The development of bio-based chemicals in corporate managementy
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The development of bio-based chemicals in corporate management– Over the past three decades, sustainability in the chemical industry has evolved from a marginal issue to a central topic in the boardroom. Once considered a curiosity, bio-based chemicals were deemed unnecessary for the demanding task of supplying global industries on a large scale. Profitability, reliability, and production volume were decisive factors. The idea of replacing fossil-based chemicals with bio-based alternatives was dismissed as costly and impractical.
Today, this discussion is completely different. Bio-based chemicals are no longer a neglected topic, but a central item on the agenda of top managers. In the pharmaceutical, cosmetics, personal care, agricultural, and consumer goods industries, executives at multinational corporations are looking for ways to decarbonize their supply chains with minimal disruption. Increasingly, the answer lies in bio-based chemicals. Now it’s just a matter of who dares to take the plunge and be the first to market.
Why this change?
The main reason for this shift in perspective is emissions accounting, particularly Scope 3. This refers to indirect emissions generated in a company’s supply chain. While many companies have made significant progress in reducing their Scope 1 and Scope 2 emissions thanks to renewable energies and electrification, Scope 3 remains a challenge. For most companies, Scope 3 emissions account for the largest share of their carbon footprint, often exceeding 70 percent. Bio-based chemicals can help remedy this situation.
A practical solution for achieving Scope 3 targets
For decades, industry has used raw materials from fossil fuels as the basis for everyday products. From solvents in cosmetics to excipients in pharmaceuticals, fossil fuels form the foundation. Replacing these raw materials with chemicals from renewable resources offers a viable solution. Think potato scraps, whiskey, pot ale, and other agricultural byproducts. Together, they offer a practical way for executives to achieve their Scope 3 goals. These chemicals have nearly identical properties to their fossil-based counterparts. Customers and supply chains experience minimal disruption, while companies reap significant sustainability benefits.
Beyond the perception problem
Increasing regulatory pressure has significantly changed attitudes toward bio-based chemicals over the past three decades. They used to be considered too expensive and unusual. The hurdles that once made management hesitant have now been largely overcome. The industry has spent years refining production techniques and establishing stable supply chains based on biomass waste, making the production of bio-based chemicals economically viable. Economic efficiency is steadily improving, driven by rising demand and increasing price volatility for fossil fuels.
At the same time, consumer demand for sustainable products has reached a tipping point. Cosmetics brands, for example, are facing increased criticism from customers who expect environmentally friendly products to perform well. Bio-based chemicals offer both.
The advantage of being a pioneer
As perceptions of bio-based chemicals change, companies that refuse to embrace the shift will be left behind. Leading companies that commit to integrating bio-based chemicals now will not only reduce Scope 3 emissions in their supply chains, but also future-proof themselves against further regulatory changes.
Around 2035
When many of the world’s most ambitious climate protection measures come into force around 2035, companies with established partnerships in the field of bio-based chemistry will have an advantage over competitors who have delayed their adaptation plans and are now trying to catch up. By this point, the costs of inaction will be high – in the form of fines, reputational damage, and lost market share. Pioneers, on the other hand, will benefit from security of supply, stronger brand awareness, and an authentic sustainability message that resonates with stakeholders.
Collaboration is essential
Regardless of the pace of industry development, we need cross-industry collaboration to achieve the urgently needed CO₂ savings.
Consumers must be willing to change their purchasing behavior—but perhaps they won’t have to. Sustainable products have very similar properties to their fossil-based counterparts, and switching to bio-based alternatives is unlikely to have much impact on their purchasing behavior. Of course, there may be short-term costs associated with more sustainable products, but these will fall rapidly as bio-based chemicals become more widespread.
Manufacturers, governments, and industry associations
Manufacturers must move away from profit-oriented metrics and recognize sustainability indicators as a measure of success. The transition from fossil-based to bio-based chemicals requires additional investment and commitment. However, it is a long-term strategy that will ultimately secure margins and competitiveness.
Governments should also set binding targets that require a certain proportion of bio-based precursors in production, similar to the zero-emission vehicle regulation in the automotive industry. Voluntary implementation is only effective to a limited extent; regulation is essential to accelerate implementation and create a level playing field.
Finally, industry associations must agree on a scientifically sound and simple system for reporting on the reduction of the carbon footprint of chemicals. Without a harmonized methodology, comparisons are inconsistent and progress is difficult to measure.
Challenge for the futurer
If we succeed in combining these four forces, the chemical industry will have a significant opportunity to end its dependence on fossil fuels and achieve its sustainability goals. It is an ambitious undertaking, but if we can identify the beneficiaries of this collaboration, we can form a forward-looking group and displace those who are stuck in the fossil fuel era.
The shift in corporate leadership
Due to its size and scope, the chemical industry bears an extraordinary responsibility and, at the same time, has a unique opportunity to reduce the carbon footprint of thousands of household products. It is particularly encouraging that the discussion in the boardrooms has finally shifted from the question “Should we?” to “How quickly can we do it?” Executives at most companies understand that bio-based chemicals are no longer a well-intentioned, experimental side project, but a fundamental tool for achieving climate neutrality goals. Those who fully embrace bio-based chemicals over the next decade will not only achieve their Scope 3 goals, but also build more resilient, competitive, and sustainable businesses. This shift in corporate leadership is a clear step in the right direction, and now is the time to turn words into action. Climate change will not wait for us to come to terms with it.
Source: CHEMICAL INDUSTRYJOURNAL
Also read: Four turning points for the chemical industry
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This information has been compiled with the greatest possible care, in some cases from different information sources. (Interpretation) errors are not excluded. No legal obligation can therefore be derived from this text. Everyone dealing with this subject has the responsibility to delve into the matter!