Upstream pressure, downstream disruption
Throughout the global chemical industry, a steady stream of pressure is flowing upstream at the same time as downstream markets face disruption. Resource constraints and rising environmental concerns are changing how consumers think about chemicals. Consumers are also flexing their purchasing power. To explore how attitudes about sustainability are changing, Accenture surveyed 6,000 consumers in 11 countries and found the following:
Impact on the industry
Recessions aside, the global chemical industry has seen relatively steady growth for decades. However, the industry is now at a tipping point. New regulations, aging infrastructure and lack of consumer trust are putting it at significant risk of disruption, so chemical companies must be prepared.
Our survey sheds light on what appears to be an encouraging trend—that is, contrary to long-held views, consumers seem willing to pay more for sustainable products. Nevertheless, purchasing decisions are still at stake. As such, brands and retailers in sectors like automotive, clothing, electronics, toys and furniture are looking to address growing consumer concerns, particularly around issues like single-use plastics, to retain brand loyalty.
Looking ahead, they are rethinking the design of their products, packaging and use of chemicals to embed circularity throughout the entire product lifecycle. As brands and retailers consider how to bring more sustainable products with cleaner ingredients to life, they want and need help—which is where chemical companies can step in and step up.
A golden growth opportunity
Rather than fear the shift to a circular economy, chemical companies should embrace it. It gives them a golden opportunity to offer customers innovative solutions that unlock value, drive growth and fulfill sustainability commitments. By enabling circularity, chemical companies can be powerful partners to manufacturers, suppliers and retailers, helping them respond fast as consumer preferences change. And the possible rewards are compelling. How can chemical companies tap into this growth potential at scale?
Pivot toward a circular economy
In the circular economy, today’s linear “take-make-waste” model—where materials are made into products, the products used and materials then discarded—is replaced with an approach that eliminates the concept of waste. New value is unlocked by continuously keeping products, components and materials at their highest utility. Constantly cycling materials and molecules back through the value chain for reuse requires less energy and resources, creating potential to reduce costs and reinvest for growth. This can be achieved by embedding circularity internally and downstream.
Adopting internal circularity
With feedstock accounting for a significant percentage of total costs, recirculating molecules from used products enables the use of less price-sensitive, renewable alternatives and creates incentives to design products for reuse. Embracing green chemistry principles that reduce the development and use of hazardous substances is another way to benefit from the adoption of internal circularity.
Enabling circularity downstream
Chemical manufacturers are ideally placed to guide downstream companies as they reformulate recipes and rethink material inputs in order to develop more durable, eco-friendly products that support sustainability. A key differentiator will be partnering with brands and retailers, providing them the vital consulting and technical capabilities needed for product redesign in a circular economy.
Capitalize on new business models
As the chemical industry evolves, new business models are emerging that enable chemical manufacturers to capture value at every stage of the circular value chain and turn disruptive change to their advantage.
- Circular supply chainSwitch to renewable energy and replace single lifecycle inputs with sustainable or fully recyclable input material throughout production.
- Product as a serviceShift to chemical leasing models and service-based sales focused on product usage for a specific outcome rather than ownership.
- Recovery and recyclingSalvage useful resources and/or energy from disposed end-of-life products or by-products and reuse existing materials.
- Product life extensionPartner with brands to develop more durable product offerings that extend the life of products downstream without the need for modification.
- Sharing platformsOptimize product utilization by leveraging shared use, access and ownership via online marketplaces where companies can trade inventory.
Embrace circularity, accelerate growth
Changing consumer mindsets and even a willingness to pay more for sustainable products are opening exciting new opportunities for chemical companies that are ready and willing to pivot to a more circular future. With useful pointers and valuable insights on how to get started, this report scopes out an approach to unlock value, accelerate growth and drive sustainability in a circular economy.
Are you ready? Are you set? The time to go circular is now.