Our Training Partner, DFGE, outlines the sustainability challenges the chemical industry is facing and provides ways to respond to them by presenting suitable standards and initiatives.
The Vital Role of the Chemical Industry
The role the chemical industry plays in contributing to the production of all goods and services produced is definitely vital. Across many industries – from health, hygiene, construction and mobility to agriculture and energy supply – chemicals are an essential ingredient. This makes the industry globally one of the largest.
Therefore, the chemical industry has an important part to play in maintaining growth and prosperity, and in transitioning to a sustainable society. With increasing competition worldwide, innovation remains crucial in finding new ways for the industry to satisfy its increasingly sophisticated, demanding and environmentally-conscious consumers.
Top 10 Sustainability Challenges
By evaluating reports of the top 10 companies in the chemical sector, we identified the 10 most important sustainability-related topics/challenges faced by the industry:
- Energy management
- Sustainable products (materials)
- CO2 emissions
- Occupational health and safety
- Human rights assessment
- Water and effluents
- Customer health and safety
- Effluents and waste
- Environmental compliance
The key challenges in the industry lie in the first and third challenge, i.e., energy management and CO2 emissions. The high energy use in the industry results in the high fossil fuel input requirements to power production as well as the key ingredient hydrocarbons. The GHG emissions arise from the use of fossil fuels, flue gas release and gas flaring practices. In terms of sourcing, these products have a large emission factor, meaning that purchased goods and services will be an important position in the carbon footprint. Please see the full report for details about the eight remaining challenges.
And, why not read Corporate Action on Greenhouse Gas Emissions if you’re interested in finding out more about opportunities for Scope 3 management and supply chain?
Using Supply Chain and Reporting Standards to Address Sustainability Challenges
In order to tackle the sustainability challenges, usually supply-chain or report-driven standards are used.
In the context of supply chain driven standards, the suppliers are requested to disclose information about their consideration of human rights, their labor standards, their compliance systems, their environmental engagement and their CO2 emissions through a third-party solution. The most relevant ones are EcoVadis and the CDP.
Report driven standards are based on reporting standards and are best suited to find out where the company stands compared to competitors, to measure the effectiveness of its management and to understand the attitude of stakeholders towards it. Presenting information on achievements in the field of sustainable development increases transparency and therefore the confidence of stakeholders in the company. A report is also highly recommendable because investors more and more make their investment decisions based on ESG criteria.
Among the most popular reporting standards are the United Nations Global Compact and the standards of the Global Reporting Initiative. The former is also suited for sustainability beginners, while the latter requires more time and reporting as well as sustainability expertise.
To find out more about the challenges for the chemical industry, check out a DFGE whitepaper on the chemical industry and for insights on how to address CO2 emissions in the supply chain see the latest report by EcoVadis analysts.
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