Pillars of society13 July 2020
In the first part of our discussion with Stahl on its latest ESG report and developments that appeared in the last issue, we focused on responsible chemistry. In this, the concluding part, we take a look at key pillars and takeaways from the report and how they overlap. Answering Matthew Rogerson’s questions is group director for ESG Michael Costello.
What are some of the key themes or highlights of the ESG (environment, social and government) report? Were there any key trends or topics you discovered?
Michael Costello: We are very current in our understanding of the latest trends and developments, as we have to be in our business. We are constantly keeping abreast of what’s going on in the world, and I don’t just mean with the pandemic right now. When we wrote the report, none of this had started. A major area was climate change; in fact, this might be the most important issue of this generation – this is even mentioned in the opening statement from our CEO.
So, we are focused on improving our footprint when it comes to climate change, and that is stated in the report in some detail. One of the key metrics for this is emissions from CO2, which is a solid way to be able to check progress against recognised targets.
In absolute terms, we have reduced our carbon dioxide emissions by about 25% over the past five years. This is a fairly significant highlight. We may not be able to achieve such a massive reduction in the next five years, for example, but this was achieved through a combination of factors and practices; from investments in efficient energy equipment and installations across our manufacturing through to a switch to green energy usage in our European sites. This has allowed us to make such significant ground in this area.
Safety is one of the core priority strands for the business; not just the health and safety of our employees but of all those who use our chemicals or encounter them as consumers at the end of the line. All of these falls under the safety part of our ESG framework. We are pleased to confirm that we have achieved significant improvements in this area as well. As a critical topic for the future, we pay a lot of attention to it and measure safety in increasing detail – we are very transparent about all of this, even if the results are not beneficial or great, we still publish them. The best way to improve is to be clear, concise and transparent about all reporting so that we can see where we are strong and where we need to improve.
With regard to climate change, sustainability and the circular economy, is biotechnology a fundamental pillar within your platform?
As an example of overlap we could take biotechnology for instance (see Ingrid Weijer’s comments, opposite, for more on Stahl’s three pillars). If you think about it, one of the ways that we can use biotechnology is to get natural oils or natural raw materials from plants, or even from waste potentially, from the agriculture industry. And if you can do that, and we are doing it in some cases already, then of course, what you’re doing is you’re sourcing a material from something that can be regrown and reused, and there’s a certain circularity to that when compared with taking it from the petroleum industry where it’s not going to be returned.
It’s not a depleting resource from the petroleum industry; it’s becoming a more circular resource, one that’s renewable from the agricultural industry. There are many ways that this can be used across these three pillars. Energy efficiency in production means a lower footprint, combined with biomaterials that can be reclaimed, or even reusing the energy to make products but keeping the energy use in a circular loop so you have lowimpact biotechnology and circularity in one area. It takes focus, great teamwork and communication.
The EU’s circular economy action plan is as relevant to the chemical sector as it is to other manufacturing operations in Europe. If the chemicals are made in a more circular manner, there is less waste, a finite resource is stretched out without running out and there are energy savings and resource efficiencies that are created. Is this the direction you are heading in?
The environment is important to chemistry, as is reducing our impact on it generally, but the great news is that chemistry is very simple – carbon is carbon. It doesn’t matter to chemical companies if it comes from petroleum or rapeseed, for instance, which is a good thing as the product performs the same regardless of origin.
Of course, there’s a lot of research and development needed to make sure that our products perform the same way that our customers are used to.
In addition, there are economies of scale that are incoming with biochemical molecules – they are still more expensive to make at the moment and come in very small quantities, but that is constantly evolving and we can always seek ways of making more cost-effectively.
Another issue is ensuring that we are not competing for supply with other industries; for example, with food supply chains that might need biochemicals for a specific purpose. We tend to focus on the waste that comes from corn or waste products from the food industry because what we want to avoid is taking from the same limited resources.
While we want to move away from dependency on fossil fuels, there are ethical discussions and considerations about bio sources to consider. We try to find alternative sources where possible and where we use the waste streams of food industries, for example, we are not in conflict with other sectors.
While we have not yet fully realised this desire, the hope is to be able to create chemicals from residue or waste streams so that there is a circular loop, which does not require new energy or material sources but reuses what is available to support production.
For the report, were there any discoveries or developments that were surprising, where you thought one topic would be the focus but actually another one came through?
We have been producing this report annually in the current format for about five years now, and I guess the first major difference is that, when we compare the most recent to the report from 2015 or 2016, it is much wider in focus. Another key development is that there’s a greater level of transparency in the report; there’s an awful lot more information. If you look at the back of the report, there’s all sorts of details on governance, and social and environment about our company, which not so long ago we wouldn’t have dreamed of publishing, and that’s just the way the world is going, towards transparency.
A very clear part of our strategy is to be transparent, but also to promote that transparency. Because that’s what we think leads to better decisions about the environment and addressing social issues in the marketplace – the more transparent you are the better decisions can be made. And then you can reduce your footprint. I would say that’s the main point here. I don’t know if it’s a surprise because it’s been developing over the years. But if we compared our report with the one from five years ago, there is another thing that stands out – transparency is key. If we are clear and transparent in our communications with the market and customers, they can make better decisions and base their strategy on stronger ground. If something is not working, or is unclear, that is where problems can arise. By being transparent and using common metrics to discuss what we are doing, those above us in the value chain have the information they, in turn, need to make the best possible decisions for the environment, social and governance too.
Stahl’s ESG manager, Ingrid Weijer, shares her thoughts
“This report uses, for the first time, ESG terminology to clearly assess the specific actions we have taken and our progress against them. From our 25% reduction in CO2 emissions to our responsible chemistry initiative and our Road to Zero campaign – to reduce injuries to zero – to our certification of Zero Discharge of Hazardous Chemicals Gateway, we have clearly communicated our achievements and intentions. We are pleased with the progress, and excited about the future and being able to report on further activities in our next report.
“I would add that responsible chemistry is one of our key topics and focus. We are also aware that we understand chemistry from a much more complex perspective than maybe our customers or theirs. It is not so simple to communicate information about chemistry so that everyone fully understands, so we want to make it very easy for our clients, to make sure that they source and buy the correct products – ones that really meet their values and needs.
“To do this we have set up a responsible chemistry programme, which has three pillars, with the first one being ‘low impact’. We promise that the products under ‘low impact’ have an improved footprint whether it’s in water or in energy. The second pillar is about biotechnology, which we think is a very important topic for the future. And the third one is circularity. We’ve been exploring the idea of waste, which is a burden for every country in the world as people as individuals have to deal with waste. We are just starting to explore the ideas of how our products and chemistry can change the perspective of waste but also make sure that we ‘waste less’. So, in a sense, waste is no longer incinerated or goes to landfill, but rather reused for a new product. We feel the chemical industry has a very important role to play. Our focus is these three major trends: low impact, biotechnology and circularity. They are all covered in our report.