Because it delivers into 96% of all downstream industries and is embedded in some of the world’s most important industrial value chains, the chemical processing industry bears a massive responsibility to provide sustainability-related information to its customers. And now, amid escalating global pressure on these value chains to reduce carbon emissions and behave more sustainably, the chemical industry’s information-sharing responsibilities are escalating, too.
The chemical industry’s response? A new collaborate vision embodied by an open data space called Chem-X. Although it is still in its formative stages, Chem-X soon could provide the framework to enable some of the world’s largest chemical producers, along with suppliers, customers, technology partners and others, to share data about the origin, content, properties, carbon footprint, custody journey and compliance requirements of specific materials, compounds and products.
The vision for Chem-X is to enable parties to securely exchange data without compromising its sovereignty or security. There are multiple business justifications for pursuing such a vision. One is to help individual chemical companies, their customers and, in some cases, the value chains in which chemicals are embedded, meet their sustainability-related goals and compliance responsibilities. Another is to co-innovate to create more sustainable chemical production processes, feedstocks and end products. And a third is to improve the environmental performance of chemical supply chains.
Chem-X is the latest example of chemical companies working collaboratively to meet their shared sustainability goals and responsibilities. BASF, for example, is leading an effort to get chemical and process industry stakeholders to embrace its Strategic CO2 Transparency Tool (SCOTT) methodology for calculating product carbon footprint (PCF) to align with a standard being created by TfS (Together for Sustainability), a chemical industry sustainability initiative. Similarly, commodity intelligence company ICIS and data analytics company Carbon Minds have created a central repository of comprehensive emission data by supplier, plant and product.
Efforts like these are designed to help chemical and plastic companies and their customers measure, manage and identify opportunities to act more sustainably. And they depend heavily on digital capabilities. Here is a look at two vital areas where the spirit of co-innovation and the power of digital capabilities are helping chemical companies, supply chains and entire value chains move toward a more sustainable future:
Enabling chemical companies to shrink carbon footprints and behave more sustainably
The confluence of stricter environmental regulations, internal ESG (environment/social/governance) initiatives and a growing customer/consumer preference for greener products puts the onus on chemical companies to work individually and cooperatively to reduce carbon footprint and behave more responsibility with regard to resource consumption, sourcing, emissions and more. Digital capabilities can play a key role on all these fronts. For example, Intelligent modeling tools can reveal more resource-efficient, less emission-intensive production processes as well as less carbon-intensive logistics pathways for getting products to market. They can help accelerate development of greener feedstocks from renewable sources and show companies ways to design products and processes that are more circular (for recyclability and reusability), and that minimize or eliminate hazardous substances. European consumer products company Henkel is using these kinds of tools to design and make products and packaging with less plastic and a lower carbon footprint.
Collaboration can help fuel these efforts, enabling stakeholders to share risk and reward in pursuit of more sustainable products and processes. There’s value in open innovation spaces where, for example, manufacturers can join forces with materials suppliers, academic institutions, customers and other stakeholders to conduct research and development in pursuit of greener products, sharing resources, documentation and data during the process. To make this level of collaboration possible, it’s vital that partners within these kinds of programs be connected digitally in order to readily share data, analytics insights and the like.
Giving supply chains, entire value chains and the individual companies that comprise them the critical reporting and compliance tools they need to meet regulatory requirements, internal ESG and carbon footprint targets, and customer expectations.
The global drive to regulate and reduce carbon emissions and promote more responsible use of resources means chemical companies must be able to report on the PCF associated with each specific product. To do so, they’ll need to be able to collect trusted, reportable and auditable carbon footprint data from their raw materials suppliers, logistics partners and others, using intelligent track-and-trace, data collection and analytics capabilities. Many of the new regulations that apply to chemical companies, including the Ecodesign for Sustainable Products Regulation (ESPR) in Europe, will require data from chemical companies and necessitate creation of data-sharing frameworks that encompass multiple companies. The early vision for Chem-X is to provide such a framework, enabling companies to exchange trusted data securely without sacrificing the sovereignty of that data. Not only must that data be transparent in terms of its source and accuracy, it has to come in standardized formats (common syntax and semantics) that enables seamless exchanges and apples-to-apples comparisons among similar products.
To make frameworks like Chem-X viable and valuable, there needs to be broad industry consensus not only on data standards and rules to govern data exchange, but on determining PCFs. We’re getting closer in that regard as a result of the work of ICIS, Carbon Minds, TfS and others.
Establishing common standards for PCF, along with business networks and open data spaces like Chem-X, will help chemical companies evaluate suppliers in order to strike the right balance between cost, reliability and sustainability. It also will lay the groundwork for the “digital passport” era, whereby end customers, regulators and other stakeholders can readily access a wide range of information about specific products — physical attributes, content (renewable vs. non-renewable), material sourcing information, carbon footprint, certifications, recyclability information, etc. — to determine compliance and compare products.
Digital technology will be critical to efforts like this. Generative AI, for example, can help in identifying, collecting, managing and reporting data from various sources across the value chain (such as Scope 3 emission data), while blockchain can help ensure the integrity and security of that data.
From aerospace to automotive, building materials to consumer products, chemicals — and thus, chemical companies — are integral parts of many of the world’s most important industrial value chains. As sustainability-focused, carbon-footprint-conscious and compliance-driven as those industries, and the chemicals industry itself, have become, digitally-driven collaboration isn’t just a novelty, it’s a strategic imperative.
