Sustainability tops the list of concerns for manufacturing and heavy industry, due to their need to maintain their reputation as well as their bottom line. The chemical industry is under particular pressure because it is the foundation of sustainability in many other industries like agriculture and fertilizers, housing, plastics, and pharma. 

Oliver Golly, a partner at PWC, points out that “Expectations placed on chemicals companies are high: in addition to improving their own footprint they are also supposed to promote sustainable solutions and innovative strategies in every customer industry they serve.”

It’s clear that chemical companies are fully aware of the burden. A PWC survey revealed that 58% of CEOs in the chemical industry are already planning investments in sustainability in the coming year, making it their top concern. 

PWC survey revealed that 58% of CEOs in the chemical industry are already planning investments in sustainability in the coming year

A study run by the ARC at the end of 2020 paints the same picture, reporting that 90% of global energy and chemical companies have sustainability initiatives in place. But achieving sustainability is far from simple.

What is Involved in Sustainability for Process Manufacturing? 

The main issues involved in sustainability include:

  • Reducing waste in all areas of the plant
  • Cutting pollution, emissions, and hazardous leaks
  • Minimizing impact on the environment
  • Improving employee safety and health 
  • Reducing energy consumption and fossil fuel usage
  • Extending diversity in hiring 
  • Strengthening anti-corruption and transparency measures

Many thought leaders go further, adding active sustainability initiatives like environmental stewardship and conservation such as planting trees and rewilding. 

Chemical Sustainability is a Complex Issue

It’s even more complex for the chemicals industry, where sustainability needs to encompass the entire supply chain. It includes the Environmental, Social and Governance (ESG) and sustainability principles not just of all the suppliers and partners of a chemicals plant, but also of its downstream partners. 

Many chemical sector end products cause serious environmental harm, notably plastics and fertilizers. According to the UN, plastic waste comprises up to 80% of the marine debris that’s threatening over 800 species worldwide, with the total amount of plastic waste discarded between 1950 and 2016 estimated at 6,000 million tonnes.

As a result, there’s a lot riding on chemical plants. “The chemical industry holds the key to unlocking climate strategies across the industrial manufacturing value chain,” says Paul Harnick, Principal, Global Head of Chemicals & Performance Technologies at KPMG, adding “This will be accomplished through the supply of sustainably produced products into downstream industries.”

For Chemical Companies, Sustainability Needs Focus

While employee safety, diversity in hiring, and ethical practices are important elements in sustainability, they are not the main focus for the chemicals industry at the moment. EcoVadis cites energy management and CO2 emissions as the primary issues, and KPMG lists decarbonization, renewable energy, CO2 reduction, and circular plastics as prominent ESG industry focus areas. 

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What is Driving Sustainability in the Chemical Industry? 

A number of motivating factors are pushing chemical plants to address their sustainability profile. 

1. Concern Over Climate Change and Environmental Impact

It’s impossible to ignore the impact of human-driven climate change, and chemical plants are having to face up to their responsibilities. The industry has a poor track record for emissions and pollution, due to the use of fossil fuels, flue gas release, and gas flaring practices. Chemical plants can cause significant runoff of pollutants into the local environment, air, and waterways, ruining ecosystems and destroying plant and animal life.

These emissions are also responsible for poor human health. It’s estimated that 8.3% of all deaths and 5.7% of the total burden of disease worldwide are related to chemical exposure. The chemicals sector is the second-largest source of sulfur dioxide (SO2), which damages the human respiratory system, and the 3rd largest producer of CO2, contributing 18% of industrial CO2 emissions.

Furthermore, the industry consumes massive amounts of energy and water. The high fossil fuel input required for power production and providing hydrocarbons means plants have the highest final energy consumption of any industrial sector. The chemical industry in the Middle East is thought to be contributing to water scarcity, located as it is along the coast of Gulf states which are already water-stressed. 

2. Pressure From Stakeholders

Even if chemical companies were willing to overlook their impact on the environment, stakeholders wouldn’t permit it. Investors, customers, and even stock exchanges are increasingly judging companies according to ESG principles. 

For example, Climate Action 100+ is an investor initiative to pressure the world’s largest corporate greenhouse gas (GHG) emitters to take action on climate change. It demands that 46 focus companies in the oil and gas and chemical industries create long-term energy transition plans with aligned short-and medium-term targets. Investing firm BlackRock recently announced that sustainability issues would be at the center of its investment strategies. 

As customers place sustainability at the top of their buying preferences and financial gatekeepers use it to guide decision-making, chemical plants are forced to address it. 

3. Financial Benefits 

Chemical companies are also cognizant of the financial advantages of sustainability practices. A positive reputation for sustainability delivers a competitive advantage that attracts more business and increases the company’s appeal to top talent, as Harnick notes “Strong ESG practices are becoming an essential prerequisite for employee recruitment, brand enhancement, and investor funding.”

Plants also need to comply with industrial and governmental standards to avoid fines and expensive audits, while cutting waste has the additional effect of reducing expenses and strengthening profit margins.

In general, as observed by PWC’s Golly, “Chemicals companies that actively participate in the debate about sustainability and the chemicals industry and find solutions for these issues are at a clear advantage: they can actively leverage growth opportunities instead of merely reacting to developments in order to avoid jeopardizing their license to operate.”

What are Chemical Plants Doing to Achieve Sustainability? 

1. Regulations 

First and foremost, chemical plants need to comply with evolving regulations. The European Commission recently introduced a framework to ensure that by 2030, all plastic packaging is recyclable. It’s also increasing regulations around the use of chemicals that could be harmful to the environment and human endocrine health. 

Additionally, chemical plants are adopting and implementing new company-wide governance regarding diversity, safety in the workplace – including safety from harassment – ethical business practices, and transparency in decision-making. For example, the Dow Chemical Company recently introduced more inclusive hiring practices to increase its diversity in hiring, setting up 10 employee resource groups to support minority groups, including a Disability Employee Network to ensure accessibility safety for employees with disabilities. 

2. Technologies 

One of the main ways that chemical companies are improving their sustainability profile is through R&D, producing innovative new technology involving biotechnologies, artificial intelligence (AI), and/or automation.

Deloitte reports that many US enterprises are expected to add mechanically recycled and renewable feedstock-based polymers to their product offerings, as well as investing in advanced recycling methods. Others are investigating alternative energy sources that help cut emissions. 

For example, BASF, reduced its GHG emissions by almost 50% over the last three decades, despite doubling its production volumes, largely thanks to patented catalysts to lower nitrous oxide emissions as well as increasing efficiency in its plants. 

Another line of technological innovation concerns big data and AI. New Industrial Internet of Things (IIoT) sensors and smart devices gather data so that human employees don’t need to risk their personal safety monitoring tank levels, temperature, etc. AI and machine learning (ML) enable predictive analytics to spot anomalies that may indicate human error, part depreciation (such as fouling, which reduces heat exchange efficiency), or low levels of lubricants (which requires more energy, water, and/or raw materials). It also opens up plant automation, which helps remove the risk of human error in mixing chemicals. 

Some plants are taking technology to the next level, with smart devices like drones and digital twins that use IIoT data with ML and augmented reality (AR). These make root cause analysis swifter and more accurate, enabling faster fixes that minimize damage. Digital twins often allow employees to reconfigure parameters remotely, removing the need to enter a hazardous environment for a physical fix and helping cut waste. 

3. Reconfigured Value Chains and Increased Collaboration 

New players like recyclers, tech startups, and preprocessors are entering the game, as sustainability requires multi-disciplinary collaboration across verticals. For example, a number of companies joined together to create Sustainable Chemistry for the Textile Industry (SCTI). Rohit Aggarwal, SCTI Chairman and President of Huntsman Textile Effects, said “While meaningful improvements are possible, no one company can achieve the shift to sustainability on its own. This is the impetus for SCTI.”

Role of chemical industry stakeholders

4. Improved Processes

Plants also need to improve efficiency and processes across the board, as more efficient plants result in less waste of energy, water, and raw materials. Companies need regular sustainability reports to assess the ethical and ESG values of suppliers and ensure that they are in line with their own principles. 

Another rising sustainability tactic is that of the circular economy framework, from production to use and disposal, which is being embraced by multinational chemical corporations like Dow and BASF. Dow’s goal is for 100% of their packaging products to be reusable or recyclable by 2030, while also enabling a million metric tons of plastic to be collected, reused, and recycled through direct partnerships. 

What is Holding Chemical Plants Back From Achieving Sustainability Goals?

Slow or delayed digitalization practices are leaving plants unable to implement more advanced tech that drives sustainability. Legacy software and outdated devices that can’t support smart data sharing mean that plants are unable to connect their data or enable remote monitoring, let alone adopt AI-based solutions like predictive analytics or digital twins. 

McKinsey notes that “Historically, the chemical industry has generally been a slow adopter of new digital or analytics technologies. Moreover, the current wave of artificial intelligence (AI) reaches the shores of chemical companies quite slowly.” 

Other key barriers include a lack of capital and resources, preventing companies from upgrading aging assets, and restricting their ability to meet sustainability objectives. 

Slowly But Surely, Sustainability is Coming to the Chemical Industry

The chemicals industry faces many obstacles in the road to sustainability, from incomplete digital transformations to the intricacies of a complex supply chain. As a result, the industry is prioritizing decarbonization, pollution, and energy management in their sustainability strategies. However, plants fully recognize the financial, legal, and ethical need to overcome them, and are employing a range of approaches to make the sector cleaner, greener, and eventually more efficient.