How ESG factors are driving change in the chemicals industry

29/03/2023

In recent years, there has been a growing emphasis on Environmental, Social, and Governance (ESG) factors in the business world. Companies across various industries, including chemicals, are recognising the importance of incorporating ESG factors into their operations. 

But what exactly is ESG, and how does it impact the chemicals business? In this article, we will provide an overview of ESG and its relevance to the chemicals industry and explore how chemical companies can navigate this new landscape to stay ahead of the curve.

What is ESG

ESG should be used as a framework to continually improve business ventures, sustainability outcomes, and social impact.
ESG should be used as a framework to continually improve business ventures, sustainability outcomes, and social impact.

Environment, Social and Governance (ESG) conceptualises an organisation’s ability to create and sustain long-term value in a rapidly changing world, and manage the risks and opportunities associated with these changes, in tandem with quality and safety systems. 

ESG can be used as a framework to assess how an organisation manages its non-financial risks and opportunities that changing industry conditions create. In the chemicals industry, this is vital in managing your raw materials, manufactured articles, end uses, and degradation products, as well as managing the many individuals that ensure these things happen.

Environmental

Environmental factors address an organisation improving its environmental impact performance stewardship. This is the most crucial aspect for the chemicals industry, concerning renewable feedstocks, safety and risk, and life-cycle of chemical products. 

The collective movement of Green and Sustainable Chemistry aims to critically review how and why different chemicals and processes are made and used. As we learn more about the life-long effects of chemicals on people and the environment, we are finding the need to devise safe, sustainable, and efficient alternatives to traditional methods.

The green chemistry approach is governed by twelve key principles, which are as follows: 

  1. Prevention of waste
  2. Maximising atom economy
  3. Less hazardous chemical syntheses
  4. Designing safer chemicals
  5. Safer solvents and auxiliaries
  6. Designing for energy efficiency
  7. Use of renewable feedstocks
  8. Reducing unnecessary derivatives
  9. Catalysis over stoichiometry 
  10. Designing for degradation
  11. Real-time analysis for pollution prevention
  12. Inherently safer chemistry for accident prevention

The future of the chemicals industry needs to find a balance between the 12 driving principles of sustainable chemistry, as well as having to take into account variables such as the impact on human health, environmental safety, synthesis quality, industrial constraints, and cost. In particular, reducing waste and designing for degradation are essential for minimising chemicals’ impact on the environment.

Efforts to substitute hazardous chemicals with alternatives that are less harmful for both people and the environment are just one part of environmental sustainability.
Efforts to substitute hazardous chemicals with alternatives that are less harmful for both people and the environment are just one part of environmental sustainability.

Social

The social branch of ESG refers to the management of relationships with employees, contractors, customers, and the wider community. Maintaining mutually beneficial relationships with stakeholders, supporting research and development initiatives, as well as supplying data and commentary to regulatory bodies are just some of the ways business can socially drive sustainable chemistry.

Other factors include social responsibility, respect, and human rights. It is important that businesses—particularly manufacturers of chemicals and articles—source their raw materials ethically and sustainably, as well as ensuring ethical labour practices and efforts against modern slavery. Hazardous chemicals also require that social perception be balanced with uses by downstream users, as well as any risk that may be present in the manufacture or transport of such chemicals.

Governance

As the more abstract of the three ESG subsections, it can be difficult to determine how governance factors can affect the chemicals industry. Concerns of leadership and management philosophy of the organisation, as well as practices, policies, and internal controls are just some of the ways that chemical businesses (or indeed any business) should consider the factors of governance.

Business leaders should ensure that environmental and social innovation are at the forefront of the business model and encourage continual quality management processes. Ethical behaviour, quality of the governing bodies, and stakeholder engagement should also be priorities of your business’ leadership team.

Chemwatch is here to help.

Chemwatch’s proprietary ESG assessment module is designed to give a snapshot of where an organisation stands overall and in the context of specific ESG-related categories.

The ESG module can be used for self-assessments or be deployed to suppliers to use and feed information back to you. It is composed of a number of questions designed to measure strengths and weaknesses in ESG compliance, automatically calculated and summarised in a report. From this, the feedback can be used to identify areas of improvement for your organisation or suppliers. To request access to this service, or for any questions about this assessment module, reach out to your Chemwatch Customer Service Representative. Alternatively, you can click here to contact the Chemwatch team.

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