Fecc: Global Compact drives ups responsibility

Chemical producers and distributors are becoming increasingly aware of their responsibilities right along the supply chain

Established in 2000, the Global Compact is a set of measures established by the United Nations to encourage businesses to examine their operations and the operations of their business partners, with the goal of increasing sustainability and accountability across all territories in which they are active.

Together for Sustainability (TfS) held its first conference in Shanghai, China, on 22 October 2014

The measures run along lines similar to corporate social responsibility (CSR) and other corporate citizenship and environmental sustainability measures, but with a stronger focus on human rights and labour standards.

Take-up of the Compact, which has over 13,000 signatories so far according to the UN, is also being driven by an increasing demand among consumers for companies to take greater responsibility for environmental and human rights measures, along complementary lines to CSR, according to Neville Prior, Fecc president and CEO and chairman of UK-based distributor Cornelius Group.

There are different drivers for different companies, he notes, but the preponderant driver is the ultimate consumer. “The over-arching scenario is for us to operate in a sustainable environment, and I would see both CSR and the Global Compact as being complementary to each other: both are important”, says Prior.

While the majority of distributors are not as public-facing as large listed corporations, an increasing number of chemical producers and end users have signed up to measures such as the Global Compact, meaning that they are partially responsible for the conduct of the companies they work with throughout the supply chain, and are more likely to deal with distributors that are working along similar lines.

In 2011, the chief procurement officers for BASF, Bayer, Evonik, Henkel, LANXESS and Solvay launched an initiative called Together for Sustainability (TfS), aimed at promoting the measures contained in the UN Compact, as well as Responsible Care and standards developed by the International Labour Organization (ILO). The goal was to assess and improve sustainability practices within the chemicals industry supply chain.

The European Petrochemical Association (EPCA) has also been looking at this issue. In a 2013 report on the state of the chemicals industry supply chain, it noted: “Member companies take responsibility for their own operations and in the sphere of their influence for their supply chains to support adherence to existing regulations and to respond to the needs and expectations of consumers and society.”

There are currently plenty of global opportunities for distributors, with European producers setting their sights further afield in search of higher-growth markets and looking to turn over more sales activities to third parties. But as more of the largest client companies sign up to measures like the compact, pressure will increase for distributors to match their operating goals to those principles.

But the appeal of the compact is not necessarily restricted to expediencies of complying with the wider trends moving the industry, according to EPCA. Greater focus on environmental sustainability can allow for better management of environmental and geopolitical uncertainty, and drive the use of new technologies or improved use of existing technologies, and help to make businesses more profitable and collaborative, according to the association.

“Economic drivers, customer benefits and improvements in the environmental or social sustainability of the supply chain go hand in hand. [Good practice examples] illustrate that the chemical industry can generate significant improvement in its sustainability performance through ‘people/planet/profit’ targeted projects,” EPCA concludes.