accelerating sustainable trade: there is no alternative!

Innovation and Sustainabilityin the midst of the economic crisis

Sustainability across supply chains:

there is no alternative

André Veneman

Sustainability Gala 2010

Noordwijk June 2, 2010

Sustainability Gala 2010 2

Global recession


Nikolai Dmyitriyevich Kondratieff (1892 - 1938)

• Cycles of 50 – 60 years

• Divided in 4 periods

- Spring: stage of expansion and growth

- Summer: stagflation

- Fall: deflationary growth

- Winter: severe depression


Source: Oxford Economics; World Bank; IMF; EIU

Global

GDP

Growth

Global GDP Forecast

Note: GDP figures are based on % real change y/y

Back to business as usual?

Year

2.7%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014


Growth in emerging markets

Sustainability Gala 2010 6 6

From…

Sustainability Gala 2010 7 7

To…

Sustainability Gala 2010 8How sustainability is shaping our business 8

From…


To…


2008: 900 million cars worldwide


2050: 2 billion cars worldwide


Experiencing major shift in geo-economic power

Source: Economist Intelligence Unit

China

China

India

India

United States

United States

Germany

Germany

0 5.000 10.000 15.000 20.000 25.000 30.000

2030

2007

Year

Real GDP (PPP US$ bln at 2005 prices)


Result is a rapidly emerging middle class of the BRICs

Number of people with income over $3,000 in the BRICs (in billions)

Source: Goldman Sachs Report, UN Global Compact

2010 2020 2030 2040 2050

3,5

3,0

2,5

2,0

1,5

1,0

0,5

0


Sustainability – there is no alternative


Three ecological footprint scenarios

Source: Living Planet Report, WWF 2006

Number of planet Earths


Increasing Global Energy Consumption


Sustainability is the essential element in the period of new growth

Dematerialization

Recycling

Global emission rights

Renewable energy

Demographics/

globalization

Scarcity of natural resources

Climate change

Quality of life

Requires paradigm

shifts in technology and

our institutions


From macro world to company strategy


AkzoNobel

2009

• Revenue €13.0 billion

• 54,738 employees

• EBITDA: €1.7 billion*

• 37% of our revenue in emerging markets

* Before incidentals. All data after reclassification of National Starch

Revenue by business area EBITDA* by business area

Performance Coatings

Decorative Paints

Specialty Chemicals

32%

35%

33% 32%

27%

41%

The largest paints and coatings company

and a major producer of specialty chemicals


In 2015, 50 percent of our business could be in emerging markets

1995 2015

88%

12%

Eur-NA Other

50%50%

Eur-NA Emerging


AkzoNobel strategic ambitions

Today – what we are

The world’s largest

Coatings and Specialty

Chemicals company

Tomorrow – what we want to be

The world’s leading Coatings and Specialty

Chemicals company

• Most value creating (4-year targets)

Outgrow our markets (weighted avg)

Best 5 EBITDA margin

Best 3 OWC percentage to sales

Year-on-year EVA growth

• Most sustainable (4-year targets)

Best 3 DJ sustainability index

Step change in people development

Full compliance with the Code of Conduct

Best 5 in recordable injury rate

22

Sustainability is part of everything we do

We have set ambitious sustainability targets:

• Remain in the top three in the Dow Jones Sustainability Indexes

• Reduce our total recordable injury rate

• Deliver a step change in people development

We focus on long-term performance. Our ambition is:

• That Eco-premium* products will make up 30 percent of sales (2015)

• To reduce our cradle-to-gate carbon footprint with 25 percent (2020)

• To achieve sustainable fresh water use on all our sites (2015)

We have linked remuneration to these targets and ambitions:

• 50% of our long-term incentive program is linked to performance in the leading sustainability index (DJSI)

* Higher eco-efficiency than main competitive product


The sustainability framework

Invent (tomorrow)

Manage (today)

Improve (yesterday)

Manu-

facturingSourcingR&D

Sales

and

marketing

Market

research

Investment

decisions

Level of development

Environmental Economic Social

Carbon and

water policiesEco-premium

Code of

ConductStretched

safety targets

Aspect of sustainability (linked to DJSI)

Examples

Leadership

training

Product

Stewardship


Sustainability & procurement

Vendor policy

Supportive supplier visits

Carbon reduction

Open innovation


Estimate of total CO2 emissions per business area

0

2

4

6

8

10

12

Supply Operations Use/ end of life

mln

to

ns

CO

2_

eq

Decorative Paints Performance Coatings Specialty Chemicals


UV LED spray gun for Autoclear® UV• Automotive spray gun introduced in May which paints and cures at the

same time. No warm up time, up to 25 percent less energy used during

total repair.

Dissolvine® GL• Leading the next generation of products in cosmetics and personal

care. It’s free from genetically modified raw materials, not irritating to

skin or eyes and readily biodegradable.

Rediset™ asphalt additive• Significantly reduces the mixing and paving temperatures, creating

fuel savings and reducing operational costs. Results in lower asphalt

fumes, providing better working conditions for the paving crew.

Freashaire - Colors that take your breath away. Paint that won’tTM.• The Freshaire Choice™ Paint contains no volatile organic compounds —

commonly known as VOCs — harmful chemicals that contribute to poor air

quality

Intersleek 900• Our very latest innovation in foul release coatings. Its

exceptionally smooth, slippery, low friction surface prevents

organisms attaching, saving you time and money at sea.

Developing innovative, eco-premium products – target 2015 being 30%


People Development

Unleash the talent,

creativity and

motivation to drive

sustainable

success.


Sustainability and shareholder value go hand in hand

Source: SAM (Sustainability Asset Management)


A new promise to all our stakeholders

accelerating sustainable trade: there is no alternative!

Business

sustainability framework

economic crisis sustainability

year targets

business area ebitda

coatings company

sales year

emerging markets

year eva growth