Sustainability transformation in the chemical industry

Chemical companies are facing a dilemma: On the one hand, net-zero commitments at the C-suite level are the north star when it comes to driving sustainability transformations and achieving the increasingly elusive 1.5-degree target. On the other hand, shareholders expect the focus to remain on long-term profitability and growth in an increasingly uncertain environment – above and beyond a clear path to sustainability. 

We are convinced that these two targets are not contradictory, but in fact complementary and seek to demonstrate in the following that the efforts to work towards these goals can be successfully combined. The only way to deliver not only on environmental, but also on social and governance promises and to thereby secure future profitability and growth is to incorporate ESG initiatives in the routine tasks of all key corporate functions:

• Corporate Development/M&A
• Controlling/Finance
• Supply Chain/Operations
• Marketing & Sales
• Research & Development
• Human Resources
• Regulatory, Tax & Legal

The article covers a variety of day-to-day sustainability-related challenges that corporate functions are facing, to include:

• Investments into new, less mature and more complex business models in the M&A department
• Managing trade-offs between traditional profit-related KPIs and new ESG-related ones in Controlling/Finance
• Planning and forecasting in a more complex, multi-product properties and mass-balanced environment for Supply Chain/Operations
• Communicating and valorizing the sustainable product range offered in the Marketing & Sales function to
• Managing the needs of and for skilled and motivated employees that make it happen in the HR function

This study, based on extensive research and a wide range of interviews with various market participants and academics, provides a snapshot of the ESG maturity of today’s chemical companies in terms of their day-to-day operations and reflects companies’ views on what is working, where they perceive the largest gaps and how to best close them.

Furthermore, we conducted a deep dive to specifically showcase how the corporate functions are affected by the inclusion of green hydrogen and its derivatives into the energy and supply landscape. Our observations do not focus on technical analysis but extend to the broader implications for the whole range of involved corporate functions.

As we assess the level of ESG maturity for each corporate function and how companies can prioritize their ESG rollout plans, we build on the status quo to provide a clear pathway as well as practical guidance on how to move forward. In that sense, this study serves as the foundation for the critical next steps - holistically embedding sustainability in the DNA of a company in a way that sets it up for long-term competitiveness and success.