• Industry: Chemicals & Performance Technologies
  • Type: Business and industry issue
  • Date: 7/9/2013

Going green: a sustainable advantage for chemical companies 

Going green: a sustainable advantage for chemical companies
Today’s chemical companies are taking major steps to create a more sustainable chemical sector. Megaforces can present business risks, but perhaps more importantly, they can fuel innovation for forward-looking companies. Global megaforces are prompting industry leaders to develop comprehensive sustainability strategies that incorporate the upstream and downstream social, environmental, and economic impacts of industry operations.

Global megaforces

According to KPMG’s own analysis,1 there are a number of global megaforces having an impact on the chemical sector. While many of these are driving demand for chemical products, they also provide operational risks and challenges as set out below:

  • Water scarcity and rising water costs. Regions expected to see the most demand growth for chemicals – South Asia, East Asia, and the Middle East – are also likely to face severe physical and economic water scarcity. Companies competing with local communities for scarce water resources are at risk of losing their license to operate.

  • Energy and fuel volatility. Fossil fuels are used both as feedstock and to supply energy for the chemical production process. The sector remains a high energy user, with oil and gas the dominant feedstocks, along with coal which is being used more widely, particularly in China.

  • Climate change legislation. The sector remains one of the most energy intensive industries and is vulnerable to emissions regulations, which could erode profits. Even modest taxes on greenhouse gas (GHG) emissions could reduce profitability.

  • Population growth and urbanization. Communities are increasingly sensitive to the potential environmental impact of chemical plants.

  • Reputation. Chemical companies are traditionally considered to have a negative impact on the environment. Despite attempts to improve public reputation of the sector, perceptions remain below average compared with other sectors.

Transforming the chemicals sector through innovation

The sustainability strategies of leading chemical companies have broadened as they aim to meet customer and consumer needs – and the needs of a rapidly expanding global population – through innovative and eco-friendly products and services. This is an exciting area, where leading chemical companies are investing in research and development (R&D) and finding new markets based on social and environmental responsibility.

Progressive companies are also grasping the opportunity to develop products and technologies that offer positive social and environmental benefits beyond their own operations in other, downstream industries. Examples of chemical industry products with sustainability benefits on the market today include:

  • Housing and construction materials such as insulation that reduce GHG emissions
  • Plant biotechnology that improves agricultural yields
  • Biofuels and fuel cell technologies for low carbon transport
  • Bio-based chemicals that replace the use of petrochemicals in plastics and other products
  • Chemical coatings that improve the resilience of products
  • Longer-lasting, safer batteries
  • Safety glass

In addition, the chemical sector can play a significant role in developing solutions for a cradle-to-cradle, zero-waste economy. For instance, chemical companies can support the production of tires that can be recycled into new tires as well as other products such as shipping pallets, asphalt roads and waterproofing.2

Sustainability: an opportunity for the chemical industry

Chemical companies are recognizing that what is good for people and the planet can also be good for the bottom line and shareholder value. In a recent KPMG survey, 42 percent of respondents from chemical companies (and 60 percent of respondents from the large companies) said that their organizations derive financial value from their sustainability initiatives.3

Forward-thinking companies know that sustainability presents an opportunity for the chemical industry – and innovation is the key to success.

1Expect the Unexpected, KPMG International, 2012

2Why small companies will lead the second chemical revolution

3Research conducted for the KPMG International Survey of Corporate Responsibility Reporting 2011


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