Companies have a duty to be proactive when it comes to sustainability
There’s a lot of talk about sustainability in the chemical industry. There’s a good deal of action, too, and it takes many guises – from energy efficiency and waste reduction, to moving away from petroleum-based feedstocks to more renewable bio-based sources. Some of these changes come hand-in-hand with financial benefits, which companies would be foolish to ignore. But others require investment, and their justification comes in returns that don’t feature directly on a quarterly balance sheet.
Those returns should not be overlooked. The long term health of any company relies on its ability to predict and adapt to its customers’ changing needs. When I interviewed Ramesh Kana, chief executive of speciality supplier Emery Oleochemicals, he stressed the importance of taking into account the next generation’s ingrained focus on the environmental impact of the products they use. Today’s teens and twentysomethings have been surrounded by discussions of climate change – in the media, at school and probably at home – since they could comprehend language. It’s natural for that to be reflected in their choices as consumers.
Companies hold considerable power to shape industry responses to existing and emerging challenges
Beyond reacting to customers’ desires, companies also have an incentive – some might say a moral and social responsibility – to be proactive. Sustainability is a guiding principle, not simply an opportunity to profit. Companies – particularly those with a significant presence in their sector – hold considerable power to shape industry responses to existing and emerging challenges. It should be within all companies’ remit to constantly assess, investigate and manage their social and environmental responsibilities, without waiting for prompts from regulators, campaigners or consumers. They should also put pressure on their peers and competitors to do the same.
This kind of openness and transparency is in direct competition with short-term economic gain. Removing a product from the market, or replacing a cheaper ingredient with a costlier one on environmental grounds, has an opportunity cost that can be exploited by less responsible competitors. Ideally such costs will be offset by long term gains in reputation and first mover advantages if competitors are eventually forced to replace those products. But there is nevertheless a risk, making it attractive to maintain the status quo and defer responsibility.
Having taken the plunge, campaigning on behalf of such changes is both socially responsible and well aligned with commercial benefit. However, it opens other potential pitfalls. Too strong an emphasis on specific activities attracts accusations of being superficial, and advancing vested interests rather than representing an over-arching ethos. Likewise, a knee-jerk resistance to activist, political or regulatory concerns – rather than engaging in an evidence-based discussion – reinforces the image of the heartless, self-interested corporate. No amount of token projects can reverse that.