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SUSTAINABILITY SPECIAL Chemical companies reassess product
portfolio on sustainability criteria
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Sustainability
is more than a buzzword. It represents a desire to live within the means
provided by an ecosystem, and choices that use resources in a responsible
manner so as to leave enough for future generations to maintain a good
quality of life. Clearly, there are many aspects to sustainability, but the
utilisation of resources at a pace that allows for replenishment is one. This
is however difficult for the chemical industry, much of which is based on the
non-renewable hydrocarbon resources that have been created by millions of
years of chemistry in the deep bowels of the earth.
Top of the agenda
Chemical
companies – like many others – still have sustainability at the top of their
agenda, with senior management level commitment to drive it through. Efforts
are focussed, amongst others, on the efficient utilisation of resources (be
it hydrocarbons, or, as is increasingly the case now, biomass), utilities
(such as water, energy), and ensuring products neither harms the planet nor
the species that thrive on it. This is a tall order, considering many of
these concepts are just a few decades old, in contrast to the chemical
industry, which had its birth more than a hundred years ago. There is,
therefore, a lot that needs to be undone, redone and done afresh.
Activity in product stewardship
Product
stewardship is now an area in which a lot of activity is discernible. This
involves re-examination of the existing portfolio from a sustainability
perspective through a rigorous and somewhat scientific assessment, at times
using data and information that has a fair bit of uncertainty. Critics of the
industry term the whole thing a public relations exercise carried out to
assuage concerns over possible harm from the myriad chemicals with unknown
properties out in the world. But within the industry there is a strong
commitment to the exercise, even at the risk of undermining well-entrenched
businesses, with attendant consequences for jobs and local economies.
Greater scrutiny from stakeholders
For
sure, not all of this is altruism on the part of industry. There is now
greater scrutiny of the chemicals in commerce – especially high volume ones –
by several stakeholders, and a growing realisation even within the industry
that there are unacceptable risks with some. These concerns have been around
for some time, but as the scientific evidence mounts, regulators are
questioning the relevance of some products.
Till
recently, the onus of proving that a chemical was unsafe in the intended use
was on governments. That has changed – most famously in the European
chemicals safety regulation, REACH. For the first time, the onus of proving
safety shifted to industry – with significant implications on costs to test
and register. At times, this has even been too much for the business to bear,
prompting companies to opt out of making them.
Growing suspicion
For
several products the verdict on safety is not clear, and risk assessments
differ in their conclusions. Among NGOs, consumer-facing companies and even
some regulators there is a not a surprising tendency to take a cautious
approach that requires abandoning a product on the mere whiff of suspicion.
Understandably, industry is opposed to such an approach, but not just out of
fear of loss of business income. There are real concerns that knee jerk
reactions like bans and restrictions made on unsound science could lead to
substitutions that could be even more inappropriate, especially if little is
known about the alternatives proposed. In other words, industry fears that
the cure could be worse than the disease.
Amongst
stakeholders mounting pressure on the industry to re-examine its portfolio,
are consumer-facing companies such as in the home & personal care, paints
and plastics industries (to name a few), and retailers who hawk them. These companies
are very sensitive of public opinion and quick to respond to concerns on
chemicals by putting pressure down their supply chain, all the way down to
ingredient suppliers. Several retailers are now driving the sustainability
agenda and have put in place lists of chemicals they do not want in their
offerings – never mind the science. NGOs are even more aggressive, and there
are several lists that see bans and restrictions on hundreds of chemicals,
many of whom have gone through rigorous risk assessments and come out clean.
Amongst all this noise, it is little wonder consumers are concerned and
confused, and industry’s response, often couched in scientific jargon, finds
little hearing!
For
chemical companies this perception has come to be a new reality they need to
learn to live with, and is certainly a factor in their reassessment of
portfolios.
Other drivers
Product
safety though the most important reason for a company to revaluate the
relevance of a chemical in its portfolio, is not the only. Another relates to
uncertainty of raw materials needed. Several resources – such as metals – are
stressed from an availability standpoint, or the supply choices are limited.
The business of catalysts, for example, hinges on availability of several
relatively rare metals and there is concern these may not be available in the
abundance of today or at price points that are affordable.
Regulation and innovation
Whether
increasing chemicals regulation is driving innovation is still up for
discussion. There is one school of thought that believes the focus on proving
product safety is distracting time and resources from R&D budgets. The
European Chemicals Agency, charged with implementing REACH, is carrying out a
review of the complex legislation and seeking answers. There have definitely
been innovations leading to safer products, but whether they came out of a
regulatory challenge, or would have happened even otherwise, is hard to
assess.
Process innovations
More
common are process innovations that circumvent hazardous routes, enable
precise conversions (leading to lesser wastes), have lower energy consumption
etc. This approach, orchestrated as a disciplined science called Green
Chemistry, has made significant impacts, especially in the pharmaceutical
& fine chemical industries, where production involves several sequential
steps each with a less than desired efficiency, adding up to wasteful
manufacturing. Several studies reveal that the impact of Green Chemistry has
been considerable and a step in the right direction as far as sustainability
is concerned.
Three categories
The
process of vetting a portfolio on sustainability is a continuous one. It
involves assessment on several criteria and red-flagging products that do not
make the cut and are unlikely to do so in the near future based on the
science available. These products are likely to be culled – if not
immediately, at least in the medium term. The second lot of products are ones
that pose concerns that are well identified and likely addressed, say by
investments in technology for manufacturing or formulation. Typically, these
are prioritised for attracting research dollars, with the aim of upscaling
them to the third category that includes products that meet or exceed
criteria of sustainability or are at the very top amongst the peer group.
Companies are also highlighting these preferred offerings with labels and
tags for use in marketing exercises.
Sustainability
assessments are now being made early on in the innovation cycle when a product
is little more than an idea. The idea is to take forward projects that offer
a distinct edge, compared to others in the peer group, or at the very least
just as good. Several companies swear they will not enter into a business
unless it matches internal criteria for compliance, and may drop a project if
it fails to make the cut.
Glass half full… or empty?
The
criteria for assessment of the environmental and ecological footprint of
products and their safety are not yet uniform and that invites legitimate criticism.
Some efforts at harmonisation have been initiated, but there is more work to
done, and industry is cognisant of it. The glass is half full or half empty –
depending on the point of view – but either way the industry has come some
way, if not all down this road of sustainability.
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RAVI RAGHAVAN
CHWKLY2AUG16
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