Tomorrow's Answers Today

Wednesday 10 October 2012, by He Yan, li yunzhi, Nicolò Locatelli

3 inspired

A. The main facts about the activities of the company.

AkzoNobel is a Dutch chemical company, based in Amsterdam, being active in decorative paintings, performance coatings and specialty chemicals fields. Sales were €15.7 million in 2011.
AkzoNobel’s activity can be divided in two big families:

1) Decorative Paintings → all the paints that have been used by individual customer.
2) Performance Coating → Automotive & Aerospace Coatings, Industrial Coatings, Car-Refinishing, Powder Paintings, Marine and Protective Paintings and Packaging Coatings.

We decided to choose this company because one team member has worked there and she told us that this company is very sensible to environmental problems and what their business is about is to make our life better. She also told us that the working environment was really nice and in this company human rights come before money. For these reasons we decided to study deeper into the company and understand what they do to reach this goal. The other reason because we have chosen this company is that one team member’s parents have been involved in this business for more than 40 years and they participated in a lot of social responsible projects in their country.

What’s more, we find that in 2012 AkzoNobel reached the 1st place in rank of global sustainability leader in the Chemicals industry by Dow Jones Sustainability World Indexes.

We decided to analyze this company because we are really interested in the way how AkzoNobel involves its employees and its stakeholders in these social responsible projects and we think that “Tomorrow answers today” and AkzoNobel does a very good job to reach this goal.

B. The Ethical challenges this company is addressing.

We find the ethical challenges may exist in AkzoNobel due to its industry characteristics and globalized organization

Chemical products e.g. protective coating will more or less cause environment contamination or pollution. How can AkzoNobel make its profit integrated with the responsibility to environment?

Chemical industry has been recognized as dangerous for workers. As a leading manufacturer, may AkzoNobel ensure the basic human right of employee to stay safe in working?

AkzoNobel is such a large multinational organization with operations over 80 countries all over the world. Obviously, the existing of cross-culture issues and different moral standards related would cause ethical issues e.g. bribe, hostile competition and conflicts of interest, especially in emerging market.

Does the corporate have responsibility to integrate its corporate value to society, and provide a stage more than business, positively influence the staff, and their family, and even community.

C. What makes you believe this company is really ethical and why you trust it?

Environmental protection
-  Innovative ECO-premium solution
The company also spends a lot of efforts on the development of innovative products with low-toxic, improvement of energy efficiency; use of natural resources/ raw materials, reduction of waste emissions, e.g. marine coatings usually contain pesticide to kill shellfish attached to the ship surface, while contaminating the seawater in the meanwhile. New products are designed to make the coating so smooth that almost nothing can attach to ship surface, without any toxicity. Also, coatings with superior quality make less water resistance, hence saving fuel energy of ship. This product brings patents and profit for company.

-  Commitment and Carbon policy target
In 2007, AkzoNobel became a signatory to the Global Responsible Care ® Charter. This is the chemical industry’s global voluntary initiative to work together to continuously improve their health, safety and environmental performance, and to communicate with stakeholders about their products and processes.
• Reduce its cradle-to-gate carbon footprint by 10% per metric ton of product by 2015 compared to 2009.
• Aim to reduce cradle-to-gate carbon footprint by 20-25% per ton of product by 2020, compared to 2009.

Respect employees
It is quite common to see a lot of employees working in the company for more than 10,even 20years. Working in the office with senior aged colleagues really makes a sense of safety.

-  Safety of workers in plant
AkzoNobel adheres to the humane care to ensure that all employees’ rights are guaranteed. In order to ensure the safety of workers. Strict safety regulations e.g. helmet, mask, safety suit and anti-static shoes should be well equipped. Inspectors examines workshop frequently, any worker obeys the regulation will be recorded and warned, and unsafe reports should be written by his supervisor. Fire drill conducted every month. Every staff has an obligation to provide potential unsafety factors to safety division. Different levels of HSE trainings and examinations will be provided to staff in terms of different working site. Everyone in the plant knows safety is the most division GM cares about.

- Developing staff ability
Besides, developing staff ability is another core value of AkzoNobel. It is the company’s ambition to build a true and lasting talent factory. At the end of year, performance review and development plan will be made to each employee with his supervisor together, which gives staff a chance to communicate and express his idea about working with manager.

- Commercial insurance and team buildings
Additional commercial insurances in addition to mandatory medical insurance by government and annual physical examinations are specially prepared for the staff. The company regularly communicates with its staff by holding different parent-child activities, such as travelling and painting completion. It not only provides improving plan and specialized training program, but also helps everyone to realize the value of the individual.

Ethics in business and Code of conducts
-  No bribes
-  No conflict of interest
Code of conducts published on line, and every staff have face-to-face training with business ethics, and formal documents to sign after the training to ensure employee’s action in compliance with code of conducts.

I think they are trying to minimize the conflicts of interest, e.g. salaries of sales department are not direct linked with the sales volumes they make. In some extent, release the pressure for salesmen in sales, which reduce the possibility of bribe and corruption. For commissions AkzoNobel have certain percentage for each costumer as companies, transparent and non-negotiable.

CSR and Community program

AkzoNoble has a very strong sense of company social responsibility. The company launched a worldwide initiative in 2005 called the AkzoNobel Community Program, which are in various forms, such as provide a safe shelter for the American child victims, paint old hospitals in Korea and teach young people how to protect the environments etc. Though this program, employees from all over the world can join together to make a significant contribution to the sustainable development of the society. And I know community program is always one of the most popular activities every year in company, almost every employee propose their ideas and highly participate in.

D.The possible challenges facing the company in the future and how you think this company may improve.

As it was mentioned in the statement of chairman, Hans Wijers, at the end of 2011, the company “began to experience increasing headwinds”. Besides of soaring price of raw material, Euro crisis risk and depression of North American housing and construction market had negative impact on the decorative coating business. Slow down in global economic growth infiltrate into the emerging market, e.g. prosperity of ship building industry in China suffering from the unexpected recession of global shipping industry in 2008, led to massive loss in marine coating division in AkzoNobel. As a result, though revenue in 2011 increased by 7% compared to 2010 driven by cost inflation, profit (EBIT) decreased by 14%.

Some ideas may help them to improve including
1- Exploit new market into e.g. Brazil, India and Africa. In these regions company may benefit from huge potential demands of infrastructure construction, low labor cost and government preferential policy.
2- Cost saving strategy focus on operating working capital should be well enforced, e.g. conference all or web-telephone conference should be projected instead of excessive business trips around world.



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1 Discussion / 2 Messages

  • AkzoNobel 28 February 2013 at 09:38 , by Carol

    Akzo Nobel inspires me, because I’ve been working there and I know for sure that all the things mentioned are true. Once a year Akzo stops its production in all countries, all its employees (about 60.000) stop their normal workday to get instructions about how to have less accidents, how to avoid them and not to be injured: the Safety Day. Last September 19th, I attended the Safety Day and it was an amazing experience. Bosses and workers joined together to get security information, as equals. We played some games related to securities issues and we had fun! Imagine 60.000 employees stopping their activities to attend the Safety Day, how many expenses represent this for Akzo? Akzo see this as an investment, not as an expense. Akzo knows how to spread its values to its employees.

    Besides, in June 14th we also run the Sustainability Day. Akzo is concerned about the environment, it works everyday to enhance its products, more efficient and less polluting. To be environmentally aware it could sound odd in a chemical industry, however, Akzo Noble really cares.

    The office environment is excellent. The bosses are always willing to help you, in any time. Your colleagues take care about you and your safety: when you come in for the first time and you don’t know the safety rules of the company, your peers kindly explain you what to do at all times.

    Akzo Nobel has taught me how to be safer, to have more social and environmental consciousness. And above all, it taught me comradeship.

    I think the model strategy of Akzo Nobel should be an example for all industries, especially for those whose condition can be more harmful to the environment, such as chemicals. Safety has to be a goal for all companies and not something forced by governments, like sustainability. It is our responsibility to care for the Earth and not waste its resources.

    • AkzoNobel 13 May 2013 at 12:04 , by Andre Oost

      I know AkzoNobel very well and they inspire me as well, but to stop production in all countries once a year, to get instruction about how to have less accidents, how to avoid them and not to be injured : Safety Day is for me a bit over the hill. This is basically a waste of money and could have planned and distribute this over the year. She may also honestly believe the management of Akzo views this as an investment, not as an expense. I think this is just a big umbrella, which is not true.

      For the rest I also believe that AkzoNobel wants to become more social and environmental consciouness and that the ’Safety Day’ may help emoployees to become safer in their daily job.

      I really appreciate the responsiblity they take care for the Earth and not waste its rescources. However I think they could also do something for society as starting up school and other little things to make life of the other stakeholders named : society also a bit better.

Location: Amsterdam (Netherlands)

Sector: Manufacturing

Official website: http://www.akzonobel.com/

Key figures:

Revenue € 15.7 billion
Profit (EBIT) € 1,175 million
Employee 57,200

Run business in decorative paintings, performance coatings and specialty chemicals

Famous sub-brands like Dulux, International, Sikkens

Nbr. visits: 1268

Nbr. inspires: 3