Social responsibility should extend through the whole supply chain, not just be a tool to put pressure on feedstock suppliers
‘I think there is a kind of hypocrisy in the value chain for speciality chemicals,’ says Ramesh Kana, group chief executive of Emery Oleochemicals, which manufactures products derived from natural lipids – animal fats (tallow) in the company’s historical US base, a mix of tallow and vegetable oils in Europe, and palm oil in Malaysia, where the firm’s headquarters now resides.
This is particularly apparent for products derived from palm oil, he explains. Pressure from environmental campaigns has – rightly – led to tighter scrutiny of the origins of palm-based feedstocks. ‘I have senior people from the companies that buy from Emery wanting to ensure we have traceability of our products right through to the plantation,’ says Kana. That’s relatively easy to ensure, he explains. ‘But once we sell these socially responsibly produced chemicals to these firms, they end up in face creams and shampoos, mixed with all sorts of other ingredients, and marketed in packaging that is hardly socially responsible. That’s where I see the sustainability theme in the whole value chain falling apart – it gets up to a certain point, and then you get into producing the end product and it fades into the background.’
Kana acknowledges that companies are under significant pressure to create products that consumers will buy, but he believes that those companies also have social and environmental responsibilities that should not be neglected. ‘If I take a purist’s view and say it’s not about the money, we’re all here to do the right thing for the planet, then let’s have a value chain that’s sustainable and green right through to the hands of the consumer. It can’t just be a tool to exert pressure on your feedstock suppliers.’
Part of the issue, says Kana, is that there is little or no financial premium attached to sustainably sourced chemicals. Palm oil producers, for example, have made significant efforts to ensure that their products can be tracked through the supply chain. Under rules set out by the Roundtable on Sustainable Palm Oil (RSPO), products can be certified if the land on which the palms grow was not cleared of tropical rainforest after November 2005. All of Emery’s palm-derived products are certified by the RSPO, either ‘segregated’ – meaning they are kept separate from non-certified oil at all stages – or alternatively ‘mass balance’ – which simply tracks the amount of certified oil entering the global supply chain and checks it against certified production volumes.
For Kana, that lack of premium isn’t an issue. ‘We have a commitment to the environment and using socially responsible feedstock. We’re doing the right thing and, for us, that’s more important. I’d like all companies along the whole value chain to be able to look at ourselves and defend our positions honestly.’ However, he suggests that more producers would make the effort if there was a financial incentive. ‘That day will come,’ he adds.
Beyond financial pressures, Kana believes change will be driven by a generational shift in awareness of environmental impact. ‘You have a whole generation of teens and younger people who understand this space much more than we give them credit for. I think there’s a tidal wave of change coming generationally. I’m 50, and in my lifetime I’ve seen changes to weather patterns – not in some book I’ve read, or some statistic. I’ve seen changes in cities that I’ve lived in or grown up in.’ Living in Australia while his children grew up, Kana has seen first hand the impact extensive drought has had on local farming economies and the depletion of natural resources. ‘My toughest critics are my three daughters – they time me in the shower. They read Emery’s sustainability handbook and they question me on it.’
‘It’s very personal for me,’ he says. ‘The generation before me, I think, heard about it and maybe thought “maybe, maybe not – I’m not sure”. My generation has lived through it (notwithstanding the skeptics), and then you’ve got the next generation coming along, for whom it’s not about whether or not it’s real, or whether or not we need to do something about it, but it’s how, when, how quickly. The pace of change, the inertia, is just going to get more and more.’