Sustainability Survey 

In June-July 2024, Daydream launched a survey on “Opportunities and Challenges for the Global Chemical Industry”, receiving 234 responses of market experts (see Appendix Profile of respondents).

 

Why this survey?

Sustainability and ESG (Environmental, Social, and Governance) topics are frequently mentioned, especially in some financial reporting where a sustainability report is required, and are becoming important aspects of industrial companies’ operations.

As professionals in the sector, we aimed to have an overview of the opinion of executives and managers to capture a snapshot of the current situation and expectations in terms of sustainability, presented in graphical form.

The objective is not to provide a detailed analysis of the results or to make recommendations, but rather to offer a quantified, overall view of the situation and to enable comparison with partners and competitors and between regions.

 

To the question “What are the main drivers of pursuing “Sustainability” in your company?

  • Among Chemical and Materials-companies the primary motivation comes from customer/market demand, followed by regulations and internal commitments (due to their positioning upstream in the manufacturing industrial value chain).
  • While for Consumer goods companies, internal commitment is the 1st driver for developing sustainability, followed by consumer/market demand.

In any case, it should be emphasized that for Mainland (ML) China companies, internal commitments driving sustainability is not as strong as it is for EU and NA companies:

  • Only 35% respondents from Mainland (ML) China companies view internal commitments, compared to
  • 70%+ and 50%+ for Europe (EU) and North America (NA) companies respectively.

The opportunities that the “Sustainability” trends bring to your company are: 

  • Primarily in building corporate image
    • 70% and more respondents believe that advancing sustainable development reflects favorably on the company with better social responsibility.
  • However, for financial statements, they seem of insignificant influence (remain relatively low)
    • <40% respondents thought that sustainability can bring higher margin for some products.
  • Apart from that, respondents from different industries see different advantages to the trend, for instance:
    • Nearly 80% respondents in Petrochemicals observed that advancing sustainable development has enhanced their company’s competence.
    • >70% respondents from Fine chemicals, Specialty chemicals and Plastics & Composites believed that sustainable development has created more business opportunities.

The challenges that the “Sustainability” trends bring to your company are…

  • The rise in production cost is commonly recognized, which adds pressure on chemical and materials companies in an increasingly competitive market.
    • Though the causes are not homogeneous and vary by region and type of industry, a majority of respondents (75~80%) from EU and ML China companies still mentioned it.
  • Whether to comply with sustainable development regulations or for obtainment of certification, sourcing compliant raw materials is a challenge, which is primarily mentioned by EU (55%) and NA companies (55%) alike, but rarely brought up by ML China companies (15%).
  • Additionally, respondents from different industries have identified various challenges, such as:
    • Fine Chemicals – Food & Personal Care Ingredients
      • High requirements for the traceability of product and transparent supply chain: more likely to recognize challenges related to data transparency management and supply chain relocation to align with ESG standards.
    • Plastics & Composites and Chemical conglomerate
      • Usually deal with numerous downstream applications: ∼50% of respondents consider that the challenges are how to position sustainable products in the market and which business models to use for promotion.
    • Petrochemicals and Commodity chemicals
      • more mentioned concern is the lack of incentives to advance sustainable development.

How does your company involve “Sustainability” in daily business?

(*) Abbreviations:

  • EOL – End of Life
  • CCU: Carbon Capture and Use
  • CCS: Carbon Capture and Storage

(**) Width of the link:

  • % of respondents choose this measure involving “Sustainability”
  • The wider the link is, the more respondents that chose this measure

 

Does your company have a ESG policy (e.g., publish Sustainability Reports, Set up Emission Reduction Targets etc.)

  • For European and Asian companies (excl. Mainland China), >85% respondents indicated that their company has ESG policy. This ratio for Mainland Chinese and North American companies is ∼60%.
  • The larger the company is, the higher the rate of indication of knowledge related to ESG policy within the company.
  • For industries like Chemical manufacturing, Energy & Mining etc.，70%~90% respondents indicated their company has ESG policy as well. However, only 60% of consumer goods company have responded accordingly

Sustainability by Region and by Location of Company’s Headquarters

Sustainability Market context per region

By Location of Company’s Headquarters, key findings

  • Customer / market demand is widely recognized as a main driver for implementing sustainability initiatives (>80% respondents said), followed by:
    • EU and NA company: Internal commitments, suggesting that complete value chains are working on improving sustainability
    • ML China company: Regulation and industrial requirement, mainly emphasizing the sustainability in production sector, e.g., energy saving & emission reduction
  • Financial benefits of producing sustainably are not yet clear for the market. A positive impact on company image is reported as a primary benefit of sustainability, though ML China companies do not recognize this as strongly as EU and NA companies (60% vs. 75-85% respectively).
    • For ML China companies, increasing company competence is also a benefit worth noting (~60% respondents said)
  • Majority of market players report unanimously that the main challenges brought by sustainability lie with high production costs. In addition,
    • EU and NA companies: mainly face challenges around sourcing compliant raw materials and suppliers. Additionally, when operating in different regions, these companies encounter different challenges, such as relocation of supply chain to follow ESG standards, and data transparency.
    • ML China companies: less aware of other challenges

Next step:   

The issue of sustainable development in the global chemical industry is becoming essential, even if it is approached differently according to the sensitivities of different regions of the world.

  • We operate in Europe, North America and Asia, particularly in China, Korea, Japan and India, and we are able, through our methods, proven and improved for more than a quarter of a century, to answer companies’ questions about sustainability and enable the implementation of concrete actions in fact.
  • We conduct analyses on complex sustainable development issues (such as chemical calculations, market expectations, customer requirements, competitive situation, product portfolio, etc.) and
  • We can quantify customer expectations and help define the associated business models and strategy.
  • Let’s discuss it: make an appointment with Fabrice in Europe (fabrice.lacombe@daydream.eu ), Yusi in Asia (yusi.chen@daydream.eu) and Stéphanie in North America (stephanie.lorini@dynovel.com)