Net-zero Challenges and Sustainability Agenda in Chemical Industry

Vinod engaged in a conversation with Asia Business Outlook magazine to answer queries on the net-zero challenges and sustainability agenda in the chemicals manufacturing industry globally. He is responsible for managing governance of Lanxess operations in Southeast Asia in addition to heading the Asia-Pacific business of one of the company’s ten business units. He has been working for this group for more than 14 years and is located in Singapore.

The chemical industry plays a crucial role in global sustainability efforts. What is the significance of the chemical industry in reaching net-zero emissions and what obstacles might it encounter along the way?

The chemical industry plays a very diverse role in terms of supplying different types of materials to various industries, including the automobile industry, semiconductor industry, personal care industry, and others. The involvement of chemicals in the overall sustainability matrix is extensive. Consumers are becoming choosier, demanding products with lower carbon footprints. Regulatory changes are occurring in various countries, and investors are increasingly interested in more sustainable products. Employees are also seeking to work in organizations that offer sustainable solutions. Overall demand for sustainability across the world has increased. The chemical industry is energy-intensive and heavily dependent on traditional machinery that uses fossil fuels, with a complex supply chain. However, it has significant potential to improve sustainability. The use of renewable energy resources and bio-based products is being implemented as well.

Balancing economic growth with environmental sustainability is a complex task for the chemical industry. How can the chemical industry balance its economic goals with the imperative to reduce its environmental impact?

The best way to achieve this is to make sustainability a business opportunity for all stakeholders. Now, sustainability is considered a license to operate the business. A clear understanding of the various requirements of clients from different industries is needed to find sustainable alternatives. For example, in the personal care and cosmetics industry, there's a growing demand for natural, greener, and more sustainable alternatives.At LANXESS, sustainability is an integral part of our business, driving our social responsibility and growth strategy.We are expanding our portfolio of low-carbon and climate-neutral products with the goal of achieving net-zero emissions by 2050. Our Scopeblue label offers products that use biodegradable and renewable raw materials, are manufactured using green energy in green facilities, and have a carbon footprint reduced by more than 50%.These climate-neutral products help reduce our environmental and climate impact while contributing to our bottom line. This enables us to meet both our customers' and our own environmental and economic goals. Furthermore, we support our customers' sustainable growth by providing third-party verified carbon footprint certificates through our product carbon footprint engine, helping them achieve their Scope 3 targets.

What strategies can chemical companies implement to reduce their carbon footprint while maintaining profitability?

Chemical companies can reduce their carbon footprint while maintaining profitability through a range of strategies from sourcing to product development and supply. Utilizing renewable energy, recycled materials, and developing sustainable production processes are key approaches. Offering sustainable products that meet the growing customer demand for low-carbon alternatives can enhance profitability and contribute to achieving climate neutrality. A good example of this is our Scopeblue label, which identifies climate-friendly products. These range from naturally derived personal care preservatives with at least 50% sustainable raw materials to alternative products with up to 100% reduced carbon footprints. Such products not only support our customers' sustainability goals but also positively impact our bottom line.Furthermore; production facilities can improve profitability and reduce their carbon footprint by adopting green energy and eco-friendly processes. For instance, our Jagadia site in India is transitioning to a mix of biomass (such as soybean or mustard husks) and solar power. This shift is expected to reduce CO2e emissions by a further 150,000 metric tons from 2024.