PCI Magazine recently interviewed Fred Moreux, South Asia Pacific Manufacturing and Supply Chain Director at AkzoNobel, on the pivotal role of sustainability within the manufacturing process and the coatings industry. Moreux discusses what drives sustainability initiatives, risks and opportunities associated with integrating renewable energy sources into manufacturing processes, and the future of sustainable manufacturing.

PCI: What role do regulatory changes and evolving consumer preferences play in shaping sustainability initiatives?

Moreux: Regulatory changes and evolving consumer preferences play pivotal roles in driving sustainability initiatives within the paint and coatings industry. These factors significantly influence our approach to innovation and product development. For instance, the European Food Safety Authority’s (EFSA) recent opinion of BPA restrictions in metal packaging of food and beverage products necessitates a bisphenol-free transition. As a company, AkzoNobel is already working on a carefully managed transition that incorporates responsible material substitutions and limits disruption to our value chain.

Moreover, as consumers increasingly prioritize environmentally friendly products, there is a growing demand for paints that are low in VOCs, anti-bacterial, and derived from renewable sources. This shift in consumer preferences compels us to innovate and develop sustainable solutions to meet market demands.

By responding to our customers' needs, we ensure that our products not only meet sustainability standards but also offer additional benefits such as improved production efficiency. Fast-curing coatings, for example, not only reduce carbon footprint, but also enhance operational efficiency, particularly in sectors like automotive repair.

As we navigate these challenges, we remain committed to our sustainability goals, collaborating with suppliers and partners to reduce carbon emissions across our operations and value chain. Through ongoing research and strong partnerships, we are confident we will rise to the challenge to successfully address them and achieve our targets.

PCI: Can you share some company initiatives to address carbon reduction challenges within the industry?

Moreux: First and foremost, we believe it is of utmost importance to set ambitious goals when committing to long-term sustainability. AkzoNobel has committed to reducing carbon emissions by 50% by 2030 for the entire value chain. These targets have been validated by the Science Based Targets initiative (SBTi), indicating a rigorous approach to carbon reduction. Some initiatives we employ include:

• Collaborative innovation ecosystem: AkzoNobel has established the "Paint the Future" program, described as the largest collaborative innovation ecosystem in the industry. This initiative aims to accelerate, test, launch, and scale ideas and sustainable solutions for the paint and coatings industry, fostering collaboration among various stakeholders to drive carbon reduction innovations.
• Research partnerships: AkzoNobel also collaborates with academics, industry partners, and government stakeholders to advance research and innovation in sustainable coatings. For example, partnerships with the Universities of Manchester and Sheffield for the Sustainable Coatings by Rational Design (SusCoRD) project and involvement in the Advanced Research Center Chemical Building Blocks Consortium (ARC CBBC) demonstrate a commitment to developing greener and more sustainable solutions.
• Participation in open innovation platforms: We participate in programs like the EU-funded VIPCOAT program, an open innovation platform aimed at developing corrosion protection technologies. By collaborating with other industry players, we can accelerate the development and adoption of sustainable coatings technologies.
• Education and awareness: Initiatives like the openly accessible online energy savings calculator for powder coatings users demonstrate AkzoNobel's commitment to raising awareness and providing tools for reducing energy consumption and carbon emissions within the industry.

PCI: How does AkzoNobel prioritize sustainability within its operations, and how do these efforts reflect broader trends in sustainability within the industry?

Moreux: Our sustainability commitment includes focuses such as: 

• A sustainable product portfolio: The company has identified a sustainable product portfolio as a key opportunity. By aiming to increase revenue from sustainable solutions to more than 50% by 2030, we hope to demonstrate a strategic focus on offering products that bring tangible sustainability benefits to customers. This not only reflects a commitment to sustainability but also responds to growing market demand for eco-friendly products.
• A collaborative approach: AkzoNobel engages in a collaborative approach with suppliers and customers to deliver sustainable products and services. The company uses frameworks like the Sustainable Product Portfolio Assessment (SPPA), co-developed with other chemical companies, to identify the sustainability value of its product portfolio. This collaborative effort helps tailor value-selling strategies to specific customer needs, fostering a deeper understanding of sustainability benefits throughout the industry.
• Cross-functional sustainability groups: We maintain cross-functional groups like the Raw Material Sustainability Group (RMSG), which provides governance to sustainability aspects concerning raw materials. By involving subject matter experts and ensuring continuous improvement through tools like the Product Stewardship Continuous Improvement Tool, we lead with a systematic approach to addressing sustainability concerns across operations.
• Training and education: We also invest in training and education to enhance the capabilities of our technical and sales teams. For example, organizing company-wide training on green building certifications and the customer benefits of sustainable solutions reflects a commitment to raising awareness and promoting the adoption of sustainable practices within not only the industry, but also within our own operations.

PCI: Can you elaborate on the company’s approaches to implement sustainability strategies aimed at effectively increasing manufacturing and supply chain efficiency?

Moreux: Crafting a sustainable supply chain that balances environmental goals with operational efficiency in manufacturing requires a multi-faceted approach tailored to the unique needs of our industry. Some strategies that are employed by AkzoNobel include:

• Water consumption reduction: We focus on reducing water consumption at water-intensive sites located in water-scarce areas. This initiative aligns with a double materiality assessment to address environmental concerns while ensuring operational efficiency.
• Transition risks mitigation: Annual quantification of transitional risk impact aids in analyzing different scenarios and devising strategies to mitigate risks and seize opportunities. AkzoNobel, for example, has implemented sustainability assessments for material investment projects, incorporating internal carbon pricing to anticipate the impact of potential future carbon taxation. 
• Long-term trends analysis: Analyzing long-term trends, including environmental transition risks like climate change, is essential for identifying potential challenges and opportunities for adaptation. Key transition risks encompass availability of raw materials, infrastructure limitations, evolving legislation, societal expectations, and changing demand for recyclability.
• GHG emission reduction targets: We have set ambitious GHG emission reduction targets for Scope 1, 2, and 3 emissions, validated by the Science Based Targets initiative and aligned with a 1.5˚C scenario. Our strategies include transitioning to renewable energy sources, optimizing energy efficiency, and reducing carbon emissions across the value chain.
• Energy consumption reduction: AkzoNobel implements energy efficiency measures to reduce energy consumption in its own operations. Absolute and relative energy consumption has decreased compared to baseline years, attributed to various initiatives such as operational improvements and increased production volumes.

PCI: Considering the focus on sustainability and meeting market demands, how does AkzoNobel’s recent capacity expansion in Vietnam align with your broader integrated supply chain strategy?

Moreux: Our recent capacity expansion in Vietnam aligns with our broader integrated supply chain strategy by focusing on sustainability and meeting market demands in several key ways:

• Sustainable manufacturing: The expansion project includes the addition of five new powder coating lines and a line for producing water-based products for the consumer electronics market. By investing in these technologies, the company is transitioning towards more sustainable manufacturing processes. The installation of advanced equipment and technology contributes to higher productivity rates and efficiency gains, which can help reduce energy consumption and emissions.
• Market demand alignment: The expansion allows AkzoNobel to better serve the Vietnamese market and support volume growth in the northern part of the country. By strategically locating the facility in Bac Ninh province near Hanoi, we can streamline manufacturing processes to meet the diverse needs of local customers. Additionally, the investment in water-based products aligns with market demands for eco-friendly solutions, especially in the consumer electronics sector where sustainability is a growing concern.
• Customer-centric approach: Our investment in the latest water-based technology enables the company to offer sustainable solutions to multi-national customers based in Vietnam, including key Asian consumer electronic brands. This customer-centric approach reflects the company's commitment to providing value-added products and services that meet evolving market preferences and sustainability requirements.
• Carbon emission reduction: The expansion project contributes to our ambition in halving our carbon emissions by 2030. By incorporating more sustainable manufacturing processes and technologies, such as water-based products and advanced equipment, we aim to lower emissions across the value chain. This aligns with broader sustainability goals and demonstrates a proactive approach to mitigating environmental impact.

PCI: How does the company actively work to attract a more diverse talent pool, particularly focusing on increasing female representation, within a historically male dominated sector of manufacturing and supply chain?

Moreux: AkzoNobel actively promotes diversity by setting targets for female representation, aiming for at least 30% at the executive level by 2025, while currently at 25%. We assess and nurture internal talent pipelines, with 30% of newly hired executives and 27% of internal promotions being women. 

The company tracks female representation across all levels, including leadership positions and boards. Additionally, we invest in creating a healthy and inclusive environment at manufacturing and supply chain sites, such as improving facilities like women’s bathrooms, showers, and changing rooms. Funds are allocated to further enhance or create facilities for women in 2024. 

AkzoNobel's commitment to diversity is outlined in its DE&I position paper and policy, demonstrating our proactive approach to attracting and retaining diverse talent in historically male-dominated sectors.

PCI: How do you assess the potential risks and opportunities associated with integrating renewable energy sources into manufacturing processes?

Moreux: By following a structured process, we achieve a comprehensive understanding of the risks and opportunities linked to renewable energy integration, facilitating informed decision-making and proactive management.

• Research phase: Beginning with research, we gather data on potential impacts, risks, and opportunities from various sources, including ESG ratings, sustainability reports, and previous assessments.
• Workshops: We then consult internal experts to rate and analyze impacts, considering factors such as severity, likelihood, and financial materiality.
• Materiality assessment: It is important to shortlist material topics related to renewable energy integration and validate them with both internal and external stakeholders.
• Review and update: We conduct regular reviews and update assessments, taking into account changes in technology, regulations, and market trends to ensure relevance.
• Mitigation and exploration: Finally, we develop strategies to mitigate risks such as intermittency and regulatory changes, while exploring opportunities for cost savings and environmental benefits.

PCI: Could you elaborate on how AkzoNobel's new manufacturing facilities, especially in the Asian region, are incorporating renewable energy and energy-efficient design? Specifically, how is the Faisalabad plant in Pakistan contributing to these efforts?

Moreux: Our commitment to sustainability in our Asian manufacturing sites is evident through the integration of renewable energy and energy-efficient design. The recent investment in the new plant in Faisalabad, Pakistan, underscores this dedication. This newly inaugurated plant incorporates renewable energy generation systems and energy-efficient technologies to minimize its environmental footprint. It strictly adheres to environmental standards, ensuring responsible operations and reducing carbon emissions. 

Moreover, the facility includes sustainability features like water conservation measures and waste recycling programs. Its agile manufacturing capabilities allow for efficient future expansion while maintaining sustainability standards. In essence, the Faisalabad plant exemplifies AkzoNobel's dedication to sustainable practices and responsible business conduct in the Asian region.

PCI: Looking ahead, what do you think will be some key developments in sustainable manufacturing and supply chain practices in the region, and how do you see AkzoNobel addressing them in the future?

Moreux: The future of sustainable manufacturing and supply chain practices hinges on a comprehensive approach that integrates environmental stewardship, resilience, and innovation. This entails strengthening supplier engagement to enhance transparency and collaboration throughout the supply chain, while continuing efforts to reduce emissions and mitigate climate-related risks.

Managing transition risks, adhering to emission reduction targets, and prioritizing energy efficiency and renewable energy adoption are crucial steps. Embracing circular economy practices and promoting sustainability across all facets of operations will be pivotal in driving progress towards a low-carbon, environmentally conscious future in the region.

For more information, visit the AkzoNobel website here.