Engineering News

Sustainability: Solving global challenges
12:57 PM MDT | April 1, 2013

Chemical makers are sharpening focus on the business of sustainability and placing it at the center of growth strategies. For many, the practice of sustainability is already generating huge benefits in efficiency and profits. Providing for the energy, water, food, housing, mobility, and hygiene needs of a growing population—all while mitigating climate change and dwindling resources—is creating large market opportunities.

Producers say their companies are uniquely positioned to help solve looming global challenges posed by population growth, climate change, and constrained natural resources. Embedding sustainability in day-to-day operations and refocusing product portfolios and innovation on solutions to meet the needs of human development are vital to top-line growth and long-term viability, they say.

Dawn Rittenhouse, director/sustainability at DuPont, believes that a company must be focused on sustainable solutions to achieve above-GDP growth. “It is hard to imagine having big growth opportunities if you can’t help solve global problems like feeding the world, reducing dependence on fossil fuels, or protecting people and the environment,” Rittenhouse says. DuPont has transformed its portfolio over the past 15 years, divesting gas and oil, nylon and polyester, and automotive coatings segments and making multibillion dollar acquisitions in agriculture, nutrition, and biosciences. “We’re looking at how to use biology along with chemistry to be able to bring next-generation technologies to the marketplace that solve world problems,” Rittenhouse adds.

Chemistry is critical to meeting the needs of the 9 billion people that will be on the planet in 2050, says Charlene Wall-Warren, sustainability leader/North America for BASF, which in 2011 launched a new corporate purpose that declares, “We create chemistry for a sustainable future.” BASF is targeting chemistry innovation as an enabler to solve challenges of resources, environment, and climate; food and nutrition; and quality of life, Wall-Warren adds. “Whether it’s in product manufacturing or developing products to meet market needs, I would say everything in our portfolio is driven on some level by sustainability.”

As chemical companies shift their view of sustainability to a business imperative that steers global strategy, they are faced with the challenges of managing complexity and prioritizing investments.

“In a thoughtful sustainability program, you have to minimize your own footprint—improve efficiency of resources; reduce emissions; reduce energy consumption. Doing this makes bottom-line sense,” says Neil Hawkins, v.p./global environment, health and safety, and sustainability at Dow Chemical. “Manufacturing efficiency; emissions; waste; water; social value of product uses—you have to really focus on helping every business make the best choices it can.”

The industry is already seeing significant benefit from sustainability efforts. Dow spent $1 billion implementing its first set of 10-year sustainability goals from 1995–2005. The effort reduced both carbon dioxide (CO2) equivalent emissions and energy intensity by more than 20% over that period and saved the company more than $4 billion. Since 1990, energy efficiency efforts have saved the company over $20 billion, Hawkins says.

At DuPont, energy efficiency investments have saved the company about $6 billion since it began tracking energy use in 1990. The company is targeting a further 10% reduction in nonrenewable energy intensity by 2020, Rittenhouse says.

BASF’s Verbund concept, which encompasses integrated manufacturing at large sites with efficient value chains, helped the company reduce 2012 emissions by 3.4 million m.t. of CO2 equivalents, and it is targeting an additional 40% reduction in greenhouse gas (GHG) emissions per ton of products sold and a 35% improvement in energy efficiency by 2020. “We save about a €800 million ($1,025 million) annually in cost through our Verbund efficiency measures around the world, so the financial savings are pretty significant as well,” Wall-Warren says.

Eastman Chemical currently meets 90% of its global electricity needs with cogeneration, which uses up to 40% less fuel, and generates fewer GHG and other emissions. But while energy usage and GHG emissions have been one of the “macrochallenges” facing the chemical industry, “value for us comes from creating new demand,” says Godefroy Motte, senior v.p./integrated supply chain and chief regional and sustainability officer at Eastman. “We are focused on using sustainability as an opportunity to create innovation—engage both our customers and our customers’ customers.”

Sustainability executives say consumer use of sustainably advantaged products generates much larger environmental benefits than operating measures put into place at their companies. BASF products help customers avoid 320 million m.t. of CO2 equivalents annually—emissions savings almost 13 times that of BASF’s whole 2012 footprint of 25 million m.t., Wall-Warren says. Big contributors include products BASF sells into housing, construction, and transportation markets.

Since 1990, Dow products and technologies have helped its customers avoid over 1 billion tons of GHG emissions, Hawkins says. Dow Automotive Systems and Ford Motor Company have teamed up to develop low-cost carbon fiber solutions with the goal of reducing Ford’s average vehicle weight by up to 750 lbs, boosting miles/gal. The company’s insulation products have reduced GHG emissions by five times what Dow’s manufacturing operations emit in a year, Hawkins adds. Dow will be the official Carbon Partner of the Sochi 2014 Olympic Winter Games, in Russia. The company will use its technologies and expertise to mitigate the direct carbon footprint associated with the hosting of the games by the Sochi 2014 Organizing Committee.

Riva Krut, v.p. and chief sustainability officer at Praxair, says the company evaluated the carbon productivity of just 3 applications together that are collectively worth 11% of revenue. “In 2011, these applications enabled 23 million m.t. of GHG emissions to be avoided,” she says. “This nets out at 7 million more metric tons than Praxair’s total GHG emissions.” Overall, 26% of Praxair’s 2011 revenue was generated from applications technologies that help customers reduce operating costs, increase process efficiencies, and improve their environmental performances, she adds.

Targeting innovation

Many companies have identified specific human development challenges to drive their respective R&D efforts and are adding aggressive R&D and innovation targets to ensure a steady flow of sustainably advantaged product introductions. Developing sustainably advantaged products makes financial sense, executives say, because providing for the energy, water, food, housing, mobility, and hygiene needs of a growing population—all while mitigating climate change and dwindling resources—is creating large market opportunities.

Dow’s 2015 goals include a commitment to achieve at least three breakthroughs that will significantly improve the world’s ability to solve the challenges in affordable and adequate food supply, decent housing, energy and climate change, sustainable water supplies, or improved personal health and safety. “This has been an incredibly successful goal for us because it helps our people focus on what Dow science and technology can do to help solve the big challenges affecting the planet,” Hawkins says.

Working through a portfolio of about 50 candidates, and seeking input from its external advisory panel of sustainability experts, Dow announced its first breakthrough—the company’s omega-9 heart-healthy oils—in 2012. Derived from Dow AgroSciences canola and sunflower seeds, the use of omega-9 oils has eliminated more than 1 billion pounds of trans and saturated fats from the North American diet since 2005.

Sales of products identified by Dow as highly advantaged grew by 27% from 2010 to 2011, and already account for more than $2 billion of Dow’s sales. “We’re not saying we’re going to solve all the world’s challenges, but we are going to make significant positive impacts on the provision of clean drinking water, on feeding the world’s hungry, on increasing healthier life styles, and providing more sustainable energy,” Hawkins says. He adds that it is important for innovations that help solve world challenges also be commercially viable. “The invention of something nobody uses doesn’t really help.”

In 2006, DuPont added goals that call for the company by 2015 to double the amount of R&D invested in programs with direct, quantifiable environmental benefits for its customers and consumers, to $640 million; introduce at least 1,000 new products or services that help make people safer globally; increase annual revenue by at least $2 billion from products that create energy efficiency or reduce GHG emissions; and nearly double revenue from nondepletable resources, to at least $8 billion.

DuPont had already met most of these goals by 2012. It invested $823 million in R&D for products that reduce environmental impacts—more than half of DuPont’s R&D budget for new product development in 2012, Rittenhouse says. The company’s offering of products and services that improve safety reached 1,207, and revenue from products that reduce GHG emissions or are renewably sourced reached $1.9 billion and $10 billion, respectively.

Praxair has made energy a major focus of its sustainability program, Krut says. “It is an opportunity because our business model is to provide energy efficiency and other sources of resource efficiencies to our customers, and because some of our atmospheric gases and other applications are core ingredients of renewable energy products such as photovoltaics.” The energy challenge is one Praxair understands well, and will remain a priority for its sustainability program, she adds.

Eastman aims to have two-thirds of new product revenue coming from sustainably advantaged products by 2015—up from about a half in 2012. Eastman’s polymer development expertise positions the company to address two sustainability challenges in particular—reducing waste by making products more durable and improving efficiency with lightweight, higher-performing materials, Motte says.

By 2020, BASF is targeting €30 billion in sales and €7 billion Ebitda from innovations launched within the last 10 years—many of which will be sustainable solutions, Wall-Warren says. The market for battery cathodes and electrolytes is expected to reach €5 billion by 2020, and BASF is looking to achieve battery market sales of at least €500 million by then. The company’s climate protection products—those that, taking into account multiple parameters, have a more favorable environmental footprint than comparable products—accounted for 9% of 2012 sales.

Acquisitions have also played a role in shaping BASF’s portfolio of sustainably advantaged products. “The Ciba acquisition in 2006 brought in a solid portfolio of water technologies,” Wall-Warren says. Cognis, which BASF acquired in 2010, added several consumer product chemistries with solid performance, both from financial and market sustainability needs standpoints.

Sustainably advantaged technologies are a core driver for Eastman’s financial growth and for shaping the company’s acquisition strategy, Motte says. Previously, Eastman had made a number of acquisitions to boost its presence in non-phthalate plasticizers, including Genovique (Rosemont, IL) in 2010 and Sterling Chemical (Houston) in 2011. Its largest deal, however—last year’s $4.7-billion buyout of Solutia—provided a portfolio of performance window films that makes automobiles and buildings more energy efficient. Eastman forecasts annual growth above 10% through 2015, driven by innovation to serve global trends of energy efficiency, emerging middle class, and health and wellness. “We believe the product portfolio we have, especially since adding Solutia, will position us very well to respond to global sustainability challenges,” Motte says.

Many chemical companies are looking to relevant stakeholders and life-cycle tools to help identify, prioritize, and implement sustainable new product strategies.

Wall-Warren says the development of BASF’s Eco-Efficiency tool for comparing similar products or processes was one of the most impactful in BASF’s sustainability efforts because it engaged external partners and enabled a sustainability approach that would lead to integration of sustainability into the company’s core corporate strategy. First launched in 1996, Eco Efficiency analysis goes beyond usual life-cycle analysis, Wall-Warren says. “It looks at multiple environmental categories and it incorporates economic factors like total cost of ownership. We’ve done this for 15 years and have found it to be an invaluable tool for understanding and evaluating new technologies, particularly where there are benefits and there are trade-offs.”

BASF also prioritizes sustainability efforts by doing a materiality assessment. “Essentially, we go through a stakeholder input process to determine what they believe is most important,” Wall-Warren says. This includes both external and internal stakeholders—customers, academia, nongovernmental organizations, and government.

One of Dow’s most recent sustainability initiatives its partnership with the Nature Conservancy. The two agreed in 2011 to work together to apply scientific knowledge and experience to examine how Dow’s operations rely on and affect nature. “Ecosystem diversity and the interface of companies to nature is a trend we watched for a number of years, but we decided three years ago to put together this strategic partnership to proactivtely explore how Dow interfaces with water and land,” Hawkins says. Dow has also been working across the supply chain to determine end-of-life scenarios for its products.

“Everyone is focused on getting it done today, but some of these trends are longer term,” Hawkins adds. “Building strategies for the longer term, we have to be cognizant of sustainability trends. This is probably one of the bigger challenges, but our business leaders are very outside-in focused.”

Source: IHS Chemical Week

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