BLOG: The rules of the chemicals game are changing as companies pay the penalty for “growth for growth’s sake”

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson.

The chemicals industry, as with every other industry, has always chased growth for growth’s sake.

Companies have had to “run harder to stand still” in order to convince investors that every new quarter would deliver profit or volume growth.

This has fed into the kinds of data we’ve been poring over throughout our careers as we have constantly searched for the next volume and margin growth opportunities.

But the rules of the game are changing. Today’s inflation, austerity and geopolitical challenges – along with a new China that may no longer bankroll our industry – will, we believe, add momentum to the sustainability push.

As the rules of the game change, so will the measures or metrics for success (more on this in later posts as the discussion develops).

What must chemicals companies to be the winners in this new environment? Here are our suggestions:

• Innovation must accelerate in developing low or zero-carbon chemicals production processes as carbon taxes and credits develop
• Polymer companies need to fund collection, sorting, storage and recycling systems for plastic waste in the developing world
• They will need meet higher global brand owner targets for recycled content
• Whole new circular polymer value chains will have to be built, with the existing chains made a lot more efficient
• Chemicals 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 will be necessary to make finished goods last longer.
• Companies, hopefully supported by the end of quarterly financial reports, must shift from volume-based to service-based business models.

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.