Integrating innovation and sustainability to move beyond abatement

Global chemical producers need to focus on their stated objectives of emissions reduction to meet their 2030 goals, starting with Scope 1 and 2 emissions and, in many cases, driving noticeable reductions across Scope 3 as well. And to impact the larger ecosystem, these efforts should reach beyond abatement to harness material or product alternatives on a larger scale. Achieving desired outcomes and results, however, will likely require additional capabilities and approaches beyond those necessary for the invention of new materials.

Near-term portfolio action positions the industry for long-term transformation

Heading into 2023, the chemical industry is in a strong financial position. The year ahead could be a turning point when companies emphasize the long-term viability of product portfolios in the context of sustainability in a move toward asset-oriented deal-making. This trend will take longer to scale, given the uncertainty around feedstock prices, energy demand, supply chain, and end-market demand, affecting the appetite for strategic buyers. But the foundations for this shift are being laid in the current environment.

Rearchitecting to balance costs, carbon footprint, and resilience

Over the coming year, reevaluating supply-chain structures will be critical for producers to meet the scale of changes required for the next decade. Overall, supply chains will need to balance costs and carbon footprint while managing resiliency—a tough act that will require companies to consider strategies markedly different than those of the past three decades.

Emerging technologies drive value chain improvements and sustainability

Digital implementation is changing the decision-making landscape of chemical producers. However, the near-term focus will be on stabilizing current platforms and capabilities, with the intent to monetize the current investment pool before expanding to newer areas. Producers may increasingly use digital technologies to empower materials innovation and expedite low-cost formulations by evaluating, optimizing, and assimilating ingredient recipes and domain knowledge.