SUSTAINABILITY the prospect of a fundamental change in the economy . Sustainable business models have become a key foundation for economic survival and competitiveness . Companies that do not embrace this development and prepare accordingly are exposed to significant risk . In the short and medium term , they will struggle with new market and policy requirements , as well as facing financial burdens . In the long term , this could translate into missed business opportunities and the steady decline of market share – they will become ‘ stranded by sustainability ’. Such a fate is not inevitable , however . There is a broad spectrum of opportunity to accelerate innovation , competitiveness and new market applications , with the speciality chemicals sector well-equipped to lead a transformation of the chemical sector to a more sustainable and circular contribution to the economy . 27 Demand for greener and more sustainable chemicals continues to increase . A recently published report shows how “ green chemistry-marketed products significantly outperform their conventional counterparts ”. 28 , 29 Their growth rate has been higher than the total market growth in the last years . Based on ERM ’ s experience and the literature , we would summarise the risks for companies not responding to market and policy developments thus :
• Loss of customers due to changed expectations and requirements , particularly for the speciality chemicals sector , as it is closest to end-customers . With increased understanding and knowledge about their products , constituents and applications , customers are optimising processes and reducing their chemical requirements . Some are proactively substituting substances of concern , independent from their suppliers
• Increased competition from new players : Changing customer expectations will impact traditional business operations . Companies that do not embrace new ways of thinking will be competing with start-ups and competitors who understand that customers expect service-oriented chemical suppliers that help them to meet their sustainability targets
• Incomplete and / or decentralised chemical inventory data : This is often a key reason for delays in compliance and , in the worst cases , low quality submission of notifications and registrations
• High costs for late substitution of substances of concern : More substances will come under regulatory scrutiny with the revision of REACH and CLP and will be subject to restrictions
• Decreased attractiveness for investors : Many investors who have publicly announced that they will only invest in activities that fulfil high ethical and environmental standards . This is further fuelled by the Sustainable Finance Disclosure Regulation and the EU Taxonomy Regulation , which seeks to direct investment towards sustainable activities The key opportunities for companies addressing risks and showing proactive engagement are :
• The demand for safer and more sustainable chemicals will increase as businesses shift to Circular Economy strategies , creating new opportunities : The transition can only be successful when safer and more sustainable chemicals are the new standard . Keeping materials in a circular flow requires these to be safe for human health and the environment
• The speciality chemicals sector can be a frontrunner in the transition to new business models , serving as a bridge between end customers and the commodity chemicals sector . In addition , because speciality chemicals have always been sold based on their specific function and performance , the sector is well equipped to change its business from a volume-based model to deliverers of value-based services ‣
Figure 4 - Barriers to implementation of Green Chemistry & Sustainable Chemistry
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