BLOG: Global chemicals: What I believe our industry must do in response to a deep and complex crisis
SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson. The blog worries that we face a crisis deeper and more complex than any of us have seen before because of a combination of geopolitics, demographics, the changing nature of the Chinese economy as its “Common Prosperity” reforms accelerate, China’s rising petrochemicals and polymers self-sufficiency, the high levels of global inflation with all its causes, and, last, but certainly not least, climate change.
Today’s post provides an executive summary of each of these challenges, with further in-depth posts to follow.
What should we do next? Here are our suggestions:
- Innovation must accelerate in developing low or zero-carbon chemicals production processes.
- Companies must help fund collection, sorting, storage and recycling systems in the developing world.
- Companies must work more closely with converters, brand owners and retailers to reduce the need for virgin plastics in single-use applications.
- New chemicals and polymer solutions are required to make finished goods last longer. The solutions must again be developed through close collaboration with converters, brand owners and retailers.
- Companies must shift from volume to service models. Instead of success being judged on how many extra tonnes they keep selling, success needs to be measured on the effectiveness of service-based supply models.
- For instance, a synthetic rubber producer works with a tyre manufacturer to secure a 30-year contract with a car hire company. Fees are based on commonly agreed and shared environmental targets to reduce consumption of new tyres through data analysis of driver behaviour – e.g. the severity of breaking and rates of acceleration over short distances. Car hire customers are incentivised to drive more smoothly. The synthetic rubber producer and tyre manufacturer are incentivised to make their products last longer.
- The shift to service-base models will enable companies to hit ever-more stringent emissions targets – and will allow them to capture market share as public and legislative pressure to make things last longer increases.
- Legislators need to get rid of quarterly financial reports to make a service-based model work. This will allow companies to build long-term business plans that may take years to be profitable.
We believe that this is the direction in which the chemicals industry must travel.
Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.