We have just returned from this year’s annual European Chemical Convention, put on in Helsinki by Cefic—the European chemical industry association. For the industry, the gathering took place against a background of economic challenges, increasing regulatory pressures and uncertainties over trade. But the overall mood at the meeting was upbeat, with plenty of talk about the industry’s pivotal role in creating a more prosperous, sustainable Europe—a pathway mapped out by Cefic in its recently released mid-century vision, ‘Molecule Managers’.
Amid all the debate, one topic in particular dominated the discussions in Helsinki: the circular economy. Of course, this isn’t a new subject. Indeed, it’s one we discussed at the 2016 event (you can read our report here). And its high profile at the meeting was hardly surprising, given the recent headlines on plastics bans, consumers’ growing preference for more sustainable products, and the voluntary commitments being made by many leading brand owners to circular economy goals.
But what is surprising is the speed with which the topic of the circular economy has leapt to the top of the agenda for chemical companies. This rise is being driven by an range of powerful factors—including escalating end-consumer demand for environmentally friendly products; intensifying regulatory pressure for recycling, especially in the EU; the rapid global growth in “responsible investment” funds dedicated to supporting sustainable businesses; the explosion in circular technology startups; and the voluntary move to circular models by dozens of leading brands.
Committing to lead the way
Add to this the overarching imperative to decarbonize supply chains across and beyond the chemical sector, and it’s clear why the pressure for change is irresistible. The result? Today, chemical industry leaders not only recognize the importance of adapting to the circular economy—but are also actively articulating their commitment to leading the way to a more circular and sustainable world.
Delivering on this commitment won’t be easy. Chemical companies will have to pressure-test their existing business models department by department to develop circular economy strategies; redefine their portfolio of businesses, assets and products; and refocus their technology and product development capabilities. Achieving all of this will require significant change—and deciding how to proceed can be a daunting undertaking.
To get started, chemical companies can follow a series of clear steps:
- Approach the circular economy as an opportunity for growth and business model innovation.
- Build capabilities to identify and build circularity options.
- Embed circularity into daily operations and management—including ways of working, target-setting and roles.
- Identify consumers and value chains planning to embrace eco-friendly buying.
- Revise long-term demand assumptions for linear models in light of the move to circular.
- (Re)gain ownership of the narrative.
While taking these steps is far from simple, the payoff will be worth it. Chemical companies that develop systematic, strategic approaches to the circular economy will position themselves to help set the agenda for change, rather than simply reacting to events.
Winning the race
As industry leaders head home from the Cefic event in Helsinki, what’s clear is that the race is on to occupy the “sweet spots” in the circular value chains of the future. As the graphic below illustrates, this race to circular is taking place on multiple tracks.
The starting-gun has been fired. Chemical companies must get into their stride now and join the front-runners—or face playing catch-up for many years to come.
CLICK TO ENLARGE FIGURE 1