< PreviousChapter 3 – Our Material Issues To define the most relevant sustainability issues for the coatings industry, the WCC conducted its first, industry-wide materiality analysis. The analysis helped the WCC identify the industry’s challenges, achievements, and the matters requiring the most urgent action. The results were decisive for determining the industry’s contribution to the UN Sustainable Development goals and the content of this report. Methodology The materiality analysis was conducted in 2021 according to the principles of the Sustainability Reporting Standards of the Global Reporting Initiative (GRI SRS). In a workshop with member associations, the WCC selected a short list of 26 topics in five fields of action to be included in the materiality analysis. To ensure all relevant issues were considered, sustainability reporting standards – such as GRI, Sustainability Accounting Standards Board (SASB), CDP, UN SDGs – were applied. Also, the process included an evaluation of studies by the WCC and its members and of paint and coatings companies’ sustainability reports. The WCC member associations and 60 companies from the industry took part in the global survey “Sustainability in the Coatings Industry,” and prioritized the 26 topics from an industry perspective. The selection and the assessment of the material topics was validated by including feedback from external stakeholders. Stakeholders were chosen according to their expertise within the five fields of action: Business Model & Innovation, Environment, Human Capital, Leadership & Governance, and Social Capital. SUSTAINABILITY IN THE GLOBAL PAINT & COATINGS INDUSTRY 10Our Fields of Action External Stakeholders’ Feedback Social Capital In its long and complex supply chains, the industry has to tackle forced and child labor. To ensure consumer safety, all chemicals that go into products need to be assessed, especially if they are potentially toxic. Leadership & Governance Compliance with existing regulations is a basic requirement for doing business. Future potential lies in creating smarter rather than more regulation . Human Capital Fundamental labor rights need to be enforced in all workplaces. Offering career paths and enabling personal growth to employees helps attract and retain a qualified workforce. Training plays an enabling role for all aspects of sustainable development. Environment Decarbonization is a major task for the industry. More efficient production processes and waste management play a key role for resource efficiency and environmental performance. Business Model & Innovation Research and innovation are key for future sustainability and economic performance. With funding for paint and coatings-related university curricula, research and development capacities can be enhanced. Stakeholder dialogue is an important aspect on the path to achieve a sustainable business model. 1. Employee Health and Safety 2. Research and Development 3. Customer Satisfaction 4. Product Safety and Stewardship 5. Management of the Legal and Regulatory Environment 6. Product Design and Lifecycle Management 7. Waste and Hazardous Materials Management 8. Air Quality 9. Economic Performance 10. Efficient Choice and Use of Raw Materials Industry Ranking of Material Issues* 11. Responsible Supply Chains 12. Compliance and Anti- Corruption 13. Corporate Governance and Ethics 14. Training and Education 15. Greenhouse Gas Emissions and Climate Strategy 16. Circular Economy and New Business Models 17. Attracting and Retaining Employees 18. Water and Wastewater Management 19. Labor Rights 20. Stakeholder Engagement and Public Policy 21. STEM Education and Learning 22. Community Relations and Contribution to Industrial Development 23. Renewable Energies and Energy Management 24. Diversity and Inclusion 25. Digitalization and Data Security 26. Biodiversity * Ranking according to member associations and companies. For a definition of each material issue, refer to the Appendix, p. 36-37. Colors correspond to the above Fields of Action. 11Achievements and Challenges in the Areas of Action The coatings industry has worked hard to address critical issues, to ensure full compliance with regulations worldwide, and to increase the sustainability of its products through innovation. Adherence to environmental, health and safety regulations form the basis for the industry’s continued success. There are, however, areas in which the industry still needs to increase its efforts, as well as challenges which will require extensive research and, in some cases, novel solutions. The feedback collected from WCC member associations, companies, and external stakeholders provides a picture of the achievements and challenges in the five fields of action. Business Model & Innovation The industry is constantly challenged to provide sustainable products without compromising on consumers’ demand for high-level performance. For companies in the paint and coatings industry, the design of new products, as well as their life-cycle assessment and management, demand continuous improvement. These actions form important stepping stones for the transition to a circular economy. Achieving a full transition will require additional investments in the research and development of green alternatives and an increased standardization of life-cycle assessments. Acceptance of new business models can be greatly enhanced by clear sustainability guidelines from governments and a high level of transparency on societal and environmental impacts provided by companies. Increasingly, environmental and societal issues are and will continue to be embedded in companies’ structures. Environment Reducing the use of hazardous substances, offering low-VOC (volatile organic compound) products, while at the same time considering the carbon footprint of its production lines poses ongoing challenges for paint and coatings manufacturers. An increased focus on the composition and sourcing of raw materials will help deliver greener products. Barriers to overcome in this area include high costs and lack of standardization of life-cycle assessment procedures. Marginal improvements are still possible for the efficiency of the industry’s production processes. At the same time, finding more efficient ways of recycling paint and closing the loop remains a challenge. To guarantee an efficient handling of paints and coatings along their lifecycle, there is a continued need to train workers in manufacturing plants, painters and waste managers, and for skilled labor. SUSTAINABILITY IN THE GLOBAL PAINT & COATINGS INDUSTRY 12Human Capital Workers’ health and safety are maintained through strict regulatory compliance, which has been implemented throughout the industry supply chain. Future success of the industry depends on a skilled workforce. Key elements in attracting and retaining a skilled workforce include a renewed focus on wellbeing at work and continual learning opportunities. In addition, the industry will need to pay additional attention to the values of diversity and inclusion. Meeting sustainability challenges and achieving continued economic performance will require extensive training and career pathways for highly skilled individuals. Leadership & Governance The paint and coatings industry is a mature sector operating in a highly regulated environment. Individual companies are faced with different rules within both national and international jurisdictions, which can cause a lack of alignment across countries and geographic regions. Industry associations and the companies they represent engage with governmental bodies and advocate for a better informed and more consistent legal environment, to assure effective and valuable products for society. Additionally, harmonization of regulations worldwide contributes to raising the sustainability standards of the industry. Social Capital Ensuring that labor rights are upheld along the supply chain is one of the most complex and challenging tasks for the industry, and cooperation within the industry and with stakeholders along the supply chain plays a crucial role in identifying blind spots. Regarding consumer use of products, the industry has been successful in providing strong product safety and stewardship. Nevertheless, the assessment of chemicals in commerce remains a central concern of governments at both the national and regional levels to ensure consumer safety. The paint and coatings industry also builds social capital by supporting educational activities with a focus on Science, Technology, Engineering and Mathematics (STEM) education. 13Our Commitment to Sustainable Development The WCC and its members support the UN’s 17 global Sustainable Development Goals (SDGs). We have identified nine strategic SDGs in which our industry has a high impact or to which coatings companies can make a large contribution. This report outlines our commitment and provides examples of industry’s good practices from around the world. Chapter 4 – Our Sustainability Principles Sustainability Charter The paint and coatings industry is proud to provide products that protect, sustain, and add value to buildings, infrastructure, vehicles, and the objects we depend on every day. We want to achieve this with products that are safe to use and increasingly eco-efficient. As such, the industry evaluates the impacts of our products along their entire life cycle, and continuously develop product offerings that reflect currently available science. At the same time, industry works to ensure sustainable production processes and the health and safety of its workforce. Both national and regional industry associations have already introduced guidance on environmental and societal impacts and collected metrics on a regional level. With Our Sustainability Principles, the WCC and its members have – for the first time – created a globally harmonized basis for sustainability programming in the paint and coatings industry. In addition, our Commitment to the United Nations Sustainable Development Goals shows how the paint and coatings industry can contribute to overcoming global challenges. Our Sustainability Principles 1. Contributing to value creation worldwide through long-term economic performance 2. Committing to ethical business practices and responsibility throughout the supply chain 3. Providing good employment and ensuring a safe workplace 4. Producing and developing safe and sustainable products 5. Supporting education for STEM and applied sustainability 6. Engaging with stakeholders and local communities 7. Working to maximize efficiency and reduce the impact of manufacturing processes SUSTAINABILITY IN THE GLOBAL PAINT & COATINGS INDUSTRY 1414Chapter 5 – Our Industry’s Contribution to The Sustainable Development Goals We are at the beginning of a decade of action for global Sustainable Development from 2021 to 2030. In 2015, the United Nations presented its plan for achieving 17 Sustainable Development Goals (SDGs) by 2030. The SDGs outline a plan to eradicate poverty, preserve the planet, and achieve prosperity on a global level. The building blocks of this plan are the 17 goals that, together with their 169 targets, guide efforts at international and local levels. For more information on the SDGs, visit https://sdgs.un.org/goals. The World Coatings Council and its members embrace the UN’s 2030 Agenda for Sustainable Development. To focus our efforts in this decade of action, we have identified the nine SDGs wherein our industry can have the greatest impact. The following pages describe the challenges specific to our industry and show examples of how the WCC, our regional member associations, as well as paint and coatings manufacturers around the world, contribute to achieving these SDGs. “The coming years will be a vital period to save the planet and to achieve sustainable, inclusive human development.” – António Guterres, Secretary-General of the United Nations SDG 3 — Good Health and Well-Being See pages 16-17 SDG 4 — Quality Education See pages 18-19 SDG 6 — Clean Water and Sanitation See page 20 SDG 8 — Decent Work and Economic Growth See pages 21-22 SDG 9 — Industry Innovation and Infrastructure See pages 23-24 SDG 11 — Sustainable Cities and Communities See page 25 SDG 12 — Responsible Production and Consumption See pages 26-27 SDG 13 — Climate Action See pages 28-29 SDG 14 — Life Below Water See pages 30-31 15Our Contribution to SDG 3: Ensure Healthy Lives and Promote Well- Being For All at All Ages Decorative paints and specialized functional coatings enable the creation of safe and healthy environments throughout everyday life. The industry offers a variety of specialized products like antimicrobial paints and coatings for medical instruments. To increase safety and mitigate health impacts on consumers, manufacturers have greatly reduced the use of solvents in indoor paints throughout all product lines. In addition, the coatings sector acts to ensure the safe management and handling of chemicals throughout their supply chain, as well as identifying and eliminating hazardous materials from their formulations . Safe Management and Handling of Chemicals Paints and coatings, for the largest part, are produced using chemical materials such as pigments, binders, solvents and other additives. Therefore, adequate management and safe handling of chemicals along the value chain is a vital prerequisite for doing business in this industry. Regulations are in place on multiple levels that require manufacturers to ensure that chemicals used in their products undergo an evaluation first and be classified according to their impact on human health and the environment during manufacture and use. In addition to national laws and regulations, a set of international frameworks exists and therefore, ensures safe coatings products for all. The voluntary Globally Harmonized System of Classification and Labelling of Chemicals (GHS) introduced by the United Nations, provides the main international framework for the classification of chemicals. The World Coatings Council is proactively engaged in efforts to promote global harmonization to ensure effective and technically sound classification of chemicals and labeling requirements. As such, the council regularly sends representatives to the UN Subcommittee of Experts on the GHS and takes part in the discussion and refinement of technical issues. Numerous national regulations are based on the GHS, given its broad scope and far-reaching impacts. For example, the United States and Canada each implement a Hazard Communication Standard (HCS), based on GHS. In the EU, the Classification, Labelling and Packaging (CLP) Regulation adopts classification and labeling criteria defined by the GHS. The European Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulation sets the rules for classifying and labeling the chemicals used in products. It makes sure that only those chemical inputs — registered with REACH first — are used in the European market. Therefore, it requires hazard classification information from the GHS as part of a chemical’s registration dossier. The coatings industry especially contributes to the following SDG-targets: 3.9 By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination. 3.d Strengthen the capacity of all countries, in particular developing countries, for early warning, risk reduction and management of national and global health risks. 16A growing number of national regulations is a constant presence in the industry and a challenge to globally operating enterprises. Different countries or regions follow different sets of regulations. In places where regulation is not sufficient, many of the World Coatings Council member associations and their industry members have established their own standards for the assessment and declaration of their products, to ensure safety during the manufacturing and use phase. Globally, the member associations of the WCC support their member companies in the management of their regulatory requirements. Example: Since 2005, the German Paint and Printing Ink Association (VdL) and its members have an industry- wide objective to minimize substances classified as carcinogenic, mutagenic, or toxic for reproduction (CMR substances). This is ensured through monitoring, declaration and voluntary commitment using VdL’s sets of guidelines. Consumers Benefit from Wider Range of Low-VOC Paints Reducing exposure of workers and consumers to volatile organic compounds (VOC) from paints has been a priority for the industry as part of a sector-wide commitment to product safety and good air quality. This has led to a significant reduction in VOC emissions from coatings. Especially low or near-zero VOC paints for indoor use are now widely available for consumer use. Biocides Remain an Essential Ingredient To preserve materials and prevent paints from spoiling, biocides serve a crucial role. Biocides are additives used to prevent the growth of unwanted microorganisms such as fungi and mold. In waterborne paints and coatings they prevent products from spoiling, while stored in cans and after being applied. Without biocides, these paints would spoil and have to be discarded more frequently. Additional biocides are applied in products for wood preservation and in marine coatings to preserve hulls and reduce friction (see SDG 14). The availability of effective biocides has made it possible to develop a wide range of waterborne products. The industry strongly recognizes the need for effective policies regarding biocides and supports policies concerning proper handling. However, stringent biocides requirements without industry input could jeopardize the circular economy approach to leftover paint, which has seen significant quantities of paint recycled in countries like the United States, Canada, Australia, Brazil, Germany and New Zealand. To protect the environment and the public, the industry continuously engages with governments to ensure levels of biocides are closely monitored. Consequently, regulation is becoming increasingly comprehensive globally. Global Alliance to Eliminate Lead Paint Due to the health risks associated with lead, its use in paints has been restricted by most countries around the globe. The Global Alliance to Eliminate Lead Paint, also known as the Lead Paint Alliance – formed by the UNEP and the WHO – engages national governments, industry, non-governmental organizations and consumers to prevent and minimize exposure to lead paint, especially for children. The World Coatings Council is a contributing member of the alliance and has called for the adoption of restrictions for paint and printing inks. The council is also assisting in expanding the number of countries that restrict the use of lead in paint and offers its technical knowledge for the formulation of lead-free alternatives. Coatings for Hygienic Environments in the Health Care and Food Sectors For the health sector the industry offers a wide range of specialized products, ensuring hygienic surfaces as well as safe performances of medical gear and instruments. Antimicrobial coatings are routinely used on surfaces in high- stress environments like hospitals, nurseries, and consulting rooms. Care facilities and kindergartens also increasingly make use of the antimicrobial features of specialized coating products. This safeguarding potential has received recognition and a wider application as the need for protecting people from the spread of disease continues to grow. This recent trend has motivated companies to develop new solutions and performance characteristics, especially for anti-viral coatings. Coatings also play a crucial role along the value chain of food provision. In facilities and on machinery for food processing, coatings ensure hygienic conditions. Coatings for food packaging can have a positive impact on the shelf-life and hygiene of food items, thus contributing to the provision of food globally and reducing the amount of food waste along the entire supply chain. 17Our Contribution to SDG 4: Quality Education The companies and associations in the coatings industry play an important role as a source of educational opportunities. Bringing up the next generation of coatings scientists and enabling lifelong learning is crucial for continued innovation in the industry and for establishing the knowledge to tackle global sustainability challenges. This is addressed through programs offered for students in partnership with schools and universities, as well as for both potential and current employees. Beyond vocational and professional training, the industry sponsors STEM programs and Sustainable Development programs; helps teenagers enter the job market; and contributes to the training of teachers and professors. Bringing up the Next Generation of Coatings Professionals The paint and coatings industry offers increasingly specialized career paths. The development of formulations as well as the correct and efficient application of coatings requires the right set of skills. Therefore, the industry supports STEM education as well as vocational training. Initiatives span from programs that offer a basic understanding of coatings science to young children, to science programs in high schools, to vocational chemical education facilities that link important resources with a possible career path and traineeships. Progressively, more programs also include sustainability aspects of coatings. Courses and curricula are sponsored by trade associations as well as by single companies. Existing programs are targeted at entrants in the sector and seasoned professionals who aim to hone specific skills, be they marketing strategies or chemical formulation technologies. Larger corporations also offer educational opportunities on sustainability — beyond the core business — to their workers, and in some cases, to the communities around their facilities. The coatings industry especially contributes to the following SDG-targets: 4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship. 4.5 By 2030, eliminate gender disparities in education and ensure equal access to all levels of education and vocational training for the vulnerable, including persons with disabilities, indigenous peoples and children in vulnerable situations. 4.7 By 2030, ensure that all learners acquire the knowledge and skills needed to promote sustainable development, including, among others, through education for sustainable development and sustainable lifestyles, human rights, gender equality, promotion of a culture of peace and non-violence, global citizenship and appreciation of cultural diversity and of culture’s contribution to sustainable development. 18Sponsoring Education to Bring Youth into Meaningful Employment Individual companies from the industry help young people acquire the skills they need for a decent livelihood and career – and in many cases to lift them out of poverty. Having access to a new generation of young and educated people is also key to the sustainable transformation of all industries. Therefore, beyond the traditional focus on STEM education, companies — especially in countries without widespread opportunities for vocational training — offer initiatives with a broader focus on skills for entering the job market with the aim of bringing kids out of poverty. Lifelong Learning in an Increasingly Specialized Industry High quality outcomes for paints and coatings rely on a skilled workforce along the entire value chain. This encompasses the development of paint formulas, but also the production, distribution, and application of the industry’s products. In the future, career profiles will further shift towards highly specialized and skilled tasks. The curriculum for the industry covers chemical composition capabilities, laboratory practices, as well as marketing and sales skills. Essentially, but very crucially, all workers need to be trained on proper handling of machines and chemicals and following application procedures – which is both key to workplace safety and producing high quality products. The human resources of the industry play a crucial role in fulfilling the sustainability potential of functional coatings and a correct and resource-efficient application of products. As such, the coatings industry offers training for employees at all stages of their careers. Regional coatings associations sponsor an array of coatings diplomas. They span from partnership with universities and chemistry education to online courses. Additionally, regional associations offer updating and training webinars from the industry, for both the industry and vocational training. But opportunities also come from companies that provide young people with entry-level abilities, fund science laboratories, disseminate scientific knowledge, offer traineeships, or promote careers in the sector. They also sponsor scholarships for chemistry university programs. Globally, there is a plethora of approaches towards training and lifelong learning. Through the World Coatings Council, knowledge transfer on best practices is encouraged. Examples: The National Autonomous University of New Mexico offers a degree in paint technology in partnership with ANAFAPYT; FIPEC has an agreement in place with third- level chemistry schools to offer traineeships and foster crucial skills; BCF, CNCIA, and CPCA all provide online diplomas in Coatings Technology. Workshops and webinars are also offered by ANAFAPYT and VdL. VdL also uses various channels to offer information about educational opportunities, including a dedicated website. CEPE launched a three- year Master’s Engineering Program for paint and ink technology. 19