Submitted by LyondellBasell Industries
This article, written by LyondellBasell Senior Vice-President, Strategic Planning and Transactions, Ronald Haddock, was originally posted by the World Economic Forum as part of a series focusing on the transformation of the chemicals industry.
The chemical industry cannot change its image without a deliberate and significant sustainability transformation. This agenda must be both broad and deep. The magnitude of investments required to become more sustainable is daunting and the challenge is to pace initiatives and investments that balance progress on sustainability objectives with shareholder expectations for acceptable returns.
Mega trends shaping the chemical industry over the next five to 10 years (and beyond) are the foundation for the strategic scenarios in which these decisions and investments will be made and they continue to offer a framework to structure the industry’s position. They include energy and resource transitions, changes in consumer buying habits, changing needs for and from agriculture (especially given the dual use of traditional food sources as feedstocks for chemicals production), post-globalization changes in trade flows, changes in the consumption of consumer and healthcare products, and new digitally-enabled business models that change how chemicals products are bought and sold.
The pace of change continues to accelerate, driven by changes in regulation, technology, consumer buying behaviours, new markets and shifting sources of feedstocks.
Chemical and advanced materials companies are getting ready to make investments within strategic scenarios that include, for example:
These four scenarios are not mutually exclusive and represent the context in which strategic decisions and investments are currently being made at the enterprise level.
Focused on objective-setting
Facing the breadth of the sustainability challenges ahead, companies will increasingly need to formulate, commit to, and deliver against specific sustainability objectives. As an example, LyondellBasell has developed specific objectives across over twenty targets today including:
Achieving much greater sustainability requires a careful rebalancing of the policy and business mix to meet the needs of multiple stakeholder groups while ensuring the chemical industry is economically sustainable and can continue to attract investments. At the enterprise level, this requires a deeper understanding of customer and consumer demand-side requirements while simultaneously developing more sustainable solutions via existing and emerging technologies and business models.
What we need to understand as an industry, to make these decisions for each company, is how the industry is likely to evolve and what strategies can succeed. Key questions to address include:
The technologies that are required to drive toward greater sustainability are either already available or sufficiently well understood that it is possible to anticipate many of the investments required for the next wave of sustainability improvements. Clearly, technology and associated business models will continue to evolve. Therefore, the challenge for the chemical industry is finding the right balance that addresses the challenges and new opportunities from sustainability goals while also being economically viable and attractive to shareholders who will rightfully demand acceptable financial performance.
We are LyondellBasell – a leader in the global chemical industry creating solutions for everyday sustainable living. Through advanced technology and focused investments, we are enabling a circular and low carbon economy. Across all we do, we aim to unlock value for our customers, investors and society. As one of the world’s largest producers of polymers and a leader in polyolefin technologies, we develop, manufacture and market high-quality and innovative products for applications ranging from sustainable transportation and food safety to clean water and quality healthcare. For more information, please visit www.lyondellbasell.com or follow @LyondellBasell on LinkedIn.
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