Going Green: Sustainability’s Effect on the Chemical Industry
Sustainability ranks among the most discussed concepts of the past decade — and for good reason. Everyone from the blue-collar breadwinner to the high-powered executive is grappling with going green. Their respective decisions regarding sustainability carry immense weight within the global marketplace, where demand drives operational decision-making. Businesses within numerous sectors are feeling the effects of sustainability’s emergence in consumer and enterprise circles as a consequence. Chemical industry companies are among the organizations most susceptible to this development. Why? Many depend on industrial niches that produce products at risk for reduced usage or outright elimination due to the onward march of sustainability initiatives. Approximately 60% of all ethylene, the most widely manufactured organic compound in the world, per the American Chemical Society, goes toward the creation of polyethylene, the substance used to create sustainability’s mortal enemy: plastic. Petrochemicals essential to the production of petroleum face similar fates, as both businesses and consumers turn away from traditional energy sources and embrace solar and wind power.
These risks necessitate significant action. The chemicals industry should begin adjusting to these developing marketplace conditions and prepare themselves for an immediate future when the plastics and fuels that once characterized material society no longer generate the interest and related revenue they once did.
Consumers support sustainable alternatives
While marketplace variables like availability and price still carry immense importance among consumers, another factor has risen to challenge these once-bedrock value propositions: sustainability. Modern consumers are intent on preserving the environment and protecting themselves and their children against manmade ingredients and products they see as harmful. In fact, almost three-quarters would change their shopping habits to reduce their environmental footprints, while more than one-third are willing to spend more on products that deliver on claims of sustainability, according to researchers from Nielsen.
As mentioned above, discontinuing plastic use is at the center of many consumers’ personal sustainability efforts. Hundreds of millions of tons of plastic are manufactured annually, the Association of Plastics Manufacturers discovered. Food packaging manufacturers account for 40% of this material, while building materials makers produce around 20%. Organizations within the automotive, electronic, household materials, and sports and leisure markets are responsible for the rest. The plastics these businesses produce serve a purpose, of course. However, such items are not biodegradable and often find their way into natural environment, where they can do damage to animal and plant life. Additionally, some consumers wonder how plastics and the chemicals with which they are produced affect humans, particularly children. For instance, many have joined the crusade against bisphenols, or BPAs, in recent years due to preliminary medical research that indicates such plastic might cause health issues in children, per the American Academy of Pediatrics.
Consumers are similarly concerned about fossil fuel consumption and its potential impact on the natural world. In fact, more than 60% of Americans believe the widespread release of greenhouse gas is causing climate change, researchers for Yale University and George Mason University recently learned. As a result, support for environmentally friendly energy solutions, including wind and solar power, is growing, per Pew Research Center, which revealed that two-thirds of Americans support the expansion of sustainable alternatives to fossil fuel and coal. Many are taking action personally to de-emphasize fossil fuel by purchasing hybrid electrical vehicles, which have experienced significant sales growth since the early 2000s, according to the U.S. Department of Energy.
Businesses follow the money
With large numbers of consumers embracing sustainability, enterprises have no choice but to follow suit. More than three-quarters of consumers expect businesses to develop and deploy corporate sustainability initiatives, according to analysis from Nielsen. Even buyers from older generations — 65% of the silent generation and 72% of baby boomers, specifically — are on board with such programs.
This is why an estimated 82% of S&P 500 companies have corporate sustainability initiatives in place, per the Governance and Accountability Institute. These internal initiatives encompass a whole host of functions, including everything from back-office paper reduction to the use of biodegradable packaging. Some organizations have gone even further than this. For instance, Google, which operates numerous data centers and offices across the globe, pledged to swap all of its traditional energy sources for renewable alternatives back in 2010. The technology giant accomplished this goal in 2017. Facebook embarked on the same quest in 2013 and is expected to complete the transition to 100% renewable energy by 2020. Even oil companies are embracing sustainability due to pressure from environmentally geared investors, The Houston Chronicle reported.
Chemical companies take action
These developments have chemical companies searching for new operational strategies that will keep them solvent as consumer and enterprise attitudes toward nonsustainable materials grow more negative. How can such organizations survive without plastics and petrol? While there is no all-encompassing antidote, innovative players within the space are nearing long-term solutions by focusing on process improvement and change management.
Reporters for Bloomberg recently covered the emergence of industrial plastic recycling and the chemical industry’s role in its development. Approximately 60 chemical firms are working together to perfect a reuse workflow that allows shop floor teams to break down used plastic components — old food containers, for example — and reintroduce their molecular remnants into production processes. This closed circular strategy would not only reduce the volume of plastic material threatening the environment but also lend chemical companies invested in the production of the material new life. This is the kind of transformative process change businesses within the industry should pursue to ensure they remain viable after sustainability has transitioned from trend to status quo.
Chemical companies embarking on process improvements to address the emergence of sustainability could encounter trouble when pursuing such enhancements alone. Few operational stakeholders and executives have the bandwidth necessary to manage chemical manufacturing operations within an immensely competitive marketplace while also seeking out and implementing shop floor improvements. Fortunately, there is an effective solution to the time-management conundrum: partnering with a tried-and-true industrial consultancy like USC Consulting Group. We have been helping companies of every size, in virtually every sector, optimize their operations for decades, leveraging proven techniques and tools that ease change management and lay the foundation for growth.
Contact us today to learn more about our work.