Speciality Chemicals Magazine MAY / JUN 2023 | Page 5

SPECCHEMONLINE . COM
MAY / JUN 2023
SPECIALITY
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A call to action

Probably one of the most significant moments of the year to date came in March when a coalition of 15 investors co-ordinated by responsible investment NGO ShareAction issued a joint statement to Europe ’ s 13 biggest chemical companies . It demanded that they “ set a path to transition away from their reliance on fossil fuels in order to live up to the climate policies many have publicly committed to ”.
The 15 – including Amundi Asset Management , Legal & General Investment Management , Barrow Cadbury Trust , Grünfin and KBI Global Investors , even Jesuits in Britain – are not in the league of private equity giants who buy and sell major chemical firms . They are not insignificant either , however , with over $ 4 trillion of assets under management . And the companies they targeted are mostly major players in speciality chemicals , such as BASF , Croda , DSM , Evonik , Givaudan , Lanxess and Solvay . As ShareAction ’ s letter points out , the chemicals industry currently accounts for over 6 % of greenhouse gas emissions . It therefore has a major role to play in reaching net zero – and it has to act soon before the window to keeping below a 1.5 º C rise closes . This may be as few as six years away . They also point out that this industry has not come under as much public scrutiny for its emissions as other high-energy consumption sectors like aviation and farming .
“ The case for decarbonising the chemicals industry is economic as well as moral ,” said Penny Fowler , head of corporate climate campaigns at ShareAction . “ As the world pivots towards a greener future , the risks of this business model are clear and they will only keep growing . The evidence is there : green chemicals are essential for long-term profits , people and planet .”
The industry could , of course , point out that it is very aware of how energy-intensive it is in these days of high input costs ; is already the most regulated of all industries ; is already acting in many ways to address the demand for greener chemistry ; and that chemicals are a vital part of the solution as well as the problem . Nonetheless , I think these points are valid and have to be addressed . They will certainly not go away .
ShareAction noted that some companies have made significant strides in certain areas , partly , it claimed , in response to its own campaigning and investors ’ engagement . The industry still has time to set out robust short- , medium- and long-term decarbonisation plans . However , it is only one investment cycle away from 2050 . Decisions therefore need to be made now .
Among the actions being urged are electrifying chemical production processes , switching to renewable energy sources and switching to more emission-neutral feedstocks instead of fossil fuels . More targeted ones include eliminating woody biomass as an energy source and aligning capex with 1.5 ° C pathways .
“ As investors , we will support companies if they show strong potential for long-term value creation ,” the 15 concluded . “ Chemicals will still be a critical sector in 2050 , but only companies that can decouple from fossil fuels and navigate the difficult transition ahead will have a share of that market … Companies that are quickest to scale new processes , feedstocks and circular products will be best positioned for long-term profitability and competitive advantage .”
And therein lies the trillion-dollar question . Will all or even most investors be doing the same ? Or will the four- to seven-year investment cycles of venture capital remain more important ? An awful lot hangs on the answer , not just for the chemicals industry but also for the whole world .
Dr Andrew Warmington
EDITOR – SPECIALITY CHEMICALS MAGAZINE
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