As Chuck Deise, vice president and chemical sector lead, CSC explains, “We are seeing a significant shift in the industry to reinvent the corporate sustainability agenda as a major driver of innovation. Leading companies are doing this by developing more eco-friendly products to differentiate the brand which improves top line, and reducing carbon emissions and energy to enhance the bottom line. Sustainability practices not only positively impact the environment and an organization’s public perception; they can create quantifiable competitive advantages.”
The message is clear – these companies are finding that it pays to embrace sustainability. While regulatory compliance has been the primary focus in previous years, the ability to support a much broader sustainability agenda has become a top priority because of the benefits that it can deliver – from sustainability-driven innovation to energy efficiency, cost-savings, and ultimately, revenue-growth.
Moreover, in addition to supporting sustainability initiatives at the enterprise level, many of these companies are also setting aggressive targets to reduce carbon and water in the product development cycle and throughout the supply chain to achieve even greater gains, according to the research.
The question is - how do they do it? In terms of addressing the issue of sustainability at the product-level, the research reveals that a number of key business practices have been adopted by top performers:
1. Utilize LCA (Lifecycle Analysis) to Evaluate Products, assessing their total impact on the environment through customer and consumers, and applying this knowledge to design new products and supply chains to deliver them. “Borealis at this time is assessing its impact along the supply chain via a series of life cycle assessments (LCA) of its products. It will enable us to better manage risk,” says Sylvain Lhôte, EU and Sustainability Affairs/ Strategy and Group Development.
2. Promote Growth in Eco-Premium Branding and Sustainable Products to drive additional revenue and improve the environmental footprint. AkzoNobel has built on its approach (begun about five years ago) of treating sustainability from a position only of risk management, to one of building its future business around sustainable or “ecopremium” products. The company’s risk management activities, include global product stewardship and standards for its suppliers verified by environment, health and safety audits.
3. Measure Supply Chain Sustainability Contribution by establishing criteria for suppliers and holding them accountable for materials and energy performance and specific distribution methods. DuPont has embarked on a program to assess the environmental footprint of its supply chain activities, including its raw materials and the footprint of its customers. Their initial phase involves pilot assessments of certain supply chains and will include water consumption and scarcity in certain areas as well as energy use and GHG emissions.
4. Incorporate Environmental Conditions in Emerging Markets into Product Design associated with both climate change and the ability to increase food supply globally with minimum impact to the environment. “Dow historically had wanted to be a leader in environmental performance so as to ensure its right to operate. We had always looked at safety of our employees as a priority. Now we have discussions into the business strategy for megatrends such as sustainable energy supply, human health, housing, and water in the emerging world.” David Kepler, II, chief sustainability officer/Dow Chemical.
5. Achieve Carbon and Environmental Footprint Reductions in conjunction with energy savings and incorporate improvements into your products environmental performance and positive carbon financial benefits. Energy management and carbon emissions reduction are the most important factors financially for Borealis when it comes to environmental sustainability by virtue of the energy intensity of the company, the cost of energy, as well as the impending cost of the European Union’s (EU) emissions trading scheme (ETS). The ETS, scheduled for 2013, will oblige major chemical firms in Europe to purchase emissions allowances via public auctions.
So what can we learn from these chemical manufacturers? A lot. After all, much of what plagues manufacturers of consumer products, automobiles or high tech electronics when it comes to sustainability is the potential risk posed by the chemicals or substances contained within their products. Indeed, the need for "green chemistry" is at the very heart of the sustainability issue. So, it’s worth paying attention to the sustainability-related “Lessons Learned” by chemical manufacturers in this critical area.
It’s all part of next-generation product design, a topic that is explored in greater detail in the related research study, “Sustainability and the Product Lifecycle: A Report on the Opportunities, Challenges and Best Practices for Sustainable Product Design and Manufacturing.” So, stay tuned. We’ll be providing updates and an opportunity to participate in the research in the weeks and months ahead.
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