi-currency revolving credit facility
We have a multi-currency revolving credit facility of €1.3
billion which runs until 2026. 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 2022 and 2021, this facility has not
been drawn.
Long-term borrowings
Bonds issued
In € millions, at December 31
2021
2022
1 3/4% 2014/24 (€500 million)
1 1/8% 2016/26 (€500 million)
1 5/8% 2020/30 (€750 million)
1 1/2% 2022/28 (€600 million)
2% 2022/32 (€600 million)
499
497
744
—
—
499
498
745
595
597
Total
1,740
2,934
In March 2022, two bonds were issued with nominal
values of €600 million each, of which one at a coupon
rate of 1.5%, maturing in 2028 and one at a coupon rate
of 2.0%, maturing in 2032. For details on the exposure to
interest rate and foreign currency risk, refer to Note 27.
The average effective interest rate of the bonds included in
long-term borrowings at year-end 2022 was 1.6% (year-
end 2021: 1.9%).
AkzoNobel Report 2022 | Financial statements
132
Aggregated maturities of long-term borrowings
In € millions
Bonds issued
Lease liabilities
Other long-term borrowings
Total
2024-2027
After 2027
997
153
175
1,937
45
25
1,325
2,007
The increase in Other long term borrowings is related to
loans included in the balance sheet of acquired companies
and acquisition related financing.
The blended incremental borrowing rate applied to the
lease liabilities at year-end 2022 was 1.9% (2021: 1.8%).
At year-end 2022 and 2021, none of the borrowings was
secured by collateral.
Short-term borrowings
The current portion of long-term borrowings decreased
mainly due to the maturing of a €750 million bond in
July 2022.
Debt to credit institutions includes our commercial paper
program. 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 €1.3 billion
commercial paper outstanding at year-end 2022 (2021:
€371 million) against an average interest rate of 1.6%
(2021: 0.5% negative). At year-end 2022, we had short-
term bank loans outstanding of €1.1 billion (2021:
€300 million) against a 3-months Euribor plus a mark-up
(2021: 0.6% negative). None of these facilities contain
financial covenants.
Short-term investments
Short-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 equivalents
Deposits 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, 2022, an amount of €11 million in
cash and cash equivalents was restricted (2021:
€14 million). Restricted cash is defined as cash that
cannot be accessed centrally due to regulatory or
contractual restrictions.
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 unwind-
ing of discount, movements through other comprehensive
income, acquisitions and divestments, and changes in
exchange rates.
Cash and cash equivalents
In € millions, at December 31
Cash on hand and in banks
Short-term investments with a life up
to three months
Included in cash and cash equiva-
lents in the balance sheet
Debt to credit institutions
Total per statement of cash flows
Changes in working capital as per consolidated
statement of cash flows
2021
877
275
2022
922
528
In € millions
Trade and other receivables
Inventories
Trade and other payables
1,152
1,450
Total
2021
(240)
(439)
274
(405)
2022
(95)
(134)
(280)
(509)
(40)
1,112
(52)
1,398
Note 24 COMMITMENTS
Note 22 TRADE AND OTHER PAYABLES
Purchase commitments for property, plant and equipment
aggregated €23 million (2021: €35 million).
2021
2,376
2022
2,206
Note 25 RELATED PARTY
TRANSACTIONS
Trade and other payables
In € millions, at December 31
Trade payables
Taxes and social security
Amounts payable to employees
Interest
FX contracts
Dividends
Other liabilities
Total
191
264
42
27
6
42
184
234
58
60
4
55
2,948
2,801
Trade and other payables can be broken down as per the
above table. Other liabilities consist of a large number of
individually immaterial items.
Note 23 CASH FLOW
Operating activities in 2022 resulted in a cash inflow of
€263 million (2021: cash inflow of €605 million).
The amounts in the following table cannot be reconciled
directly to the respective balance sheet positions. They
reflect changes in balance sheet positions only to the
We 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 2022, 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.
AkzoNobel Report 2022 | Financial statements
133
Note 26 REMUNERATION OF THE
SUPERVISORY BOARD AND THE
BOARD OF MANAGEMENT
Total compensation for key management personnel
expensed during the period amounted to €13.2 million
(2021: €14.4 million). An amount of €7.4 million relates to
short-term employee benefits (2021: €6.6 million); €0.8
million relates to post contract benefits and other post
contract compensation (2021: €0.6 million); €3.0 million
relates to share-based compensation (2021: €7.2 million);
no payments relate to other long-term incentives (2021:
€nil); €2.0 million payments relate to payments upon termi-
nation of employment (2021: €nil). Additional charges were
accrued which relate to taxation on excessive pay of €1.0
million (“Belasting heffing excessieve beloningsbestand-
delen”) (2021: €nil).
This compensation includes total remuneration for the
members of the Supervisory Board of €0.9 million (2021:
€0.8 million) and for the members of the Board of Manage-
ment of €2.0 million (2021: €8.9 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.
Shares held by the members of the
Supervisory Board
Number of shares at year-end
Nils Smedegaard Andersen, Chair
Byron Grote*
Pamela Kirby
Dick Sluimers
Patrick Thomas
Jolanda Poots-Bijl
Ester Baiget
Hans Van Bylen
* In the form of ADRs.
2021
4,500
7,394
—
—
—
—
—
—
2022
4,500
8,061
—
—
—
—
—
—
Shares held by the Board of Management
Maturity of liabilities and cash outflows
Number of shares at year-end
Greg Poux-Guillaume*
Maarten de Vries
2021
—
2022
—
14,643
21,766
*Appointed CEO as per November 1, 2022, replacing Thierry Vanlancker.
In € millions
At December 31, 2021
Less than
1 year
Between
1 and 5 years
Over 5
years
Borrowings
1,469
1,006
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 27 FINANCIAL RISK MANAGEMENT
FINANCIAL RISK MANAGEMENT
FRAMEWORK
Our activities expose us to a variety of financial risks:
liquidity risk, credit risk and market risk (including foreign
exchange rate risk, interest rate risk and capital risk).
These risks are inherent to the way we operate as a multi-
national with a large number of locally operating subsid-
iaries. Our overall risk management program seeks to
identify, assess, and – if necessary and possible – 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,
evaluation, hedging and monitoring in the businesses.
Next to our centralized Treasury organization in Amster-
dam, we have treasury hubs located in Brazil and China
that are primarily responsible for regional cash manage-
ment and short-term financing. We do not allow exten-
sive treasury operations directly with external parties at
subsidiary level.
Interest on borrowings
Lease liabilities
60
87
Trade and other payables
2,921
FX contracts (hedges)
Outflow
Inflow
Total
At December 31, 2022
Borrowings
Interest on borrowings
Lease liabilities
Trade and other payables
FX contracts (hedges)
Outflow
Inflow
Total
2,819
(2,806)
4,550
2,457
118
86
2,741
3,097
(3,055)
5,444
134
165
—
—
—
1,305
776
40
47
—
—
—
863
1,172
1,962
197
153
—
—
—
84
45
—
—
—
1,522
2,091
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 2022, we had €1.5 billion available as cash
and cash equivalents (2021: €1.2 billion) and €336 million
available as short-term investments (2021: €58 million),
refer to Note 21.
In addition, we have a multi-currency revolving credit facil-
ity of €1.3 billion which runs until 2026. This facility does
not contain financial covenants or acceleration provisions
that are based on adverse changes in ratings or on other
material adverse changes. At year-end 2022 and 2021,
this 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.
AkzoNobel Report 2022 | Financial statements
134
We had €1.3 billion commercial paper outstanding at
year end 2022 (2021: €371 million) against an average
interest rate of 1.6% (2021: average interest rate of 0.5%
negative). Further, at year-end 2022, we had €1.1 billion
short-term bank loans outstanding (2021: €300 million)
against 3-months Euribor plus a mark-up (2021: interest
rate of 0.6% negative). None of these facilities contain
financial covenants. 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 agree-
ments and ISDA agreements in place. We set limits per
counterparty for the different types of financial instruments
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.
The credit risk from trade receivables is measured and
analyzed by dedicated teams in the businesses, mainly
by means of ageing analysis, refer to Note 17. Addition-
ally, 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
approaches per financial asset type, refer to Note 1.
The maximum exposure to credit risk is represented by the
carrying value of financial assets in the balance sheet.
At year-end 2022, the credit risk on consolidated level was
€4.6 billion (2021: €3.9 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 €280 million at year-end 2022 (2021:
€301 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 exposures which are 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. Hedge
accounting is generally not applied for foreign currency
hedging activities, except for certain specific forecasted
transactions. In 2022 and 2021, we applied cash flow
hedge accounting on a COP 1,600 billion hedge of the
foreign currency risk related to the acquisition of Grupo
Orbis which was finalized in April 2022. The hedges
matured in April 2022. The fair value of the cash flow
hedge of €31 million (positive) has subsequently been
released from other comprehensive income and allo-
cated to the purchase consideration. The hedges were
fully effective during 2022 and 2021. In 2022, cash flow
hedge accounting was applied on a $450 million hedge
for foreign currency risk exposure related to the intended
acquisition of Kansai Paint’s African activities, refer to
Note 2 for further details. The fair value of this hedge at
year-end 2022 was €37 million negative; the spot result
related to this hedge was recognized in other compre-
hensive income and accumulated in the cash flow hedge
Hedged notional amounts at year-end
In € millions
US dollar
Pound sterling
Chinese yuan
Colombian peso
Other*
Total
Buy
2021
263
601
179
348
391
Sell
2021
413
45
145
1
745
Buy
2022
784
649
110
—
278
Sell
2022
692
10
157
1
821
1,782
1,349
1,821
1,681
* No individually significant position is included in ‘Other’, the amounts per currency
are highly disaggregated.
reserve. The hedge will mature in the course of 2023.
During 2022, the hedge was fully effective.
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.
Investments in foreign subsidiaries, associates
and joint ventures
During 2022 and 2021, net investment hedge account-
ing was applied on hedges of certain net investments in
foreign operations, which were partly hedged. The main
net investments that were hedged with forward exchange
contracts for the same currencies were related to Chinese
yuan, Indonesian rupiah and Indian rupee (2021: Brazilian
real, Chinese yuan, Indonesian rupiah and Vietnamese
dong). The spot results related to these hedges were
recognized in other comprehensive income and accumu-
lated in the cumulative translation reserves. In addition,
a net investment in Colombian peso was hedged with a
COP 330 million bank loan. The spot result related to this
hedge was recognized in other comprehensive income
and accumulated in the cumulative translation reserves. At
year-end 2022, the hedge of net investment in Colombian
peso was outstanding. During 2022 and 2021, the hedges
of net investments 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
AkzoNobel Report 2022 | Financial statements
135
as floating rate debt for debt portfolio purposes. At the end
of 2022, the fixed/floating ratio of our outstanding bonds
was 100 percent fixed (2021: 70 percent fixed). During
2022 and 2021, 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. Our long-term borrowings have fixed interest rates
and we currently do not have any interest related hedging
instruments. Fallback language has been added to our
contracts while preparing for the transition to new rates.
Based on this and following an internal assessment of the
impact of the IBOR reform, we conclude that the interest
rate benchmark reform does not have a material impact on
the company’s financial statements.
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 an adequate financial strategy, with the objec-
tive to retain a strong investment grade credit rating as
assigned by the rating agencies Moody’s and Standard &
Poor’s. The capital structure can be altered, among others,
by adjusting the amounts of dividends paid to sharehold-
ers, return of capital to capital providers, or issuance of
new debt or shares. In March 2022, two bonds were
issued with nominal values of €600 million each of which
one at a coupon rate of 1.5%, maturing in 2028 and one
at a coupon rate of 2.0%, maturing in 2032. In July 2022,
a bond of €750 million matured.
Consistent with other companies in the industry, we
monitor capital headroom based on the leverage ratio
net debt/EBITDA, for which we have set a target range
of around 2. The ratio was 3.8 at December 31, 2022
(December 31, 2021: 1.6). EBITDA is operating income
excluding depreciation and amortization, which amounted
to €1,076 million for 2022 (2021: €1,469 million). Net debt
is calculated as the total of long- and short-term borrow-
ings less cash and cash equivalents and short-term invest-
ments, amounting to €4,089 million at year end 2022 (year
end 2021: €2,340 million).
Fair value per financial instrument category
In € millions
2021 year-end
Financial non-current assets2
Trade and other receivables3
Short-term investments
Cash and cash equivalents
Total financial assets
Long-term borrowings
Short-term borrowings
Trade and other payables4
Total financial liabilities
2022 year-end
Financial non-current assets2
Trade and other receivables3
Short-term investments
Cash and cash equivalents
Total financial assets
Long-term borrowings
Short-term borrowings
Trade and other payables4
Total financial liabilities
Carrying value per IFRS 9
category
Measured at
amortized
cost
Measured
at fair value
through profit
or loss
Total
carrying value
Fair value
of items
measured at
amortized cost
Carrying
amount
Out of scope
of IFRS 71
2,076
2,339
58
1,152
5,625
1,994
1,556
2,948
6,498
1,475
2,447
336
1,450
5,708
3,332
2,543
2,801
8,676
1,766
182
—
—
302
2,089
—
—
1,948
2,391
—
—
455
455
1,158
214
—
—
1,994
1,556
2,466
6,016
308
2,215
—
—
1,372
2,523
—
—
418
418
3,332
2,543
2,323
8,198
8
68
58
1,152
1,286
—
—
27
27
9
18
336
1,450
1,813
—
—
60
60
310
2,157
58
1,152
3,677
1,994
1,556
2,493
6,043
317
2,233
336
1,450
4,336
3,332
2,543
2,383
8,258
330
2,089
—
—
2,419
2,114
1,570
2,466
6,150
311
2,215
—
—
2,526
3,031
2,543
2,323
7,897
1 Mainly includes pension assets (refer to Note 15), (non) income tax related
3 €2,215 million (2021: €2,089 million) relates to the remainder of trade and
receivables (refer to Note 17), payables to employees and (non) income taxes payables
(refer to Note 22).
other receivables (refer to Note 17) and €18 million (2021: €68 million) relates
to FX contracts.
2 €308 million (2021: €302 million) relates to loans and receivables (refer to
4 €2,323 million (2021: €2,466 million) relates to the remainder of trade and other
Note 15), €9 million (2021: €8 million) relates to other than financial instruments
(refer to Note 15).
payables (refer to Note 22) and €60 million (2021: €27 million) relates to
FX contracts.
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,
AkzoNobel Report 2022 | Financial statements
136
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 EVENTS
No significant subsequent events have been identified.
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
and short-term 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 observable 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 approximate
fair value due to the short maturity period of those
instruments and were determined using level 2 fair value
methods.
• A level 3 fair valuation method (discounted cash flow)
was used for the subordinated loan granted to the
Pension Fund APF in the Netherlands, resulting in a fair
value of €93 million.
MASTER NETTING AGREEMENTS
We 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
Sensitivities on financial instruments at year-end 2022
Sensitivity object
Sensitivity
Hypothetical impact
Foreign currencies:
We perform foreign currency sensitivity analysis by
applying an adjustment to the spot rates prevailing
at year-end. This adjustment is based on observed
changes in the exchange rate in the past and manage-
ment’s expectation for reasonably possible* future
movements over a longer term from a sensitivity test
perspective. We then apply the expected possible
volatility to revalue all monetary assets and liabilities
(including derivative financial instruments) in a currency
other than the functional currency of the subsidiary in
the balance sheet at year-end. These effects are of a
fairly linear nature.
Interest rate:
We perform interest rate sensitivity analysis by applying
an adjustment to the interest rate curve prevailing
at year-end. This adjustment is based on observed
changes in the interest rate in the past and manage-
ment’s expectation for reasonably possible* future
movements over a longer term from a sensitivity test
perspective. We then apply the expected possible
volatility to revalue all interest bearing assets and liabili-
ties. These effects are of a fairly linear nature.
A 10% (2021: 10%) strengthening of the euro
versus US dollar
Profit €9 million (2021: profit €6 million);
Other comprehensive income loss €41
million (2021: profit €1 million)
A 10% (2021: 10%) strengthening of the euro
versus the pound sterling
Profit €1 million (2021: profit €1 million)
A 10% (2021: 10%) strengthening of the euro
versus Chinese yuan
Profit €1 million (2021: €nil). Other compre-
hensive income €nil (2021: profit €2 million)
A 10% (2021: 10%) strengthening of the euro
versus Colombian peso
Profit €nil (2021: €nil). Other comprehensive
income €nil (2021: loss €35 million)
A 100 basis points increase of
EUR interest rates
A 100 basis points increase of
USD interest rates
A 100 basis points increase of
GBP interest rates
Loss €16 million (2021: loss €11 million)
Profit €1 million (2021: €nil)
Profit €1 million (2021: profit €1 million)
* This analysis does not indicate any probability of such changes occurring; nor does it preclude
larger changes in any given period or longer term.
AkzoNobel Report 2022 | Financial statements
137
COMPANY FINANCIAL STATEMENTS
Statement of income
In € millions, for the year ended
December 31
Revenue
Gross profit
General and administrative expenses
Other results
Note
A
Operating income
Financing income and expenses
Net income from subsidiaries, associates
and joint ventures
B
D
5
(10)
—
(25)
871
Profit before tax
Income tax
Net income
2021
5
(10)
(5)
846
841
(12)
829
4
(46)
(1)
(71)
440
2022
4
(47)
(43)
369
326
26
352
Balance sheet, before allocation of profit
In € millions, at December 31
Note
2021
2022
Assets
Non-current assets
Intangible assets
Deferred tax assets
Financial non-current assets
Total non-current assets
Current assets
Short-term receivables
Short-term investments
Cash and cash equivalents
Total current assets
Total assets
Equity and liabilities
Equity
Subscribed share capital
Cash flow hedge reserve
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
91
30
12,497
154
–
404
91
(19)
275
(493)
(2,613)
7,435
749
99
51
12,656
12,618
12,806
223
290
643
558
13,176
1,156
13,962
87
(34)
296
(656)
(2,902)
7,265
277
5,425
4
4,333
3
6,225
7,102
6,225
7,102
1,425
97
2,403
121
1,522
13,176
2,524
13,962
AkzoNobel Report 2022 | Financial statements
138
Note C
INTANGIBLE ASSETS
Intangible assets mainly include (internally developed)
software.
Intangible assets
In € millions
Balance at January 1, 2021
Cost of (internally developed) intangibles
Accumulated amortization
Carrying value at January 1, 2021
Movements in 2021
Additions
Amortization
Total movements
Cost of (internally developed) intangibles
Accumulated amortization
Balance at December 31, 2021
Movements in 2022
Additions
Amortization
Total movements
Cost of (internally developed) intangibles
Accumulated amortization
Balance at December 31, 2022
Other intangibles
82
(11)
71
31
(11)
20
113
(22)
91
26
(18)
8
139
(40)
99
Note A GENERAL INFORMATION
Akzo 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 is gener-
ated through service contracts with third parties.
Consolidated subsidiaries are all entities (including inter-
mediate subsidiaries) over which the company has control.
The company controls an entity when it is exposed, or
has rights, to variable returns from its involvement with
the subsidiary and has the ability to affect those returns
through its power over the subsidiary. Subsidiaries are
recognized from the date on which control is transferred to
the company or its intermediate holding entities. They are
derecognized from the date that control ceases.
The company applies the acquisition method to account
for acquiring subsidiaries. The consideration transferred
for the acquisition of a subsidiary is the fair value of assets
transferred by the company, liabilities incurred to the
former owners of the acquiree and the equity interests
issued by the company. Identifiable assets acquired and
liabilities and contingent liabilities assumed in an acquisi-
tion are measured initially at their fair values at the acquisi-
tion date, and are subsumed in the net asset value of the
investment in consolidated subsidiaries. Acquisition-related
costs are expensed as incurred.
Investments in consolidated subsidiaries are measured
using the equity method, based on the measurement of
assets, provisions and liabilities and determination of profit
based on the principles applied in the consolidated finan-
cial statements. When an acquisition of an investment in
a consolidated subsidiary is achieved in stages, any previ-
ously held equity interest is remeasured to fair value on the
date of acquisition. The remeasurement against the book
value is accounted for in the statement of income. When
the company ceases to have control over a subsidiary,
any retained interest is remeasured to its fair value, with
the change in carrying amount to be accounted for in the
statement of income.
When parts of investments in consolidated subsidiaries are
bought or sold, and such transaction does not result in the
loss of control, the difference between the consideration
paid or received and the carrying amount of the net assets
acquired or sold, is directly recognized in equity.
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 2022 was 7 (2021: 7). All employees are based
in the Netherlands.
Akzo Nobel N.V. is head of the Dutch fiscal unity for corpo-
rate income tax. Members of the fiscal unity reflect taxes
in their accounts on the basis as if they are taxable on a
standalone basis and are charged or credited accordingly
by the company.
Note B FINANCING INCOME AND
EXPENSES
Other items in 2022 and 2021 mainly include foreign
currency results.
Financing income and expenses
In € millions
2021
2022
Financing income - third parties
Financing income - subsidiaries
Financing expense - third parties
Financing expense - subsidiaries
Net Interest on net debt
Other items
Net other financing income/(expenses)
Total
2
77
(94)
(6)
(21)
(4)
(4)
(25)
5
53
(75)
(39)
(56)
(15)
(15)
(71)
AkzoNobel Report 2022 | Financial statements
139
Note D FINANCIAL NON-CURRENT ASSETS
Note E SHORT-TERM RECEIVABLES
Movements in non-current assets
In € millions
Balance at January 1, 2021
Investments/acquisitions/capital contributions
Divestments/capital repayments/dividends
Net income from subsidiaries
Equity-settled transactions
Loans granted
Loans transferred
Repayment of loans
Changes in exchange rates
Post-retirement benefits
Balance at December 31, 2021
Impact IAS 29 Hyperinflation Türkiye
Balance at January 1, 2022
Investments/acquisitions/capital contributions
Divestments/capital repayments/dividends
Net income from subsidiaries
Equity-settled transactions
Cash flow hedges
Loans granted
Repayment of loans
Changes in exchange rates
Post-retirement benefits
Balance at December 31, 2022
Subsidiaries
Share in capital
9,284
41
(61)
871
11
—
—
—
337
(8)
10,475
16
10,491
458
(1,058)
440
12
(3)
—
—
(180)
(290)
9,870
Loans
2,851
—
—
—
—
293
29
(1,298)
57
—
1,932
—
1,932
—
—
—
—
—
987
(244)
19
—
2,694
Other non-
current assets
90
—
—
—
—
—
—
—
—
—
90
—
90
2
—
—
—
—
—
—
—
—
92
Total
12,225
41
(61)
871
11
293
29
(1,298)
394
(8)
12,497
16
12,513
460
(1,058)
440
12
(3)
987
(244)
(161)
(290)
12,656
Investments in subsidiaries are measured using the equity
method of accounting.
Intercompany loans are priced at arm’s length, taking
factors like the credit quality of AkzoNobel and the coun-
terparty, country and currency risks into consideration. The
fair value of the loans to subsidiaries approximates
the book value.
Due to an intra-group funding restructuring, several
intercompany loans were transferred in 2021 from certain
foreign subsidiaries to Akzo Nobel N.V..
Loans to subsidiaries that will mature in 2023 amounted
to €262 million, an amount of €1,738 million will mature
between 2024 and 2027 and an amount of €84 million
after 2027. The remainder of the loans to subsidiaries has
no fixed repayment schedule.
Other non-current assets include the subordinated loan
granted to the Pension Fund APF in the Netherlands.
Using a level 3 fair valuation method (discounted cash
flow), a fair value of €93 million was determined for this
loan. For information on valuation methods, see Note 27 of
the Consolidated financial statements.
Short-term receivables
In € millions, at December 31
Receivables from subsidiaries
FX contracts
Other receivables
Total
2021
133
14
7
154
2022
202
18
3
223
Short-term receivables are expected to be settled within
one year. Receivables from subsidiaries include interest to
be received on intercompany loans of €17 million (2021:
€10 million). The fair value of the receivables from subsid-
iaries approximates the book value.
Note F SHAREHOLDERS’ EQUITY
The 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 2022 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% of
AkzoNobel Report 2022 | Financial statements
140
Statement of changes in equity
In € millions
Balance at January 1, 2021
Changes in exchange rates in respect of
subsidiaries, associates and joint ventures
Other comprehensive income/(expense)
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, 2021
Impact IAS 29 Hyperinflation Türkiye*
Balance at January 1, 2022
Changes in exchange rates in respect of
subsidiaries, associates and joint ventures
Cash flow hedges
Post-retirement benefits
Net income
Comprehensive income
Dividend
Equity-settled transactions
Share buyback
Addition to other reserves
Balance at December 31, 2022
Legal reserves
Subscribed
share capital
Cash flow
hedges
Other
legal reserves
Cumulative trans-
lation reserves
Actuarial
gains & losses
Other reserves
Undistributed
results
Shareholders'
equity
(2,587)
8,317
95
—
—
—
—
—
—
—
(4)
—
—
91
—
91
—
—
—
—
—
—
—
(4)
—
87
—
—
(19)
—
—
(19)
—
—
—
—
—
(19)
—
(19)
—
(15)
—
—
(15)
—
—
—
—
(34)
246
—
—
—
—
—
—
—
—
—
29
275
—
275
—
—
—
—
—
—
—
—
21
296
(873)
380
—
—
—
380
—
—
—
—
—
(493)
—
(493)
(163)
—
—
—
(163)
—
—
—
—
—
—
(26)
—
(26)
—
—
—
—
—
(2,613)
—
(2,613)
—
—
(289)
—
(289)
—
—
—
—
—
—
—
—
—
—
16
(1,131)
(1)
234
7,435
16
7,451
—
—
—
—
—
—
14
(656)
456
7,265
548
—
—
—
829
829
(365)
—
—
—
(263)
749
—
749
—
—
—
352
352
(347)
—
—
(477)
277
5,746
380
(19)
(26)
829
1,164
(365)
16
(1,135)
(1)
—
5,425
16
5,441
(163)
(15)
(289)
352
(115)
(347)
14
(660)
—
4,333
(656)
(2,902)
* As per June 2022, Türkiye has been identified as a hyperinflationary economy. IAS 29 “Financial Reporting in Hyperinflationary Economies”
has been applied for our activities in Türkiye as from January 1, 2022. Refer to Note 8 in the Consolidated Financial Statements for details on
the financial impact from applying IAS 29. The opening balance adjustment includes a tax charge of €4 million.
Unrestricted reserves at year-end
In € millions
Shareholders' equity at year-end
Subscribed share capital
Subsidiaries' restrictions to transfer funds
Reserve for development costs
2021
5,425
(91)
(174)
(101)
2022
4,333
(87)
(190)
(106)
Unrestricted reserves
5,059
3,950
10% of the issued share capital. The issue or repurchase
of shares requires the approval of the Supervisory Board.
On February 16, 2021, a €1 billion share buyback
program was announced, which was completed in
January 2022. All shares bought back under this program
were cancelled.
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
In February 2022, a €500 million share buyback program
was announced, which was completed in 2022. As at
December 31, 2022, a total of 7.3 million shares had
been acquired under this program, of which 3.3 million
were cancelled.
Of the shareholders’ equity of €4.3 billion (2021:
€5.4 billion), €4.0 billion (2021: €5.1 billion) was unrestrict-
ed and available for distribution, subject to the relevant
provisions of our Articles of Association and Dutch law.
During 2022, 8,651,230 common shares were
repurchased (2021: 11,296,283 shares repurchased).
The total amount of shares cancelled was 7,448,544;
cancelled shares related to share buybacks in the
current and the previous year (2021: 9,247,849 shares
cancelled). For further details on weighted average
number of shares, refer to Note 10 of the Consolidated
financial statements.
AkzoNobel Report 2022 | Financial statements
141
Legal reserves include the €190 million reserve relating
to earnings retained by subsidiaries, associates and joint
ventures after the year 1983, to the extent that there are
limitations to arrange profit distributions, and a €106 million
reserve for capitalized development costs.
Dividend
Our dividend policy is to pay a stable to rising dividend.
In 2022, an interim dividend of €0.44 (2021: €0.44) per
common share was paid. We propose a 2022 final divi-
dend of €1.54 (2021: €1.54) per common share, which
would equal a total 2022 dividend of €1.98 (2021: €1.98).
Note G NET DEBT
Analysis of net debt by category
In € millions, at December 31
Bonds issued
Debt from subsidiaries*
Long-term borrowings
Current portion of long-term
borrowings
Debt to credit institutions
Other
Short-term borrowings
Total borrowings
Short-term investments
Cash and cash equivalents
Net debt
2021
1,740
4,485
6,225
749
672
4
1,425
7,650
—
(404)
7,246
2022
2,934
4,168
7,102
—
2,399
4
2,403
9,505
(290)
(643)
8,572
* Part of the debt from subsidiaries has no fixed repayment schedule. The fair value of
the debt from subsidiaries approximates the book value.
Multi-currency revolving credit facility
We have a multi-currency revolving credit facility of €1.3
billion which runs until 2026. 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 2022 and 2021, this facility has not
been drawn.
Long-term borrowings
For 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 2022, the fair value of the bonds included in long-
term borrowings was €2,633 million (2021: €2,624 million).
Bonds issued
In € millions, at December 31
1 3/4% 2014/24 (€500 million)
1 1/8% 2016/26 (€500 million)
1 5/8% 2020/30 (€750 million)
1 1/2% 2022/28 (€600 million)
2% 2022/32 (€600 million)
2021
2022
499
497
744
—
—
499
498
745
595
597
Total
1,740
2,934
In March 2022, two bonds were issued with nominal
values of €600 million each, of which one at a coupon rate
of 1.5%, maturing in 2028 and one at a coupon rate of
2.0%, maturing in 2032.
At year-end 2022 and 2021, none of the borrowings was
secured by collateral.
In 2023, an amount of €125 million of debt from subsidiar-
ies will mature; a further amount of €100 million will mature
between 2024 and 2027. The remainder of the loans from
subsidiaries has no fixed repayment schedule.
Short-term borrowings
For the fair value of the debt to credit institutions, refer to
Note 27 of the Consolidated financial statements.
The current portion of long-term borrowings decreased
mainly due to the maturing of a €750 million bond in
July 2022.
Debt to credit institutions includes our commercial paper
program. 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 €1.3 billion
commercial paper outstanding at year-end 2022 (2021:
€371 million) against an average interest rate of 1.6%
(2021: 0.5% negative). At year-end 2022, we had short-
term bank loans outstanding of €1.1 billion (2021:
€300 million) against a 3-months Euribor plus a mark-up
(2021: interest rate of 0.6% negative). None of these facili-
ties contain financial covenants.
Short-term investments
Short-term investments almost entirely consist of time
deposits, money market funds and marketable securities
with a lifetime at investment date longer than three months
but shorter than twelve months. At year-end 2022, we had
short-term investments outstanding for an amount of €290
million (2021: €nil).
Cash and cash equivalents
Deposits 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.
2021
304
100
404
2022
293
350
643
Cash and cash equivalents
In € millions, at December 31
Cash on hand and in banks
Deposits and money markets funds
with a maturity less than three months
Included in cash and cash equiva-
lents in the balance sheet
Note H OTHER CURRENT
LIABILITIES
Other current liabilities
In € millions, at December 31
2021
2022
Payables to subsidiairies*
FX contracts
Other suppliers
Interest payable
Other liabilities
Total
30
27
1
22
17
97
23
60
2
33
3
121
* The fair value of the payables to subsidiaries approximates the book value.
Other current liabilities are expected to fall due in less than
one year.
AkzoNobel Report 2022 | Financial statements
142
Note I FINANCIAL INSTRUMENTS
Note K
INDEPENDENT AUDITOR’S FEES
Amsterdam, February 27, 2023
The Board of Management
Greg Poux-Guillaume
Maarten de Vries
The Supervisory Board
Nils Smedegaard Andersen
Ester Baiget
Jolanda Poots-Bijl
Hans Van Bylen
Byron Grote
Pamela Kirby
Dick Sluimers
Patrick Thomas
Our independent auditor, PricewaterhouseCoopers
Accountants N.V., 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.
Fees PricewaterhouseCoopers
Accountants N.V.
In € millions
Audit of the financial
statements
Other audit services
Tax services
Other non-audit
services
Total
In the
Netherlands
Network
outside the
Netherlands
3.7
0.3
—
—
4.0
5.5
0.1
—
—
5.6
Fees PricewaterhouseCoopers
Accountants N.V.
In € millions
Audit of the financial
statements
Other audit services
Tax services
Other non-audit
services
Total
In the
Netherlands
Network
outside the
Netherlands
4.1
0.2
—
—
4.3
4.3
0.1
—
—
4.4
2022
Total
9.2
0.4
—
—
9.6
2021
Total
8.4
0.3
—
—
8.7
At year-end 2022, Akzo Nobel N.V. had outstanding
foreign exchange contracts to buy currencies for a total of
€1.7 billion (year-end 2021: €1.7 billion), while contracts
to sell currencies totaled €1.5 billion (year-end 2021: €1.2
billion). The contracts mainly relate to US dollars, pound
sterling and Chinese Yuan, and all have maturities within
one year. These contracts offset the foreign exchange
contracts concluded with 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, or recognized in other comprehensive income
in case hedge accounting is applied. For information on
risk exposure and risk management, see Note 27 of the
Consolidated financial statements.
Note J CONTINGENT LIABILITIES
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
and Irish consolidated companies (Article 403 of Book
2 of the Dutch Civil Code and section 357(1) of the Irish
Companies Act 2014). These debts, at year-end 2022,
aggregating €0.6 billion (2021: €0.5 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 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
termination of residual liability is still pending and
AkzoNobel, Nouryon and Nobian continue to cooperate
to get this resolved.
Additionally, at year-end 2022, guarantees were issued on
behalf of consolidated companies for an amount of €0.4
billion (2021: €0.3 billion). The debts and liabilities of the
consolidated companies underlying these guarantees are
included in the Consolidated balance sheet.
AkzoNobel Report 2022 | Financial statements
143
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 €14 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 €338 million (to be increased by dividend on
shares issued in 2023 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
€1.98 per share, of which €0.44 was paid earlier as an
interim dividend. The final dividend of €1.54 per share will
be made available from May 5, 2023.
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 2022 | Financial statements
144
INDEPENDENT
AUDITOR’S REPORT
To: The Annual General Meeting and the Supervisory
Board of Akzo Nobel N.V.
Report on the financial statements 2022
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, 2022, 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, 2022, 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
2022 of Akzo Nobel N.V., Amsterdam, the Netherlands.
The financial statements comprise the Consolidated finan-
cial statements of the group and the Company financial
statements.
The Consolidated financial statements comprise:
• The Consolidated balance sheet as at December 31,
2022
• The following statements for 2022: the Consolidated
statement of income, the Consolidated statements of
comprehensive income, of changes in equity and of
cash flows
• The notes, comprising a summary of the significant
accounting policies 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 state-
ments.
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 requirements
regarding statutory audit of public-interest entities”, the
“Wet toezicht accountantsorganisaties” (Wta, Audit firms
supervision act), the “Verordening inzake de onafhankelijk-
heid van accountants bij assuranceopdrachten” (ViO, Code
of Ethics for Professional Accountants, a regulation with
respect to independence) and other relevant independence
regulations in the Netherlands. Furthermore, we have
complied with the “Verordening gedrags- en beroeps-
regels accountants” (VGBA, Dutch Code of Ethics).
Our audit approach
We designed our audit procedures with respect to the key
audit matters, fraud and going concern, and the matters
resulting from that, in the context of our audit of the
financial statements as a whole and in forming our opinion
thereon. The information in support of our opinion, such
as our findings and observations related to individual key
audit matters, the audit approach fraud risks and the audit
approach going concern was addressed in this context,
and we do not provide a separate opinion or conclusion
on these matters.
The Company financial statements comprise:
• The Balance sheet as at December 31, 2022
• The Statement of income for the year then ended
• The notes, comprising a summary of the accounting
policies applied and other explanatory information
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 material-
ity and assessed the risk of material misstatement in the
financial statements. In particular, we considered where
the Board of Management made important judgments,
for example in respect of significant accounting estimates
that involved making assumptions and considering 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. We considered the
valuation of the post-retirement benefit provisions and the
valuation of deferred tax assets to be key audit matters
as set out in the section “Key audit matters” of this report,
given the significant estimation uncertainty, the judgmental
nature and the related higher inherent risks of material
misstatement. In addition, we paid attention to, amongst
others, the assumptions underlying the physical and tran-
sition risk related to climate change.
The company executed over the past years a wide range
of transformational projects. These projects continued
in 2022, with the goal to align to the company’s evolv-
ing operating model, focusing on end-to-end processes
and to increase operational efficiencies and effectiveness.
Inherently, transformation processes encompass changes
in the organization, systems, processes and controls.
We therefore evaluated the impact of the transforma-
tion on our audit. Due to the significance of the ongoing
transformation to the company and the extended audit
procedures, we included “Ongoing transformation of the
organization, systems, processes and controls” as a key
audit matter, as set out in the section “Key audit matters”
of this report.
Global events during 2022 caused cost inflation, chal-
lenged supply chains, dented consumer confidence and
weakened market demand. The Russian military invasion
of Ukraine and resulting government sanctions impacted
the wider economy, especially Europe. China’s zero
COVID-19 policy and resulting government restrictions put
pressure on demand in this market and on sourcing of raw
materials from China. These events in combination had an
adverse impact on the company’s results of operations.
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145
The outline of our audit approach was as follows:
Materiality
• Overall materiality: €43.75 million
(2021: €55 million)
Audit scope
• We conducted audit work at 49
components in 18 countries (2021:
49 components in 18 countries)
• Site reviews were physically conducted
to four countries (11 components)
and virtually to three countries (17
components) (2021: virtually conducted
to nine countries (39 components))
• Audit coverage: 64% of consolidated
revenue (2021: 64%), 72% of
consolidated total assets (2021: 68%)
and 67% of consolidated profit before
tax (2021: 60%)
Key audit matters
• Ongoing transformation of the
organization, systems, processes and
controls
• Valuation of post-retirement benefit
provisions
• Valuation of deferred tax assets
Materiality
The scope of our audit was influenced by the application
of materiality, which is further explained in the section “Our
responsibilities for the audit of the financial statements”.
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 considered the impact of these global geo-political and
macro-economic developments on our audit approach,
including our scoping, materiality and risk assessment.
The impact of these developments on our materiality
assessment is further explained in the section “Material-
ity”. Furthermore, we assessed the impact on significant
management accounting judgments, including inventory
valuation, and future business and cash flow projections
underpinning impairment assessments, deferred tax asset
recoverability, key assumptions used in the valuation of
post retirement benefit provisions, and the going concern
assumption. We concluded the impact of the geo-political
and macro-economic developments on the company’s
results of operations to be an area of focus but was not
considered as a separate key audit matter.
Climate change is an area of key interest to a wide group
of stakeholders. Akzo Nobel N.V. assessed the potential
effects of climate change and their plans to meet the
company’s announced emissions reduction commitments.
The company considered, amongst others, physical risks,
such as those associated with water scarcity, flooding and
weather events, as well as transitional risks that can lead
to changes in technology, market dynamics and regula-
tions. Management also assessed the resulting impact on
the financial position, including underlying assumptions
and estimates. As part of our audit risk assessment, we
gained an understanding of the company’s strategy and
sustainability targets, evaluated the potential impact on the
financial statements and discussed the assessment and
governance thereof with management. We concluded the
impact of climate change to be an area of focus that is not
considered a key audit matter.
Other areas of focus that we do not consider to be key
audit matters were related to the impairment testing of
goodwill and brands with indefinite useful lives, testing of
the purchase price allocation for the acquisition of Colom-
bia-based paints and coatings company Grupo Orbis S.A.
(Grupo Orbis), testing of valuation of the other provisions
and information technology general controls (ITGCs).
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.
Overall group
materiality
Basis for
determining
materiality
Rationale for
benchmark
applied
Component
materiality
€43.75 million (2021: €55 million).
We used our professional judgment to determine
overall materiality. As a basis for our judgment, we
used 5% of a three-year average of profit before tax,
including the current year results.
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 the most relevant metric for the
financial performance of the company and is a metric
widely used within the industry.
We applied a three-year average of profit before tax
as outlined above. In prior years we applied current-
year profit before tax. The comparative year-on year
decline of the company’s profit before tax caused
us to re-assess the appropriateness of a single
year profitability for the current audit. In preparing
this assessment, we have considered recent global
geo-political and macro-economic developments,
as described in the section “Overview and context”
and the impact thereof on the financial results of the
company, as well as management’s expectations and
budget for the results in the upcoming years.
Applying a multi-year average benchmark for
materiality responds to adverse economic trends and
volatility in profit before tax from year to year. On this
basis we concluded that applying a three-year average
is a more appropriate basis for the current year
audit, and also better reflects the company’s scale of
operations for the year.
Furthermore, we utilised a 5% threshold, based on
our professional judgment, noting it is within the
range of commonly acceptable thresholds and the
predominant threshold used for companies with similar
characteristics.
Based on our judgment, we allocate materiality to
each component in our audit scope that is less than
our overall group materiality. The range of materiality
allocated across components was between €8 million
and €43 million.
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 (2021: €2 million) as
well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
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146
The scope of our group audit
Akzo Nobel N.V. is the parent company of a group of enti-
ties managed by the Board of Management and Execu-
tive 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 opera-
tions 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 strat-
egy and plan, we determined the type of work required to
be performed at component level by the group engage-
ment team and by each component auditor.
The group audit included 23 components which were
subjected to audits of their complete financial information,
selected on the basis of the relative size of their operations.
None of the components are individually financially signifi-
cant to the group. We further subjected 15 components
to specific focused audit procedures on individual financial
statement line items, such as revenue, cost of sales, inven-
tories, trade and other receivables, post-retirement benefit
provisions, tax, cash and cash equivalents and short-term
investments, based on the relative size or related higher
inherent risks of material misstatement. Additionally, we
selected 11 components for audit procedures to achieve
appropriate audit coverage on specific financial line items in
the Consolidated financial statements.
In total, in performing these procedures, this resulted in the
following coverage on the financial line items:
Revenue
Total assets
Profit before tax
64%
72%
67%
None of the remaining components represented more than
1.5% of total group revenue, 1.5% of total group assets or
4.5% of profit before tax. For those remaining components
we performed, amongst others, 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
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 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 statements 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 the 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 identi-
fied, the materiality 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, that could be of relevance for the Consolidated
financial statements.
The group engagement team attended physical or virtual
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 businesses, 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
components are selected, depending on specific consider-
ations which include, amongst others, audit observations,
specific risks identified and other major events. In the
current year, components in the following countries were
selected: United States, China, Brazil, Germany, France,
United Kingdom and the Netherlands.
The group engagement team performed the audit work on
the group consolidation, financial statement disclosures
and a number of more 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, testing of
purchase price allocation for acquisitions of Grupo Orbis
and the wheel liquid coatings business of Lankwitzer
Lackfabrik GmbH, share-based payments, valuation of
deferred tax assets, group level other provisions and
contingent liabilities, treasury, ITGCs and the Akzo Nobel
N.V. Company financial statements.
By performing the procedures outlined above at the
components, combined with additional procedures at
group level, we have been able to obtain sufficient and
appropriate audit evidence on the group’s financial infor-
mation, to provide a basis for our opinion on the financial
statements.
Audit approach fraud risks
As in all of our audits, we identified and assessed the risk
of material misstatement to the financial statements due to
fraud. Together with our forensic specialists, we evaluated
fraud risk factors with respect to financial reporting fraud,
misappropriation of assets and bribery and corruption.
As a starting point, we obtained an understanding of the
entity and its environment and the elements of the system
of internal control relating to fraud risks. We conducted
interviews with members of the Board of Management, the
Executive Committee, the Supervisory Board and others
within the company, including the Internal Audit and Inte-
grity and Compliance function, to obtain an understanding
of the company’s fraud risk assessment and the processes
for identifying and responding to the risks of fraud and
the internal control that management has established to
mitigate these risks. Akzo Nobel N.V. has an integrity and
compliance program, which includes a governance and
organization structure, policies and procedures around
risk management, policy management, communica-
tion, training and education, a competition law program,
privacy program, anti-bribery and anti-corruption program,
monitoring, grievance and investigation procedures, and
reporting. We considered management’s own risk assess-
ment and response to the risks of fraud, management’s
monitoring of the system of internal control and how the
Supervisory Board exercises oversight, as well as the
outcomes thereof.
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147
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 describe the key audit matters and include a
summary of the audit procedures we performed on those
matters.
As described in the auditing standards, management over-
ride of controls and risk of fraud in revenue recognition are
presumed risks of fraud.
Inherently, management of a company is in a unique posi-
tion to perpetrate fraud because of its ability to manipu-
late accounting records and prepare fraudulent financial
statements by overriding controls that otherwise appear
to be operating effectively. The ongoing transformation of
the organization, systems, processes and controls, which
we consider a key audit matter, also increases, inherently,
the risk of management override of internal controls. We
addressed this risk of management override of controls,
including evaluating journal entries, transactions outside
the normal course of business and whether there was
evidence of potential bias by management when making
assumptions and estimates that may represent a risk of
material misstatement due to fraud. We evaluated journal
entries by processing and reviewing postings with the
support of data analytics. To address the assessed risks
of significant transactions outside the normal course of
business, we performed, amongst others, procedures
over the acquisition of Grupo Orbis. The audit procedures
to respond to the assessed risks of management bias
include, among others, evaluation of the design and the
implementation of internal controls that intend to mitigate
fraud risks, and retrospective review of prior year’s esti-
mates. For examples of key assumptions and estimates,
refer to the key audit matters “Valuation of post-retirement
benefit provisions” and “Valuation of deferred tax assets”.
Furthermore, we, together with our forensic specialists,
assessed matters reported through the group’s SpeakUp!
program and complaints procedures and results of
management’s investigation of such matters if deemed
applicable, and discussed this with the Audit Committee.
With regard to the risk of fraud in revenue recognition,
based on our risk assessment procedures, we concluded
that this risk is related to the occurrence of revenue trans-
actions, due to the company’s strategy to continuously
grow and expand market share. We performed procedures
over this risk, including evaluation of the design and imple-
mentation of relevant internal controls, tracing a sample of
revenue transactions to the supporting documents, and
validating unusual journal entries.
We incorporated elements of unpredictability in our audit.
During the entire audit we remained alert to indications of
fraud and considered the impact on our audit, if any. We
also considered the outcome of our other audit proce-
dures and evaluated whether any findings were indicative
of fraud or non compliance.
Audit approach going concern
As disclosed in Note 1 of the Consolidated financial
statements, management performed their assessment
of the company’s ability to continue as a going concern
for at least 12 months from the date of preparation of the
Consolidated financial statements and has not identi-
fied events or conditions that may cast significant doubt
on the company’s ability to continue as a going concern
(hereafter: going concern risks). Our procedures to evalu-
ate management’s going concern assessment included,
among others:
• Considering whether management’s going concern
assessment includes relevant information of which we
are aware as a result of our audit and inquiring with
management regarding management’s most important
assumptions underlying its going concern assessment
• Analyzing the financial position per balance sheet
date, such as financial leverage and cash positions, in
relation to the financial position per prior year balance
sheet date to assess whether events or circumstances
exist that may lead to a going concern risk, and
liquidity management as disclosed in Note 27 of the
Consolidated financial statements
• Evaluating management’s current budget, including
expected future cash flows in comparison with last year,
market developments, developments in the macro-
economic environment, climate-related developments
and the relevant information of which we are aware as a
result of our audit, including, amongst others, the cash
flow projection of the five-year plan obtained as part of
the goodwill impairment testing
• Performing inquiries of management as to their
knowledge of going concern risks beyond the period of
management’s assessment
Our procedures did not result in outcomes contrary to
management’s assumptions and judgments used in the
application of the going concern assumption.
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148
Key audit matter
Our audit work and observations
Ongoing transformation of the organization, systems, processes, and controls
Over the past years the company executed a wide range of transformational projects, which included central-
ization of finance activities in global business service hubs and simplification of the IT environment, impacting
the company’s systems, processes and controls. These projects continued in 2022, with the goal to align to the
company’s evolving operating model, focusing on end-to-end processes and to increase operational efficiencies
and effectiveness.
The company’s overall approach to governance, risk management and internal controls, its processes,
outcomes, financial reporting and disclosures is subject to oversight by the Audit Committee.
The Audit Committee considered the impact of changes to systems, processes and controls, such as the
IT landscape rationalization and the implementation of Regional Accounting Centers (“RAC”) on the internal
controls.
We evaluated the impact of the transformation on systems, processes and controls on our audit.
During our audit, we updated our understanding of the ongoing transformation programs. We held discussions with
group management, global process owners, functional management and with the business service hubs manage-
ment 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 implementation of the controls in place, we also performed walkthroughs on selected controls. Furthermore, we
attended the considerations of the internal controls during the Audit Committee meetings throughout the year. We used
this information as part of our risk assessment procedures, including the evaluation of potential risk of fraud or error,
and for the determination of the scope of our audit.
For new and changed IT systems and related ITGCs of the IT environment, we involved our IT audit specialists. We
obtained an understanding of project governance and change validation approach and we tested data migration and IT
general controls. We used data analytics to identify unexpected journal entries.
Inherently, transformation processes encompass changes in the organization, processes and culture and as
such contribute to the risk of management override of controls, which is a presumed audit risk in our audit.
Given the possible pervasive impact this may have on our audit, we considered this a key audit matter.
From the procedures performed, we did not have material findings with respect to the balance sheet positions and
results recorded and disclosed.
Valuation of post-retirement benefit provisions
Note 19
The post-retirement benefit provisions consist of defined benefit obligations (€9.58 billion) more than offset by
plan assets (€10.19 billion). The largest pension plans are the ICI Pension Fund (ICIPF), the Akzo Nobel (CPS)
Pension Scheme and the ICI Specialty Chemicals Pension Fund (ISCPF) in the UK, which together account for
90% of the defined benefit obligation (DBO) and 94% of the plan assets.
We consider the valuation of these largest post-retirement benefit provisions to be a key audit matter because
positions are significant to the company and the assessment process is complex and involves significant
management judgment, which could be subject to management bias. The actuarial assumptions used include
demographic assumptions (rates of employee turnover, disability, early retirement and mortality) and financial
assumptions (discount rate, future salary development, benefit increases/indexation and inflation), as disclosed
in Note 19 to the Consolidated financial statements. Technical expertise is required to determine closing posi-
tions.
With the assistance of our actuarial experts, we evaluated management’s actuarial assumptions and the valuation
methodologies applied, as well as 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 (discount rate, inflation and mortality) by performing independent testing over the assump-
tions 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 to the Consolidated financial statements and we veri-
fied the appropriate accounting. We also assessed the adequacy of the company’s disclosure in that note.
Our procedures did not result in material findings with respect to the valuation and disclosure of post-retirement benefit
provisions at December 31, 2022.
Valuation of deferred tax assets
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 in Germany, the Netherlands and the UK, resulting from net
operating losses, tax credits and temporary differences is significant to our audit as the positions are significant
to the company, calculations are complex and involve high estimation uncertainty and judgmental assump-
tions, which could be subject to management bias. The key assumptions include long-term projected revenue
growth, margin development and local fiscal regulations. The company’s disclosures concerning income taxes
are included in Note 9 to the Consolidated financial statements.
With respect to the valuation of deferred tax assets, 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 developments of the budget compared to the actual results in light of
the recent macro-economic developments and forecast 2023. We also performed lookback testing by comparing the
development of last year’s budget and estimates to the actual results for the year
• We also assessed the applicable local fiscal regulations and developments, in particular those related to changes in
the statutory income tax rates and the statutes of limitation, since these are key assumptions underlying the valuation
of the deferred tax assets. 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 assumptions used
Our procedures did not result in material findings with respect to the valuation of deferred tax assets, recorded and
related disclosures at December 31, 2022.
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149
Report on the other information included in the
annual report
The annual report contains other information. This includes
all information in the annual report in addition to the finan-
cial statements and our auditor’s report thereon.
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
January 1, 2016. Our engagement has been renewed
annually.
European Single Electronic Format (ESEF)
Akzo Nobel N.V. has prepared the annual report in ESEF.
The requirements for this are set out in the Delegated
Regulation (EU) 2019/815 with regard to regulatory techni-
cal standards on the specification of a single electronic
reporting format (hereinafter: the RTS on ESEF).
• Contains all the information regarding the directors’
report and the other information that is required by Part
9 of Book 2 and regarding the Remuneration report
required by the sections 2:135b and 2:145 subsection 2
of the Dutch Civil Code.
In our opinion, the annual report prepared in XHTML
format, including the marked-up Consolidated financial
statements as included in the reporting package by Akzo
Nobel N.V., complies, in all material respects with the RTS
on ESEF.
We have read the other information. Based on our knowl-
edge and the understanding obtained in our audit of the
financial statements or otherwise, we have considered
whether the other information contains material misstate-
ments.
The Board of Management is responsible for preparing
the annual report, including the financial statements, in
accordance with the RTS on ESEF, whereby the Board
of Management combines the various components into a
single reporting package.
Our responsibility is to obtain reasonable assurance for
our opinion on whether the annual report in this reporting
package complies with the RTS on ESEF.
We performed our examination in accordance with
Dutch law, including Dutch Standard 3950N “Assurance-
opdrachten inzake het voldoen aan de criteria voor het
opstellen van een digitaal verantwoordingsdocument”
(assurance engagements relating to compliance with
criteria for digital reporting).
– Examining the information related to the Consolidated
financial statements in the reporting package to
determine whether all required mark-ups have been
applied and whether these are in accordance with the
RTS on ESEF
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 or its controlled entities, for the
period to which our statutory audit relates, are disclosed in
Note K to the financial statements.
Responsibilities for the financial statements
and the audit
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 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
By performing our procedures, we comply with the
requirements of Part 9 of Book 2 and section 2:135b
subsection 7 of the Dutch Civil Code and the Dutch Stan-
dard 720. The scope of such procedures was substantially
less than the scope of those procedures 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. The Board of
Management and the Supervisory Board are responsible
for ensuring that the Remuneration report is drawn up and
published in accordance with sections 2:135b and 2:145
subsection 2 of the Dutch Civil Code.
Report on other legal and regulatory
requirements and ESEF
Our appointment
We were appointed as auditors of Akzo Nobel N.V. on April
29, 2014, by the Supervisory Board. This followed the
passing of a resolution by the shareholders at the Annual
General Meeting held on April 29, 2014, and effective
Our examination included amongst others:
• Obtaining an understanding of the company’s financial
reporting process, including the preparation of the
reporting package
• Identifying and assessing the risks that the annual report
does not comply in all material respects with the RTS on
ESEF and designing and performing further assurance
procedures responsive to those risks to provide a basis
for our opinion, including:
– Obtaining the reporting package and performing
validations to determine whether the reporting
package, containing the Inline XBRL instance
document and the XBRL extension taxonomy files,
have been prepared in accordance with the technical
specifications as included in the RTS on ESEF
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-
cant doubt on the company’s ability to continue as a going
concern in the financial statements.
The Supervisory Board is responsible for overseeing the
company’s financial reporting process.
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150
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 assur-
ance 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 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 27, 2023
PricewaterhouseCoopers Accountants N.V.
Original has been signed by Fernand Izeboud RA
Appendix to our auditor’s report on the financial
statements 2022 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, amongst others, 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.
• 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 respon-
sible 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,
amongst 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 addi-
tional 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 to 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
regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, not communicating
the matter is in the public interest.
AkzoNobel Report 2022 | Financial statements
151
LIMITED ASSURANCE
REPORT OF THE
INDEPENDENT AUDITOR
To: The Board of Management and the Supervisory Board
of Akzo Nobel N.V.
Assurance report on the selected non-financial
performance indicators in the Sustainability
statements of the annual report 2022
Our conclusion
Based on the procedures performed and evidence
obtained, nothing has come to our attention that causes
us to believe that the selected non-financial performance
indicators in the Sustainability statements of the annual
report 2022 of Akzo Nobel N.V. over 2022 are not
prepared in all material respects, in accordance with Akzo
Nobel N.V.’s Reporting Principles Sustainability statements
2022.
What we have examined
The object of our assurance engagement concerns the
selected non-financial performance indicators in the
Sustainability statements of the annual report 2022,
marked with the symbol “” (hereafter: the Indicators).
We have examined the selected non-financial performance
indicators in the Sustainability statements of the annual
report 2022 of Akzo Nobel N.V. (hereafter: Akzo Nobel or
the Company) Amsterdam, the Netherlands, over 2022.
The Indicators examined are as follows:
• Organizational health score (number)
• Female executives (in %)
• Fatalities employees (number)
• Fatalities contractors – temporary workers plus
independent (number)
• Loss of primary containment – Level 1 (number)
• Loss of primary containment – Level 2 (number)
• Occupational illness rate employees
(per 200,000 hours worked)
• Security events Level 3 (number)
• Energy use (in 1000 TJ)
• Energy use (GJ per ton of production)
• Renewable energy – own operations (in %)
• Renewable electricity – own operations (in %)
• Greenhouse gas emissions – Direct CO2(e) emissions
(Scope 1) (kiloton)
• Greenhouse gas emissions – Direct CO2(e) emissions
(Scope 1) (kg per ton of production)
• Greenhouse gas emissions – Indirect CO2(e) emissions
(Scope 2) (kiloton)
• Greenhouse gas emissions – Indirect CO2(e) emissions
(Scope 2) (kg per ton of production)
• Greenhouse gas emissions – Total CO2(e) emissions
Scope 1 and 2 (kg per ton of production)
• Volatile organic compounds (in kiloton)
• Volatile organic compounds (kg per ton of production)
• Total waste (kiloton)
• Total waste (kg per ton of production)
• Circular use of materials (in %)
• Hazardous waste total (kiloton)
• Hazardous waste (kg per ton of production)
• Hazardous waste to landfill (kiloton)
• Non-hazardous waste to landfill (kilotons)
• Total waste to landfill (kilotons)
• Total freshwater use (in million m3)
• Total freshwater use (m3 per ton of production)
• Total freshwater consumption (excluding water related
to product) (in million m3)
• Total freshwater consumption (excluding water related
to product) (m3 per ton of production)
• Suppliers in sustainability program – In line with our
expectation (in % against baseline)
• Suppliers in sustainability program – Under development
• Life-changing injuries (number)
• Lost time injury rate employees/temporary workers
(in % against baseline)
• Suppliers participating in sustainability program
(per 200,000 hours worked)
(in % against baseline)
• 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)
• Sustainable solutions (in % of revenue)
• Scope 3 upstream (million tons)
• Scope 3 downstream (million tons)
• Scope 3 – upstream and downstream combined
(million tons)
• Cradle-to-grave carbon footprint (Scope 1, 2 and 3)
(million tons)
Some Indicators have a different reporting period
compared to the calendar year 2022. When this is the
case, it is indicated in the annual report and in Akzo
Nobel’s Reporting Principles Sustainability statements
2022.
The basis for our conclusion
We conducted our examination 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 examination” 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 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).
PwC applies the “Nadere voorschriften kwaliteitssystemen”
(NVKS, Regulations for quality systems) and accordingly
maintains 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 reporting criteria used for the preparation of the
Indicators are Akzo Nobel’s Reporting Principles
Sustainability statements 2022, developed by the
Company, as disclosed in the “Managing sustainability”
paragraph of the annual report 2022 and further
elaborated in the document “Reporting Principles
Sustainability statements 2022”, which was made
AkzoNobel Report 2022
152
available online* at www.akzonobel.com/en/about-us/
sustainability-/reporting-principles-.
The absence of an established practice on which to
draw, to evaluate and measure non-financial performance
indicators allows for different, but acceptable,
measurement techniques, and can affect comparability
between entities, and over time.
Consequently, the Indicators need to be read and
understood together with the reporting criteria used.
Responsibilities for the Indicators and the
examination thereof
Responsibilities of the Board of Management and
the Supervisory Board
The Board of Management of Akzo Nobel is responsible
for the preparation of the Indicators in accordance
with Akzo Nobel’s Reporting Principles Sustainability
statements 2022, 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 it determines to be necessary
to enable the preparation of 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 examination
Our responsibility is to plan and perform our examination
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 Indicators and the
information included in the Sustainability statements of
the annual report 2022. 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.
Procedures performed
We have exercised professional judgement and have
maintained professional scepticism throughout the
examination in accordance with the Dutch Standard
3000A, ethical requirements and independence
requirements.
Our examination consisted, among other things, of
the following:
• Evaluating the appropriateness of the reporting
criteria used, their consistent application and related
disclosures to the Indicators. This includes the
evaluation of the reasonableness of estimates made by
the Board of Management
• Through inquiries, obtaining a general understanding
of the control environment, processes, and information
relevant to the preparation of the Indicators, but not for
the purpose of obtaining assurance evidence about their
implementation or testing their operating effectiveness
• Identifying areas of the Indicators with a higher risk of
material misstatement, whether due to fraud or error.
Designing and performing further assurance procedures
aimed at determining the plausibility of the Indicators
responsive to this risk analysis. Those other procedures
consisted among others of:
– interviewing management (and/or relevant staff)
at corporate level 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 resulting in the
Indicators
– determining the nature and extent of the review
procedures for locations. For this, the nature, extent
and/or risk profile of these locations are decisive.
Based thereon we selected the locations to visit, being
Wapenveld, the Netherlands; Warsaw, the United
States of America; and Montataire, France. Of these,
one was a physical visit and two of were virtual. These
visits are aimed at, on a local level, observing parts of
Akzo Nobel’s Health, Safety, Environment and Security
(HSE&S) audits and validating source data and
obtaining through inquiries a general understanding of
the control environment, processes and information
relevant to the preparation of the Indicators
– obtaining assurance evidence that the Indicators
reconcile to 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 of the Indicators 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
• 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 the
Board of Management regarding, among other matters,
the planned scope and timing of the review and significant
findings that we identified during our review.
Amsterdam, February 27, 2023
PricewaterhouseCoopers Accountants N.V.
Original has been signed by Fernand Izeboud RA
* The maintenance and integrity of Akzo Nobel’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 Sustainability statements 2022
when presented on Akzo Nobel’s website after the date of this assurance report.
AkzoNobel Report 2022
153
FINANCIAL SUMMARY
Consolidated statement of income
In € millions, for the year ended December 31
Revenue
Operating income
Adjusted operating income1
Financing income and expenses
Income tax
Results from associates and joint ventures
Profit/(loss) 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%1
OPI margin%1
ROI%1
Net income in % of shareholders’ equity
Employee benefits in % of revenue
Interest coverage (operating income / net interest on net debt)
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
2013
2014
2015
14,590
14,296
14,859
20163,4
9,434
2017
9,612
958
897
(200)
(111)
14
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
987
1,072
(156)
(252)
21
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
1,573
1,462
(114)
(416)
17
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
923
928
(91)
(234)
18
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
825
905
(78)
(253)
17
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
605
798
(52)
(118)
20
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
20195
9,276
841
991
(76)
(230)
20
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
963
1,099
(69)
(241)
25
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
2021
9,587
1,118
1,092
(39)
(246)
26
859
6
(36)
829
181.6
365
32,800
32,700
1,773
293
34
11.4
11.7
16.0
15.3
18.5
18.0
4.48
4.07
30.32
107.80
83.50
96.50
2022
10,846
708
789
(124)
(214)
18
388
(10)
(26)
352
174.4
347
35,200
35,100
1,960
309
20
7.3
6.5
9.8
8.1
18.1
8.1
2.01
2.45
25.43
98.50
56.22
62.56
¹ Refer to the glossary for definitions.
2 Cash dividend paid to shareholders of AkzoNobel.
3 Represented to present the Specialty Chemicals business as discontinued operations.
4 Represented to the new adjusted earnings per share definition, which no longer excludes post-tax amortization charges.
5 Includes the impact of the adoption of IFRS 16 “Leases”.
AkzoNobel Report 2022
154
Consolidated balance sheet
In € millions at December 31
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
Other current liabilities
Current portion of provisions
Liabilities held for sale
Total current liabilities
Average invested capital3
Capital expenditures4
Depreciation
Operating Working Capital5
Net debt
Ratios
Equity/non-current assets
Inventories and receivables/other current liabilities
Operating working capital as % of revenue6
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
10,007
9,871
10,475
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
20161
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
–
20192
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
2021
2022
3,690
1,800
304
2,736
8,530
1,650
2,488
58
1,152
—
5,348
5,425
211
5,636
812
1,994
567
3,373
1,556
3,164
149
—
4,869
6,829
288
281
1,247
2,340
0.66
1.31
13.0
4,072
1,968
291
2,166
8,497
1,843
2,615
336
1,450
—
6,244
4,333
215
4,548
554
3,332
561
4,447
2,543
3,037
166
—
5,746
8,062
292
281
1,760
4,089
0.54
1.47
16.9
¹ 2016 is represented to present the Specialty Chemicals business as discontinued operations.
2 Includes the impact of the adoption of IFRS 16 “Leases”.
3 Refer to glossary for definition.
4 Capital expenditures include investments in intangible assets as from 2018.
5 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.
6 Operating working capital is measured against four times fourth quarter revenue.
AkzoNobel Report 2022
155
Segment statistics
In € millions, for the year ended December 31
2013
2014
2015
2016
2017
2018
20191,2
2020
20213
2022
Decorative Paints
Revenue1
Operating income
Adjusted operating income
ROS%
OPI margin%
Average invested capital
ROI%
Capital expenditures
Average number of employees
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
Performance Coatings
Revenue1
Operating income
Adjusted operating income
ROS%
OPI margin%
Average invested capital
ROI%
Capital expenditures
Average number of employees
Average revenue per employee (in €1,000)
Average operating income per employee (in €1,000)
4,174
3,909
4,007
3,835
3,898
3,699
3,670
3,558
3,979
4,371
398
199
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
366
357
9.3
9.5
2,783
12.8
107
334
351
9.0
8.6
2,803
12.5
112
308
346
9.4
8.3
2,798
12.4
50
425
418
11.4
11.6
3,106
13.4
62
551
573
16.1
15.5
2,799
20.5
77
622
580
14.6
15.6
2,872
20.2
108
392
397
9.1
9.0
3,678
10.8
91
16,800
15,500
15,100
14,800
14,700
14,100
12,900
12,100
12,500
13,800
248
24
252
16
265
23
259
25
265
23
262
22
284
33
294
46
318
50
317
28
5,571
5,589
5,955
5,665
5,775
5,587
5,549
4,957
5,603
6,472
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
735
759
13.4
13.0
2,586
29.4
159
668
669
11.6
11.6
2,860
23.4
129
577
629
11.3
10.3
3,066
20.5
107
565
688
12.4
10.2
3,325
20.7
113
665
700
14.1
13.4
3,388
20.7
146
616
614
11.0
11.0
3,520
17.4
147
444
493
7.6
6.9
3,894
12.7
167
21,300
21,000
19,700
19,300
19,800
19,200
18,000
17,500
17,000
18,000
262
25
266
26
302
40
294
38
292
34
291
30
308
31
283
38
330
36
360
25
1 The 2019 figures are restated to represent revenue from third parties instead of group revenue.
2 Includes the impact of the adoption of IFRS 16 “Leases”.
3 Operating income, adjusted operating income, EBITDA and adjusted EBITDA (and related measures) per segment for 2021 have
been updated to reflect changes in the financial reporting structure related to a narrower definition of corporate activities and
corporate costs in corporate and other activities.
AkzoNobel Report 2022
156
Regional statistics
In € millions
2018
20192
2020
2021
2022
2018
20192
2020
2021
2022
2018
20192
2020
2021
2022
The Netherlands
North America
China
Revenue by destination
Revenue by origin
Capital expenditures
Average invested capital
Number of employees1
Revenue by destination
Revenue by origin
Capital expenditures
Average invested capital
UK
318
458
25
1,560
2,400
818
918
29
758
359
484
42
1,622
2,400
838
951
16
850
342
434
46
1,713
2,300
838
975
15
623
335
445
45
1,701
2,400
319
409
45
2,038
2,300
882
900
1,034
1,092
26
553
24
503
1,233
1,263
20
716
1,246
1,278
32
707
1,114
1,126
43
689
1,163
1,194
37
784
1,416
1,445
42
899
1,329
1,321
13
732
1,268
1,271
15
908
1,205
1,198
24
852
1,418
1,389
30
876
1,396
1,387
32
878
3,000
3,100
3,000
3,100
3,100
5,300
4,900
4,500
4,400
4,300
Latin America3
Other Asian countries and Pacific
716
718
12
335
709
674
11
350
601
588
11
290
744
724
15
315
1,298
1,282
16
823
1,538
1,482
29
706
1,548
1,525
32
773
1,282
1,215
44
768
1,454
1,416
61
684
1,703
1,647
62
834
Number of employees1
3,200
3,200
3,000
3,000
3,000
2,400
2,400
2,300
2,400
5,100
7,100
6,800
6,100
6,200
6,300
Other EMEA countries
Revenue by destination
Revenue by origin
Capital expenditures
3,304
3,096
56
3,308
3,093
66
3,147
2,994
75
3,591
3,385
74
3,814
3,584
71
Average invested capital
1,533
1,816
1,899
1,916
2,087
Number of employees1
11,100
11,000
11,000
11,300
11,100
1 At year-end.
2 Includes the impact of the adoption of IFRS 16 “Leases”.
3 Previously reported as South America.
AkzoNobel Report 2022
157
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.
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.
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.
BBS
Behavior-based safety. A global program run at all
AkzoNobel locations.
EMEA
Europe, Middle East and Africa.
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.
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, hazardous and
non-hazardous waste. Definitions are in the Sustainability
statements.
Capital expenditures
The total of investments in property, plant and equipment
and investments in intangible assets.
HSE&S
Health, safety, environment and security.
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. 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.
Code of Conduct
Defines our core values 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.
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.
Latin America
Excludes Mexico.
Leverage ratio
Calculated as net debt divided by EBITDA, which is
calculated as the total of the last 12 months.
Lost time injury rate (LTIR)
The number of lost time injuries per 200,000 hours
worked. Full definitions are in the Sustainability statements.
Net debt
Defined as long-term borrowings plus short-term
borrowings less cash, cash equivalents and short-term
investments.
North America
Includes Mexico.
North Asia
Includes, among others, China, Japan and South Korea.
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.
Relevant markets
Segments and regions of the paints and coatings industry
from which AkzoNobel generates revenue.
ROI (return on investment)
ROI is adjusted operating income of the last 12 months as
a percentage of average invested capital.
AkzoNobel Report 2022
158
ROS (return on sales)
ROS is adjusted operating income as a percentage of
revenue.
Shareholders’ equity per share
Akzo Nobel N.V. shareholders’ equity divided by the
number of common shares outstanding at year-end.
South Asia Pacific
Includes South East Asia and Asia Pacific.
Total reportable rate of injuries (TRR)
The number of injuries per 200,000 hours worked. Full
definitions are in the Sustainability statements.
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.
AkzoNobel Report 2022
159
Energy
33
Return on sales
Executive Committee
58, 59, 65
Risk management
143
154
13
6
50
Safety
Segment information
Shareholders’ equity
Strategy
Supervisory Board
Independent auditor’s report
145
Supervisory Board Chair’s statement
3
78
41, 50
110
140
13
62
61
49
31
INDEX
2022 results at a glance
Acquisitions
AkzoNobel Cares
Assurance report of the independent auditor
Audit Committee
Automotive and Specialty Coatings
Behaviors
2
Financial instruments
7, 109
Financial summary
46
152
66
20
13
Grow & Deliver
How we created value
Human rights
Industrial Coatings
Board of Management
58, 59, 60
Innovation
Borrowings
Capital markets
Carbon footprint
Case studies
132, 133
Intangible assets
96
32
Internal controls
Invested capital
10, 19, 28, 84
“Let’s Colour”
Cash, cash flow and net debt
14, 132, 133
Marine and Protective Coatings
CEO statement
Circularity
Climate change
Code of Conduct
Company financial statements
Company purpose
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
4
38
32
72
138
Net debt
Nomination Committee
Operating income
Outlook
Paint the Future
100
101
102
Pensions
Performance Coatings
Powder Coatings
Consolidated statement of comprehensive income
99
Product stewardship
Consolidated statement of income
Core values
Corporate governance
COVID-19
Decorative Paints
Dividend proposal
Earnings per share
Emissions
Employees
99
13
70
4, 6
16-18
8, 66, 97
6, 8, 119
Profit allocation
Property, plant and equipment
Raw materials
Regional statistics
Remuneration
Remuneration Committee
Report of the Supervisory Board
32, 33, 35
Resource productivity
8, 41, 42, 44
Return on investment
Inside cover
People. Planet. Paint.
Inside cover
22
15
Supplier sustainability
Sustainable Development Goals (SDGs)
120
Sustainable solutions
2, 34, 37, 40, 47, 48
66, 77
Sustainability statements
6, 9
Talent management
Waste
Water
10, 46
24
8, 132
68
7, 114
9
15, 51
29
64
8, 38
8, 38
126
20-27
26
48, 49
65, 144
121
4, 14
157
85, 134
67
62
38
3
AkzoNobel Report 2022
160
APPENDIX
Reporting principles
Our reporting principles describe in detail the definitions, methods and major
assumptions for all sustainability metrics reported in our annual report and
on our website. The full version is available on our website via https://www.
akzonobel.com/en/about-us/sustainability-/reporting-principles-
Social
Organizational health
Female executives
The overall percentile score is used in external reports. In 2019, four quarterly surveys were held with results per quarter. For the annual report of 2019, the Q4 scores were reported.
Since 2020, frequency was changed to two (Q1 and Q3) survey. For 2022, we have decided to change the frequency to once a year. Therefore the reported results in the 2022 annual
report are from Q2, 2022. All permanent employees are part of the survey except for contingent workers, contractors, temporary or interns.
Percentage of women at executive level. Executive level includes all employees with an executive position grade at AkzoNobel and its subsidiaries, including the members of the
Executive Committee who are not members of the Board of Management. Executive level further includes the members of the board of management and the supervisory board of
each of Akzo Nobel Nederland B.V., Akzo Nobel Decorative Coatings B.V., Akzo Nobel Car Refinishes B.V. and International Paint (Nederland) B.V. The company’s executives are
considered as AkzoNobel’s sub top as referred to in the Dutch Gender Diversity Bill implemented in 2022.
Total reportable injury rate (TRR)
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.
Temporary workers are reported with employees, since day-to-day management is by AkzoNobel. The classifications of injuries are in line with OSHA guidelines.
Lost time injury rate employees/temporary
workers
The lost time injury rate (LTIR) is the number of injuries resulting in a lost time case per 200,000 hours worked. Temporary workers are reported together with employees since
day-to-day management is by AkzoNobel.
Life-changing injuries
Occupational illness rate employees
Loss of primary containment –
Level 1 and 2
Life-changing injuries are injuries to employees, temporary workers and contractors that are considered life-changing. This includes (but is not limited to): coma, some level of perma-
nent disability (including loss of sight or hearing), organ removal, the requirement for ongoing multiple surgeries, lingering trauma, any amputation of digits or limbs, skin grafts, the
insertion of plates, pins or screws. This category also includes fatalities.
The total number of reportable occupational illness cases for the reporting period per 200,000 hours worked. This parameter is reportable for employees. Occupational illness is
defined as any abnormal condition or disorder other than one resulting directly from an accident caused by, or mainly caused by, work-related factors over a period of time rather than
an instantaneous event, and recognized during the reporting year as part of national schemes or regulations. Occupational illness rate employees includes illness related to mental
health caused by work conditions.
A loss of primary containment (LoPC) from a process or uncontrolled or unsafe release from a pressure relief device (PRD) that exceeds the Level 1 chemical release threshold. Level
1 includes on-site injury to employees, contractors or members of the general public that leads to severe injury; release that is observable or has impact off-site and can give rise
to public concern and local media attention; permit violation (significant regulatory action as a result of LoPC Level 1 release); damage (including financial and quality of life) to local
stakeholders (such as local suppliers or neighbors) or exceeding €25,000 asset damage.
Level 2 includes reportable injury, medical treatment injury, restricted work injury, or lost time injury not resulting in severe injury; release almost certainly contained on site, not readily
controlled, with no observable impact off-site; external complaint which affects company reputation for some employees; orexceeding €2,500 asset damage.
Regulatory actions Level 4
Formal legal notification with fines above €100,000 (Level 4).
Security incident Level 3
AkzoNobel Cares (number of projects
and number of people empowered)
Security incidents are divided into three categories, dependent on severity, from small up to Level 3 – a significant security incident. They are also separated into three incident
category types (crime against a person, property crime and financial crime). This is the number of security incidents (Level 3) resulting from:
1. Crime against person/organization: kidnapping, robbery, malicious wounding, murder, other fatality resulting from criminal activity, multiple victims (>5)
2. Property crime: hijacking, sabotage, terrorism or any of the above with loss or damage to property >€10,000
3. Financial crime: >€10,000
Social impact programs effort; consists of four programs: “Let’s Colour”, SOS Children’s Villages, Education Fund and local AkzoNobel CSR projects (e.g. CSR in India).
• Number of community people trained
• Number of projects
AkzoNobel Cares projects are defined as a separate activity benefiting people in communities, involving AkzoNobel employees or funding, reported to the central AkzoNobel Cares
team quarterly.
Community people empowered with new skills are people with vulnerable backgrounds, including young people at risk, who are trained in painting, professional and life/soft skills as a
result of project/activity/participation delivered by AkzoNobel employees or through financial donations.
AkzoNobel Report 2022
161
Environmental
Energy use
Percentage renewable energy
The energy consumption of AkzoNobel in absolute measures (1,000 TJ) and per ton of production. Energy is expressed as “primary” energy, or fuel equivalents, used on our sites and
to generate electricity/heat for our sites.
Percentage renewable energy used in our operations. Renewable energy (in fuel equivalent) is the sum of energy used from renewable electricity, biomass, renewable steam and hot
water. Energy is expressed as “primary” energy, or fuel equivalents. Expressed as the share of renewable energy AkzoNobel uses in its own operations relative to the total energy
used. We use an average efficiency factor of 40%.
Percentage renewable electricity
Percentage renewable electricity used in our operations. Renewable electricity is electricity that is generated from inexhaustible resources, such as wind, solar, hydro, biomass and
tidal. Expressed as the share of total renewable electricity (own generated plus imported from grid) AkzoNobel uses in its own operations relative to the total electricity used.
Greenhouse gas emissions –
Scope 1 (direct) and Scope 2 (indirect)
Volatile organic compounds
Total waste
The total greenhouse gas emissions from processes and combustion at our facilities and indirect emissions from purchased energy in absolute measures (Mt CO2e) and kg CO2e per
ton of production. Emissions from transport in own operations is very limited and therefore not material compared to other Scope 1 and 2 emissions. As transport is not material to
Scope 1 and 2, these scopes exclude transport. We measure and report CO2 in line with the GHG Protocol. The other gases from the GHG Protocol are considered immaterial and
not actively measured.
Volatile organic compound emissions in absolute measures (kilotons) and kg per ton production. Volatile organic compounds (VOCs) are emitted as gases from certain solids or
liquids, for instance from solvent-based paints.
Total waste in absolute measures (kilotons) and kg per ton production. Waste is reported as total weight, not dry weight. Waste is any material arising from our routine operations
which is not incorporated into final products and not directly released to atmosphere or direct to surface water. Non-reusable waste is waste which is not used for resource recovery,
recycling, reclamation, direct re-use or alternative uses (e.g. composting).
Circular use of materials
The amount of materials reused by AkzoNobel and third parties (reusable waste plus by-products) divided by the total waste plus by-products (percentage).
Hazardous waste
Total waste to landfill
Total fresh water use and consumption
Hazardous waste is waste that is classified and regulated as such according to the national, state, provincial or local legislation in place.
All hazardous and non-hazardous non reusable waste (in absolute measures (kilotons) and kg per ton production) as it leaves our premises in the reporting period, sent for disposal to
landfill.
Fresh water use as absolute measure (million m3) and m3 per ton production.
• Extraction recorded as surface, ground and potable water
• Use recorded as cooling, process and other use (e.g. hygiene, grounds)
The majority of water is used for cooling and returned to the original source, slightly heated.
Fresh water consumption as absolute measure (million m3) and m3 per ton production. Fresh water consumption is the fresh water use minus cooling water and water in product.
Cooling water is excluded as it is extracted and returned from the same basin only with a potentially altered temperature (chemically unchanged).
Suppliers signed Business Partner Code of
Conduct (% of spend)
Percentage product related spend (measured in euro value) with suppliers (raw materials and packaging) who have signed our business partner Code of Conduct.
Percentage non-product related (NPR) spend (measured in euro value) with suppliers who have signed our Business Partner Code of Conduct.
Our Business Partner Code of Conduct states that we want to do business with business partners who endorse our ethical values and our social and environmental standards. We
therefore require suppliers to sign our Business Partner Code of Conduct, which is based on the AkzoNobel Code of Conduct.
Suppliers sustainability risk analysis
(baseline)
Number of suppliers who have been identified as risk to AkzoNobel due to their spend level (>€250,000), country risk (sensitive and emerging countries using EcoVadis’ country risk
profile) and/or category risk. Spend levels are based on the prior reporting year, which means for the 2022 annual report, 2021 spend levels were used.
Suppliers participating in sustainability
program
Number of suppliers who performed an EcoVadis online assessment or TfS onsite audit (in % of baseline as indicated under “Sustainability risk analysis”).
Suppliers in sustainability program – in line
with expectations
Number of suppliers who meet our expectation in the EcoVadis assessment (in % of baseline as indicated under “Sustainability risk analysis”): 45 total score and human right and
labor score of 50.
Suppliers in sustainability program – under
development
Suppliers who have performed the EcoVadis assessment but who are not yet meeting our expectation. Suppliers have three years to reach the minimum EcoVadis scores
(see “Suppliers in line with our expectation”).
Product portfolio
Sustainable solutions
Cradle-to-grave carbon footprint
(Scope 1, 2, and 3)
A measure of the sustainability of our products, which have customer/consumer sustainability benefits, as percentage of our revenue. The reporting period for sustainable solutions is
November 2021-October 2022. A sustainable solution is a product or solution that has a sustainability benefit in one or more of the following sustainability criteria, when compared to
other products or solutions which provide a similar functional effect/benefit to the user: reduced carbon and energy, health and well-being, less waste, reduced/reused and renewed
material use and longer-lasting performance. A sustainable solution does not have any adverse effects in any of these sustainability criteria throughout the value chain.
Our CO2(e) footprint in million tons of CO2(e) including Scope 1 (own operations), Scope 2 (energy use) and Scope 3 (upstream) and Scope 3 (downstream). The footprint includes the
six main greenhouse gases defined in the Greenhouse Gas Protocol.
• Upstream – category 1: purchased 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
The climate change impact of VOC emissions is included in the cradle-to-grave footprint, due to the impact VOC emissions have within the paints and coatings industry.
Assessment of Scope 3 emissions relies on using industry average data (category 1), use phase models (category 10 and 11) and Life Cycle Assessment (category 10, 11 and 12)
for certain parts of our value chain. The numbers used are reviewed and updated conservatively to ensure proper data quality and comparability.
AkzoNobel Report 2022
162
Appendix: List of affiliated legal entities and
corporations
List at December 31, 2022, 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
Ownership %1
100
50.394
100
100
100
100
100
84.615
100
100
Santa Cruz de la Sierra
Buenos Aires
Oranjestad
Salzburg
Vienna
Sunshine
Sunshine
Vilvoorde
Vilvoorde
Vilvoorde
Vilvoorde
Argentina
Akzo Nobel Argentina S.A.
Aruba
Arubaanse Verffabriek N.V.
Australia
Akzo Nobel Coatings (Holdings) Pty Limited
Akzo Nobel Pty Limited
Austria
Akzo Nobel Coatings GmbH
Akzo Nobel Holding Österreich GmbH
Belgium
Akzo Nobel Paints Belgium NV
Auto Body Services CV (ABS)
Cleming BV
International Paint (Belgium) NV
Bolivia
Pinturas Coral De Bolívia Ltda
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 (China) Investment Co., Ltd.
Akzo Nobel Car Refinishes (Suzhou) Co, Ltd.
Akzo Nobel Chang Cheng Coatings (Guangdong) Co., Ltd.
Shenzhen
Dongguan
Jiashan
Tianjin
Guangzhou
Akzo Nobel Coatings (Dongguan) Co., Ltd.
Akzo Nobel Coatings (Jiaxing) Co., Ltd.
Akzo Nobel Coatings (Tianjin) Co., Ltd.
Akzo Nobel Decorative Coatings (China) Ltd
Akzo Nobel Decorative Coatings (Langfang) Co., Ltd.
Ontario
Port Hope
Shanghai
Suzhou
Gaborone
Santiago
Barueri
Akzo Nobel International Paint (Suzhou) Co., Ltd.
Langfang
Akzo Nobel Paints (Chengdu) Co., Ltd.
Akzo Nobel Paints (Guangzhou) Co., Ltd.
Akzo Nobel Paints (Shanghai) Co., Ltd.
Suzhou
Chengdu
Guangzhou
Shanghai
George Town
George Town
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
Akzo Nobel Performance Coatings (Changzhou) Co., Ltd.
Varnishes and Paints Industry Vivechrom Dr. Stefanos D. Pateras S.A.
Changzhou
Akzo Nobel Performance Coatings (Shanghai) Co., Ltd.
Shanghai
Akzo Nobel Powder Coatings (Chengdu) Co., Ltd.
Chengdu
Akzo Nobel Powder Coatings (Langfang) Co., Ltd.
Langfang
Prague
Cartago
Shanghai
Willemstad
Willemstad
Copenhagen
Herlev
Quito
Guayaquil
Guayaquil
Medellin
Medellin
Medellin
Medellin
Medellin
Medellin
Akzo Nobel Powder Coatings (Wuhan) Co., Ltd. Wuhan
International Paint of Shanghai Co., Ltd.
Colombia
AkzoNobel Colombia S.A.S.
Anhidridos y Derivados de Colombia S.A.S.
Cacharreria Mundial S.A.S.
Compania Global de Pinturas S.A.S.
Interquim S.A.S.
Oceanic Paints S.A.S.
Costa Rica
Pintuco Costa Rica PCR, S.A.
Curacao
Macomoca B.V.
Pintuco Curacao B.V.
Czech Republic
Akzo Nobel Coatings CZ, a.s.
Denmark
Akzo Nobel Deco A/S
International Farvefabrik A/S
Ecuador
Interquimec S.A.
Pinturas Ecuatorianas S.A.
Poliquim, Polimeros y Quimicos C.A.
Egypt
Akzo Nobel Egypt LLC
Akzo Nobel Powder Coatings S.A.E.
El Salvador
Pintuco el Salvador S.A. de C.V.
Estonia
Akzo Nobel Baltics AS
Eswatini
Dulux Swaziland (Pty) Limited
Finland
Oy International Paint (Finland) Ab
France
Akzo Nobel Decorative Paints France S.A.
Akzo Nobel Distribution SAS
Akzo Nobel SAS
Mapaero SAS
SAS BOUCHER
Germany
Akzo Nobel Coatings GmbH
Akzo Nobel Deco GmbH
Akzo Nobel GmbH
Akzo Nobel Hilden GmbH
Akzo Nobel Powder Coatings GmbH
International Farbenwerke GmbH
Schramm Coatings GmbH
Schramm Holding GmbH
Greece
Akzo Nobel Anonymous Company of Paints and Related Products
Stuttgart
Wunstorf
Cologne
Hilden
Reutlingen
Börnsen
Offenbach am Main
Offenbach am Main
Thiverny
Corbas
Montataire
Pamiers
Pamiers
6th of October City
Giza
San Salvador
Matsapha
Helsinki
Tallinn
Athens
100
100
100
100
100
51
100
100
100
100
100
60
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.983
99.975
100
100
100
100
100
100
100
100
100
100
100
100
Mandra Attica
79.184
St. Peter Port
Guatemala
Choloma
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Budapest
Guatemala
Pintuco Guatemala S.A.
Guernsey
Impkemix Trustee Limited
Honduras
Pintuco de Honduras, S.A.
Hong Kong SAR 2
Akzo Nobel Chang Cheng Limited
Akzo Nobel HK (Holdings) Limited
Akzo Nobel Paints Limited
International Paint (East Russia) Limited
International Paint (Hong Kong) Limited
Mapaero HK Limited
Schramm Hong Kong Co., Limited
Hungary
Akzo Nobel Coatings Zrt
India
Akzo Nobel Global Business Services LLP
Akzo Nobel India Limited
ICI India Research & Technology Centre
Indonesia
Jakarta
PT Akzo Nobel Car Refinishes Indonesia
PT Akzo Nobel Wood Finishes and Adhesives Indonesia
Jakarta
Jakarta
Jakarta
PT ICI Paints Indonesia
PT International Paint Indonesia
Ireland
Akzo Nobel (CR9) Limited
Akzo Nobel Car Refinishes (Ireland) Limited
Dulux Paints Ireland Limited3
ICI Fertilisers (Ireland) Limited
ICI Ireland Limited
Italy
Akzo Nobel Coatings S.P.A.
Japan
Akzo Nobel Coatings K.K.
Kenya
Akzo Nobel Kenya Limited
Kuwait
International Warba Coatings Paint Mfg Co. W.L.L.
Dublin
Dublin
Cork
Cork
Cork
Nairobi
Como
Tokyo
Pune
Kolkata
Mumbai
Kuwait
Riga
Vilnius
Latvia
Akzo Nobel Baltics SIA
Lithuania
Akzo Nobel Baltics, UAB
Malaysia
Akzo Nobel Industrial Coatings Sdn Bhd
Akzo Nobel Paints (Malaysia) Sdn Bhd
Akzo Nobel Paints Marketing Sdn Bhd
Colourland Paints Sdn Bhd
International Paint Sdn Bhd
Mauritius
Coloris Ltd
Mauvilac Industries Limited
Mexico
Akzo Nobel Performance Coatings S.A. de C.V. Mexico City
Morocco
Akzo Nobel Coatings S.A.
Les Pailles
Les Pailles
Casablanca
Kuala Lumpur
Kuala Lumpur
Selangor
Selangor
Johor Darul Takzim
100
100
100
100
100
100
51
100
100
100
100
100
74.757
18.689
100
100
55
100
100
100
100
100
100
100
100
100
49
100
100
100
59.949
59.949
59.949
70
100
100
100
59.628
AkzoNobel Report 2022 | Appendix
163
Akzo Nobel Performance Coatings Morocco S.A.R.L.
Casablanca
Rabat
Casablanca
Yangon
Avondale
Managua
Woerden
Arnhem
Sassenheim
Arnhem
Sassenheim
Arnhem
Arnhem
Arnhem
Sassenheim
Arnhem
Ammerzoden
Rotterdam
Rotterdam
Rhoon
Hoofddorp
Arnhem
Arnhem
Distral Maroc S.A.
Sadvel S.A.
Myanmar
Akzo Nobel (M) Co. Ltd.
Netherlands4
*Akzo Nobel (C.) Holdings B.V.
Akzo Nobel Assurantie N.V.
*Akzo Nobel Car Refinishes B.V.
*Akzo Nobel Coatings International B.V.
*AKZO Nobel Decorative Coatings B.V.
*Akzo Nobel Insurance Management B.V.
*Akzo Nobel Management B.V.
*Akzo Nobel Nederland B.V.
*Akzo Nobel Sino Coatings B.V.
*Akzo Nobel Sourcing B.V.
*B.V. Alabastine (Holland)
*ICI Omicron B.V.
ICI Theta B.V.
*International Paint (Nederland) B.V.
*Panter B.V.
*Remmert Holland B.V.
*Syncoflex B.V.
New Zealand
Akzo Nobel Coatings Ltd
Nicaragua
Industrial Pintuco Nicaragua S.A.
Norway
Akzo Nobel Coatings AS
Oman
Akzo Nobel Oman SAOC
Pakistan
Akzo Nobel Pakistan Limited
Panama
Centro de Pinturas Pintuco, S.A.
International Paint (Panama) Inc.
Kativo Chemical Industries, S.A.
Kativo Holding Co., S.A.
KCI Export Trading Ltd
Pinturas Mundial de Panama, S.A.
Papua New Guinea
Akzo Nobel Limited
Peru
Akzo Nobel Peru S.A.C.
Poland
Akzo Nobel Car Refinishes Polska Sp. z o.o. Warsaw
Warsaw
Akzo Nobel Decorative Paints Sp. z o.o.
Kostrzyn Wlkp.
Akzo Nobel Industrial Coatings Sp. z o.o.
International Paint Sp. z o.o.
Gdansk
Portugal
Akzo Nobel Tintas para Automoveis Lda
International Paint Ibéria, Lda
Tintas Titan, S.A.
Qatar
Akzo Nobel LLC
Romania
Fabryo Corporation Srl
Russian Federation
Akzo Nobel Dekor CJSC
OOO “Akzo Nobel Coatings”
Panama
Mercantil
Panama City
Panama City
Panama
Panama
Carregado
Setúbal
Maia
Balashikha
Moscow
Karachi
Muscat
Geheru
Doha
Lima
Oslo
Popesti-Leordeni
100
59.608
59.625
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.910
100
50
98.083
100
100
99.965
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Orehovo-Zuevo
Dammam
OOO “Akzo Nobel Lakokraska”
Saudi Arabia
Akzo Nobel Saudi Arabia Ltd
Singapore
Singapore
Akzo Nobel Adhesives Pte Ltd
Akzo Nobel Car Refinishes (Singapore) Pte Ltd Singapore
Singapore
Akzo Nobel Paints (Singapore) Pte Ltd
International Paint Singapore Pte Ltd
Singapore
Slovenia
Akzo Nobel Adhezivi d.o.o.
South Africa
AkzoNobel South Africa (Pty) Ltd
ICI Dulux (Pty) Ltd
South Korea
Akzo Nobel Industrial Coatings Korea Ltd.
Akzo Nobel Powder Coatings Korea Co., Limited
Ljubljana
Ansan
Johannesburg
Johannesburg
Ansan
Busan
Geoje City
Barcelona
Colombo
Stockholm
Tyresoe
Malmö
Malmö
Västervik
Malmö
Göteborg
Bäretswil
Neuenkirch
Chung Li
Kaohsiung
International Paint (Korea) Ltd
International Paint (Research) Ltd
Spain
Akzo Nobel Coatings, S.L.U.
Sri Lanka
Akzo Nobel Paints Lanka (Pvt) Ltd
Sweden
Akzo Nobel Adhesives AB
Akzo Nobel Car Refinishes AB
Akzo Nobel Decorative Coatings AB
Akzo Nobel Industrial Coatings AB
Akzo Nobel Industrial Finishes AB
Akzo Nobel Sweden Finance AB
International Färg AB
Switzerland
Akzo Nobel Car Refinishes AG
Akzo Nobel Coatings AG
Taiwan
Akzo Nobel Paints Taiwan Limited
International Paint (Taiwan) Limited
Thailand
Akzo Nobel Coatings Limited
Akzo Nobel Paints (Thailand) Limited
Schramm SSCP (Thailand) Co., Ltd.
Tunisia
Société Tunisienne de Peintures Astral S.A.
Türkiye
Akzo Nobel Boya Sanayi ve Ticaret A.S.
Akzo Nobel Kemipol Kimya Sanayi ve Ticaret A.S.
Nakornprathom
Amphur Pakkred
Rayong
Megrine
Izmir
Izmir
Istanbul
Dilovasi
Dilovasi
Akzo Nobel Server Boya Sanayi ve Ticaret A.S. Dilovası/ Kocaeli
International Paint Pazarlama Limited Sirketi
Marshall Boya Ve Vernik Sanayii A.S.
Tekyar Teknik Yardim A.S.
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 (CPS) Pension Trustee Limited
Dubai
Jebel Ali Free Zone
Dubai
Kampala
Slough
Kiev
Akzo Nobel (NASH) Limited
Akzo Nobel (NSC) Limited
Akzo Nobel Aerospace Coatings Limited
Akzo Nobel CIF Nominees Limited
Akzo Nobel Coatings (BLD) Limited
Akzo Nobel Coatings Limited
Akzo Nobel Decorative Coatings Limited
Akzo Nobel Finance Limited
Akzo Nobel Finance (2) Limited
Akzo Nobel Holdings Limited
Akzo Nobel ICI Holdings
Akzo Nobel Industrial Coatings Limited
Akzo Nobel Limited
Akzo Nobel Packaging Coatings Limited
Akzo Nobel Powder Coatings Limited
Akzo Nobel UK Ltd
Cuprinol Limited
Dulux Limited
Ergon Investments International Limited
Ergon Investments UK Limited
Flexcrete Technologies Limited
Hammerite Products Limited
Holywell-Halkyn Mining and Tunnel Company Limited
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
I C I Finance Limited
ICI Chemicals & Polymers Limited
ICI Paints (Trade Contract) Limited
Imperial Chemical Industries Limited
International Coatings Limited
International Paint Limited
International Paints (Holdings) Limited
Intex Yarns (Manufacturing) Limited
J.P. Mcdougall & Co. Limited
Mapaero UK Ltd
Mortar Investments International Limited
Mortar Investments UK Limited
Polycell Products Limited
Resinous Chemicals Limited
Sales Support Group Limited
Scottish Agricultural Industries Limited
Stevenston Holdings Limited
United States of America
Akzo Nobel Coatings Inc.
Akzo Nobel Inc.
Akzo Nobel Services Inc.
Blue Water Marine Paint LLC
Expert Management Inc.
ICI Americas Inc.
International Paint LLC
Mapaero Inc.
New Nautical Coatings Inc.
Uruguay
Pinturas Inca S.A.
Vietnam
Akzo Nobel Vietnam Limited
Zambia
Dulux Zambia (2005) Limited
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Slough
Crawley
Slough
Slough
Slough
Slough
Slough
Edinburgh
Edinburgh
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Montevideo
Binh Duong
Lusaka
100
60
100
100
100
100
100
100
100
100
100
60
100
100
40
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
100
51
55
100
92.974
100
100
100
49
100
48.979
100
100
99.902
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96.955
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
AkzoNobel Report 2022 | Appendix
164
List of non-consolidated legal entities
and corporations
Colombia
Glasst Innovation Company S.A.S.
Minerales Industriales S.A.S.
Italy
Metlac Holding S.r.l.
Metlac S.p.A.
Medellin
Sabaneta
Alessandria
Alessandria
25
40
49
71.667
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 Hong Kong Special Administrative Region.
3 Akzo Nobel N.V. has declared in writing that it guarantees the commitments entered
into by Dulux Paints Ireland Limited, in conformity with section 357(1) of the Irish
Companies Act 2014.
4 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 2022 | Appendix
165