REPORT
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 benefits 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.
Planet
We challenge ourselves and our partners
every day to be better global citizens
and protect the future of our planet.
People
We care passionately about people
and building communities, with safety,
integrity and sustainability at our core.
Paint
We keep pushing boundaries to develop
paint solutions that make a world of
difference.
www.akzonobel.com
1
AkzoNobel Report 2022
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 official version of the
company’s Report 2022. The European Single Electronic Filing format (the ESEF
reporting package) is the official 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.
Contents
2022 results at a glance
2
CEO statement
4
How we created value
6
Strategy and operations
12
Sustainability statements
29
Leadership and governance
57
Financial information
98
Glossary
158
Index
160
Appendix
161
Case studies:
Out of the blue
10
We've got the power
19
Biting back to combat disease
28
Promoting gender equality
84
10
28
84
19
2
AkzoNobel Report 2022
Financial summary
€10,846
mln revenue
€708
mln operating income
€789
mln adjusted operating income*
€2.01
earnings per share
35,200
employees
2022 results at a glance
North America
13%
EMEA
46%
Latin America
12%
Revenue by destination
Sustainable solutions
40%
Sustainable solutions development
in % of revenue
39
40
>50
2021
2022
2030 ambition
Adjusted EBITDA*
€1,157 mln
Adjusted EBITDA development*
in € millions
1,442
1,436
1,157
2020
2021
2022
3
South Asia Pacific
13%
AkzoNobel Report 2022
North Asia
16%
Return on sales (ROS)*
7.3%
Return on sales development*
in %
12.9
11.4
7.3
2020
2021
2022
Return on investment (ROI)*
9.8%
Return on investment development*
in %
16.1
16.0
9.8
2020
2021
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 financial statements.
4
CEO statement
|
AkzoNobel Report 2022
I joined AkzoNobel
as CEO in 2022,
so it will always be a
significant 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.
On a more general level, 2022
proved to be a year of persistent
worldwide uncertainty as global
events caused significant cost
inflation, challenged supply chains,
dented consumer confidence 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
profitable growth for years to come.
It’s been a question of finding 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 inflation 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
Refinishes and Aerospace businesses.
Meanwhile, we continued to work on our
operational efficiency 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 finalized (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
“I’m convinced
that our ongoing
transformation
will set us up for
profitable growth for
years to come.”
GREG
POUX-GUILLAUME
5
AkzoNobel Report 2022
|
CEO statement
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,
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.
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
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.
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.
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.
6
AkzoNobel Report 2022
How we created value
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.
By delivering more value to our
customers, shareholders,
employees and society in general,
we can better accelerate
profitability while positioning
ourselves for growth.
Summary of financial outcomes*
in € millions
2021
2022
∆%
Revenue
9,587
10,846
13
EBITDA*
1,469
1,076
(27)
Adjusted EBITDA*
1,436
1,157
(19)
Operating income
1,118
708
(37)
Identified items*
26
(81)
Adjusted operating income*
1,092
789
(28)
OPI margin*
11.7
6.5
ROS*
11.4
7.3
Average invested capital*
6,829
8,062
18
ROI (%)*
16.0
9.8
Capital expenditures
288
292
Net debt
2,340
4,089
Leverage ratio (net debt/EBITDA)*
1.6
3.8
Number of employees
32,800
35,200
Net cash from operating activities
605
263
Net income attributable to shareholders
829
352
Weighted average number of shares (in millions)
185.0
174.7
Earnings per share from total operations (in €)
4.48
2.01
Adjusted earnings per share from continuing
operations (in €)*
4.07
2.45
* Alternative performance measures: Please refer to reconciliation to the most directly comparable
IFRS measures in Note 4 of the Consolidated financial statements.
A
North Asia
16
B
South Asia Pacific
13
C
EMEA
46
D
North America
13
E
Latin America
12
Revenue by destination
in %
Revenue development full-year 2022
in %
Increase
Decrease
Total
A
B
C
D
E
Capital expenditures 2022:
total €292 million
A
Decorative Paints
91
B
Performance Coatings
167
C
Corporate and other
34
A
B
C
Capital expenditures are expected to be around 3% of
revenues for 2023.
Based on full-year 2022.
0
5
10
-5
Total
Exchange
rates
Total
in CC
Acquisitions/
divestments
Price/
mix
Volume
14
4
11
2
13
-7
2022
2021
2020
6,472
4,371
4,957
3,558
5,603
3,979
Revenue from third parties
in € millions
Decorative Paints
Performance Coatings
2022
2021
2020
258
238
230
Innovation investment
research and development expenses
in € millions
7
AkzoNobel Report 2022
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 inflation.
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 significant 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 inflation
and higher operating expenses.
Operating income included €5 million
negative Identified 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 inflation.
Operating income included €49 million
negative Identified 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 figures and will be
finalized 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 financing income and expenses
increased by €85 million, resulting from
an increase in exchange rate results of
€64 million negative (which includes €20
CLIMATE CHANGE
CIRCULARITY
Circular use of materials
The amount of materials (in own operations)
reused by AkzoNobel and third parties
56
%
2022
100
%
2030 ambition
Carbon emission reduction
Own operations (baseline 2018, absolute)
Carbon emission reduction value chain
(Scope 3 emissions, selected Scope 3
upstream and downstream. Baseline 2018,
absolute)
Renewable electricity
(of total electricity used in own operations)
Energy reduction
Baseline 2018 (of total energy used in own
operations, relative)
28
%
2022
6
%
2022
50
%
2022
1
%
2022
50
%
2030 ambition
50
%
2030 ambition
100
%
2030 ambition
30
%
2030 ambition
8
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.
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).
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.
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.
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.
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
AkzoNobel Report 2022
Dividend
in €
2020
2021
2022
1.95
1.98
1.98
1
Earnings per share total operations
in €
2020
2021
2022
3.29
4.48
2.01
1
Proposed
Adjusted earnings per share from
continuing operations
in €
2020
2021
2022
3.88
4.07
2.45
How we created value
HEALTH AND WELL-BEING
72
2022
26
%
2022
76
Ambition
30
%
2025 ambition
Organizational health score
(OHI)
Female executives
38,087
2020-2022
100,000
+
2030 ambition
Community projects
(cumulative)
People empowered
Members of local communities empowered
with new skills (cumulative)
591
2020-2022
2,000
+
2030 ambition
9
AkzoNobel Report 2022
(€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).
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.
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.
* 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.
Case study
10
Out of the blue
Watch the video on our
Report 2022 website
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.”
STRATEGY AND OPERATIONS
An overview of our strategy, approach to
innovation and the performance of our Paints
and Coatings businesses during the year.
Strategy
13
Innovation
15
Decorative Paints
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 figures, see the previous How we
created value pages and the segment information in Note 3 of the
Consolidated financial statements.
12
Color of the Year 2023
WILD
WONDER
™
13
AkzoNobel Report 2022
|
Strategy and operations
Our strategy
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 profitability improvement.
Right now, macro-economic uncertainty
means we need to focus on delivering
profit 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 significant presence in the
South Asia Pacific 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 significant 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 – reflected
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 efficient
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
THE NEXT PHASE OF OUR TRANSFORMATION
Grow
&
Deliver
Ambitions 2023
Growth in line with
relevant markets
€1.2 to €1.5 bln
adjusted EBITDA
Be customer
focused
Passion for paint
Execute with
discipline
Precise processes
Deliver on
commitments
Powerful performance
Take
ownership
Proud people
Strategy and operations
|
AkzoNobel Report 2022
14
Our strategy
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.
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 profitability
improvement.
We’re committed to retaining a strong
investment grade credit rating and
have clear capital allocation priorities,
including a disciplined approach to
targeted value-creating acquisitions,
aligned with our strategic mandates.
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.
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 benefit from our
robust pricing initiatives in response to
significant raw material cost inflation.
We’re building on our experience and
setting ourselves up to deal with future
cycles. When it comes to costs, we’ve
identified multiple opportunities –
especially within our integrated supply
chain – to deliver significant savings.
These actions are necessary to adapt
to changes in the markets where we
operate and offset cost inflation, 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 flow and
lower net debt/EBITDA leverage ratio.
Deliver results
€1.2 to €1.5 bln adjusted EBITDA
Manage our margins
Simplify our product range
Fine-tune make and deliver
Grow revenue
in line with relevant markets
Make our processes and systems work for our customers and us
Grow
Deliver
Grow with our market
Outgrow selected segments
Provide innovative sustainable
solutions
15
AkzoNobel Report 2022
|
Strategy and operations
Innovation
Stretching boundaries in
paints and coatings
“
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
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
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 ecosystem
– 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 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
– 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.
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
Decorative Paints
Asia
Strategy and operations
|
AkzoNobel Report 2022
16
Revenue
in € millions
2022
2021
2020
916
1,172
1,073
Key brands
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)
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.
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
1.6 million kWh
of electricity
annually.
2022 SUMMARY
We faced market challenges in China,
mainly due to uncertainties created by
COVID-19, which impacted consumer
confidence and the real estate sector.
Despite difficult 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-proofing products in India,
Malaysia, Indonesia and Pakistan. Our
Paint the Future startup challenge in
India was also a success.
“We once
again demon-
strated our
resilience
and agility
to deliver
balanced and
sustainable
results,
despite a
turbulent
year.”
Mark Kwok, Director
of Decorative Paints
North Asia
“Our team
delivered
strong
growth and
market
penetration
by gaining
share, as
well as
expanding
into adjacent
segments.”
Oscar Wezenbeek,
Director of Decorative
Paints South East and
South Asia
• Introduced the first United States
Department of Agriculture (USDA)
certified 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 Archifiction 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 first Dulux Living Center officially
opened in Chengdu, China. The
immersive brand store creates an
interactive space designed to provide
an extraordinary consumer shopping
experience
EMEA
Decorative Paints
17
AkzoNobel Report 2022
|
Strategy and operations
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.
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 benefits 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 significant 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 flourish. 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
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 finalized 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.
2022 SUMMARY
Our results were impacted by lower
demand due to the turbulent business
environment. The war in Ukraine, high
raw material and energy costs and
unprecedented inflation 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 inflation. 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.
Revenue
in € millions
2022
2021
2020
2,429
2,246
2,405
Key brands
“2022 was
a turbulent
year. The war
in Ukraine,
rising energy
costs and
reduced
macro-
economic
confidence
impacted
our business
significantly.
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
Decorative Paints
Latin America
Strategy and operations
|
AkzoNobel Report 2022
18
Revenue
in € millions
Decorative Paints revenue
by destination
in %
A
B
C
A
EMEA
55
B
Latin America
18
C
Asia
27
Key brands
2022
2021
2020
477
396
794*
2022 SUMMARY
Although we faced significant market
challenges, including supply constraints
and high inflation, 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.
“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
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
strong and widely admired approach to sustainability,
with its social programs being organized through the
Pintuco Foundation.
OTHER KEY DEVELOPMENTS
• 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 first regional
campaign to be introduced simultaneously in Brazil, Argentina
and Uruguay
• A new solar power project at our Recife site in Brazil entered its
final 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
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
statue in Brazil. Towering 43.5 meters over Rio
Grande do Sul, it’s Latin America’s largest statue
of Christ and the world’s third biggest.
*The acquired coatings activities are now part of our
Performance Coatings business.
*Includes Grupo Orbis
Case study
19
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 firmly
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
fit for purpose, but is equipped for the
long term as well.
“That’s where epoxy technology – and
in particular our Interzone range –
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.”
Performance Coatings
Automotive and Specialty Coatings
Strategy and operations
|
AkzoNobel Report 2022
20
Nintendo
partnership
Supplied special coatings for the interior
of the Nintendo Switch OLED, which
offers a larger screen with more intense
colors.
2022 highlight
We introduced the vehicle refinish industry’s first repair calculator to measure,
manage and reduce carbon emissions. The CO
2
eRepairCalculator is designed
to help customers reduce their carbon footprint when using our premium
refinish products. It identifies the carbon levels associated with the painting
and drying process – including the energy consumed – and is linked directly
to the vehicle refinishing 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.
Revenue by destination
in %
A
B
C
A
EMEA
43
B
Americas
33
C
Asia Pacific
24
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 Refinishes 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.
Key brands
“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
Revenue
in € millions
2022
2021
2020
1,231
1,127
1,390
21
AkzoNobel Report 2022
|
Strategy and operations
Sharing success
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.
BYD agreement
We became global refinish 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.
New milestone
Our Acoat Selected program for the
vehicle refinishes industry – which offers
business benchmarking, management
training and process optimization –
celebrated its 45
th
anniversary.
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.
Capacity boost
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.
Virtual training
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 floor itself.
2022 highlight
We introduced our CERAM-A-STAR 1050 Select
standard color palette for coil coatings. It’s formulated
using our market reference SMP technology
to provide improved productivity and more
efficient use of working capital for our coil
coater customers. Our other service partners
benefit 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 confidence
in the security of supply. This is important for
our customers in the evolving landscape of coil
and extruded metal manufacturing, who have faced
supply challenges in the PVDF (polyvinylidene fluoride)
supply chain. Our new portfolio is based on greener chemistry
alternatives than PVDF, so customers now have more sustainable
options to achieve a comparable finish and performance in most applications.
Performance Coatings
Industrial Coatings
Strategy and operations
|
AkzoNobel Report 2022
22
2022 SUMMARY
It was a year of two halves. The first 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 benefit
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
inflation impacted all our end markets in Europe.
Customers reduced output significantly 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-efficient coatings, which will be a key feature
in 2023 and years to come.
Revenue
in € millions
2022
2021
2020
1,893
1,634
2,181
Key brands
Revenue by destination
in %
A
B
C
A
EMEA
43
B
Americas
33
C
Asia Pacific
24
“We managed
our external
challenges,
while focus-
ing on the
future,
delivering
strong
pricing in all
segments
and main-
taining high
customer
confidence.”
Daniela Vlad,
Director of Industrial
Coatings (until
February 1, 2023)
OTHER KEY DEVELOPMENTS
• 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
finishes which will enable our Chemcraft
distributors in North America to offer an
alternative to solvent-borne technologies
• Introduced PVDF (polyvinylidene fluoride)
product alternatives including CERAM-A-
STAR Plus and SILKSTAR 5000
23
AkzoNobel Report 2022
|
Strategy and operations
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 finishes market.
It will help them – and their third party
suppliers – to become more sustainable
and marks the first step towards wider
use of renewables within wood coatings.
Anniversary
for Zweihorn
brand
Our Zweihorn premium wood finishes
brand celebrated its 110
th
anniversary.
Established in 1912, the portfolio
includes paints, stains, varnishes, oils
and waxes, and special products for
carpenters and joiners.
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.
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.
Performance Coatings
Marine and Protective Coatings
Strategy and operations
|
AkzoNobel Report 2022
24
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
efficiency 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.
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.
B-Free Explore
sets sail
We introduced B-Free Explore, the first
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.
“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
Chartek demand
continues
There was high demand throughout
the year for our Chartek brand and its
high-performance range of fireproofing
products, which continue to be the
energy industry benchmark.
25
AkzoNobel Report 2022
|
Strategy and operations
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.
Revenue by destination
in %
A
B
C
A
EMEA
35
B
Americas
24
C
Asia Pacific
41
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.
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.
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.
Revenue
in € millions
Key brands
2022
2021
2020
1,164
1,068
1,374
Photo: Smulders
Performance Coatings
Powder Coatings
Strategy and operations
|
AkzoNobel Report 2022
26
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 reflects our proven commitment to sustainability, while helping designers
connect to the latest developments in the built environment. In fact, our architectural
offering was the first-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.
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 inflation 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.
Revenue
in € millions
2022
2021
2020
1,315
1,128
1,376
A
B
C
A
EMEA
47
B
Americas
21
C
Asia Pacific
32
Revenue by destination
in %
Key brands
“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
27
AkzoNobel Report 2022
|
Strategy and operations
Corrosion
prevention
Launched Redox One Coat, a corrosion
prevention solution for agricultural and
construction equipment, metal outdoor
furniture, lighting, leisure equipment and
steel products.
Brand refresh
Relaunched and refreshed our Interpon
brand
with a dedicated microsite and
targeted campaigns
to help us further
grow our digital presence.
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.
Resicoat R8
Our Resicoat R8 range of powder coatings
was introduced. The products are completely
free of intentionally added Bisphenol A (BPA).
Low E update
Updated our Interpon Low E product range,
based on increasing energy prices and
growing demand for sustainable solutions.
Lankwitzer
deal
Acquired the liquid wheel coatings
business of Lankwitzer Lackfabrik GmbH
– perfectly complementing our existing
powder coatings portfolio.
Site investments
Made further investments in our factories in
Asia, Europe and Africa.
Case study
28
Biting back to
combat disease
Our Coral brand in Brazil has introduced a
mosquito-repellent coating which will be a
powerful ally in the fight against a notorious
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 specifically
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 figures
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.
“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, certified 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.
TRANQUIL
DAWN
™
Color of the Year 2020
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
30
CLIMATE CHANGE
32
Carbon emissions in own operations
33
Carbon emissions in our full value chain
35
Climate change adaptation and
risk management
36
CIRCULARITY
38
Waste and water management
38
Recycled content in packaging
40
HEALTH AND WELL-BEING
41
Health and safety
41
Employees
44
AkzoNobel Cares
46
VALUE CHAIN
48
Sustainable solutions
48
Sustainability and risk management
with our suppliers
49
Human rights
50
Managing sustainability
52
EU taxonomy disclosure
53
Sustainability performance summary
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.
29
Sustainability statements
|
AkzoNobel Report 2022
30
Sustainability
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.
An external review of our
compensation practices,
conducted as part of
our commitment to
diversity and inclusion,
has found no significant
gender pay gap.
By installing solvent
recovery units, our
Industrial Coatings
sites are reusing and
reprocessing solvents
to help us reduce
our emissions and
waste.
Three new startups
joined the growing
ranks of global Paint the
Future challenge winners
and have started our
accelerator program.
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
PAGE
45
Minding the
gender pay gap
PAGE
40
Taking solvent
recovery to the
next level
PAGE
51
Paint the Future
accelerates
sustainable
startup
solutions
PAGE
34
Increased
capacity for
sustainable
solutions
2022 sustainability
highlights
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.
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 identified
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
pushing boundaries and finding
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.
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
Key achievement
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 influential
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
.
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
.
Key partnerships
31
AkzoNobel Report 2022
|
Sustainability statements
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.
28
%
2022
56
%
2022
40
%
2022
50
%
2030 ambition
100
%
2030 ambition
50
%
2030 ambition
38,087
2020-2022
100,000
+
2030 ambition
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 efficiency – 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.
Health and well-being
Climate change
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.
Carbon emission reduction
Own operations (baseline 2018, absolute)
Sustainable solutions
Revenue from sustainable solutions
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)
Circularity
Sustainability statements
|
AkzoNobel Report 2022
32
CLIMATE
CHANGE
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
Carbon emission reduction
Own operations (baseline 2018, absolute)
Carbon emission reduction value chain
Scope 3 emissions, selected Scope 3
upstream and downstream (baseline 2018,
absolute)
Renewable electricity
(of total electricity used in own operations)
Energy reduction
(baseline 2018, relative)
The carbon footprint in our value chain
% contribution to carbon footprint
28
%
2022
6
%
2022
50
%
2022
1
%
2022
50
%
2030 ambition
50
%
2030 ambition
100
%
2030 ambition
30
%
2030 ambition
Suppliers
Scope 3:
46%
AkzoNobel
Scope 1+2:
2%
Customers
Scope 3:
30%
VOC
11%
End-of-life
Scope 3:
11%
Carbon emissions in own operations
33
AkzoNobel Report 2022
|
Sustainability statements
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%.
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.
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%.
A
North America
18
B
Latin America
10
C
North Asia
16
D
South Asia
11
E
EMEA
45
Sustainability
A
Electricity non-renewable
40
B
Electricity renewable
41
C
Gas
15
D
Other
4
A
B
C
D
Energy breakdown
in %
D
E
A
B
C
Regional split energy use
in %
Total greenhouse gas emissions made up of direct emissions from processes
and combustion at our facilities and indirect emissions from purchased energy.
2022
2021
2020
2019
73
71
67
75
0.06
0.06
0.06
0.06
0.18
0.17
0.17
0.15
Greenhouse gas emissions (CO
2
)
in million tons
Direct CO
2
(e) (Scope 1)
kg CO
2
(e) per ton of production
Indirect CO
2
(e) (Scope 2)
Energy use
in 1000 TJ
Energy use
GJ per ton of production
2022
2021
2020
2019
5.7
6.0
6.3
5.9
1.83
1.89
1.90
1.88
The energy consumption of AkzoNobel in absolute measures and per
ton of production.
Sustainability statements
|
AkzoNobel Report 2022
34
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
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.
Sustainability
Carbon emissions in our full value chain
35
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Sustainability statements
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.
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 identified key levers for reduction
which can be grouped into four
categories: Energy transition; Application
efficiency; 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 efficiency; 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-specific 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).
“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 significant
value chain decarbonization.”
Greg Poux-Guillaume, CEO
Climate change adaptation
and risk management
Sustainability statements
|
AkzoNobel Report 2022
36
Sustainability
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
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.”
37
AkzoNobel Report 2022
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Sustainability statements
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
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).
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.
Energy efficiency
– new low-curing
powder coatings in the agriculture,
construction and equipment market
segment help our customers reduce
energy consumption.
2022 sustainable solutions for climate change
Many sustainable solutions that help our customers lower their carbon footprint were launched during 2022.
Circular solutions
– we scaled up
the use of bio-based renewable raw
materials in our wood finishes for the
furniture market.
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.
Waste and water management
Sustainability statements
|
AkzoNobel Report 2022
38
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 landfill (defined as
<1% of total waste). In 2022, our waste
to landfill reduced by 16% (absolute)
versus 2021 (238 tons) to 2.2% of
total waste. Overall, we’ve reduced
CIRCU-
LARITY
Sustainability
Circular use of materials
The amount of materials (in own operations)
reused by AkzoNobel and third parties
56
%
2022
100
%
2030 ambition
Raw
materials
Own
operations
By-product*
9
Waste
59
Reusable*
29
Non-reusable
30
Incineration
29
Landfill
1
Product
3,107
Material flow
in kilotons
*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.
Ground-
water
1.66
Surface
water in
5.36
Cooling
water
6.76
Other*
1.13
Own operations
Potable
water
1.61
Product
0.74
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Sustainability statements
Waste means any substance or object arising from our routine operations which
we discard or intend to discard.
* Factory process water other than water that ends up in the
product, and water used for drinking, sanitation and irrigation
20.0
19.9
19.0
21.0
2022
2021
2020
2019
34
32
35
29
33
30
31
30
Total waste
in kilotons
Total reusable waste
Total kg per ton of production
Total non-reusable waste
waste to landfill 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 define as a site that
uses more than 15,000m
3
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 definition 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.
Water use
in %
A
Cooling
78
B
Product
9
C
Other
13
Total fresh water use
in million m
3
Total fresh water use
m
3
per ton of production
2022
2021
2020
2019
8.6
8.1
9.1
9.6
2.9
2.9
2.8
2.5
Total fresh water use is the sum of the intake of groundwater, surface water and
potable water.
A
B
C
Water flow
in milion m
3
(total for AkzoNobel)
Recycled content in
packaging
Sustainability statements
|
AkzoNobel Report 2022
40
Sustainability
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.
Renewable materials
– we began
using a bio-based binder in much of our
high-volume decorative paint in the
EMEA region.
Reduced materials
– we launched
a powder coatings solution that coats
objects with only one or two layers,
versus three with liquid coatings.
Recycled materials
– decorative paint
containing recycled post-consumer
waste paint was rolled out in several
European countries under the Sikkens
and Dulux brands.
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.
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.
Colleagues at our Hilden
site in Germany reduced
waste at the site by more
than 50% in 2022.
Health and safety
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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.
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.
Sustainability
HEALTH
AND WELL-
BEING
72
2022
26
%
2022
76
Ambition
30
%
2025 ambition
Organizational health score
(OHI)
Female executives
38,087
2020-2022
100,000
+
2030 ambition
Community projects
(cumulative)
People empowered
Members of local communities empowered
with new skills (cumulative)
591
2020-2022
2,000
+
2030 ambition
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.
Sustainability statements
|
AkzoNobel Report 2022
42
Lost time injury rate
employees including
temporary workers (per 200,000 hours)
2022
2021
2020
2019
0.09
0.11
0.13
0.08
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.
Total reportable injury rate
employees including
temporary workers (per 200,000 hours)
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.
2022
2021
2020
2019
0.23
0.21
0.24
0.24
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.
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.
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.
Sustainability
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.
Process safety events
2021
2022
Loss of primary containment – Level 1
5
2
Loss of primary containment – Level 2
67
51
43
AkzoNobel Report 2022
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Sustainability statements
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 conducted 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.
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.
Employees
Sustainability statements
|
AkzoNobel Report 2022
44
Sustainability
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, reflect on their results
and identify improvement actions, which
are then supported by our Regional
Culture and Change teams and HR.
According to their needs, leaders are
encouraged to deploy specific 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 reflecting 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
Diversity and inclusion employee networks
Female executives
in %
Ambition
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 definition.
Organizational health score (OHI)
Ambition
AkzoNobel score on the organizational health index
of McKinsey.
Women Inspired
Network
Gender
True Colors
LGBTI+
Equal Access Board
Disability
Vibe
Race and ethnicity
2022
2021
2020
0.4
76
0.2
72
72
69
2025
2022
2021
2020
0.4
30
0.2
22
26
21
45
AkzoNobel Report 2022
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Sustainability statements
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 companies
1
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.
“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.”
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.
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.
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
AkzoNobel Cares
Sustainability statements
|
AkzoNobel Report 2022
46
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
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 defined 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.
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.
The Pintuco
Foundation, in
partnership with the
National Tourism
Fund, refreshed
and restored tourist
destinations across
Colombia, including
the town of Carolina
del Principe.
Sustainability
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Sustainability statements
Anti-bacterial benefits
– a new all-in-
one decorative paint rolled out in China,
offering anti-bacterial protection due to
its silver ion technology.
Reduce harmful substances
–
launched new food packaging coatings
that are free from BPA, including
Aqualure G1 50.
Safer handling
– launched a new
exterior wood finishes primer for high
moisture resistant MDF, which is safer
for users as it contains fewer substances
of concern.
2022 sustainable solutions for health and well-being
Customers and end-users benefited from a number of sustainable solutions launched in 2022, designed with safety,
health and well-being in mind.
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 fifth 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 first 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.
And to further help provide dignified
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-profit 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.
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.
Sustainable solutions
Sustainability statements
|
AkzoNobel Report 2022
48
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 benefits 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 benefits
we offer, we continue to influence 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
specific 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.
In 2022, 40% of our revenue came
from sustainable solutions. During the
year, we launched new products with
clear sustainability benefits 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.
VALUE
CHAIN
Sustainability
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
Health and
well-being
Reduced carbon
and energy
Less
waste
Longer-lasting
performance
Reduce, reuse
and renew
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
Sustainability and risk management
with our suppliers
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Sustainability statements
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 significant
time to support suppliers to reach our
minimum requirements and thereafter
to continuously improve. Because the
number of suppliers in our program
increased significantly, 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 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 Officer) and
Petra Lehmann (Global Procurement
Sustainability Manager) kicked off the
discussion about working together
to find 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 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 specific focus in
2022. To enhance the capabilities of our
technical and sales teams, we organized
company-wide training on green building
certifications and the customer benefits of
our sustainable solutions in realizing more
sustainable buildings.
We continue to
influence the
growing acceptance
of more sustain-
able solutions.
Human rights
Sustainability statements
|
AkzoNobel Report 2022
50
Sustainability
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.
Suppliers in sustainability
program
Meet expectations
Under development
Not assessed/lost validity
2022:
1,432
2021:
1,028
2020:
885
51
%
24
%
57
%
27
%
52
%
24
%
Salient human rights assessment
Upstream supply
chain
Own
operations
Logistics
Downstream
(customers,
end users)
Health and safety
l
l
l
l
Working conditions
l
l
l
l
Discrimination and harassment
l
Negative impacts on local communities
l
l
Modern slavery
l
l
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.
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Sustainability statements
Impact on local communities
We aim to be a good neighbor and
contribute 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
confirmed 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 Responsible 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.
Paint the Future accelerates sustainable startup solutions
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
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
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.”
Managing sustainability
Sustainability statements
|
AkzoNobel Report 2022
52
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.
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
Table of material topics
Topic
Report 2022 section
Impacts on the economy,
environment and people
Climate change adaptation
Climate change adaptation and water risk
Medium
Diverse, inclusive and healthy organization
Employees
Medium
Emissions and energy (climate change
mitigation)
Carbon emissions in own operations and carbon
emissions in our value chain
High
Health and safety (employees and customers)
Health and safety
High
Human rights
Human rights
Medium
Sustainable product portfolio
Sustainable solutions
High
Community involvement
AkzoNobel Cares
Low
Materials and waste
Waste and water management and recycled content
in plastic packaging
High
Responsible procurement
Sustainability and risk management with
our suppliers
Medium
Water and waste water
Waste and water management
Low
EU taxonomy disclosure
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Sustainability statements
EU taxonomy OpEx
Amount in €
RD&I expenses
258 mln
Short-term lease costs
11 mln
Maintenance and repair costs
102 mln
Total
371 mln
EU taxonomy CapEx
Amount in €
Additions to property, plant
and equipment from capital
expenditures and acquisitions
387 mln
Additions to intangible assets
from capital expenditures and
acquisitions
568 mln
Additions to right-of-use
assets from additions and
acquisitions
98 mln
Total
1,053 mln
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
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
Sustainability statements
|
AkzoNobel Report 2022
54
Eligible Turnover (A)
Description of
activity
Taxonomy
code
Related
Turnover
% of total
Turnover
Substantial
contribution
criteria
Do no significant
harm (DNSH)
criteria
Minimum
social safe-
guards
Taxonomy
aligned
Turnover
Taxonomy
non-aligned
Turnover
Not applicable, no
eligible Turnover
identified
N/A
€nil
0%
N/A
N/A
N/A
N/A
N/A
Non-eligible Turnover (B)
Taxonomy non-eligible
Turnover
€10,846 mln
100%
Total (A+B)
€10,846 mln
100%
Eligible CapEx (A)
Description of
activity
Taxonomy
code
Related
CapEx
% of total
CapEx
Substantial
contribution
criteria(%)*
Do no significant
harm (DNSH)
criteria (Y/N)*
Minimum
social safe-
guards (Y/N)*
Taxonomy
aligned
CapEx*
Taxonomy
non-aligned
CapEx
Production of
electricity from
solar PV
4.1
€1 mln
<1%
0%
N
N
€nil
€1 mln
Water collection,
treatment and supply
5.1
€1 mln
<1%
0%
N
N
€nil
€1 mln
Construction of new
buildings
8.1
€13 mln
1%
0%
N
N
€nil
€13 mln
Sub-total (A)
€15 mln
1%
€nil
€15 mln
Non-eligible CapEx (B)
Taxonomy non-eligible
CapEx
€1,038 mln
99%
Total (A+B)
€1,053 mln
100%
Eligible OpEx (A)
Taxonomy
code
Related
OpEx
% of
total OpEx
Substantial
contribution
criteria
Do no significant
harm (DNSH)
criteria
Minimum
social safe-
guards
Taxonomy
aligned
OpEx
Taxonomy
non-aligned
OpEx
Not applicable,
no eligible OpEx
identified
N/A
€nil
0%
N/A
N/A
N/A
N/A
N/A
Non-eligible OpEx (B)
Taxonomy non-eligible
OpEx
€371 mln
100%
Total (A+B)
€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.
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).
55
AkzoNobel Report 2022
|
Sustainability statements
Social
Area
Unit
2018
2019
2020
2021
2022
Ambition 2025
Employees
Organizational health score
number
58
61
69
72
72
Top quartile 76
1
Female executives
2
%
20
18
21
22
26
30
People and process safety
Fatalities employees
number
0
2
0
1
0
–
Total reportable injury rate employees/
temporary workers
/200,000 hours
0.20
0.24
0.23
0.21
0.24
–
Lost time injury rate employees/
temporary workers
/200,000 hours
0.09
0.08
0.09
0.11
0.13
–
Occupational illness rate employees
/200,000 hours
0.012
0.003
0.010
0.003
0.003
–
Fatalities contractors (temporary workers
plus independent)
number
0
0
0
0
0
Total reportable injury rate contractors
/200,000 hours
0.18
0.19
0.17
0.12
0.21
–
Lost time injury rate contractors
/200,000 hours
0.07
0.09
0.11
0.08
0.06
Life-changing injuries
number
3
3
2
2
1
Loss of primary containment – Level 1
number
6
3
6
5
2
–
Loss of primary containment – Level 2
number
63
64
52
67
51
–
Regulatory actions – Level 4
number
1
0
0
0
0
–
Security incidents – Level 3
number
0
0
0
4
0
HSE management
Management audits plus reassurance audits
number
25
32
28
29
33
–
AkzoNobel Cares
2020-2030
Members of local communities empowered
with new skills
number
4,276
4,078
2,669
11,193
24,225
100,000+
Projects
number
126
225
170
182
239
2,000+
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-
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.
Environmental
Area
Unit
2018
2019
2020
2021
2022
Ambition 2030
Energy use and emissions
Energy use
3
– per ton of production
1000TJ
GJ/ton
6.20
1.91
6.02
1.88
5.69
1.83
6.33
1.89
5.91
1.90
–
30% less
4
Renewable energy (own operations)
%
31
31
33
37
41
–
Renewable electricity (own operations)
%
38
37
40
45
50
100
Greenhouse gas emissions – Direct CO
2
(e)
emissions (Scope 1)
– per ton of production
kiloton
kg/ton
62.9
19.42
58.3
18.18
57.2
18.42
64.5
19.27
60.1
19.35
–
–
Greenhouse gas emissions – Indirect CO
2
(e)
emissions (Scope 2)
– per ton of production
kiloton
kg/ton
226.0
69.77
183.1
57.13
168.2
54.22
172.1
51.41
147.5
47.45
–
–
Total greenhouse gas emissions – Scope 1 and
Scope 2 combined CO
2
(e) emissions
– per ton of production
kiloton
kg/ton
288.9
89.19
241.4
75.31
225.4
72.64
236.6
70.68
207.6
66.80
50% less
4
Volatile organic compounds
– per ton of production
kiloton
kg/ton
1.57
0.49
1.19
0.37
0.95
0.31
0.96
0.29
0.83
0.27
–
–
Sustainability performance summary
Sustainability statements
|
AkzoNobel Report 2022
56
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.
2
As of 2021, we report on sustainable solutions instead of eco-premium solutions. The reporting period
for both eco-premium as well as sustainable solutions is November-October.
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
treatment of sold products; VOC. The reporting period is October-September.
5
Versus 2018 baseline.
Environmental
Area
Unit
2018
2019
2020
2021
2022
Ambition 2030
Resource efficiency
Total waste
– per ton of production
kiloton
kg/ton
67
20.97
67
21.00
62
19.96
67
19.87
59
18.95
–
Circular use of materials
1
%
52
55
57
58
56
100
Total reusable waste
kiloton
33
34
32
35
29
–
Total non-reusable waste
– per ton of production
kiloton
kg/ton
34
10.63
33
10.28
30
9.57
31
9.39
30
9.68
–
Hazardous waste total
– per ton of production
kiloton
kg/ton
30
9.13
29
9.07
28
8.93
31
9.19
28
9.15
–
Hazardous waste non-reusable
– per ton of production
kiloton
kg/ton
15
4.59
14
4.46
15
4.70
17
4.95
17
5.36
–
Total waste to landfill
kiloton
11.6
9.8
6.5
1.5
1.3
Hazardous waste to landfill
kiloton
0.69
0.45
0.23
0.11
0.14
–
Hazardous waste to landfill per ton of production
kg/ton
0.21
0.14
0.07
0.03
0.05
–
Non-hazardous waste to landfill
kiloton
10.93
9.40
6.22
1.39
1.12
Total fresh water use
– per ton of production
million m
3
m
3
/ton
9.27
2.86
8.05
2.51
9.12
2.94
9.56
2.86
8.63
2.78
–
Total fresh water consumption (excluding water
related to product)
– per ton of production
million m
3
m
3
/ton
–
–
–
–
–
–
1.27
0.38
1.14
0.37
–
Supplier management
Business Partner Code of Conduct product related
% of spend
98
98
98
99
99
–
Business Partner Code of Conduct non-product
related
% of spend
83
84
89
89
93
–
Suppliers participating in sustainability program
% against baseline
60
65
75
84
77
–
Suppliers in sustainability program – under
development
% against
baseline
22
18
24
27
24
–
Suppliers in sustainability program – in line with
our expectations
% against
baseline
38
47
51
57
52
–
Product portfolio
Area
Unit
2018
2019
2020
2021
2022
Ambition 2030
Sustainable product portfolio and product
safety
Sustainable solutions
2
% of revenue
–
–
–
39
40
>50
Eco-premium solutions
2
% of revenue
22
22
21
–
–
–
Value chain emission
Cradle-to-grave carbon footprint
(Scope 1, 2 and 3) – selected Scope 3
million tons
14.3
13.8
12.8
14.7
13.4
–
Scope 3 upstream
3
million tons
6.5
6.3
5.9
6.8
6.2
–
Scope 3 downstream
4
million tons
7.5
7.3
6.7
7.7
7.0
–
Scope 3 upstream and downstream combined
million tons
14.0
13.6
12.6
14.5
13.2
50% less
5
Sustainability performance summary
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-
57
AkzoNobel Report 2022
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Leadership
LEADERSHIP AND GOVERNANCE
An 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
58
Statement of the Board of Management
60
Statement of Chair of Supervisory Board
61
Our Supervisory Board
62
Report of the Supervisory Board
62
Corporate governance statement
70
Risk management
78
Integrity and compliance management
81
Remuneration report
85
AkzoNobel and the capital markets
96
JUICY
RED
™
Color of the Year 2012
GREG POUX-GUILLAUME
KAREN-MARIE KATHOLM
MICHAEL FRIEDE
Leadership
|
AkzoNobel Report 2022
58
Grégoire (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 Officer
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 Officer – Performance
Coatings and member of the Executive Committee* (1980, DE) –
Michael joined AkzoNobel in July 2021 as Chief Commercial
Officer – 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, 2023
Image
DR. HILKA SCHNEIDER
MAARTEN
DE VRIES
JOËLLE BOXUS
59
AkzoNobel Report 2022
|
Leadership
Our Board of Management and Executive Committee
Joëlle Boxus
• Chief Human Resources Officer and member of
the Executive Committee (1971, BE) –
Joëlle rejoined AkzoNobel as Chief Human Resources Officer in
2020. She had previously been global HR leader for AkzoNobel’s
former Specialty Chemicals business. Joëlle managed the
separation of Specialty Chemicals before becoming part of the
Executive Committee of the newly established company. In 2018,
she returned to Belgium to become Chief Human Resources
Officer at Etex 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 Office 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.
Leadership
|
AkzoNobel Report 2022
60
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
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
Statement of the Board of Management
The Board of Management’s
statement on the financial
statements, the management
report and internal controls.
2022 was an eventful and demanding year for
AkzoNobel. In November, we officially welcomed
our new CEO, Greg Poux-Guillaume, and said
goodbye to Thierry Vanlancker. Thierry led the
company through a period of significant 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 five 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
simplified, integrated business processes
were installed and employee engagement
was lifted to a high level. The company
focused on profitability, 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 confident 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 confident 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
financial 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 significantly
reduced economic activity in our main
markets. Like other companies in our
industry, we’d benefited from strong demand
for decorative paints during COVID-19.
However, global supply chain challenges
forced us to increase stocks of raw materials,
finished products and staffing to secure
stable supplies to customers. As a result of
the macro-economic turmoil and sudden
market downturn, 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 significant negative impact on
profitability.
Nevertheless, our teams were able to
defend AkzoNobel’s market positions, while
implementing 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 significant
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 find Thierry Vanlancker’s
successor, we also strengthened the
Supervisory Board by recruiting two new
colleagues with significant 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 difficult and we
can’t be fully satisfied with the financial
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 significant
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 confident
that with your support,
they’ll successfully take the
company forward.
Amsterdam,
February 27, 2023
Nils Smedegaard
Andersen, Chair of
the Supervisory
Board
Statement of Chair of Supervisory Board
NILS SMEDEGAARD ANDERSEN
61
Chair
1958, DK
Initial appointment: 2018
Term of office:
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
Leadership
|
AkzoNobel Report 2022
62
DICK SLUIMERS
JOLANDA POOTS-BIJL
1969, NL
Initial appointment:
2019
Term of office:
2019-2023
MEETINGS AND ATTENDANCE
The Supervisory Board values the
attendance of its meetings by all
members. If Supervisory Board
members are unable to attend a
Supervisory Board or committee
meeting, they inform the relevant Chair
of their reasons. Supervisory Board
members always receive the materials
for each specific meeting, allowing
them to offer input and discuss any
agenda items with the relevant Chair.
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 defined 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/Ukraine
Regular 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 updates
Throughout 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 Chair
1948, US and UK
Initial appointment:
2014
Term of office:
2022-2024
BYRON GROTE
ESTER BAIGET
1961, BE
Initial appointment:
2022
Term of office:
2022-2026
HANS VAN BYLEN
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.
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 THOMAS
Chair of Johnson Matthey
plc.; member of the
Supervisory Board of
Covestro A.G.
1957, UK
Initial appointment:
2017
Term of office:
2021-2025
1953, NL
Initial appointment:
2015
Term of office:
2019-2023
Non-executive Director at
Reckitt Benckiser plc. and
Bunzl Plc.
1953, UK
Initial appointment:
2016
Term of office:
2020-2024
Non-executive Director
of Tesco plc., IGH
(International Hotels
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, ES
Initial appointment:
2022
Term of office:
2022-2026
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Leadership
Report of the Supervisory Board
Supervisory Board activities 2022
Q1
Q2
Q3
Q4
• 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
• 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
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.
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.
Discussions on corporate performance
were held at each regular Supervisory
Board meeting and included business
reviews and performance updates
from corporate functions. Forward-
looking targets were also addressed
in light of these reviews, and both the
proposed budget and operating plan
for 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.
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 attendance record
Regular SB
Additional SB
AC
RC
NC
Nils Smedegaard Andersen
9/9
3/4
3
7/7
7/8
3
Ester Baiget
1
5/5
3/4
3/3
Jolanda Poots-Bijl
8/9
3/4
7/8
Hans Van Bylen
2
5/5
3/4
4/4
4/4
Byron Grote
9/9
4/4
8/8
1/1
3
Pamela Kirby
9/9
3/4
7/7
8/8
Dick Sluimers
9/9
2/4
7/7
8/8
Patrick Thomas
9/9
4/4
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.
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AkzoNobel Report 2022
64
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
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
1
Per September 1, 2022.
2
Per April 22, 2022.
Committees of the Supervisory Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Nils Smedegaard Andersen (Chair)
Member
Chair
Byron Grote (Deputy Chair)
Chair
Ester Baiget
1
Member
Jolanda Poots-Bijl
Member
Hans Van Bylen
2
Member
Member
Pamela Kirby
Member
Member
Dick Sluimers
Chair
Member
Patrick Thomas
Member
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Leadership
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
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
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AkzoNobel Report 2022
66
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
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.
Integrity and compliance
The Executive Committee is responsible
for maintaining a culture of integrity
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.
To ensure its effectiveness and
expertise, the Audit Committee was
provided with regular updates on IFRS
Report of the Supervisory Board
67
AkzoNobel Report 2022
|
Leadership
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.
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
submitted 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
Supervisory Board skills and profiles
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)
Independent
l
l
l
l
l
l
l
l
Consumer goods key end-user segment
l
l
l
l
Industrial key end-user segment
l
l
l
l
l
l
l
l
Buildings and infrastructure key end-user segment
l
l
l
Transportation key end-user segment
l
l
l
l
l
l
(International) business, commerce,
finance/economics
l
l
l
l
l
l
l
l
Scientific/information technology experience
l
l
l
l
l
Public sector experience
l
l
Management experience
l
l
l
l
l
l
l
l
Business strategy planning
l
l
l
l
l
l
l
l
Investor relations
l
l
l
l
l
l
l
l
Manufacturing experience
l
l
l
l
l
l
l
l
Supply chain/logistics experience
l
l
l
l
l
l
Social, environmental or sustainability experience
(ESG)
l
l
l
l
l
l
l
l
Finance expert
l
l
l
Four or less external directorships
l
l
l
l
l
l
l
l
Dutch/EU national
l
l
l
l
l
Non-EU national
l
l
l
Pensions experience
l
l
Business-to-business sales experience
l
l
l
l
R&D experience
l
l
l
l
Legal experience
l
Industrial/employment relations
l
l
Risk management
l
l
l
l
Consulting
l
l
l
(f) = female, (m) = male
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AkzoNobel Report 2022
68
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.
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
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.
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.
Report of the Supervisory Board
Remuneration Committee activities 2022
Q1
Q2 & Q3
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
• 2021 Remuneration report
• Review Remuneration Policy for Board of Management
• Review of management base salaries for 2022
• Target setting 2022
• CFO reappointment
• 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
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.
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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.
Nomination Committee activities 2022
Q1
Q2, Q3 and Q4
• 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
Leadership and governance
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Akzo Nobel N.V. is a public limited
liability company (naamloze
vennootschap) established under the
laws of the Netherlands, with common
shares listed on Euronext Amsterdam.
AkzoNobel has a sponsored level 1
American Depositary Receipt (ADR)
program and ADRs can be traded on the
international OTCQX platform in the US.
The company’s management and
supervision are organized under Dutch
law in a so-called two-tier system,
comprising a Board of Management
(solely composed of executive directors)
and a Supervisory Board (solely
composed of non-executive directors).
The Supervisory Board supervises and
advises the Board of Management and
ensures a strong external presence in
the governance of the company. The
two Boards are independent of each
other and are accountable to the Annual
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.nl
With the exception of those aspects
of our governance which can only
be amended with the approval of the
AGM, the Board of Management and
the Supervisory Board may make
adjustments to the way the Code is
applied, if this is considered to be in
the best interests of the company.
Where changes are made, these
will be reported and explained in the
annual report for the relevant year and
discussed at the subsequent AGM.
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/
taxgovernancecode
BOARD OF MANAGEMENT AND
EXECUTIVE COMMITTEE
The Board of Management is entrusted
with the management of the company.
When it comes to the management
of our business, it operates in the
context of an Executive Committee. In
2022, the Executive Committee was
comprised of the members of the Board
of Management (the Chief Executive
Officer (CEO) and the Chief Financial
Officer (CFO)), the Chief Integrated
Supply Chain Officer, Chief Commercial
Officer – Performance Coatings, the
General Counsel and the Chief Human
Resources Officer.
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 defines 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 financial targets, its sustainability
performance and its pursuit of long-term
value creation. In fulfilling their duties,
Board of Management members are
assisted by the Executive Committee
and guided by the interests of the
company and its affiliated 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 statement
Supervisory
Board
Share-
holders
Commercial
Integrated
Supply Chain
Support
functions
Board of
Management
Executive
Committee
AkzoNobel aspires to the
highest standards of corporate
governance and seeks to
consistently enhance and
improve corporate governance
performance, emphasizing
transparency and a sustainable
culture of long-term value
creation.
37.5
%
Female
25
%
25
%
12.5
%
12.5
%
12.5
%
12.5
%
62.5
%
Male
8-10
5-8
0-4
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the 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
finances, its corporate control, investor
relations and information management.
The tasks, responsibilities and
procedures of the Board of Management
and Executive Committee are set out
in their Rules of Procedure. These rules
have been approved by the Supervisory
Board and are available on our website.
Authority to represent the company is
vested in the two members of the Board
of Management, acting jointly. The Board
of Management has also delegated a
level of authority to corporate agents,
including members of the Executive
Committee. The list of authorized
signatories is filed 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 specific responsibility for
their activities and performance.
Appointment
Board of Management members are
appointed and removed from office by the
AGM. The current Board of Management
members were first 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 specified in
the Articles of Association, shareholders
may also be entitled to nominate
Supervisory Board or Board of
Management members for appointment.
Such appointments require a two-thirds
majority, representing at least 50% of the
outstanding share capital, in order to be
adopted at an AGM (or EGM).
Diversity
AkzoNobel believes in the strength
of diversity and, in accordance with
the Code, a Diversity Policy has been
adopted for the composition of the
Board of Management and Executive
Committee. The objective of the
Diversity Policy is to enrich the Board
of Management’s perspective, improve
performance, increase member value and
enhance the probability of achievement
of the company’s goals and objectives.
The Diversity Policy addresses concrete
targets relating to diversity, including
nationality, age, gender, education and
work background.
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 justified 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.
Culture
The Board of Management and
Executive Committee promote openness
and engagement through a SpeakUp!
grievance mechanism and have
SUPERVISORY BOARD
Tenure in years
Leadership and governance
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72
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.
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.
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
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
Corporate governance statement
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.
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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 responsibilities
to specific committees. The Supervisory
Board’s Audit Committee oversees
this responsibility. More details on the
Integrity and Compliance governance
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
internal risk management and control
systems
• The main financial parameters,
compliance with applicable laws and
regulations and risk factors
The Supervisory Board advises the
Board of Management and Executive
Committee, while taking into account
the interests of the company and
its stakeholders. Major investments,
acquisitions and functional initiatives are
subject to Supervisory Board approval.
The Supervisory Board is governed
by its Rules of Procedure (available on
our website). The Rules of Procedure
include the 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 objective 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.
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
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74
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
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
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.
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Leadership and governance
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.
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
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.
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
Related information
For more details about AkzoNobel shares and Bearer
Certificates, contact Investor Relations:
investor.relations@akzonobel.com
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.
Leadership and governance
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76
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-
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
Corporate governance statement
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.
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Leadership and governance
of the Audit Committee, and the meeting
of the Supervisory Board at which the
financial statements are approved. During
these meetings, the auditor discusses the
outcome of the audit procedures and the
reflections thereof in the auditors’ report.
In particular, the key audit matters are
highlighted. The auditor receives the
financial information and underlying
reports of the quarterly figures 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 benefit of external users of this
information and also for the benefit 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 findings
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, notified 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
framework
Control environment
Setting objectives
Responding to risk
Control activities
Monitoring activities
Information and communication
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Risk management
Vision 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 identified 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 significant
number of enterprise risk workshops
across the organization, as well as
one workshop focused on fraud risk.
Risks were identified by responsible
management teams and functional
experts, followed by the definition
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 financial
risk management, see Note 27 of the
Consolidated financial statements.
For (longer term) risks related to
climate change, refer to the Sustain-
ability statements.
Risk identification
and assessment
Risk
profiles
Risk response
per risk profile
Actions
Risk profiles
and risk
responses
Enterprise
Risk
Management
reporting
Enterprise
Risk
Management
process
Supervisory
Board
Executive
Committee top 10 risks
and risk responses
Functions
and
business
units top 10
risks and risk
responses
Areas of
major risk
exposure (projects)
top 10 risks and
risk responses
Risk
consolidation
Risk
transparency
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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
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.
Strategic
Financial
Operational
Compliance
Health, safety and
sustainability
Very low
(Averse)
Low
(Minimalist)
Medium
(Cautious)
High
(Open)
Very high
(Risk-taking)
Risk-taking preferences 2022
Cybersecurity
The risk of significant 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 (intensified 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
• Definition 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 company
Macro-economic crisis
The risk of a prolonged macro-
economic downturn, leading to local
currency devaluation, high inflation,
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
strategy
Integrated Business Planning
maturity
The risk that we do not reach the
required service levels due to inadequate
end-to-end planning processes and
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80
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
Ability to execute
The risk of misalignment between the
business and functions and short term
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)
Risk management
Symbols indicate the following:
Risk assessed to increase.
Risk assessed to remain fairly stable.
Risk assessed to decrease.
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Integrity and compliance management
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
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.
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• Design and implement effective
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.
RISK MANAGEMENT
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.
COMMUNICATION
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.
TRAINING AND
EDUCATION
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.
COMPETITION LAW PROGRAM
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-
Integrity and compliance management
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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
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.
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.
Visit the SpeakUp! website
https://akzo.no/SpeakUp
SpeakUp! reports
2020
2021
2022
Total reports and alerts registered
250
305
350
Reports received through SpeakUp!
180
232
251
Integrity
61
94
72
Safety
21
17
23
Sustainability
98
121
156
Dismissals resulting from SpeakUp! reports
6
6
6
Conclusions to SpeakUp! reports closed in
calendar year:
Substantiated
Unsubstantiated
Other (e.g. referred)
27
70
46
33
50
106
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.
84
Promoting gender equality
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
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.
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.
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.
Graduates from
our Women in
Color program
assisted artist Mari
Pavanelli when she
painted a special
mural onto a
community center
in São Paulo.
Case study
85
AkzoNobel Report 2022
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Leadership and governance
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
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.
Remuneration report
Leadership and governance
|
AkzoNobel Report 2022
86
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 metrics, 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;
(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:
Maximum
Target
Threshold
and below
100
24
24
46
6
6
26
17
51
Maximum
Target
Threshold
and below
100
29
23
42
6
6
25
21
48
CFO pay-mix 2022
in %
Base salary
STI
LTI
Share-matching
CEO pay-mix 2022
in %
Base salary
STI
LTI
Share-matching
Remuneration report
87
AkzoNobel Report 2022
|
Leadership and governance
AEX-listed
European industry
• ASML
• Air Liquide
• DSM
• Arkema
• Philips
• Clariant
• Randstad
• Covestro
• RELX
• Evonik Industries
• Signify
• Givaudan
• Wolters Kluwer
• Henkel
• Holcim Group
• Sika
• Solvay
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
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.
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
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.
• Aims to provide a fair and competitive basis for the total pay level to attract high
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
• Annualized amounts, effective as of
January 1, 2022
• CEO: €1,225,000
• CFO: €727,750
Short-Term Incentive (STI)
Aligning short-term business objectives and
business drivers towards long-term value
creation. Driving pay for performance.
• 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
• For on-target STI, 70% is linked to financial objectives and 30% is related to
quantifiable non-financial objectives
• 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
• Threshold: no STI pay-out below threshold
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
• Considered are shares privately purchased and vested shares granted under
AkzoNobel share-based compensation plans
The minimum share-holding requirement is
300% of annual base salary for the CEO and
150% for the CFO.
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)
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
Pension contributions for the CEO equal
16.7% of base salary and for the CFO equal
22.9% of base salary.
Leadership and governance
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AkzoNobel Report 2022
88
Remuneration of Board of Management for the reported financial year
in €
LTI value
based on
Fixed
remuneration
Variable
remuneration
Post-contract
compensation
Termina-
tion and
other
benefits
7
Total
remuneration
Base
salary
Fringe
benefits
One-year
variable
Multi-year
variable LTI
2021
2022
2021
2022
2021
2022
3,4
2021
2022
2021
2022
2022
2021
2022
Greg Poux-
Guillaume
(CEO)
1
IFRS 2
expenses
5
N/A
204,167
N/A
25,400
N/A
204,167
N/A
88,425
N/A
34,067
–
N/A
556,225
Market value
at year-end
6
N/A
204,167
N/A
25,400
N/A
204,167
N/A
N/A
N/A
34,067
–
N/A
467,800
Thierry
Vanlancker
(former
CEO)
2
IFRS 2
expenses
5
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
at year-end
6
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
Maarten
de Vries
(CFO)
IFRS 2
expenses
5
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
at year-end
6
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.
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.
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
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.
CEO fixed vs performance-linked
in %
CFO fixed vs performance-linked
in %
Base salary
Fringe benefits
Post-contract compensation
One-year variable
Multi-year variable
Fixed
47.4
Performance-linked
52.6
Short-term
84.1
Long-term
15.9
Fixed
80.0
Performance-linked
20.0
Short-term
100
Long-term
0.0
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
Remuneration report
89
AkzoNobel Report 2022
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Leadership and governance
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
2022 number of performance-related shares
for Thierry Vanlancker
Plan
Performance/
Vesting period
Award date
End of
performance
period
End of
holding
period
Balance at
January 1
2022
1
Awarded
in 2022
Vested
in 2022
Forfeited
in 2022
Dividend
in 2022
Balance at
December
31, 2022
Thierry
Vanlancker
(former CEO)
ANS2019
2019 – 2021
January 1,
2019
March
2022
March
2024
14,110
—
(14,110)
—
—
—
ANS2020
2020 – 2022
January 1,
2020
February
2023
February
2025
19,615
—
—
(20,121)
506
—
ANS2021
2021 – 2023
January 1,
2021
February
2024
February
2026
27,226
—
—
—
702
27,928
ANS2022
2022 – 2024
January 1,
2022
February
2025
February
2027
—
25,578
—
—
660
26,238
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.
Leadership and governance
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AkzoNobel Report 2022
90
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
STI on financial objectives
Performance metric
Weighting
Threshold
Maximum
Performance
Pay-out
Adjusted OPI (in € mln)
40%
Corresponding target
1,000
1,400
789
Corresponding award
0%
150%
0.0%
0.0%
FCF (in € mln)
30%
Corresponding target
350
975
(29)
Corresponding award
0%
150%
0.0%
0.0%
Total
0.0%
STI on personal objectives
Personal objective
Description
Performance
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%
Resulting in
pay-out of
39.81%
Resulting in
pay-out of
31.85%
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).
122%
Organizational
health
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.
133%
Average perfor-
mance score
132.7%
Remuneration report
Actual performance on FCF and Adj. OPI, incl. and excl. Grupo Orbis, is below threshold.
The actual performance shown here is including Grupo Orbis.
91
AkzoNobel Report 2022
|
Leadership and governance
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 subse-
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
(31.85% of salary)
• Greg Poux-Guillaume, CEO: €306,250
(100% of salary)
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 27/36
th
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,
ESG performance metrics
Measurement
Target
(100%)
Total reportable injury rate (TRR)
A three-year average, measured per 200,000 hours
over all employees, including temporary workers
0.23
Total waste – circular
As the percentage circular waste of total waste
65%
Energy use (GJ/ton)
GJ per ton of production
1.73
Renewable electricity
Use of renewable electricity (own operations) as a
percentage of total electricity use
50%
Performance metrics LTI share plan 2022-2024
Weight
AkzoNobel adjusted EBITDA (in € million)
40%
AkzoNobel return on investment (in %)
20%
AkzoNobel revenue growth (in %)
20%
Environmental, social and governance (ESG)
20%
Leadership and governance
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AkzoNobel Report 2022
92
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
• PPG
• Axalta
• RPM
• Masco Corp
International
• Nippon Paint
• Sherwin-Williams
• Tikkurilla
• 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
Vesting (as % of 50%
of conditional grant)
1
150
2
135
3
120
4
100
5
75
6
50
7
25
8-10
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.
2022 remuneration of the Board of Management –
Number of performance-related shares
Plan
Performance/
Vesting period
Award date
End of
perfptmance
period
End of
holding
period
Balance at
January 1,
2022
1
Awarded
in 2022
Vested
in 2022
Forfeited
in 2022
Dividend
in 2022
Balance at
December
31, 2022
Greg Poux-
Guillaume
(CEO)
ANS2022
2022 – 2024
October 1,
2022
February
2025
February
2027
—
19,936
—
—
514
20,450
Maarten
de Vries
(CFO)
ANS2019
2019 – 2021
January 1,
2019
March
2022
March
2024
9,495
—
(9,495)
—
—
—
ANS2020
2020 – 2022
January 1,
2020
February
2023
February
2025
13,200
—
—
(13,541)
341
—
ANS2021
2021 – 2023
January 1,
2021
February
2024
February
2026
12,606
—
—
—
325
12,931
ANS2022
2022 – 2024
January 1,
2022
February
2025
February
2027
—
11,844
—
—
306
12,150
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.
Remuneration report
93
AkzoNobel Report 2022
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Leadership and governance
Number of potential matching shares
Year of share
investment
Potential
matching
shares
Matched in
2022
Forfeited in
2022
Balance at
year-end 2022
Maarten de
Vries
2022
1,338
-
-
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.
Comparative table of remuneration and company performance over last five reported financial years
in €
2018
2019
2020
2021
2022
Remuneration CEO
Thierry Vanlancker
Greg Poux-Guillaume
1
Fixed compensation
1,151,900
1,186,500
1,245,800
1,408,900
1,581,800
Total rewards (incl. benefits, excl. one-off special payments)
2,899,883
3,561,212
3,494,689
4,465,361
3,337,352
One-off special payments
n/a
n/a
2,067,000
1,806,000
n/a
Total rewards (incl. benefits and one-off special payments)
2,899,883
3,561,212
5,561,689
6,271,361
3,337,352
% change fixed compensation
1%
3%
5%
13%
12%
% change total compensation
3%
23%
56%
13%
(47%)
Remuneration CFO
Maarten de Vries
Fixed compensation
797,600
819,800
865,500
882,700
927,650
Total rewards (incl. benefits, excl. one-off special payments)
1,515,816
1,843,977
2,168,658
2,583,320
1,129,122
One-off special payments
n/a
n/a
1,391,000
n/a
n/a
Total rewards (incl. benefits and one-off special payments)
1,515,816
1,843,977
3,559,658
2,583,320
1,129,122
% change fixed compensation
12%
3%
6%
2%
5%
% change total compensation
(30%)
22%
93%
(27%)
(56%)
Company performance
Net profit number
6,674,000,000
539,000,000
630,000,000
829,000,000
352,000,000
Net profit % change
702%
(92%)
17%
32%
(58%)
ROI number (excl. unallocated cost)
16.6
17.2
20.6
19.5
11.3
ROI % change
(8%)
4%
20%
(5%)
(42%)
Adjusted OPI number
798,000,000
991,000,000
1,099,000,000
1,092,000,000
789,000,000
Adjusted OPI % change
(12%)
24%
11%
(1%)
(28%)
Average remuneration on a full-time equivalent basis of employees
Average salary per employee
2
56,619
54,825
56,061
54,220
55,840
% change average remuneration
6%
(3%)
2%
(3%)
3%
CEO pay ratio
56.4
65.0
99.2
115.7
59.8
CEO pay ratio (incl. benefits, excl. one-off special payments)
56.4
65.0
62.3
82.4
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.
Leadership and governance
|
AkzoNobel Report 2022
94
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.
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.
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%.
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.
2022 Remuneration of the Supervisory Board
in €
Remuneration
Attendance fee
Committee
allowance fees
Total remuneration
Nils Smedegaard Andersen, Chair
150,000
12,500
20,000
182,500
Byron Grote, Deputy Chair
93,000
12,500
25,000
130,500
Pamela Kirby
80,000
10,000
15,000
105,000
Dick Sluimers
80,000
—
20,000
100,000
Ester Baiget
1
55,165
5,000
13,791
73,956
Patrick Thomas
80,000
5,000
20,000
105,000
Hans Van Bylen
1
55,165
5,000
10,343
70,508
Jolanda Poots-Bijl
80,000
—
20,000
100,000
Total 2022
673,330
50,000
144,135
867,465
Total 2021
612,670
7,500
130,866
751,036
1
As of April 23, 2022.
Fixed base fee
Audit Committee fee
Remuneration Committee/
Nomination Committee fee
Chair
Deputy Chair
Member
Chair
Member
Chair
Member
€150,000
€93,000
€80,000
€25,000
€20,000
€20,000
€15,000
Remuneration report
95
AkzoNobel Report 2022
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Leadership and governance
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.
Comparative table of remuneration of the Supervisory Board over last five reported financial years
in €
2018
2019
2020
2021
2022
Nils Smedegaard Andersen, Chair
2
111,373
162,500
157,500
172,500
182,500
Anthony Burgmans
3
53,215
—
—
—
—
Peggy Bruzelius
4
119,318
37,710
—
—
—
Byron Grote, Deputy Chair
1
135,500
130,500
114,250
120,500
130,500
Louis Hughes
3
32,322
—
—
—
—
Pamela Kirby
92,500
92,500
87,500
95,000
105,000
Dick Sluimers
107,500
107,500
90,000
100,000
100,000
Ben Verwaayen
6
95,000
92,500
32,775
—
—
Sue Clark
7
87,995
92,500
87,500
29,492
—
Patrick Thomas
90,659
97,500
92,500
102,500
105,000
Michiel Jaski
7
78,159
87,500
85,000
31,044
—
Jolanda Poots-Bijl
5
—
59,166
85,000
100,000
100,000
Ester Baiget
8
—
—
—
—
73,956
Hans Van Bylen
8
—
—
—
—
70,508
Total remuneration
1,003,541
959,876
832,025
751,036
867,465
% change total remuneration
5.24
(4.35)
(13.32)
(9.73)
15.50
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.
Leadership and governance
|
AkzoNobel Report 2022
96
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.
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
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 investors
1
, while
13% of the share capital was held by
ESG funds
2
at year-end 2022.
Delivering on our capital allocation
priorities, we continued returning cash
to our shareholders in the form of share
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.
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 data
3
2020
2021
2022
Year-end (share price in €)
87.86
96.50
62.56
Year-high (share price in €)
4
91.60
107.80
98.50
Year-low (share price in €)
4
48.50
83.50
56.22
Number of shares outstanding at year-end (in millions)
191
182
174
Market capitalization at year-end (in € billions)
16.7
17.5
10.9
Dividend per share (in €)
1.95
1.98
1.98
Dividend yield (in %)
2.2
2.1
3.2
3
Based on Bloomberg share data.
4
Based on close value.
Dec 31, 21
Jan 22
Feb 22
Mar 22
Apr 22
May 22
Jun 22
Jul 22
Aug 22
Sept 22
Oct 22
Nov 22
Dec 31, 22
Euronext ticker symbol
AKZA
ISIN common share
NL0013267909
OTC ticker symbol
AKZOY
ISIN ADR
US0101995035
40
50
70
60
80
100
90
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
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.
97
AkzoNobel Report 2022
|
Leadership and governance
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
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
a full overview, please refer to the ESG
rating agencies and benchmarks in the
Sustainability statements.
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.
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.
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.
A
B
C
A
Buy
16
B
Hold
6
C
Sell
2
Analyst recommendations
Rating agency
Long-term rating
Outlook
Moody’s
1
Baa1
Negative
Standard & Poor’s
2
BBB
Stable
1
Rating affirmed on October 11, 2022.
2
Rating updated on November 22, 2022.
Dividend
in € per share
Interim dividend
Final dividend
For further information please
visit our website:
akzonobel.com/en/investors
* Proposed.
Distribution of institutional shares
in 2022
in %
A
US
61
B
UK
13
C
Rest of Europe
21
D
Rest of world
5
D
C
B
A
D
A
B
C
2022
2021
2020
1.54
0.44
1.52
0.43
1.54*
0.44
Total
1.95
1.98
1.98
Bonds maturity
in € millions (nominal amounts)
2032
2031
2030
2029
2028
2027
2026
2025
2024
2023
750
500
600
500
600
98
AkzoNobel Report 2022
|
Financial statements
FINANCIAL STATEMENTS
Financial statements
Consolidated statement of income
99
Consolidated statement of comprehensive income
99
Consolidated balance sheet
100
Consolidated statement of cash flows
101
Consolidated statement of changes in equity
102
Notes to the Consolidated financial statements
Note 1
Summary of significant accounting policies
103
Note 2
Scope of consolidation
109
Note 3
Segment information
110
Note 4
Alternative performance measures
111
Note 5
Revenue
113
Note 6
Operating income
114
Note 7
Employee benefits
114
Note 8
Financing income and expenses
116
Note 9
Income tax
116
Note 10 Earnings per share
119
Note 11 Intangible assets
120
Note 12 Property, plant and equipment
121
Note 13 Leases
123
Note 14 Investments in associates and joint ventures 123
Note 15 Financial non-current assets
124
Note 16 Inventories
124
Note 17
Trade and other receivables
124
Note 18 Group equity
125
Note 19 Post-retirement benefit provisions
126
Note 20
Other provisions and contingent liabilities
130
Note 21 Net debt
132
Note 22 Trade and other payables
133
Note 23 Cash flow
133
Note 24 Commitments
133
Note 25 Related party transactions
133
Note 26 Remuneration of the Supervisory Board
134
and the Board of Management
Note 27 Financial risk management
134
Note 28 Subsequent events
137
Company financial statements
Statement of income
138
Balance sheet
138
Note A
General information
139
Note B
Financing income and expenses
139
Note C
Intangible assets
139
Note D
Financial non-current assets
140
Note E
Short-term receivables
140
Note F
Shareholders’ equity
140
Note G
Net debt
142
Note H
Other current liabilities
142
Note I
Financial instruments
143
Note J
Contingent liabilities
143
Note K
Independent auditor’s fees
143
Other information
Other information
144
Profit allocation and distributions
144
Independent auditor’s report
145
Limited assurance report of the independent auditor
152
Financial summary
154
Glossary
158
Index
160
Appendix
161
99
AkzoNobel Report 2022
|
Financial statements
CONSOLIDATED STATEMENT
OF INCOME
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
*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.
In € millions, for the year ended December 31
Note
2021
2022
Continuing operations
Revenue
5
Cost of sales*
6
(5,683 )
(6,923 )
Gross profit
Selling and distribution expenses*
6
(2,041 )
(2,308 )
General and administrative expenses
6
(582 )
(649 )
Research and development expenses
6
(230 )
(258 )
Other results
6
(2,786 )
(3,215 )
Operating income
Financing income and expenses
8
(39 )
(124 )
Results from associates and joint ventures
14
Profit before tax
Income tax
9
(246 )
(214 )
Profit for the period from continuing
operations
Discontinued operations
Profit / (loss) for the period from discontinued
operations
(10 )
Profit for the period
Attributable to
Shareholders of the company
Non-controlling interests
Profit for the period
Earnings per share, in €
Continuing operations
Basic
10
Diluted
10
Discontinued operations
Basic
10
(0.06 )
Diluted
10
(0.05 )
Total operations
Basic
10
Diluted
10
In € millions, for the year ended December 31
2021
2022
Profit for the period
Other comprehensive income / (expense)
Items that will not be reclassified to the statement of income:
Post-retirement benefits
(13 )
(375 )
Income tax
(13 )
Net effect
(26 )
(289 )
Items that may be reclassified subsequently to the statement
of income:
Exchange differences arising on translation of foreign operations
(163 )
Cash flow hedges
(19 )
(15 )
Income tax
Net effect
(176 )
Other comprehensive income / (expense) for the period
(465 )
Comprehensive income / (expense) for the period
(87 )
Comprehensive income attributable to
Shareholders of the company
(115 )
Non-controlling interests
Comprehensive income / (expense) for the period
(87 )
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AkzoNobel Report 2022
|
Financial statements
CONSOLIDATED BALANCE SHEET, BEFORE
ALLOCATION OF PROFIT
In € millions, at December 31
Note
2021
2022
Assets
Non-current assets
Intangible assets
11
Property, plant and equipment
12
Right-of-use assets
13
Deferred tax assets
9
Investments in associates and joint ventures
14
Financial non-current assets
15
Total non-current assets
Current assets
Inventories
16
Current tax assets
9
Trade and other receivables
17
Short-term investments
21
Cash and cash equivalents
21
Total current assets
Total assets
Equity and liabilities
Equity
Shareholders' equity
18
Non-controlling interests
18
Group equity
Non-current liabilities
Post-retirement benefit provisions
19
Other provisions
20
Deferred tax liabilities
9
Long-term borrowings
21
Total non-current liabilities
Current liabilities
Short-term borrowings
21
Current tax liabilities
9
Trade and other payables
22
Current portion of provisions
19, 20
Total current liabilities
Total equity and liabilities
101
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Financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
* Capital expenditures include investments in intangible assets (refer to Note 11) and investments in property, plant and equipment (refer to Note 12).
In € millions, for the year ended December 31
Note
2021
2022
Profit for the period from continuing operations
Adjustments to reconcile profit for the period to net cash generated from operating activities
Amortization and depreciation
11, 12, 13
Impairment losses
11, 12, 13
Financing income and expenses
8
Results from associates and joint ventures
14
(26 )
(18 )
Pre-tax result on acquisitions and divestments
2
(14 )
(21 )
Income tax
9
Changes in working capital
23
(405 )
(509 )
Pension pre-funding
19
Changes in post-retirement benefit provisions
19
(55 )
(31 )
Changes in other provisions
20
(94 )
(33 )
Interest paid
(77 )
(78 )
Income tax paid
(222 )
(224 )
Other changes
(23 )
Net cash generated from / (used for) operating activities
Capital expenditures*
11, 12
(288 )
(292 )
Interest received
Dividends from associates and joint ventures
Acquisition of consolidated companies, net of cash acquired
2
(73 )
(588 )
Investments in short-term investments
21
(56 )
(1,361 )
Repayments of short-term investments
21
Proceeds from divestments, net of cash divested
Other changes
(1 )
(2 )
Net cash generated from / (used for) investing activities
(134 )
(1,095 )
Proceeds from borrowings
21
Borrowings repaid
21
(590 )
(7,322 )
Share buyback
18
(1,135 )
(669 )
Dividends paid
18
(391 )
(379 )
Buy-out of non-controlling interests
2
(1 )
Net cash generated from / (used for) financing activities
(974 )
Net cash generated from / (used for) continuing operations
(503 )
Net cash generated from / (used for) discontinued operations
(1 )
(9 )
Net change in cash and cash equivalents from continued and discontinued operations
(504 )
Net cash and cash equivalents at January 1
21
Effect of exchange rate changes on cash and cash equivalents
(14 )
Net cash and cash equivalents at December 31
102
AkzoNobel Report 2022
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Financial statements
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.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of the company
In € millions
Subscribed share
capital
Cash flow
hedge reserve
Cumulative
translation reserve
Other (legal) reserves
and undistributed
profit
Shareholders’
equity
Non-controlling
interests
Group equity
Balance at January 1, 2021
(873 )
Profit for the period
Other comprehensive income / (expense)
(19 )
(13 )
(1 )
Tax on other comprehensive income
(13 )
(7 )
(7 )
Comprehensive income for the period
(19 )
Dividend
(365 )
(365 )
(27 )
(392 )
Share buyback
1
(4 )
(1,131 )
(1,135 )
(1,135 )
Equity-settled transactions
2
Acquisition of non-controlling interests
(1 )
(1 )
(1 )
(2 )
Balance at December 31, 2021
(19 )
(493 )
Impact IAS 29 Hyperinflation Türkiye
3
Balance at January 1, 2022
(19 )
(493 )
Profit for the period
Other comprehensive income / (expense)
(15 )
(165 )
(375 )
(555 )
(553 )
Tax on other comprehensive income
Comprehensive income for the period
(15 )
(163 )
(115 )
(87 )
Dividend
(347 )
(347 )
(29 )
(376 )
Share buyback
1
(4 )
(656 )
(660 )
(660 )
Equity-settled transactions
2
Acquisition of non-controlling interests
Balance at December 31, 2022
(34 )
(656 )
NOTES TO THE CON-
SOLIDATED FINANCIAL
STATEMENTS
ACCOUNTING POLICIES
headquartered in the Netherlands
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
of Akzo Nobel N.V. in accordance with International Finan-
cial Reporting Standards (IFRS) as adopted by the Euro-
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
•
Leadership and governance: Remuneration report
•
Financial information: Note 6 Operating income
•
Financial information: Note 27 Financial risk 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
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
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-
103
AkzoNobel Report 2022
|
Financial statements
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.
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-
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
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
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)
•
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
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
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
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-
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Financial statements
ed in foreign currencies are translated into the functional
currency at the exchange rate at acquisition date.
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
2020
2021
2022
Argentina
386
582
1,135
Türkiye
505
687
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-
EXCHANGE RATES OF KEY
CURRENCIES
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
5.6
0.860
0.853
(0.8)
Chinese yuan
7.197
7.426
3.2
7.626
7.086
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.
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
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
(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-
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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
(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
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.
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.
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.
(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
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
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-
(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.
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
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
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Financial statements
period in which they occur. We recognize conditional asset
retirement obligations in the periods in which sufficient
information becomes available to reasonably estimate the
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
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
(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
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
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Financial statements
condition. The costs of inventories are determined using
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
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
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
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
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
and other receivables (Note 17)
Loans and receivables are measured at amortized cost, using
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
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
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
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CONSOLIDATION
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
Principal place of
business/country of
Legal entity
incorporation
Akzo Nobel Coatings Inc.
US
Akzo Nobel Paints (Shanghai) Co Ltd.
China
Akzo Nobel India Limited
India
Imperial Chemical Industries Limited
UK
Akzo Nobel Decorative Coatings B.V.
The Netherlands
Akzo Nobel Coatings SPA
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
Lankwitzer
Grupo Lackfabrik
Orbis S.A.,
GmbH,
Total
In € millions
Colombia
Germany
Other
2022
Other intangibles
259
17
—
276
Property, plant and
121
4
—
125
equipment
Right-of-use assets
8
2
—
10
Associates and joint
5
—
—
5
ventures
Inventories
91
6
—
97
Trade and other receivables
98
2
(1)
99
Cash and cash equivalents
14
—
—
14
Long-term debt
(79)
(2)
—
(81)
Provisions
(9)
—
—
(9)
Deferred tax assets/
(104)
—
—
(104)
(liabilities)
Non controlling interests
(3)
—
—
(3)
Trade and other payables
(97)
—
—
(97)
Net identifiable assets
304
29
(1)
332
and liabilities
Goodwill
262
7
(7)
262
Purchase consideration
566
36
(8)
594
Cash and cash equivalents
(14)
—
—
(14)
acquired
To be received in 2023 and
—
—
8
8
later years
Net cash outflow
552
36
—
Divestments
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Financial statements
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
Amortization and
Operating
Identified
Adjusted
Adjusted
OPI
parties)
depreciation
income
items
1
operating income
1
EBITDA
1
EBITDA
1
ROS%
1,2
margin%
1,2
In € millions
2021
2022
2021
2022
2021
3
2022
2021
3
2022
2021
3
2022
2021
3
2022
2021
3
2022
2021
3
2022
2021
3
2022
Decorative Paints
3,979
4,371
(154)
(154)
622
392
42
(5)
580
397
776
546
727
552
14.6
9.1
15.6
9.0
Performance Coatings
5,603
6,472
(160)
(171)
616
444
2
(49)
614
493
776
615
773
664
11.0
7.6
11.0
6.9
Corporate and other
5
3
(37)
(43)
(120)
(128)
(18)
(27)
(102)
(101)
(83)
(85)
(64)
(59)
Total
9,587
10,846
(351)
(368)
1,118
708
26
(81)
1,092
789
1,469
1,076
1,436
1,157
11.4
7.3
11.7
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
Invested capital
Total assets
Total liabilities
Capital expenditures
1
ROI%
1,2
In € millions
2021
2022
2021
3
2022
2021
3
2022
2021
2022
2021
2022
Decorative Paints
3,022
3,604
5,591
5,890
1,862
1,581
108
91
20.2
10.8
Performance Coatings
3,671
3,950
5,686
6,270
1,944
2,083
147
167
17.4
12.7
Corporate and other
428
581
2,601
2,581
4,436
6,529
33
34
Total
7,121
8,135
13,878
14,741
8,242
10,193
288
292
16.0
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
Intangible assets and property,
Revenue by region of destination
plant and equipment
Invested capital
Capital expenditures
In € millions
2021
2022
2021
2022
2021
2022
2021
2022
The Netherlands
335
319
1,206
1,223
1,787
1,900
45
45
Other EMEA countries
4,473
4,714
1,777
1,753
2,555
2,679
100
95
North Asia
1,735
1,728
1,203
1,162
969
965
45
40
South Asia Pacific
1,137
1,371
516
526
639
677
46
54
North America
1,163
1,416
602
648
809
890
37
42
Latin America*
744
1,298
186
728
362
1,024
15
16
Total
9,587
10,846
5,490
6,040
7,121
8,135
288
292
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Financial statements
Note 4 ALTERNATIVE PERFORMANCE
MEASURES
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
or statistical ratio, this is also considered an alternative
performance measure.
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.
Alternative performance measures
2021
2022
Continuing
Discontinued
Continuing
Discontinued
In € millions
operations
operations
Total
operations
operations
Total
Operating income
1,118
—
1,118
708
—
708
APM adjustments to operating income
- Restructuring costs
28
—
28
80
—
80
-
Brazil ICMS case
(42)
—
(42)
—
—
—
- UK pensions past service credit
(23)
—
(23)
—
—
—
- Acquisition related costs
11
—
11
9
—
9
- Other
—
—
—
(8)
—
(8)
Total APM adjustments (identified
(26)
—
(26)
81
—
81
items) to operating income
Adjusted operating income
1,092
—
1,092
789
—
789
Profit for the period attributable to
823
6
829
362
(10)
352
shareholders of the company
Adjustments to operating income
(26)
—
(26)
81
—
81
Adjustments to interest
(29)
—
(29)
(10)
—
(10)
Adjustments to income tax
(15)
—
(15)
(5)
—
(5)
Adjustments to discontinued operations
—
(8)
(8)
—
—
—
Total APM adjustments
(70)
(8)
(78)
66
—
66
Adjusted profit for the period attribu-
753
(2)
751
428
(10)
418
table to shareholders of the company
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).
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Financial statements
Adjusted operating income, OPI margin and ROS%
In € millions
2021
2022
Revenue from third parties
Decorative Paints
3,979
4,371
Performance Coatings
5,603
6,472
Corporate and other
5
3
Total
9,587
10,846
Operating income
1
Decorative Paints
622
392
Performance Coatings
616
444
Corporate and other
(120)
(128)
Total
1,118
708
Total APM adjustments (identified items)
1, 2
Decorative Paints
42
(5)
Performance Coatings
2
(49)
Corporate and other
(18)
(27)
Total
26
(81)
Adjusted operating income
1, 2
Decorative Paints
580
397
Performance Coatings
614
493
Corporate and other
(102)
(101)
Total
1,092
789
OPI margin%
1, 2, 3
Decorative Paints
15.6
9.0
Performance Coatings
11.0
6.9
Corporate and other
Total
11.7
6.5
ROS%
1, 2, 3
Decorative Paints
14.6
9.1
Performance Coatings
11.0
7.6
Corporate and other
Total
11.4
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.
EBITDA
*
2021
2022
Operating
Depreciation and
Operating
Depreciation and
In € millions
income
amortization
EBITDA
income
amortization
EBITDA
Decorative Paints
622
(154)
776
392
(154)
546
Performance Coatings
616
(160)
776
444
(171)
615
Corporate and other
(120)
(37)
(83)
(128)
(43)
(85)
Total
1,118
(351)
1,469
708
(368)
1,076
*
Refer to the glossary for definitions of the APMs.
Adjusted EBITDA
*
2021
2022
Adjusted
Depreciation and
Adjusted
Depreciation and
operating
amortization exclu-
Adjusted
operating
amortization exclu-
Adjusted
In € millions
income
ding identified items
EBITDA
income
ding identified items
EBITDA
Decorative Paints
580
(147)
727
397
(155)
552
Performance Coatings
614
(159)
773
493
(171)
664
Corporate and other
(102)
(38)
(64)
(101)
(42)
(59)
Total
1,092
(344)
1,436
789
(368)
1,157
*
Refer to the glossary for definitions of the APMs.
Adjusted earnings per share
In € millions
2021
2022
Profit for the period attributable to
823
362
shareholders of the company from
continuing operations
APM adjustments to operating income
(26)
81
APM adjustments to interest
(29)
(10)
APM adjustments to income tax
(15)
(5)
Adjusted profit from continuing
753
428
operations attributable to share-
holders of the company*
Weighted average number of shares
185.0
174.7
(in millions)
Earnings per share from continuing
4.45
2.07
operations (in €)
Adjusted earnings per share from
4.07
2.45
continuing operations (in €)
*
Refer to the glossary for definitions of the APMs.
ROI%
In € millions
2021
2022
Average invested capital
1
Decorative Paints
2,872
3,678
Performance Coatings
3,520
3,894
Corporate and other
437
490
Total
6,829
8,062
Adjusted operating income
1, 2
Decorative Paints
580
397
Performance Coatings
614
493
Corporate and other
(102)
(101)
Total
1,092
789
ROI%
3
Decorative Paints
20.2
10.8
Performance Coatings
17.4
12.7
Corporate and other
3
Total
16.0
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.
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Financial statements
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
Other
Total
In € millions
2021
2022
2021
2022
2021
2022
2021
2022
Primary geographical markets - revenue from third parties
The Netherlands
231
206
99
110
5
3
335
319
Other EMEA countries
2,198
2,199
2,275
2,515
—
—
4,473
4,714
North Asia
560
564
1,175
1,164
—
—
1,735
1,728
South Asia Pacific
513
608
624
763
—
—
1,137
1,371
North America
—
—
1,163
1,416
—
—
1,163
1,416
Latin America
1
477
794
267
504
—
—
744
1,298
Total
3,979
4,371
5,603
6,472
5
3
9,587
10,846
Major goods/service lines - revenue from third parties
Decorative Paints Europe, Middle East and Africa
2,429
2,405
—
—
—
—
2,429
2,405
Decorative Paints Latin America
2
477
794
—
—
—
—
477
794
Decorative Paints Asia
1,073
1,172
—
—
—
—
1,073
1,172
Powder Coatings
—
—
1,315
1,376
—
—
1,315
1,376
Marine and Protective Coatings
—
—
1,164
1,374
—
—
1,164
1,374
Automotive and Specialty Coatings
—
—
1,231
1,390
—
—
1,231
1,390
Industrial Coatings
—
—
1,893
2,181
—
—
1,893
2,181
Performance Coatings Other
2
—
—
—
151
—
—
—
151
Corporate and other
—
—
—
—
5
3
5
3
Total
3,979
4,371
5,603
6,472
5
3
9,587
10,846
Timing of revenue recognition
Goods transferred at a point in time
3,923
4,284
5,405
6,258
—
—
9,328
10,542
Services transferred over time
56
87
198
214
5
3
259
304
Total
3,979
4,371
5,603
6,472
5
3
9,587
10,846
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
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Financial statements
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%).
Employee
Purchases and
In € millions
benefits
Amortization
Depreciation
other costs
Total
Cost of sales
(550)
(1)
(152)
(6,220)
(6,923)
Selling and distribution expenses
(965)
(57)
(93)
(1,193)
(2,308)
General and administrative expenses
(263)
(24)
(24)
(338)
(649)
Research and development expenses
(182)
(5)
(12)
(59)
(258)
Other results
—
—
—
—
—
Total
(1,960)
(87)
(281)
(7,810)
(10,138)
Costs by nature 2021
Employee
Purchases and
In € millions
benefits
Amortization
Depreciation
other costs
Total
Cost of sales*
(529)
—
(155)
(4,999)
(5,683)
Selling and distribution expenses*
(832)
(50)
(90)
(1,069)
(2,041)
General and administrative expenses
(267)
(16)
(23)
(276)
(582)
Research and development expenses
(168)
(4)
(13)
(45)
(230)
Other results
23
—
—
44
67
Total
(1,773)
(70)
(281)
(6,345)
(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)
Salaries, wages and other employee benefits in
operating income
In € millions
2021
2022
Salaries and wages
(1,395)
(1,517)
Post-retirement cost
(115)
(146)
Other social charges
(263)
(297)
Total
(1,773)
(1,960)
Average number during the year
2021
2022
Decorative Paints
12,500
13,800
Performance Coatings
17,000
18,000
Corporate and other
3,200
3,300
Total
32,700
35,100
Average number of employees in the Netherlands
Average number during the year
2021
2022
Decorative Paints
600
600
Performance Coatings
1,100
1,100
Corporate and other
700
700
Total
2,400
2,400
Number of employees
At year-end
2021
2022
Decorative Paints
12,500
14,000
Performance Coatings
17,200
17,900
Corporate and other
3,100
3,300
Total
32,800
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
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Financial statements
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.
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
Fair value performance-related shares in €
Non-market
based
Opening share
Market condi-
performance
Expected
Risk free
Series
price per:
Fair Value
tion (TSR)
4
conditions
5
Share price
volatility
interest rate
2019 - 2021
January 2, 2019
61.09
52.57
69.60
69.60
20.12%
(0.04)%
2020 - 2022
April 21, 2020
1
53.42
42.95
63.88
63.88
21.42%
(0.33)%
2021 - 2023
April 22, 2021
2
103.20
NA
103.20
103.20
NA
NA
2022 - 2024
February 23, 2022
October 3, 2022
3
88.28
NA
88.28
88.28
NA
NA
2022 - 2024
57.70
NA
57.70
57.70
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 L
TI 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.
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 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.
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 plans of AkzoNobel employees
End of
Balance at
Subject to
Subject
Balance at
Performance/
Award
Vesting
holding
January 1,
Awarded
Vested in
Forfeited
Dividend in
performance
Unvested
to holding
December
Share plan
Vesting period
date
date
period
2022
in 2022
2022
in 2022
2022
condition
in 2022
period
31, 2022
2019 – 2021 Restricted Share Plan E*
3 years
1/1/2019
1/1/2022
1/1/2023
157,455
—
(157,455)
—
—
NA
—
157,455
—
2019 – 2021 Performance Share Plan
3 years
1/1/2019
1/1/2022
1/1/2024
45,830
—
(45,830)
—
—
—
—
45,830
—
2020 – 2022 Restricted Share Plan E*
3 years
1/1/2020
1/1/2023
1/1/2024
157,095
—
(7,567)
(13,127)
—
NA
136,401
136,401
136,401
2020 – 2022 Performance Share Plan
3 years
1/1/2020
1/1/2023
1/1/2025
60,692
—
—
(51,286)
1,566
—
10,972
10,972
10,972
2020 – 2022 Restricted Share Plan NE*
3 years
4/1/2020
4/1/2023
NA
5,890
—
—
(210)
—
NA
5,680
—
5,680
2021 – 2023 Restricted Share Plan E*
3 years
4/1/2021
4/1/2024
4/1/2025
176,947
509
(3,600)
(18,906)
—
NA
154,950
154,950
154,950
2021 – 2023 Performance Share Plan
3 years
1/1/2021
1/1/2024
1/1/2026
63,404
—
—
(3,206)
1,491
61,689
61,689
61,689
61,689
2021 – 2023 Restricted Share Plan NE*
3 years
4/1/2021
4/1/2024
NA
27,140
—
—
(1,560)
—
NA
25,580
—
25,580
2022 – 2024 Restricted Share Plan E*
3 years
4/1/2022
4/1/2025
4/1/2026
—
189,797
(1,171)
(17,632)
—
NA
170,994
170,994
170,994
2022 – 2024 Performance Share Plan
3 years
1/1/2022
1/1/2025
1/1/2027
—
84,820
—
—
2,188
87,008
87,008
87,008
87,008
2022 – 2024 Restricted Share Plan NE*
3 years
4/1/2022
4/1/2025
NA
—
49,247
—
(2,065)
—
NA
47,182
—
47,182
Total
694,453
324,373
(215,623)
(107,992)
5,245
148,697
700,456
825,299
700,456
* E means executive plan; NE means non-executive plan.
115
AkzoNobel Report 2022
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Financial statements
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
AND EXPENSES
Financing income and expenses
In € millions
2021
2022
Financing income
12
19
Financing expenses
(74)
(106)
Net interest on net debt
(62)
(87)
Other interest
Financing income related to post-retire-
13
18
ment benefits
Interest on provisions
3
17
Exchange rate results
(21)
(85)
Other items
28
13
Net other financing credit/(charges)
23
(37)
Total financing income and expenses
(39)
(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
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%).
116
AkzoNobel Report 2022
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Financial statements
Classification of current and deferred tax result
In € millions
2021
2022
Current tax expense for
The year
(205)
(198)
Adjustments for previous years
36
(24)
Total current tax expense
(169)
(222)
Deferred tax expense for
Origination and r
eversal of temporary
(75)
21
differences and tax losses
(Derecognition)/recognition of deferred
18
(6)
tax assets
Changes in tax rates
(20)
(7)
Total deferred tax expense
(77)
8
Total
(246)
(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
natur
e. Origination and r
eversal 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
Effective tax rate reconciliation
in %
2021
2022
Corporate tax rate in the Netherlands
25.0
25.8
Effect of tax rates in other countries
0.2
(2.2)
Weighted average statutory income tax rate
25.2
23.6
Non-taxable income
(3.0)
(2.8)
Non-deductible expenses
2.3
6.1
(Rerecognition)/derecognition of deferred tax
(1.6)
1.0
assets
Non-refundable withholding taxes
0.9
2.4
Adjustments for prior years
(3.3)
4.0
Deferred tax adjustment due to changes in tax
1.8
1.2
rates
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
Recognized in
Balance at
equity/Other
Balance at
January 1,
Changes in
Recognized in comprehensive
December 31,
In € millions
2022*
exchange rate
income
income
Acquisitions
2022
Intangible assets
(461)
23
—
—
(83)
(521)
Property, plant and equipment*
75
2
(3)
—
(17)
57
Financial non-current assets
(406)
20
(25)
139
—
(272)
Post-retirement benefit provisions
138
3
(12)
(53)
—
76
Other provisions
28
—
(3)
—
—
25
Other items
96
(2)
36
—
(4)
126
Tax credits
204
(1)
3
—
—
206
Tax loss carryforwards
237
(9)
12
—
—
240
Deferred tax assets (liabilities)
(89)
36
8
86
(104)
(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
Recognized in
equity/Other
Balance at
Balance at
Changes in
Recognized in comprehensive
December 31,
In € millions
January 1, 2021
exchange rate
income
income
Acquisitions
2021
Intangible assets
(417)
(23)
(17)
—
(4)
(461)
Property, plant and equipment
60
6
20
—
(8)
78
Financial non-current assets
(267)
(24)
(138)
23
—
(406)
Post-retirement benefit provisions
156
4
(2)
(20)
—
138
Other provisions
29
2
(3)
—
—
28
Other items
68
3
25
(2)
3
97
Tax credits
184
—
20
—
—
204
Tax loss carryforwards
217
12
18
(12)
2
237
Deferred tax assets (liabilities)
30
(20)
(77)
(11)
(7)
(85)
117
AkzoNobel Report 2022
|
Financial statements
Deferred tax assets and liabilities per balance sheet item
December 31, 2021
December 31, 2022
In € millions
Net balance
Assets
Liabilities
Net balance
Assets
Liabilities
Intangible assets
(461)
12
473
(521)
10
531
Property, plant and equipment
78
123
45
56
124
68
Financial non-current assets
(406)
25
431
(271)
6
277
Post-retirement benefit provisions
138
141
3
76
79
3
Other provisions
28
38
10
25
34
9
Other items
97
113
16
125
143
18
Tax credits
204
204
—
207
207
—
Tax loss carryforwards
237
237
—
240
240
—
Tax assets/liabilities
(85)
893
978
(63)
843
906
Set-off of tax
—
(411)
(411)
—
(345)
(345)
Net deferred tax positions
Expiration year of loss carryforwards 2022
(85)
482
567
(63)
498
561
In € millions
2023
2024
2025
2026
2027
Later
Unlimited
Total
Deferred
tax
Total loss carryforwards
—
1
1
2
13
56
3,014
3,087
779
Loss carryforwards not recognized in
deferred tax assets
—
(1)
(1)
—
—
(10)
(2,120)
(2,132)
(539)
Total loss carryforwards recognized
Expiration year of loss carryforwards 2021
—
—
—
2
13
46
894
955
240
In € millions
2022
2023
2024
2025
2026
Later
Unlimited
Total
Deferred
tax
Total loss carryforwards
1
—
1
—
3
17
3,131
3,153
795
Loss carryforwards not recognized in
deferred tax assets
(1)
—
(1)
—
—
(9)
(2,204)
(2,215)
(558)
Total loss carryforwards recognized
—
—
—
—
3
8
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
118
AkzoNobel Report 2022
|
Financial statements
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
2021
2022
Currency exchange differences on inter-
1
2
company loans of a permanent nature
Share-based compensation
(2)
(2)
Share buyback
—
2
Post-retirement benefits
3
86
Changes in tax rates
(11)
—
IAS 29 opening balance adjustment
—
(4)
Total
(9)
84
Current tax
2
2
Deferred tax
(11)
82
Total
(9)
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
Profit for the period attributable to the shareholders of the
company was €352 million (2021: €829 million).
Profit for the period
In € millions
2021
2022
Profit before tax from continuing
1,105
602
operations
Income tax
(246)
(214)
Profit from continuing opera-
859
388
tions
Profit for the period attributable to
(36)
(26)
non-controlling interests
Profit for the period from
823
362
continuing operations attribut-
able to shareholders of the
company
Profit for the period from discon-
6
(10)
tinued operations attributable to
shareholders of the company
Profit for the period attributable
829
352
to shareholders of the company
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
2021
2022
Issued common shares at
190,579,841
181,609,509
January 1
Effect of issued common shares
225,806
186,077
during the year
Effect of share buyback program
(5,845,781)
(7,060,447)
Shares for basic earnings per
184,959,866
174,735,139
share for the year
Effect of dilutive shares
For performance-related and
714,114
575,108
restricted shares
For share-matching plan
—
3,251
Shares for diluted earnings
185,673,980
175,313,498
per share
Earnings per share
in €
2021
2022
Continuing operations
Basic
4.45
2.07
Diluted
4.43
2.06
Discontinued operations
Basic
0.03
(0.06)
Diluted
0.03
(0.05)
Total operations
Basic
4.48
4.46
2.01
Diluted
2.01
Refer to Note 4 for the calculation of adjusted earnings
AkzoNobel Report 2022
|
Financial statements
119
Intangible assets
Customer
Other
In € millions
Goodwill
Brands
lists
intangibles
Total
4,356
Balance at January 1, 2021
Cost of acquisition
1,123
2,134
921
178
Cost of internally developed intangibles
—
—
—
212
212
Accumulated amortization/impairment
(27)
(190)
(546)
(251)
(1,014)
Carrying value at January 1, 2021
1,096
1,944
375
139
3,554
36
Movements in 2021
Acquisitions through business combinations
18
8
10
—
Investments - including internally developed intangibles
—
—
—
35
35
Amortization
—
(12)
(34)
(24)
(70)
Changes in exchange rates
41
90
5
(1)
135
Total movements
59
86
(19)
10
136
4,564
Balance at December 31, 2021
Cost of acquisition
1,182
2,239
972
171
Cost of internally developed intangibles
—
—
—
241
241
Accumulated amortization/impairment
(27)
(209)
(616)
(263)
(1,115)
Carrying value at December 31, 2021
1,155
2,030
356
149
3,690
Impact IAS 29 Hyperinflation Türkiye*
—
—
—
1
1
Carrying value at January 1, 2022
1,155
2,030
356
150
3,691
538
Movements in 2022
Acquisitions through business combinations
262
72
193
11
Investments - including internally developed intangibles
—
—
—
30
30
Amortization
—
(15)
(40)
(32)
(87)
Impairments, including reversals thereof
—
—
—
(2)
(2)
Changes in exchange rates
(40)
(22)
(36)
—
(98)
Total movements
222
35
117
7
381
4,999
Balance at December 31, 2022
Cost of acquisition
1,405
2,288
1,127
179
Cost of internally developed intangibles
—
—
—
268
268
Accumulated amortization/impairment
(28)
(223)
(654)
(290)
(1,195)
Carrying value at December 31, 2022
1,377
2,065
473
157
4,072
* As per June 2022, T
ürkiye 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
120
AkzoNobel Report 2022
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Financial statements
Goodwill and other intangibles per business unit
Brands with indefinite
Other intangibles
Goodwill
useful lives
with finite useful lives
Total intangibles
In € millions, at December 31
2021
2022
2021
2022
2021
2022
2021
2022
Decorative Paints Europe, Middle East
114
107
837
837
146
136
1,097
1,080
and Africa
Decorative Paints Latin America
—
138
87
102
—
142
87
382
Decorative Paints Asia
9
8
928
901
31
21
968
930
Powder Coatings
155
152
—
—
32
19
187
171
Marine and Protective Coatings
174
197
—
—
80
94
254
291
Automotive and Specialty Coatings
288
290
—
—
175
156
463
446
Industrial Coatings
415
413
—
—
120
110
535
523
Performance Coatings Other
—
72
—
—
—
59
—
131
Corporate and other
—
–
—
—
99
118
99
118
Total
1,155
1,377
1,852
1,840
683
855
3,690
4,072
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.
Key assumptions 2022
Pre-tax weighted
Average revenue
average cost of
In % per year
growth 2023-2027
capital 2023-2027
Decorative Paints
1.8-6.7%
11.1-15.9%
Performance Coatings
1.3-4.0%
10.8-12.4%
Key assumptions 2021
Pre-tax weighted
Average revenue
average cost of
In % per year
growth 2022-2026
capital 2022-2026
Decorative Paints
1.1-5.9%
8.4-12.5%
Performance Coatings
2.6-4.7%
7.8-8.1%
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
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
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.
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Financial statements
Property, plant and equipment
Construction in progress
Plant equipment and
and prepayments on
In € millions
Land and buildings
machinery
Other equipment
projects
Assets not used
Total
Balance at January 1, 2021
Cost of acquisition
1,425
1,937
890
244
10
4,506
Accumulated depreciation/impairment
(731)
(1,386)
(757)
(4)
(7)
(2,885)
Carrying value at January 1, 2021
694
551
133
240
3
1,621
Movements in 2021
Acquisitions
36
11
—
—
—
47
Divestments
(5)
(3)
(1)
(1)
—
(10)
Investments
10
18
8
217
—
253
Transfer between categories
30
112
28
(170)
—
—
Depreciation
(44)
(102)
(41)
—
—
(187)
Impairments, including reversals thereof
—
(1)
—
—
—
(1)
Changes in exchange rates
31
29
6
11
—
77
Total movements
58
64
—
57
—
179
Balance at December 31, 2021
Cost of acquisition
1,546
2,124
919
300
10
4,899
Accumulated depreciation/impairment
(794)
(1,509)
(786)
(3)
(7)
(3,099)
Carrying value at December 31, 2021
752
615
133
297
3
1,800
Impact IAS 29 Hyperinflation Türkiye*
10
3
—
2
—
15
Carrying value at January 1, 2022
762
618
133
299
3
1,815
Movements in 2022
Acquisitions
75
45
5
—
—
125
Divestments
(9)
(4)
(2)
(5)
—
(20)
Investments
2
11
6
242
1
262
Transfer between categories
53
87
36
(176)
—
—
Depreciation
(46)
(105)
(32)
—
—
(183)
Changes in exchange rates
(5)
(29)
(7)
10
—
(31)
Total movements
70
5
6
71
1
153
Balance at December 31, 2022
Cost of acquisition
1,658
2,208
923
373
11
5,173
Accumulated depreciation/impairment
(826)
(1,585)
(784)
(3)
(7)
(3,205)
Carrying value at December 31, 2022
832
623
139
370
4
1,968
* As per June 2022, T
ürkiye 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
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Financial statements
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
Land
Buildings
Other
Total
Balance at January 1, 2021
Cost of acquisition
55
353
102
510
Accumulated depreciation/impairment
(16)
(128)
(42)
(186)
Carrying value at January 1, 2021
39
225
60
324
Movements in 2021
Additions/modifications
2
35
32
69
Disposals
—
(5)
(2)
(7)
Depreciation
(3)
(60)
(31)
(94)
Impairments, including reversals thereof
—
(2)
—
(2)
Changes in exchange rates
4
9
1
14
Total movements
3
(23)
—
(20)
Cost of acquisition
61
372
109
542
Accumulated depreciation/impairment
(19)
(170)
(49)
(238)
Carrying value at December 31, 2021
42
202
60
304
Movements in 2022
Acquisitions
2
5
3
10
Additions/modifications
—
58
30
88
Disposals
—
(7)
(2)
(9)
Depreciation
(3)
(64)
(31)
(98)
Impairments, including reversals thereof
—
(3)
—
(3)
Changes in exchange rates
1
(2)
—
(1)
Total movements
—
(13)
—
(13)
Cost of acquisition
64
393
117
574
Accumulated depreciation/impairment
(22)
(204)
(57)
(283)
Carrying value at December 31, 2022
42
189
60
291
Income/(expenses) recognized in profit and loss
In € millions
2021
2022
Sub lease income
3
2
Depreciation right-of-use assets
(94)
(98)
Impairments for right-of-use assets
(2)
(3)
Interest expense on lease liabilities
(6)
(6)
Short-term lease expenses
(7)
(11)
Expenses relating to low-value assets
(5)
(4)
Variable lease expenses
(5)
(4)
Total expenses
(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
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
Associates
In € millions, at December 31
2021
2022
Condensed balance sheet
Non-current assets
81
97
Current assets
141
152
Total assets
222
249
Shareholders’ equity
176
191
Non-current liabilities
5
6
Current liabilities
41
52
Total liabilities and equity
222
249
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Financial statements
Profit and loss of our share in associates
Associates
In € millions
2021
2022
Condensed statement of income
Revenue
194
218
Profit before tax
35
25
Profit from continuing operations
26
18
Profit for the period
26
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
ASSETS
Financial non-current assets
In € millions, at December 31
2021
2022
Pension assets
1,638
1,029
Loans and receivables
360
362
Other financial non-current assets
78
84
Total
2,076
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
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
2021
2022
Raw materials and supplies
611
676
Work in progress
94
104
Finished products and goods for resale
945
1,063
Total
1,650
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-
RECEIVABLES
Trade and other receivables
In € millions, at December 31
2021
2022
Trade receivables
1,973
2,123
Prepaid expenses
37
58
Tax receivables other than income tax
145
156
FX contracts
15
18
Receivables from associates
9
4
Other receivables
160
88
Total
2,339
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.
Ageing of trade receivables
In € millions, at December 31
2021
2022
Performing trade receivables
1,849
1,987
Past due trade receivables
< 3 months
102
104
> 3 months
64
74
Allowance for impairment
(42)
(42)
Total trade receivables
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
2021
2022
Balance at January 1
58
42
Additions charged to income
11
17
Release of unused amounts
(11)
(8)
Utilization
(17)
(9)
Acquisitions
—
2
Currency exchange differences
1
(2)
Balance at December 31
42
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Financial statements
Composition of share capital at year-end 2021
Authorized
Subscribed
In €
share capital
share capital
Priority shares (48 with nominal value
19,200
19,200
of €400)
Cumulative preferred shares (200
100,000,000
—
million with nominal value of €0.50)
Common shares (500 million with
250,000,000
90,804,755
nominal value of €0.50)
Total
350,019,200
90,823,955
Composition of share capital at year-end 2022
Authorized
Subscribed
In €
share capital
share capital
Priority shares (48 with nominal value
19,200
19,200
of €400)
Cumulative preferred shares (200
100,000,000
—
million with nominal value of €0.50)
Common shares (500 million with
250,000,000
87,187,614
nominal value of €0.50)
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-
277,517
214,262
mance-related share plan and share-
matching plan
Shares cancelled related to share
(695,776)
(2,744,210)
buyback from previous year
Shares bought back during the year
(11,296,283)
(8,651,230)
Shares bought back during the year
2,744,210
3,946,896
not yet cancelled
Outstanding at December 31
181,609,509
174,375,227
Weighted average number of common shares
Number of shares
2021
2022
Weighted average number of
184,959,866
174,735,139
common shares
Non-controlling interests
2021
2022
Equity stake
Equity stake
Group entity
Partner at year-end 2022
%
in € millions
%
in € millions
Akzo Nobel India Limited, Kolkata, India
Privately held, India
25.24
56
25.24
54
PT ICI Paints Indonesia, Jakarta, Indonesia
PT DWI Satrya Utama, Indonesia
45.00
34
45.00
31
Akzo Nobel Kemipol A.S., Izmir, Türkiye
Altan, Eyyüp and other family members
49.00
19
49.00
24
Akzo Nobel Paints (Malaysia) Sdn Bhd, Kuala
Permodalan Nasional Berhad, Malaysia
40.05
21
40.05
20
Lumpur, Malaysia
International Paint of Shanghai Co. Ltd,
Shanghai Huayi Fine Chemical Co. Ltd and China
49.00
15
49.00
16
Shanghai, China
National Shipbuilding Equipment & Materials Corp.
Akzo Nobel Saudi Arabia Ltd, Saudi Arabia
Yousuf Bin Ahmed Kanoo Co. Ltd, Saudi Arabia
40.00
12
40.00
14
Akzo Nobel Oman SAOC, Muscat, Oman
Omar Zawawi Establishment LLC, Oman
50.00
11
50.00
12
Akzo Nobel UAE Paints L.L.C., United Arab
Kanoo Group, United Arab Emirates
40.00
8
40.00
8
Emirates
Societe Tunisienne de Peintures Astral S.A.,
Several people
40.00
7
40.00
8
Megrine, Tunisia
International Paint (Korea) Ltd, Busan, South-Korea
Noroo Holdings, South Korea
40.00
11
40.00
6
Akzo Nobel Paints (Guangzhou) Limited,
Guangzhou Hi-tech Investment Group
10.00
5
10.00
5
Guangzhou, China
Corporation Ltd
Others
12
17
Total
211
215
Subscribed share capital
For further details on subscribed share capital, refer to
Note F in the Company financial statements.
Cumulative translation reserves comprise all foreign
exchange differences arising from the translation of the
financial statements of foreign operations, as well as from
the translation of intercompany loans with a permanent
nature and liabilities and derivatives that hedge the net
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.
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 shar
e, which
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
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Financial statements
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
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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
2021
2022
Plan
Plan
In € millions
DBO
assets
Total
DBO
assets
Total
Balance at the beginning of the period
(14,184)
15,014
830
(14,310)
15,330
1,020
(31)
Statement of income
Current service cost
(32)
—
(32)
(31)
—
Past service cost
22
—
22
—
—
—
Settlements
—
—
—
18
(18)
—
Net interest (charge)/income on net defined benefit (liability)/asset
(193)
206
13
(254)
272
18
Cost recognized in statement of income
(203)
206
3
(267)
254
(13)
(279)
Remeasurements recognized in Other comprehensive income
Actuarial (loss)/gain due to liability experience
(123)
—
(123)
(279)
—
Actuarial (loss)/gain due to liability financial assumption changes
289
—
289
3,754
—
3,754
Actuarial (loss)/gain due to liability demographic assumption changes
56
—
56
18
—
18
Actuarial loss due to buy-ins
—
(30)
(30)
—
(76)
(76)
Return on plan assets (less than)/greater than discount rate
—
(202)
(202)
—
(3,784)
(3,784)
Remeasurement effects recognized in Other comprehensive income
222
(232)
(10)
3,493
(3,860)
(367)
70
Cash flow
Employer contributions
—
94
94
—
70
Employee contributions
(2)
2
—
(2)
2
—
Benefits and administration costs paid from plan assets
852
(852)
—
842
(842)
—
Net cash flow
850
(756)
94
840
(770)
70
(1)
Other
Acquisitions/divestments/transfers
1
(1)
—
—
(1)
Changes in exchange rates
(996)
1,099
103
662
(760)
(98)
Total other
(995)
1,098
103
662
(761)
(99)
Balance at the end of the period
(14,310)
15,330
1,020
(9,582)
10,193
611
Asset restriction
(3)
(9)
Net balance sheet position
1,017
602
Presentation of Net balance sheet position
1,029
Other financial non-current assets
1,638
Post-retirement benefit provisions
(578)
(387)
Current portion of provisions
(43)
(40)
Net balance sheet position
1,017
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
2021
2022
Wholly or partly funded plans
14,005
9,229
Unfunded plans
179
246
Total
14,184
9,475
* Excludes other post-retirement benefit plans.
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
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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.
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.
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
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-
Plan assets
2021
2022
In € millions, at December 31
Total
Percentage of total
Total
Percentage of total
Equities
332
2
225
2
Debt - fixed interest government bonds
1,444
9
580
6
Debt - index-linked government bonds
3,221
21
1,230
12
Debt - corporate and other bonds
1,770
12
1,394
13
UK buy-in annuity policies
7,698
50
6,078
60
Cash and cash equivalents
204
1
166
2
Other
661
5
520
5
Total
15,330
100
10,193
100
Cash flows
Pensions
Other post-retirement benefits
In € millions
2022
2023
2022
2023
Regular contributions
43
41
11
11
Top-ups
13
8
—
—
Total
56
49
11
11
Sensitivity of DBO to change in assumptions
Other post-
ICIPF
CPS
Other
retirement
In € millions
UK
UK
pension plans
benefits
Total
Discount rate: 0.5% decrease
274
143
73
5
495
Price inflation: 0.5% increase*
158
85
38
—
281
Life expectancy: one year increase from age 60
367
86
41
4
498
Maturity information
Weighted average duration of DBO (years)
9.2
12.0
11.6
8.7
10.2
*
The sensitivity to price inflation assumption includes corresponding changes to all inflation-related compensation increases,
pensions in payment and pensions in deferment.
128
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Financial statements
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
Other post-
In € millions
Pensions
retirement benefits
2023
816
11
2024
818
11
2025
826
10
2026
832
10
2027
842
9
2028 - 2032
4,321
41
Key figures and assumptions by plan
2021
2022
Other post-
Other post-
ICIPF
CPS
Other pension
retirement
ICIPF
CPS
Other
retirement
In € millions or %
UK
UK
plans
benefits
Total
UK
UK pension plans
benefits
Total
Percentage of total DBO
61%
26%
12%
1%
100%
61%
25%
13%
1%
100%
Defined Benefit Obligation at year-end
(8,702)
(3,686)
(1,796)
(126)
(14,310)
(5,875)
(2,362)
(1,238)
(107)
(9,582)
Fair value of plan assets at year-end
9,563
4,353
1,414
—
15,330
6,293
2,895
1,005
—
10,193
Plan funded status
861
667
(382)
(126)
1,020
418
533
(233)
(107)
611
Restriction on asset recognition
—
—
(3)
—
(3)
—
—
(9)
—
(9)
Amounts recognized on the balance sheet
861
667
(385)
(126)
1,017
418
533
(242)
(107)
602
Percentage of total current service cost
9%
28%
63%
—
100%
6%
26%
68%
—
100%
Current service cost
(3)
(9)
(20)
—
(32)
(2)
(8)
(21)
—
(31)
Employer contributions
3
37
44
10
94
—
13
45
12
70
Discount rate
1.8%
1.9%
1.8%
3.3%
1.9%
4.9%
4.9%
4.6%
5.9%
4.9%
Rate of compensation increase
1.5%
1.4%
2.0%
—
1.5%
1.5%
1.4%
2.0%
—
1.5%
Inflation
3.5%
3.4%
2.3%
—
3.3%
3.3%
3.3%
2.3%
—
3.2%
Pension increases
3.2%
2.8%
2.3%
—
3.0%
3.1%
2.7%
2.2%
—
2.9%
Life expectancy (in years)
Currently aged 60
Males
26.2
26.2
26.2
25.8
26.2
26.2
26.2
25.7
25.8
26.1
Females
27.7
29.0
28.8
27.8
28.2
27.8
29.1
28.1
27.8
28.2
Currently aged 45, from age 60
Males
27.3
27.3
27.6
26.9
27.3
27.3
27.3
27.0
26.8
27.3
Females
28.9
30.2
30.0
28.8
29.4
29.0
30.2
29.4
28.8
29.3
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Financial statements
Key plan details for the two largest pension plans
1
ICI Pension Fund, UK
Akzo Nobel (CPS) Pension Scheme, UK
Type of plan
Defined benefit, based upon years of service and final
Defined benefit, based upon years of service and final
salary
salary
Benefits
Retirement pension for employee Dependents’ pensions
Retirement pension for employee Dependents’ pensions
on death of employee/pensioner
on death of employee/pensioner
Options for ill health early retirement
Options for ill health early retirement
Pension increases (main benefit
Annually linked to UK RPI with a maximum of 5%
Annually linked to UK CPI with a maximum of 5%
section)
Plan structure
Plans are set up under a trust and are tax approved
Plans are set up under a trust and are tax approved
Governance
Trustee directors:
Trustee directors:
Three member-nominated
Three member-nominated
Four appointed with the agreement of Law Debenture
Two company-nominated
One independent (Law Debenture)
One independent (Law Debenture)
Regulatory framework
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
Funding basis
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
Normally every three years
Latest completed valuation
March 31, 2020
March 31, 2020
Funding deficit at latest completed
£23 million (€27 million) surplus
£62 million (€73 million) deficit
valuation
1,2
Recovery plan
As there were sufficient assets to cover the Fund's
£26 million (€31 million) in 2021 and £4 million (€5
technical provisions, a recovery plan is not required
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,
March 31, 2023 (due to be completed before
2024)
June 30, 2024)
Asset allocation at March 31, 2022
Matching:
99.8%
84%
Return seeking:
0.2%
16%
Buy-in annuity contracts cover 99% of pensioner
The longevity hedge contract covers 48% of pensioner
liabilities and 84% of total liabilities
liabilities and 30% of total liabilities
Membership at March 31, 2022
Active
71
273
Deferred
5,338
5,427
Pensioner
35,032
16,570
Total
40,441
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
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%).
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Financial statements
Movements in other provisions
Liabilities to
Restructuring
Environmental
(former)
In € millions
of activities
costs
employees
Sundry
Total
Balance at January 1, 2022
43
66
132
99
340
Additions made during the year
49
10
15
66
140
Utilization
(41)
(14)
(14)
(62)
(131)
Amounts reversed during the year
(9)
(6)
(17)
(10)
(42)
Unwind of discount
—
(6)
(11)
(1)
(18)
Acquisitions
—
—
5
2
7
Changes in exchange rates
—
1
(3)
(1)
(3)
Balance at December 31, 2022
42
51
107
93
293
Non-current portion of provisions
1
38
88
40
167
Current portion of provisions
41
13
19
53
126
Balance at December 31, 2022
42
51
107
93
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.
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
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
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Financial statements
Net debt
Long-term
Short-term
Short-term Cash and cash
in € millions
borrowings
borrowings
investments
equivalents
Net debt
Net debt at January 1, 2021
2,771
119
(250)
(1,606)
1,034
Net cash from operating activities
—
—
—
(605)
(605)
Acquisitions
2
13
—
73
88
Investments in short-term investments
—
—
(56)
56
—
Repayments of short-term investments
—
—
247
(247)
—
Net cash from other investing activities
—
—
—
252
252
Buy-out of non-controlling interests
—
—
—
1
1
Unwind of discount and amortized cost
8
—
1
—
9
Proceeds from borrowings
—
1,143
—
(1,143)
—
Borrowings repaid
—
(590)
—
590
—
New/modification/disposal of lease contracts
62
(1)
—
—
61
Transfers from long-term to short-term
(855)
855
—
—
—
Movement bank overdrafts and short-term bank loans
—
19
—
(19)
—
Dividends
—
—
—
391
391
Share buyback
—
—
—
1,135
1,135
Net cash from discontinued operations
—
—
—
1
1
Changes in exchange rates
6
(2)
—
(31)
(27)
Net debt at December 31, 2021
1,994
1,556
(58)
(1,152)
2,340
Net debt at January 1, 2022
1,994
1,556
(58)
(1,152)
2,340
Net cash from operating activities
—
—
—
(263)
(263)
Acquisitions
71
2
—
588
661
Investments in short-term investments
—
—
(1,361)
1,361
—
Repayments of short-term investments
—
—
1,084
(1,084)
—
Net cash from other investing activities
—
—
—
230
230
Buy-out of non-controlling interests
—
—
—
—
—
Unwind of discount and amortized cost
9
5
—
—
14
Proceeds from borrowings
1,359
8,152
—
(9,511)
—
Borrowings repaid
—
(7,322)
—
7,322
—
New/modification/disposal of lease contracts
79
—
—
—
79
Transfers from long-term to short-term
(139)
139
—
—
—
Movement bank overdrafts and short-term bank loans
—
16
—
(16)
—
Dividends
—
—
—
379
379
Share buyback
—
—
—
669
669
Net cash from discontinued operations
—
—
—
9
9
Changes in exchange rates
(41)
(5)
(1)
18
(29)
Net debt at December 31, 2022
3,332
2,543
(336)
(1,450)
4,089
Analysis of net debt by category
In € millions, at December 31
2021
2022
Bonds issued
1,740
2,934
Lease liabilities
212
198
Other long-term borrowings
42
200
Long-term borrowings
1,994
3,332
Current portion of long-term borrowings
754
2
Current portion of lease liabilities
87
86
Debt to credit institutions
711
2,450
Other short-term borrowings
4
5
Short-term borrowings
1,556
2,543
Total borrowings
3,550
5,875
Short-term investments
(58)
(336)
Cash and cash equivalents
(1,152)
(1,450)
Net debt
2,340
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.
Bonds issued
In € millions, at December 31
2021
2022
1 3/4% 2014/24 (€500 million)
499
499
1 1/8% 2016/26 (€500 million)
497
498
1 5/8% 2020/30 (€750 million)
744
745
1 1/2% 2022/28 (€600 million)
—
595
2% 2022/32 (€600 million)
—
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%).
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Financial statements
132
Aggregated maturities of long-term borrowings
In € millions
2024-2027
After 2027
Bonds issued
997
1,937
Lease liabilities
153
45
Other long-term borrowings
175
25
Total
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
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.
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.
cash and cash equivalents was restricted (2021:
€14 million). Restricted cash is defined as cash that
cannot be accessed centrally due to regulatory or
Cash and cash equivalents
In € millions, at December 31
2021
2022
Cash on hand and in banks
877
922
Short-term investments with a life up
275
528
to three months
Included in cash and cash equiva-
1,152
1,450
lents in the balance sheet
Debt to credit institutions
(40)
(52)
Total per statement of cash flows
1,112
Trade and other payables
In € millions, at December 31
2021
2022
Trade payables
2,376
2,206
Taxes and social security
191
184
Amounts payable to employees
264
234
Interest
42
58
FX contracts
27
60
Dividends
6
4
Other liabilities
42
55
Total
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
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
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.
Changes in working capital as per consolidated
statement of cash flows
In € millions
2021
2022
Trade and other receivables
(240)
(95)
Inventories
(439)
(134)
Trade and other payables
274
(280)
Total
(405)
Purchase commitments for property, plant and equipment
TRANSACTIONS
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
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133
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
2021
2022
Nils Smedegaard Andersen, Chair
4,500
4,500
Byron Grote*
7,394
8,061
Pamela Kirby
—
—
Dick Sluimers
—
—
Patrick Thomas
—
—
Jolanda Poots-Bijl
—
—
Ester Baiget
—
—
Hans Van Bylen
—
—
* In the form of ADRs.
Shares held by the Board of Management
Number of shares at year-end
2021
2022
Greg Poux-Guillaume*
—
—
Maarten de Vries
14,643
21,766
*Appointed CEO as per November 1, 2022, replacing Thierry Vanlancker.
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
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.
Maturity of liabilities and cash outflows
Less than
Between
Over 5
In € millions
1 year
1 and 5 years
years
At December 31, 2021
Borrowings
1,469
1,006
776
Interest on borrowings
60
134
40
Lease liabilities
87
165
47
Trade and other payables
2,921
—
—
FX contracts (hedges)
Outflow
2,819
—
—
Inflow
(2,806)
—
—
Total
4,550
1,305
863
At December 31, 2022
Borrowings
2,457
1,172
1,962
Interest on borrowings
118
197
84
Lease liabilities
86
153
45
Trade and other payables
2,741
—
—
FX contracts (hedges)
Outflow
3,097
—
—
Inflow
(3,055)
—
—
Total
5,444
1,522
2,091
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.
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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
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:
FOREIGN EXCHANGE RISK
MANAGEMENT
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
Buy
Sell
Buy
Sell
In € millions
2021
2021
2022
2022
US dollar
263
413
784
692
Pound sterling
601
45
649
10
Chinese yuan
179
145
110
157
Colombian peso
348
1
—
1
Other*
391
745
278
821
Total
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
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
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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.
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
Carrying value per IFRS 9
category
Measured
Fair value
Measured at
at fair value
of items
Carrying
Out of scope
amortized
through profit
Total
measured at
In € millions
amount
of IFRS 7
1
cost
or loss
carrying value
amortized cost
330
2021 year-end
Financial non-current assets
2
2,076
1,766
302
8
310
Trade and other receivables
3
2,339
182
2,089
68
2,157
2,089
Short-term investments
58
—
—
58
58
—
Cash and cash equivalents
1,152
—
—
1,152
1,152
—
Total financial assets
5,625
1,948
2,391
1,286
3,677
2,419
Long-term borrowings
1,994
—
1,994
—
1,994
2,114
Short-term borrowings
1,556
—
1,556
—
1,556
1,570
Trade and other payables
4
2,948
455
2,466
27
2,493
2,466
Total financial liabilities
6,498
455
6,016
27
6,043
6,150
2022 year-end
311
Financial non-current assets
2
1,475
1,158
308
9
317
Trade and other receivables
3
2,447
214
2,215
18
2,233
2,215
Short-term investments
336
—
—
336
336
—
Cash and cash equivalents
1,450
—
—
1,450
1,450
—
Total financial assets
5,708
1,372
2,523
1,813
4,336
2,526
Long-term borrowings
3,332
—
3,332
—
3,332
3,031
Short-term borrowings
2,543
—
2,543
—
2,543
2,543
Trade and other payables
4
2,801
418
2,323
60
2,383
2,323
Total financial liabilities
8,676
418
8,198
60
8,258
7,897
1
Mainly includes pension assets (refer to Note 15), (non) income tax related
receivables (refer to Note 17), payables to employees and (non) income taxes payables
(refer to Note 22).
2
€308 million (2021: €302 million) relates to loans and receivables (refer to
Note 15), €9 million (2021: €8 million) relates to other than financial instruments
(refer to Note 15).
3
€2,215 million (2021: €2,089 million) relates to the remainder of trade and
other receivables (refer to Note 17) and €18 million (2021: €68 million) relates
to FX contracts.
4
€2,323 million (2021: €2,466 million) relates to the remainder of trade and other
payables (refer to Note 22) and €60 million (2021: €27 million) relates to
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,
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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
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
Sensitivity object
Sensitivity
Hypothetical impact
Foreign currencies:
We perform foreign currency sensitivity analysis by
A 10% (2021: 10%) strengthening of the euro
Profit €9 million (2021: profit €6 million);
applying an adjustment to the spot rates prevailing
versus US dollar
Other comprehensive income loss €41
at year-end. This adjustment is based on observed
million (2021: profit €1 million)
changes in the exchange rate in the past and manage-
A 10% (2021: 10%) strengthening of the euro
ment’s expectation for reasonably possible* future
versus the pound sterling
Profit €1 million (2021: profit €1 million)
movements over a longer term from a sensitivity test
perspective. We then apply the expected possible
A 10% (2021: 10%) strengthening of the euro
Profit €1 million (2021: €nil). Other compre-
volatility to revalue all monetary assets and liabilities
versus Chinese yuan
hensive income €nil (2021: profit €2 million)
(including derivative financial instruments) in a currency
other than the functional currency of the subsidiary in
A 10% (2021: 10%) strengthening of the euro
Profit €nil (2021: €nil). Other comprehensive
the balance sheet at year-end. These effects are of a
versus Colombian peso
income €nil (2021: loss €35 million)
fairly linear nature.
Interest rate:
We perform interest rate sensitivity analysis by applying
A 100 basis points increase of
Loss €16 million (2021: loss €11 million)
an adjustment to the interest rate curve prevailing
EUR interest rates
at year-end. This adjustment is based on observed
changes in the interest rate in the past and manage-
A 100 basis points increase of
Profit €1 million
(2021: €nil)
ment’s expectation for reasonably possible* future
USD interest rates
movements over a longer term from a sensitivity test
perspective. We then apply the expected possible
A 100 basis points increase of
Profit €1 million (2021: profit €1 million)
volatility to revalue all interest bearing assets and liabili-
GBP interest rates
ties. These effects are of a fairly linear nature.
*
This analysis does not indicate any probability of such changes occurring; nor does it preclude
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
Note 28 SUBSEQUENT EVENTS
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Statement of income
In € millions, for the year ended
December 31
Note
2021
2022
Revenue
A
5
4
Gross profit
5
4
General and administrative expenses
(10)
(46)
Other results
—
(1)
(10)
(47)
Operating income
(5)
(43)
Financing income and expenses
B
(25)
(71)
Net income from subsidiaries, associates
D
871
440
and joint ventures
846
369
Profit before tax
841
326
Income tax
(12)
26
Net income
829
352
Balance sheet, before allocation of profit
In € millions, at December 31
Note
2021
2022
Assets
Non-current assets
Intangible assets
C
91
99
Deferred tax assets
30
51
Financial non-current assets
D
12,497
12,656
Total non-current assets
12,618
12,806
Current assets
Short-term receivables
E
154
223
Short-term investments
G
–
290
Cash and cash equivalents
G
404
643
Total current assets
558
1,156
Total assets
13,176
13,962
Equity and liabilities
Equity
Subscribed share capital
91
87
Cash flow hedge reserve
(19)
(34)
Other legal reserves
275
296
Cumulative translation reserves
(493)
(656)
Actuarial gains and losses
(2,613)
(2,902)
Other reserves
7,435
7,265
Undistributed results
749
277
Shareholders’ equity
F
5,425
4,333
Provisions
4
3
Non-current liabilities
Long-term borrowings
G
6,225
7,102
Total non-current liabilities
6,225
7,102
Current liabilities
Short-term borrowings
G
1,425
2,403
Other current liabilities
H
97
121
Total current liabilities
1,522
2,524
Total equity and liabilities
13,176
13,962
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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
2
5
Financing income - subsidiaries
77
53
Financing expense - third parties
(94)
(75)
Financing expense - subsidiaries
(6)
(39)
Net Interest on net debt
(21)
(56)
Other items
(4)
(15)
Net other financing income/(expenses)
(4)
(15)
Total
(25)
(71)
Note C INTANGIBLE ASSETS
Intangible assets mainly include (internally developed)
software.
Intangible assets
In € millions
Other intangibles
Balance at January 1, 2021
Cost of (internally developed) intangibles
82
Accumulated amortization
(11)
Carrying value at January 1, 2021
71
Movements in 2021
Additions
31
Amortization
(11)
Total movements
20
Cost of (internally developed) intangibles
113
Accumulated amortization
(22)
Balance at December 31, 2021
91
Movements in 2022
Additions
26
Amortization
(18)
Total movements
8
Cost of (internally developed) intangibles
139
Accumulated amortization
(40)
Balance at December 31, 2022
99
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Note D
FINANCIAL NON-CURRENT ASSETS
Movements in non-current assets
Subsidiaries
Other non-
In € millions
Share in capital
Loans
current assets
Total
Balance at January 1, 2021
9,284
2,851
90
12,225
Investments/acquisitions/capital contributions
41
—
—
41
Divestments/capital repayments/dividends
(61)
—
—
(61)
Net income from subsidiaries
871
—
—
871
Equity-settled transactions
11
—
—
11
Loans granted
—
293
—
293
Loans transferred
—
29
—
29
Repayment of loans
—
(1,298)
—
(1,298)
Changes in exchange rates
337
57
—
394
Post-retirement benefits
(8)
—
—
(8)
Balance at December 31, 2021
10,475
1,932
90
12,497
Impact IAS 29 Hyperinflation Türkiye
16
—
—
16
Balance at January 1, 2022
10,491
1,932
90
12,513
Investments/acquisitions/capital contributions
458
—
2
460
Divestments/capital repayments/dividends
(1,058)
—
—
(1,058)
Net income from subsidiaries
440
—
—
440
Equity-settled transactions
12
—
—
12
Cash flow hedges
(3)
—
—
(3)
Loans granted
—
987
—
987
Repayment of loans
—
(244)
—
(244)
Changes in exchange rates
(180)
19
—
(161)
Post-retirement benefits
(290)
—
—
(290)
Balance at December 31, 2022
9,870
2,694
92
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.
Note E
SHORT-TERM RECEIVABLES
Short-term receivables
In € millions, at December 31
2021
2022
Receivables from subsidiaries
133
202
FX contracts
14
18
Other receivables
7
3
Total
154
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
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Statement of changes in equity
Subscribed
Legal reserves
Actuarial
Undistributed
Shareholders'
Cash flow
Other
Cumulative trans-
In € millions
share capital
hedges
legal reserves
lation reserves
gains & losses
Other reserves
results
equity
Balance at January 1, 2021
95
—
246
(873)
(2,587)
8,317
548
5,746
Changes in exchange rates in respect of
—
—
—
380
—
—
—
380
subsidiaries, associates and joint ventures
Other comprehensive income/(expense)
—
(19)
—
—
—
—
—
(19)
Post-retirement benefits
—
—
—
—
(26)
—
—
(26)
Net income
—
—
—
—
—
—
829
829
Comprehensive income
—
(19)
—
380
(26)
—
829
1,164
Dividend
—
—
—
—
—
—
(365)
(365)
Equity-settled transactions
—
—
—
—
—
16
—
16
Share buyback
(4)
—
—
—
—
(1,131)
—
(1,135)
Acquisition of non-controlling interests
—
—
—
—
—
(1)
—
(1)
Addition to other reserves
—
—
29
—
—
234
(263)
—
Balance at December 31, 2021
91
(19)
275
(493)
(2,613)
7,435
749
5,425
Impact IAS 29 Hyperinflation Türkiye*
—
—
—
—
—
16
—
16
Balance at January 1, 2022
91
(19)
275
(493)
(2,613)
7,451
749
5,441
Changes in exchange rates in respect of
—
—
—
(163)
—
—
—
(163)
subsidiaries, associates and joint ventures
Cash flow hedges
—
(15)
—
—
—
—
—
(15)
Post-retirement benefits
—
—
—
—
(289)
—
—
(289)
Net income
—
—
—
—
—
—
352
352
Comprehensive income
—
(15)
—
(163)
(289)
—
352
(115)
Dividend
—
—
—
—
—
—
(347)
(347)
Equity-settled transactions
—
—
—
—
—
14
—
14
Share buyback
(4)
—
—
—
—
(656)
—
(660)
Addition to other reserves
—
—
21
—
—
456
(477)
—
Balance at December 31, 2022
87
(34)
296
(656)
(2,902)
7,265
277
4,333
*
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
2021
2022
Shareholders' equity at year-end
5,425
4,333
Subscribed share capital
(91)
(87)
Subsidiaries' restrictions to transfer funds
(174)
(190)
Reserve for development costs
(101)
(106)
Unrestricted reserves
5,059
3,950
the total number of shares outstanding (and to restrict or
exclude the pre-emptive rights to those shares) and (ii)
to acquire shares in the capital of the company, provided
that the shares that will at any time be held will not exceed
10% of the issued share capital. The issue or repurchase
of shares requires the approval of the Supervisory Board.
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.
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.
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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
2021
2022
Bonds issued
1,740
2,934
Debt from subsidiaries*
4,485
4,168
Long-term borrowings
6,225
7,102
Current portion of long-term
749
—
borrowings
Debt to credit institutions
672
2,399
Other
4
4
Short-term borrowings
1,425
2,403
Total borrowings
7,650
9,505
Short-term investments
—
(290)
Cash and cash equivalents
(404)
(643)
Net debt
7,246
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
2021
2022
1 3/4% 2014/24 (€500 million)
499
499
1 1/8% 2016/26 (€500 million)
497
498
1 5/8% 2020/30 (€750 million)
744
745
1 1/2% 2022/28 (€600 million)
—
595
2% 2022/32 (€600 million)
—
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.
Cash and cash equivalents
In € millions, at December 31
2021
2022
Cash on hand and in banks
304
293
Deposits and money markets funds
100
350
with a maturity less than three months
Included in cash and cash equiva-
404
643
lents in the balance sheet
Note H OTHER CURRENT
LIABILITIES
Other current liabilities
In € millions, at December 31
2021
2022
Payables to subsidiairies*
30
23
FX contracts
27
60
Other suppliers
1
2
Interest payable
22
33
Other liabilities
17
3
Total
97
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.
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142
Note I
FINANCIAL INSTRUMENTS
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.
Note K
INDEPENDENT AUDITOR’S FEES
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.
2022
Network
In the
outside the
In € millions
Netherlands
Netherlands
Total
Audit of the financial
3.7
5.5
9.2
statements
Other audit services
0.3
0.1
0.4
Tax services
—
—
—
Other non-audit
—
—
—
services
Total
4.0
5.6
9.6
Fees PricewaterhouseCoopers
Accountants N.V.
2021
Network
In the
outside the
In € millions
Netherlands
Netherlands
Total
Audit of the financial
4.1
4.3
8.4
statements
Other audit services
0.2
0.1
0.3
Tax services
—
—
—
Other non-audit
—
—
—
services
Total
4.3
4.4
8.7
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
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144
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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.
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.
OTHER INFORMATION
145
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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 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
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.
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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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.
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
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.
The outline of our audit approach was as follows:
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.
Overall group
materiality
€43.75 million (2021: €55 million).
Basis for
determining
materiality
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.
Rationale for
benchmark
applied
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.
Component
materiality
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.
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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.
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
64%
Total assets
72%
Profit before tax
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.
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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.
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.
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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.
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.
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.
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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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
• 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.
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.
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
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).
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.
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).
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
– 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
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.
151
AkzoNobel Report 2022
|
Financial statements
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.
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
• 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.
152
AkzoNobel Report 2022
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)
• Life-changing injuries (number)
• Lost time injury rate employees/temporary workers
(per 200,000 hours worked)
• Lost time injury rate contractors (per 200,000 hours
worked)
• Regulatory actions – Level 4 (number)
• Total reportable injury rate employees/temporary
workers (per 200,000 hours worked)
• Total reportable injury rate contractors
(per 200,000 hours worked)
• Loss of primary containment – Level 1 (number)
• Loss of primary containment – Level 2 (number)
• 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 CO
2
(e) emissions
(Scope 1) (kiloton)
• Greenhouse gas emissions – Direct CO
2
(e) emissions
(Scope 1) (kg per ton of production)
• Greenhouse gas emissions – Indirect CO
2
(e) emissions
(Scope 2) (kiloton)
• Greenhouse gas emissions – Indirect CO
2
(e) emissions
(Scope 2) (kg per ton of production)
• Greenhouse gas emissions – Total CO
2
(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 m
3
)
• Total freshwater use (m
3
per ton of production)
• Total freshwater consumption (excluding water related
to product) (in million m
3
)
• Total freshwater consumption (excluding water related
to product) (m
3
per ton of production)
• Suppliers in sustainability program – In line with our
expectation (in % against baseline)
• Suppliers in sustainability program – Under development
(in % against baseline)
• Suppliers participating in sustainability program
(in % against baseline)
• 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
LIMITED ASSURANCE
REPORT OF THE
INDEPENDENT AUDITOR
153
AkzoNobel Report 2022
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.
154
AkzoNobel Report 2022
FINANCIAL SUMMARY
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”.
Consolidated statement of income
In € millions, for the year ended December 31
2013
2014
2015
2016
3,4
2017
2018
2019
5
2020
2021
2022
Revenue
14,590
14,296
14,859
9,434
9,612
9,256
9,276
8,530
9,587
10,846
Operating income
958
987
1,573
923
825
605
841
963
1,118
708
Adjusted operating income
1
897
1,072
1,462
928
905
798
991
1,099
1,092
789
Financing income and expenses
(200)
(156)
(114)
(91)
(78)
(52)
(76)
(69)
(39)
(124)
Income tax
(111)
(252)
(416)
(234)
(253)
(118)
(230)
(241)
(246)
(214)
Results from associates and joint ventures
14
21
17
18
17
20
20
25
26
18
Profit/(loss) for the period from continuing operations
661
600
1,060
616
511
455
555
678
859
388
Discontinued operations
131
18
6
436
393
6,274
22
(7)
6
(10)
Non-controlling interests
(68)
(72)
(87)
(82)
(72)
(55)
(38)
(41)
(36)
(26)
Net income, attributable to shareholders
724
546
979
970
832
6,674
539
630
829
352
Common shares, in millions at year-end
242.6
246.0
249.0
252.2
252.6
256.2
199.6
190.6
181.6
174.4
Dividend
2
210
212
222
239
1,287
390
1,423
366
365
347
Number of employees at year-end
49,600
47,200
45,600
36,300
35,700
34,500
33,800
32,200
32,800
35,200
Average number of employees
50,200
48,200
46,100
36,200
36,200
34,900
34,200
33,000
32,700
35,100
Employee benefits
2,950
2,824
2,728
1,794
1,935
1,976
1,875
1,850
1,773
1,960
Average revenue per employee (in €1,000)
291
297
322
261
266
265
271
258
293
309
Average operating income per employee (in €1,000)
19
20
34
25
23
17
25
29
34
20
Ratios
ROS%
1
6.1
7.5
9.8
9.8
9.4
8.6
10.7
12.9
11.4
7.3
OPI margin%
1
6.6
6.9
10.6
9.8
8.6
6.5
9.1
11.3
11.7
6.5
ROI%
1
9.0
10.9
14.0
14.4
13.9
12.6
14.1
16.1
16.0
9.8
Net income in % of shareholders’ equity
12.9
9.5
15.1
14.8
14.2
56.4
8.5
11.0
15.3
8.1
Employee benefits in % of revenue
20.2
19.8
18.4
19.0
20.1
21.3
20.2
21.7
18.5
18.1
Interest coverage (operating income / net interest on net debt)
5.1
8.6
16.2
13.2
12.3
8.0
14.3
18.5
18.0
8.1
Per share information
Net income
3.00
2.23
3.95
3.87
3.31
26.19
2.53
3.29
4.48
2.01
Adjusted earnings per share
2.62
2.81
4.02
3.80
4.40
1.91
3.10
3.88
4.07
2.45
Shareholders’ equity
23.06
23.53
26.04
25.99
23.22
46.19
32.33
30.26
30.32
25.43
Highest share price during the year
56.08
60.77
74.81
64.74
82.64
82.70
91.86
91.60
107.80
98.50
Lowest share price during the year
42.65
47.63
55.65
50.17
59.11
68.82
69.12
48.50
83.50
56.22
Year-end share price
55.71
57.65
61.68
59.39
73.02
70.40
90.69
87.86
96.50
62.56
155
AkzoNobel Report 2022
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.
Consolidated balance sheet
In € millions at December 31
2013
2014
2015
2016
1
2017
2018
2019
2
2020
2021
2022
Intangible assets
3,906
4,142
4,156
4,413
3,409
3,458
3,625
3,554
3,690
4,072
Property, plant and equipment
3,589
3,835
4,003
4,190
1,832
1,748
1,700
1,621
1,800
1,968
Right-of-use assets
–
–
–
–
–
–
374
324
304
291
Other non-current assets
2,219
2,148
2,125
1,736
1,894
1,965
2,541
2,614
2,736
2,166
Total non-current assets
9,714
10,125
10,284
10,339
7,135
7,171
8,240
8,113
8,530
8,497
Inventories
1,426
1,545
1,504
1,532
1,094
1,139
1,139
1,159
1,650
1,843
Receivables
2,622
2,831
2,810
2,846
2,026
2,215
2,196
2,049
2,488
2,615
Short-term investments
–
–
–
–
–
5,460
138
250
58
336
Cash and cash equivalents
2,098
1,732
1,365
1,479
1,322
2,799
1,271
1,606
1,152
1,450
Assets held for sale
203
66
–
–
4,601
–
–
–
—
—
Total current assets
6,349
6,174
5,679
5,857
9,043
11,613
4,744
5,064
5,348
6,244
Shareholders’ equity
5,594
5,790
6,484
6,553
5,865
11,834
6,350
5,746
5,425
4,333
Non-controlling interests
427
477
496
481
442
204
218
204
211
215
Total equity
6,021
6,267
6,980
7,034
6,307
12,038
6,568
5,950
5,636
4,548
Provisions
1,938
2,143
1,865
1,938
964
899
981
896
812
554
Long-term borrowings
2,666
2,527
2,161
2,644
2,300
1,799
2,042
2,771
1,994
3,332
Other non-current liabilities
389
412
360
367
285
368
391
467
567
561
Total non-current liabilities
4,993
5,082
4,386
4,949
3,549
3,066
3,414
4,134
3,373
4,447
Short-term borrowings
961
811
430
87
973
599
169
119
1,556
2,543
Other current liabilities
3,438
3,634
3,716
3,704
2,912
2,870
2,602
2,742
3,164
3,037
Current portion of provisions
601
494
451
422
241
211
231
232
149
166
Liabilities held for sale
49
11
–
–
2,196
–
–
–
—
—
Total current liabilities
5,049
4,950
4,597
4,213
6,322
3,680
3,002
3,093
4,869
5,746
Average invested capital
3
10,007
9,871
10,475
6,422
6,494
6,340
7,026
6,834
6,829
8,062
Capital expenditures
4
666
588
651
634
613
184
214
258
288
292
Depreciation
472
477
487
206
202
181
293
297
281
281
Operating Working Capital
5
1,384
1,418
1,385
1,405
927
898
1,068
878
1,247
1,760
Net debt
1,529
1,606
1,226
1,252
1,951
(5,861)
802
1,034
2,340
4,089
Ratios
Equity/non-current assets
0.62
0.62
0.68
0.68
0.88
1.68
0.80
0.73
0.66
0.54
Inventories and receivables/other current liabilities
1.18
1.20
1.16
1.18
1.07
1.17
1.28
1.17
1.31
1.47
Operating working capital as % of revenue
6
9.9
10.1
9.7
10.2
10.2
9.7
11.9
9.9
13.0
16.9
156
AkzoNobel Report 2022
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.
Segment statistics
In € millions, for the year ended December 31
2013
2014
2015
2016
2017
2018
2019
1,2
2020
2021
3
2022
Decorative Paints
Revenue
1
4,174
3,909
4,007
3,835
3,898
3,699
3,670
3,558
3,979
4,371
Operating income
398
248
345
366
334
308
425
551
622
392
Adjusted operating income
199
248
345
357
351
346
418
573
580
397
ROS%
4.8
6.3
8.6
9.3
9.0
9.4
11.4
16.1
14.6
9.1
OPI margin%
9.5
6.3
8.6
9.5
8.6
8.3
11.6
15.5
15.6
9.0
Average invested capital
2,896
2,824
2,959
2,783
2,803
2,798
3,106
2,799
2,872
3,678
ROI%
6.9
8.8
11.7
12.8
12.5
12.4
13.4
20.5
20.2
10.8
Capital expenditures
171
143
158
107
112
50
62
77
108
91
Average number of employees
16,800
15,500
15,100
14,800
14,700
14,100
12,900
12,100
12,500
13,800
Average revenue per employee (in €1,000)
248
252
265
259
265
262
284
294
318
317
Average operating income per employee (in €1,000)
24
16
23
25
23
22
33
46
50
28
Performance Coatings
Revenue
1
5,571
5,589
5,955
5,665
5,775
5,587
5,549
4,957
5,603
6,472
Operating income
525
545
792
735
668
577
565
665
616
444
Adjusted operating income
525
545
792
759
669
629
688
700
614
493
ROS%
9.4
9.8
13.3
13.4
11.6
11.3
12.4
14.1
11.0
7.6
OPI margin%
9.4
9.8
13.3
13.0
11.6
10.3
10.2
13.4
11.0
6.9
Average invested capital
2,463
2,480
2,692
2,586
2,860
3,066
3,325
3,388
3,520
3,894
ROI%
21.3
22.0
29.4
29.4
23.4
20.5
20.7
20.7
17.4
12.7
Capital expenditures
143
143
147
159
129
107
113
146
147
167
Average number of employees
21,300
21,000
19,700
19,300
19,800
19,200
18,000
17,500
17,000
18,000
Average revenue per employee (in €1,000)
262
266
302
294
292
291
308
283
330
360
Average operating income per employee (in €1,000)
25
26
40
38
34
30
31
38
36
25
157
AkzoNobel Report 2022
1
At year-end.
2
Includes the impact of the adoption of IFRS 16 “Leases”.
3
Previously reported as South America.
Regional statistics
In € millions
2018
2019
2
2020
2021
2022
2018
2019
2
2020
2021
2022
2018
2019
2
2020
2021
2022
The Netherlands
North America
China
Revenue by destination
318
359
342
335
319
1,233
1,246
1,114
1,163
1,416
1,329
1,268
1,205
1,418
1,396
Revenue by origin
458
484
434
445
409
1,263
1,278
1,126
1,194
1,445
1,321
1,271
1,198
1,389
1,387
Capital expenditures
25
42
46
45
45
20
32
43
37
42
13
15
24
30
32
Average invested capital
1,560
1,622
1,713
1,701
2,038
716
707
689
784
899
732
908
852
876
878
Number of employees
1
2,400
2,400
2,300
2,400
2,300
3,000
3,100
3,000
3,100
3,100
5,300
4,900
4,500
4,400
4,300
UK
Latin America
3
Other Asian countries and Pacific
Revenue by destination
818
838
838
882
900
716
709
601
744
1,298
1,538
1,548
1,282
1,454
1,703
Revenue by origin
918
951
975
1,034
1,092
718
674
588
724
1,282
1,482
1,525
1,215
1,416
1,647
Capital expenditures
29
16
15
26
24
12
11
11
15
16
29
32
44
61
62
Average invested capital
758
850
623
553
503
335
350
290
315
823
706
773
768
684
834
Number of employees
1
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
3,304
3,308
3,147
3,591
3,814
Revenue by origin
3,096
3,093
2,994
3,385
3,584
Capital expenditures
56
66
75
74
71
Average invested capital
1,533
1,816
1,899
1,916
2,087
Number of employees
1
11,100
11,000
11,000
11,300
11,100
158
AkzoNobel Report 2022
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.
BBS
Behavior-based safety. A global program run at all
AkzoNobel locations.
Business Partner Code of Conduct
Explains what we stand for as a company, what we value
and how we run our business. It brings our core values of
safety, integrity and sustainability to life and shows what
they mean in practice.
Capital expenditures
The total of investments in property, plant and equipment
and investments in intangible assets.
Carbon footprint
The total amount of greenhouse gas (GHG) emissions
caused during a defined period of a product’s lifecycle.
It is expressed in terms of the amount of carbon dioxide
equivalents CO
2
(e) emitted. Greenhouse gases include
CO
2
, CO, CH
4
, N
2
O 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.
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.
EMEA
Europe, Middle East and Africa.
Emissions and waste
We report emissions to air, land and water for those
substances which may have an impact on people or the
environment: CO
2
, NOx and SOx, VOCs, hazardous and
non-hazardous waste. Definitions are in the Sustainability
statements.
HSE&S
Health, safety, environment and security.
Identified items
Identified items are special charges and benefits, results
on acquisitions and divestments, major restructuring and
impairment charges and charges related to major legal,
environmental and tax cases.
Invested capital
Total assets (excluding cash and cash equivalents,
short-term investments, investments in associates, the
receivable from pension funds in an asset position, assets
held for sale) less current income tax payable, deferred tax
liabilities and trade and other payables.
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.
GLOSSARY
159
AkzoNobel Report 2022
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.
160
AkzoNobel Report 2022
INDEX
2022 results at a glance
2
Acquisitions
7, 109
AkzoNobel Cares
46
Assurance report of the independent auditor
152
Audit Committee
66
Automotive and Specialty Coatings
20
Behaviors
13
Board of Management
58, 59, 60
Borrowings
132, 133
Capital markets
96
Carbon footprint
32
Case studies
10, 19, 28, 84
Cash, cash flow and net debt
14, 132, 133
CEO statement
4
Circularity
38
Climate change
32
Code of Conduct
72
Company financial statements
138
Company purpose
Inside cover
Consolidated balance sheet
100
Consolidated statement of cash flows
101
Consolidated statement of changes in equity
102
Consolidated statement of comprehensive income
99
Consolidated statement of income
99
Core values
13
Corporate governance
70
COVID-19
4, 6
Decorative Paints
16-18
Dividend proposal
8, 66, 97
Earnings per share
6, 8, 119
Emissions
32, 33, 35
Employees
8, 41, 42, 44
Energy
33
Executive Committee
58, 59, 65
Financial instruments
143
Financial summary
154
Grow & Deliver
13
How we created value
6
Human rights
50
Independent auditor’s report
145
Industrial Coatings
22
Innovation
15
Intangible assets
120
Internal controls
66, 77
Invested capital
6, 9
“Let’s Colour”
10, 46
Marine and Protective Coatings
24
Net debt
8, 132
Nomination Committee
68
Operating income
7, 114
Outlook
9
Paint the Future
15, 51
People. Planet. Paint.
Inside cover
Pensions
126
Performance Coatings
20-27
Powder Coatings
26
Product stewardship
48, 49
Profit allocation
65, 144
Property, plant and equipment
121
Raw materials
4, 14
Regional statistics
157
Remuneration
85, 134
Remuneration Committee
67
Report of the Supervisory Board
62
Resource productivity
38
Return on investment
3
Return on sales
3
Risk management
78
Safety
41, 50
Segment information
110
Shareholders’ equity
140
Strategy
13
Supervisory Board
62
Supervisory Board Chair’s statement
61
Supplier sustainability
49
Sustainable Development Goals (SDGs)
31
Sustainable solutions
2, 34, 37, 40, 47, 48
Sustainability statements
29
Talent management
64
Waste
8, 38
Water
8, 38
161
AkzoNobel Report 2022
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
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.
Female executives
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
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.
Occupational illness rate employees
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.
Loss of primary containment –
Level 1 and 2
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
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
AkzoNobel Cares (number of projects
and number of people empowered)
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.
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AkzoNobel Report 2022
Environmental
Energy use
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
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)
The total greenhouse gas emissions from processes and combustion at our facilities and indirect emissions from purchased energy in absolute measures (Mt CO
2
e) and kg CO
2
e 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 CO
2
in line with the GHG Protocol. The other gases from the GHG Protocol are considered immaterial and
not actively measured.
Volatile organic compounds
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
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
Hazardous waste is waste that is classified and regulated as such according to the national, state, provincial or local legislation in place.
Total waste to landfill
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.
Total fresh water use and consumption
Fresh water use as absolute measure (million m
3
) and m
3
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 m
3
) and m
3
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
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.
Cradle-to-grave carbon footprint
(Scope 1, 2, and 3)
Our CO
2
(e) footprint in million tons of CO
2
(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.
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AkzoNobel Report 2022
|
Appendix
Ownership %
1
Argentina
Akzo Nobel Argentina S.A.
Buenos Aires
100
Aruba
Arubaanse Verffabriek N.V.
Oranjestad
50.394
Australia
Akzo Nobel Coatings (Holdings) Pty Limited
Sunshine
100
Akzo Nobel Pty Limited
Sunshine
100
Austria
Akzo Nobel Coatings GmbH
Salzburg
100
Akzo Nobel Holding Österreich GmbH
Vienna
100
Belgium
Akzo Nobel Paints Belgium NV
Vilvoorde
100
Auto Body Services CV (ABS)
Vilvoorde
84.615
Cleming BV
Vilvoorde
100
International Paint (Belgium) NV
Vilvoorde
100
Bolivia
Pinturas Coral De Bolívia Ltda
Santa Cruz de la Sierra
100
Botswana
Dulux (Botswana) (Pty) Limited
Gaborone
100
Brazil
Akzo Nobel Ltda
Barueri
100
Canada
Akzo Nobel Coatings Ltd
Ontario
100
Akzo Nobel Wood Coatings Ltd
Port Hope
100
Cayman Islands
Ichem Reinsurance Company Limited
George Town
100
ICI International Investments
George Town
100
Chile
International Paint (Akzo Nobel Chile) Ltda
Santiago
100
China
Akzo Nobel (China) Investment Co., Ltd.
Shanghai
100
Akzo Nobel Car Refinishes (Suzhou) Co, Ltd.
Suzhou
100
Akzo Nobel Chang Cheng Coatings (Guangdong) Co., Ltd.
Shenzhen
100
Akzo Nobel Coatings (Dongguan) Co., Ltd.
Dongguan
100
Akzo Nobel Coatings (Jiaxing) Co., Ltd.
Jiashan
100
Akzo Nobel Coatings (Tianjin) Co., Ltd.
Tianjin
100
Akzo Nobel Decorative Coatings (China) Ltd
Guangzhou
100
Akzo Nobel Decorative Coatings (Langfang) Co., Ltd.
Langfang
100
Akzo Nobel International Paint (Suzhou) Co., Ltd.
Suzhou
100
Akzo Nobel Paints (Chengdu) Co., Ltd.
Chengdu
100
Akzo Nobel Paints (Guangzhou) Co., Ltd.
Guangzhou
90
Akzo Nobel Paints (Shanghai) Co., Ltd.
Shanghai
100
Akzo Nobel Performance Coatings (Changzhou) Co., Ltd.
Changzhou
100
Akzo Nobel Performance Coatings (Shanghai) Co., Ltd.
Shanghai
100
Akzo Nobel Powder Coatings (Chengdu) Co., Ltd.
Chengdu
100
Akzo Nobel Powder Coatings (Langfang) Co., Ltd.
Langfang
100
Akzo Nobel Powder Coatings (Wuhan) Co., Ltd. Wuhan
100
International Paint of Shanghai Co., Ltd.
Shanghai
51
Colombia
AkzoNobel Colombia S.A.S.
Medellin
100
Anhidridos y Derivados de Colombia S.A.S.
Medellin
100
Cacharreria Mundial S.A.S.
Medellin
100
Compania Global de Pinturas S.A.S.
Medellin
100
Interquim S.A.S.
Medellin
100
Oceanic Paints S.A.S.
Medellin
60
Costa Rica
Pintuco Costa Rica PCR, S.A.
Cartago
100
Curacao
Macomoca B.V.
Willemstad
100
Pintuco Curacao B.V.
Willemstad
100
Czech Republic
Akzo Nobel Coatings CZ, a.s.
Prague
100
Denmark
Akzo Nobel Deco A/S
Copenhagen
100
International Farvefabrik A/S
Herlev
100
Ecuador
Interquimec S.A.
Quito
100
Pinturas Ecuatorianas S.A.
Guayaquil
100
Poliquim, Polimeros y Quimicos C.A.
Guayaquil
100
Egypt
Akzo Nobel Egypt LLC
6th of October City
100
Akzo Nobel Powder Coatings S.A.E.
Giza
100
El Salvador
Pintuco el Salvador S.A. de C.V.
San Salvador
100
Estonia
Akzo Nobel Baltics AS
Tallinn
100
Eswatini
Dulux Swaziland (Pty) Limited
Matsapha
100
Finland
Oy International Paint (Finland) Ab
Helsinki
100
France
Akzo Nobel Decorative Paints France S.A.
Thiverny
99.983
Akzo Nobel Distribution SAS
Corbas
99.975
Akzo Nobel SAS
Montataire
100
Mapaero SAS
Pamiers
100
SAS BOUCHER
Pamiers
100
Germany
Akzo Nobel Coatings GmbH
Stuttgart
100
Akzo Nobel Deco GmbH
Wunstorf
100
Akzo Nobel GmbH
Cologne
100
Akzo Nobel Hilden GmbH
Hilden
100
Akzo Nobel Powder Coatings GmbH
Reutlingen
100
International Farbenwerke GmbH
Börnsen
100
Schramm Coatings GmbH
Offenbach am Main
100
Schramm Holding GmbH
Offenbach am Main
100
Greece
Akzo Nobel Anonymous Company of Paints and Related Products
Athens
100
Varnishes and Paints Industry Vivechrom Dr. Stefanos D. Pateras S.A.
Mandra Attica
79.184
Guatemala
Pintuco Guatemala S.A.
Guatemala
100
Guernsey
Impkemix Trustee Limited
St. Peter Port
100
Honduras
Pintuco de Honduras, S.A.
Choloma
100
Hong Kong SAR
2
Akzo Nobel Chang Cheng Limited
Hong Kong
100
Akzo Nobel HK (Holdings) Limited
Hong Kong
100
Akzo Nobel Paints Limited
Hong Kong
100
International Paint (East Russia) Limited
Hong Kong
51
International Paint (Hong Kong) Limited
Hong Kong
100
Mapaero HK Limited
Hong Kong
100
Schramm Hong Kong Co., Limited
Hong Kong
100
Hungary
Akzo Nobel Coatings Zrt
Budapest
100
India
Akzo Nobel Global Business Services LLP
Pune
100
Akzo Nobel India Limited
Kolkata
74.757
ICI India Research & Technology Centre
Mumbai
18.689
Indonesia
PT Akzo Nobel Car Refinishes Indonesia
Jakarta
100
PT Akzo Nobel Wood Finishes and Adhesives Indonesia
Jakarta
100
PT ICI Paints Indonesia
Jakarta
55
PT International Paint Indonesia
Jakarta
100
Ireland
Akzo Nobel (CR9) Limited
Dublin
100
Akzo Nobel Car Refinishes (Ireland) Limited
Dublin
100
Dulux Paints Ireland Limited
3
Cork
100
ICI Fertilisers (Ireland) Limited
Cork
100
ICI Ireland Limited
Cork
100
Italy
Akzo Nobel Coatings S.P.A.
Como
100
Japan
Akzo Nobel Coatings K.K.
Tokyo
100
Kenya
Akzo Nobel Kenya Limited
Nairobi
100
Kuwait
International Warba Coatings Paint Mfg Co. W.L.L.
Kuwait
49
Latvia
Akzo Nobel Baltics SIA
Riga
100
Lithuania
Akzo Nobel Baltics, UAB
Vilnius
100
Malaysia
Akzo Nobel Industrial Coatings Sdn Bhd
Kuala Lumpur
100
Akzo Nobel Paints (Malaysia) Sdn Bhd
Kuala Lumpur
59.949
Akzo Nobel Paints Marketing Sdn Bhd
Selangor
59.949
Colourland Paints Sdn Bhd
Selangor
59.949
International Paint Sdn Bhd
Johor Darul Takzim
70
Mauritius
Coloris Ltd
Les Pailles
100
Mauvilac Industries Limited
Les Pailles
100
Mexico
Akzo Nobel Performance Coatings S.A. de C.V. Mexico City
100
Morocco
Akzo Nobel Coatings S.A.
Casablanca
59.628
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
164
AkzoNobel Report 2022
|
Appendix
Akzo Nobel Performance Coatings Morocco S.A.R.L.
Casablanca
100
Distral Maroc S.A.
Rabat
59.608
Sadvel S.A.
Casablanca
59.625
Myanmar
Akzo Nobel (M) Co. Ltd.
Yangon
100
Netherlands
4
*Akzo Nobel (C.) Holdings B.V.
Woerden
100
Akzo Nobel Assurantie N.V.
Arnhem
100
*Akzo Nobel Car Refinishes B.V.
Sassenheim
100
*Akzo Nobel Coatings International B.V.
Arnhem
100
*AKZO Nobel Decorative Coatings B.V.
Sassenheim
100
*Akzo Nobel Insurance Management B.V.
Arnhem
100
*Akzo Nobel Management B.V.
Arnhem
100
*Akzo Nobel Nederland B.V.
Arnhem
100
*Akzo Nobel Sino Coatings B.V.
Sassenheim
100
*Akzo Nobel Sourcing B.V.
Arnhem
100
*B.V. Alabastine (Holland)
Ammerzoden
100
*ICI Omicron B.V.
Rotterdam
100
ICI Theta B.V.
Rotterdam
100
*International Paint (Nederland) B.V.
Rhoon
100
*Panter B.V.
Hoofddorp
100
*Remmert Holland B.V.
Arnhem
100
*Syncoflex B.V.
Arnhem
100
New Zealand
Akzo Nobel Coatings Ltd
Avondale
100
Nicaragua
Industrial Pintuco Nicaragua S.A.
Managua
99.910
Norway
Akzo Nobel Coatings AS
Oslo
100
Oman
Akzo Nobel Oman SAOC
Muscat
50
Pakistan
Akzo Nobel Pakistan Limited
Karachi
98.083
Panama
Centro de Pinturas Pintuco, S.A.
Panama
100
International Paint (Panama) Inc.
Mercantil
100
Kativo Chemical Industries, S.A.
Panama City
99.965
Kativo Holding Co., S.A.
Panama City
100
KCI Export Trading Ltd
Panama
100
Pinturas Mundial de Panama, S.A.
Panama
100
Papua New Guinea
Akzo Nobel Limited
Geheru
100
Peru
Akzo Nobel Peru S.A.C.
Lima
100
Poland
Akzo Nobel Car Refinishes Polska Sp. z o.o.
Warsaw
100
Akzo Nobel Decorative Paints Sp. z o.o.
Warsaw
100
Akzo Nobel Industrial Coatings Sp. z o.o.
Kostrzyn Wlkp.
100
International Paint Sp. z o.o.
Gdansk
100
Portugal
Akzo Nobel Tintas para Automoveis Lda
Carregado
100
International Paint Ibéria, Lda
Setúbal
100
Tintas Titan, S.A.
Maia
100
Qatar
Akzo Nobel LLC
Doha
100
Romania
Fabryo Corporation Srl
Popesti-Leordeni
100
Russian Federation
Akzo Nobel Dekor CJSC
Balashikha
100
OOO “Akzo Nobel Coatings”
Moscow
100
OOO “Akzo Nobel Lakokraska”
Orehovo-Zuevo
100
Saudi Arabia
Akzo Nobel Saudi Arabia Ltd
Dammam
60
Singapore
Akzo Nobel Adhesives Pte Ltd
Singapore
100
Akzo Nobel Car Refinishes (Singapore) Pte Ltd
Singapore
100
Akzo Nobel Paints (Singapore) Pte Ltd
Singapore
100
International Paint Singapore Pte Ltd
Singapore
100
Slovenia
Akzo Nobel Adhezivi d.o.o.
Ljubljana
100
South Africa
AkzoNobel South Africa (Pty) Ltd
Johannesburg
100
ICI Dulux (Pty) Ltd
Johannesburg
100
South Korea
Akzo Nobel Industrial Coatings Korea Ltd.
Ansan
100
Akzo Nobel Powder Coatings Korea Co., Limited
Ansan
100
International Paint (Korea) Ltd
Busan
60
International Paint (Research) Ltd
Geoje City
100
Spain
Akzo Nobel Coatings, S.L.U.
Barcelona
100
Sri Lanka
Akzo Nobel Paints Lanka (Pvt) Ltd
Colombo
40
Sweden
Akzo Nobel Adhesives AB
Stockholm
100
Akzo Nobel Car Refinishes AB
Tyresoe
100
Akzo Nobel Decorative Coatings AB
Malmö
100
Akzo Nobel Industrial Coatings AB
Malmö
100
Akzo Nobel Industrial Finishes AB
Västervik
100
Akzo Nobel Sweden Finance AB
Malmö
100
International Färg AB
Göteborg
100
Switzerland
Akzo Nobel Car Refinishes AG
Bäretswil
100
Akzo Nobel Coatings AG
Neuenkirch
100
Taiwan
Akzo Nobel Paints Taiwan Limited
Chung Li
100
International Paint (Taiwan) Limited
Kaohsiung
100
Thailand
Akzo Nobel Coatings Limited
Nakornprathom
100
Akzo Nobel Paints (Thailand) Limited
Amphur Pakkred
100
Schramm SSCP (Thailand) Co., Ltd.
Rayong
100
Tunisia
Société Tunisienne de Peintures Astral S.A.
Megrine
60
Türkiye
Akzo Nobel Boya Sanayi ve Ticaret A.S.
Izmir
100
Akzo Nobel Kemipol Kimya Sanayi ve Ticaret A.S.
Izmir
51
Akzo Nobel Server Boya Sanayi ve Ticaret A.S. Dilovası/ Kocaeli
55
International Paint Pazarlama Limited Sirketi
Istanbul
100
Marshall Boya Ve Vernik Sanayii A.S.
Dilovasi
92.974
Tekyar Teknik Yardim A.S.
Dilovasi
100
Uganda
Akzo Nobel Uganda Limited
Kampala
100
Ukraine
LLC “Akzo Nobel Holding Ukraine”
Kiev
100
United Arab Emirates
Akzo Nobel Decorative Paints L.L.C.
Dubai
49
Akzo Nobel ME Coatings FZE
Jebel Ali Free Zone
100
Akzo Nobel UAE Paints L.L.C.
Dubai
48.979
United Kingdom
Akzo Nobel (CPS) Pension Trustee Limited
Slough
100
Akzo Nobel (NASH) Limited
Slough
100
Akzo Nobel (NSC) Limited
Slough
99.902
Akzo Nobel Aerospace Coatings Limited
Slough
100
Akzo Nobel CIF Nominees Limited
Slough
100
Akzo Nobel Coatings (BLD) Limited
Slough
100
Akzo Nobel Coatings Limited
Slough
100
Akzo Nobel Decorative Coatings Limited
Slough
100
Akzo Nobel Finance Limited
Slough
100
Akzo Nobel Finance (2) Limited
Slough
100
Akzo Nobel Holdings Limited
Slough
100
Akzo Nobel ICI Holdings
Slough
100
Akzo Nobel Industrial Coatings Limited
Slough
100
Akzo Nobel Limited
Slough
100
Akzo Nobel Packaging Coatings Limited
Slough
100
Akzo Nobel Powder Coatings Limited
Slough
100
Akzo Nobel UK Ltd
Slough
100
Cuprinol Limited
Slough
100
Dulux Limited
Slough
100
Ergon Investments International Limited
Slough
100
Ergon Investments UK Limited
Slough
100
Flexcrete Technologies Limited
Slough
100
Hammerite Products Limited
Slough
100
Holywell-Halkyn Mining and Tunnel Company Limited
Slough
96.955
I C I Finance Limited
Slough
100
ICI Chemicals & Polymers Limited
Slough
100
ICI Paints (Trade Contract) Limited
Slough
100
Imperial Chemical Industries Limited
Slough
100
International Coatings Limited
Slough
100
International Paint Limited
Slough
100
International Paints (Holdings) Limited
Slough
100
Intex Yarns (Manufacturing) Limited
Slough
100
J.P. Mcdougall & Co. Limited
Slough
100
Mapaero UK Ltd
Crawley
100
Mortar Investments International Limited
Slough
100
Mortar Investments UK Limited
Slough
100
Polycell Products Limited
Slough
100
Resinous Chemicals Limited
Slough
100
Sales Support Group Limited
Slough
100
Scottish Agricultural Industries Limited
Edinburgh
100
Stevenston Holdings Limited
Edinburgh
100
United States of America
Akzo Nobel Coatings Inc.
Delaware
100
Akzo Nobel Inc.
Delaware
100
Akzo Nobel Services Inc.
Delaware
100
Blue Water Marine Paint LLC
Delaware
100
Expert Management Inc.
Delaware
100
ICI Americas Inc.
Delaware
100
International Paint LLC
Delaware
100
Mapaero Inc.
Delaware
100
New Nautical Coatings Inc.
Florida
100
Uruguay
Pinturas Inca S.A.
Montevideo
100
Vietnam
Akzo Nobel Vietnam Limited
Binh Duong
100
Zambia
Dulux Zambia (2005) Limited
Lusaka
100
165
AkzoNobel Report 2022
|
Appendix
Colombia
Glasst Innovation Company S.A.S.
Medellin
25
Minerales Industriales S.A.S.
Sabaneta
40
Italy
Metlac Holding S.r.l.
Alessandria
49
Metlac S.p.A.
Alessandria
71.667
List of non-consolidated legal entities
and corporations
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.