As a global company active in numerous markets, AkzoNobel is similar to many other large organizations. It generates revenue, incurs costs and create value for shareholders. However, AkzoNobel believes that economic growth cannot be sustained if the underlying natural and social capital upon which wealth creation depends is depleted.
In order to get a more detailed insight into how their profit and loss is generated, AkzoNobel wanted to develop a deeper understanding across the value chain of how its business impacts the environment, people and society at large. Gaining a better understanding of these aspects – and attaching a monetary value to them – will help AkzoNobel to identify possible improvements and ultimately increase business value.
Together with True Price and Pavan Sukhdev (GIST) they carried out a pilot study during 2014 at their Pulp and Performance Chemicals business in Brazil, which specifically looked at the 4 dimensions: environmental, human, social and financial impact. Looking at the results of the pilot, outlined in the chart above, they found that ‘the impact on financial capital was positive and substantially higher than the traditional profit calculation. This is because when combined, salaries, taxes and interest payments make a substantial contribution to wealth in society.The impact on natural capital was largely negative, mainly due to the use of oil and natural gas and emissions such as carbon dioxide, sulfur dioxide, and nitrogen dioxide to air across the value chain. The positive human impact resulted from employee training programs, and career opportunities, while the impact on social capital was limited, due to the nature of the industry within the scope of the pilot, which has larger production volumes and involves fewer people compared with other industries’.
Source: AkzoNobel Annual Report 2014. Sustainability statements. p. 206, 207.Find out more about True Value
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