IHS Solutions for Sustainability in the Chemical Industry

Transcription

1 IHS Solutions for Sustainability in the Chemical Industry

2 Leveraging IHS capabilities and expertise to help chemical companies operate, invest, innovate and grow sustainably. IHS understands that sustainability is a complex topic, with focus varying by industry, geography and company-specific priorities. For the chemical industry, sustainable, long-term growth relates not only to financial success, but also to balancing social and environmental challenges and opportunities. Many of today s leading chemical companies recognize that sustainability is a business imperative, and one that can help them to create new and innovative products, reduce costs, and gain license to operate. As the focus of sustainability efforts shifts to include the entire value chain, chemical companies are rethinking relationships with employees, vendors, suppliers, customers and other stakeholders to better understand how they can work together to contribute to the betterment of their surrounding communities, their business and the world at large. The chemical industry for decades has generally embraced sustainability as a means to comply with public regulatory requirements, improve efficiency, and respond to consumer purchasing preferences for socially and environmentally responsible products. Now, with industry innovation creating solutions for a number of global challenges, such as climate change and unprecedented urban migration, chemical makers are seeing sustainability efforts and related reporting as relevant to the entire value chain. (Source: IHS Chemical Week) Business Driver Examples Increase market share Aligning products with consumers social and environmental purchasing preferences or retailers responsible sourcing requirements; Improving brand image Improve government relations Complying with government policies and regulations, e.g. REACH in Europe or national emissions reduction goals; Demonstrating how a company s investments can contribute to regional social and economic development Enhance product performance Creating the chemical building blocks required for light-weighting materials to decrease emissions; prevent disease; improve health and advance other global sustainability objectives; Seeking alternative bio-based feedstocks Decrease operational risks Improving Environment, Health and Safety performance by reducing equipment failures, spills, accidents, the release of hazardous materials and GHG emissions; Identifying and engaging key local stakeholders to prevent disruptions and gain license to operate Increase cost savings Reducing steps required in chemical production, notably specialties; Use technologies and processes that can do more with less water, energy, and raw materials

3 At IHS, the breadth and depth of our insights and capabilities allows our experts to serve customers at multiple points in the value chain. IHS helps customers in the chemical and downstream industries make sustainable decisions in three major areas: Product Innovation and Diversification Understanding global risks, policy landscapes, & megatrends that will affect future markets and customers Prioritizing R&D investment in technologies or products based on price, performance and sustainability attributes (e.g. reduced environmental impact and greater compliance) Sustainable Market Entry Choosing new markets for entry or expansion based on both global market landscape and country-specific context Gaining license to operate, most notably in emerging markets Identifying and mitigating social, economic, political & violent risk that could disrupt or derail operations Identifying broader social and economic value to new investments for mutual investor-government benefits Operational Excellence Identifying & mitigating Environment, Health and Safety risk through enterprise wide incident and risk management solutions Choosing technologies to improve efficiency of resource supply, reduce costs, and improve Environment, Health and Safety performance Improving supply chain responsibility with respect to Environment, Health and Safety performance and ethical behavior Calculating impact and monetizing sustainability investments While the solutions described herein are particularly relevant for chemical manufacturers, IHS recognizes that the chemical industry as a whole includes a complex ecosystem of organizations along the value chain (i.e. energy producers, refineries, plastics processors, molders, component fabricators, automakers, retailers, financial institutions, and governments). As such, IHS can provide knowledge and expertise to help customers in all relevant sectors to consider the unique social, environmental, economic and industry factors affecting their operational decisions, investment strategies, and policies.

4 Product Innovation and Diversification Chemical firms today are evolving products, systems and services to improve global reputation and brand image, enhance cost savings through production efficiencies, respond to customers socially and environmentally responsible procurement requirements, meet legislative requirements, and simply because it s good business. At IHS, our experts combine chemical industry knowledge with other market and country-specific growth forecasts, energy scenario models, design standards, engineering support services and alternative futures gaming methodologies that help chemical companies develop business strategies that are robust, resilient, and forward-thinking. Chemical Market Research & Process Economics Services IHS Chemical already serves the industry through its major services brands, CEH (Chemical Economics Handbook), SCUP (Specialty Chemicals Update Program) and PEP (Process Economic Program). CEH and SCUP services provide in depth analysis of market dynamics, industry structure, growth drivers, major players and strategic issues for commodities, specialties and fine chemicals. These services also provide insight into the emerging bio-based economy. In addition, PEP evaluates the economic performance of chemical technologies, providing process flow diagrams to improve efficiencies, equipment lists, material and energy balances, as well as capital and operating cost estimates. PEP can also provide insight into improvements in Environment, Health and Safety performance such as lower emissions, reduced waste and energy use. IHS Chemical also provides advice on project feasibility, advice to lenders, master planning, and understanding how mega-trends, industry trends, customers responsible purchasing preferences and other social and environmental policies and constraints influence feedstock and technology selection, product demand and innovation.

5 Forecasts for End-Use Products IHS helps chemical producers understand how their end customers are evolving and what this means for their own sustainable product portfolios. This includes: IHS Technology Intelligence Services covering more than 10,000 products; IHS Auto forecasts for vehicle sales and production, alternative powertrains, and tires; and the IHS Jane s portfolio of military and commercial aerospace publications. This deep industry expertise helps address customer questions about how sustainability will affect markets, pricing, platforms, technologies, and overall strategy, for example: How will emissions-reduction legislation in the auto industry affect demand for composites, plastics and synthetic lubricants? Billions of kg of Material Global Demand for Materials: Light-duty Vehicles Billions of kg of Material 160, , , ,000 80,000 60,000 40,000 20,000 Global Demand for Materials: Light- duty Vehicles Non-Metals Metals Other Materials Fluids and Lubes Glass Coatings Textiles Rubber Structural Plastics & Composites Engineering Plastics Polyolefins Lead Magnesium Castings Zinc Die Casting Powdered Metal Copper and Brass Aluminum Sheet Aluminum Cast Iron Other Steel Stainless Steel High Strength Steel Mild Steel sheet and Mill Products Material

6 Simulate the Future IHS is a strong advocate of horizon-scanning analytical techniques designed to help clients better anticipate emerging threats and develop and stress-test risk mitigation and response plans. Through scenario development and table top gaming exercises, IHS works with customers to play out specific scenarios in order to derive insights about the nature of sustainability challenges, opportunities and risks. The elements of war gaming SCENARIO BASED Gaming uses scenarios to create one or more new landscapes that simulate dynamics shaping real-world challenges and opportunities. Development of scenarios can occur through a range of mechanisms, including a scenario workshop held during the planning and preparation phase of the game; game execution; the facilitation of a full scenario planning exercise; or less formal guidance from clients. TIME COMPRESSED Games can compress events that, in reality, take weeks or months into hours, requiring participants to rely on instinct and experience to assess rapidly unfolding contingencies and make decisions under strategic or operational duress. DYNAMIC The interactions of teams and their decisions and actions in this simulated world have direct influence on how scenarios evolve, creating a highly dynamic forum that allows for rapidly changing or evolving challenges. Metrics and other qualitative and quantitative information can be incorporated that allow teams to see the impacts of their decisions and how the landscape changes. INTERACTIVE Participants in games are organized into teams that play a specific role. Teams are constraints posited by the scenario. COLLABORATIVE Games provide an opportunity for alternative actions to be discussed and arrived at collaboratively for participants to gain broader insights through plenary discussions about key dynamics and actors that will not have been revealed in their individual team discussions. SAFE Because the world of the game is self-contained and non-binding, participants can feel free to explore riskier approaches. FACILITATED Successful games require active facilitation by a control team. This facilitation includes moderating breakout team discussions and plenary sessions as well as "driving the action" of the game to ensure that teams are appropriately challenged or exploring new environments. In this case, IHS resilience and other subject matter experts would participate to provide additional context and background on the scenario(s) being explored. Source: IHS

7 Sustainable Market Entry In addition to having in-depth knowledge of the drivers behind industry growth, the market positions of various other players, and other technical factors, sustainable market entry requires an ongoing commitment to stakeholders and the expectations created throughout the market expansion process. Once relegated to the corporate social responsibility team, gaining license to operate is now critical for market expansion. From Brazil to Israel to China, recent protests and judicial rulings against chemical companies have disrupted production, damaged capital equipment, and, in some cases, halted plant construction or operations. By understanding the local context and carefully mapping key stakeholders and how their agendas evolve over time, chemical companies can avoid costly disruptions, delays, or other damages to the company s reputation or shareholder confidence. As chemical companies make investments in underdeveloped parts of the world with less-stable political environments and ever-changing stakeholder dynamics, IHS provides insight on the political, economic and social context in which they will be operating, and assess locationspecific opportunities, risks and stakeholder agendas. How do you prepare? Stakeholders Agendas & pressures Scenarios for change Early warning & stakeholder flags Strategy Stakeholder engagement Reputation management Social investment Source: IHS

8 Sustainable Market Entry: Steps for Chemical Companies The IHS approach to Sustainable Market Entry draws on IHS comprehensive coverage of political, violent, sovereign, banking and investment risk for more than 200 countries and human intelligence from more than 1,000 local sources. This end-to-end service helps chemical companies, governments and key stakeholders take into account not only the technical and economic factors critical to new market entry decisions, but also the social and environmental factors that will help ensure business continuity and support regional economic growth and social development. Understand Market Dynamics Forecast demand by application &country/region Review current supply base & asset utilization Forecast inter-regional trade Assess policy/regulatory acceptance of product /process Evaluate relevant workforce, infrastructure supporting institutions Assess Price, Margin & Profitability Forecast margins by region/location with netbacks Review margins by technology and process Understand the impact of Greener products/processes Adjust for operating environment risk to supply chain and production Technology Selection Forecast capital & operating costs/ competitiveness Understand & evaluate competitors by site/region Evaluate process from an EH&S perspective Assess cost impact of using "green" technology Determine Market Entry Strategy Product placement for optimum netbacks, partnering, etc. Business development roadmap Analyze regulatory & policy context Select site Map stakeholders & plan engagement strategy Calculate impact (economic, social, health) Review Case for Investment/Financials Develop/evaluate project financials & Review sensitivities Technical & commercial due diligence for lenders Review investment from a sustainability perspective for lenders Adjust cash flow forecasts for ROI based on Political, Social & Environmental risk Typical Offering Sustainability-Enhanced Offering

9 Operational Excellence The commitment to following best practices for Environment, Health and Safety (EH&S) compliance has always been at the heart of chemical producers work on sustainability. By providing customers with holistic solutions that integrates sustainability into both operations and strategy, IHS is committed to helping chemical customers achieve best-in-class EH&S performance. Integrating Sustainability into Operations Top-performing companies are using Operational Excellence programs to manage increasingly complex processes, operational risks, and endless pressures to increase efficiency and reduce cost. IHS helps chemical companies improve performance using a solutions-based approach that includes software, content and community: Software with an analytics-ready data model to help measure workflow performance Content, including templates, best practices and powerful analytics to help interpret results Community of asset-intensive customers that have walked this path before, as well as IHS domain experts and data scientists IHS Operational Excellence and Risk Management solutions help underpin the fundamental aspects of sustainable operations Risk Assessment Management of Change Compliance Assurance Incident Management Environmental Performance Procurement Chemical Management Product Compliance Maintenance, Repair and Operations

10 Climate Strategy Integrating Sustainability into Broader Business Strategies Existing and pending climate mandates and emissions reduction regulations are driving chemical companies to find ways to lower carbon-intensity and use technology to operate more efficiently. The IHS Climate Strategy Dialogue, delivered through data bases, research reports, webinars, and regular workshops in Europe and North America, provides climate change policy analysts, long-term planners and strategy executives in a number of industries with global insights on local policy, market and technology developments, and related emissions trends. This research is refined upon request to address chemical companies specific needs.

11 Carbon Footprint Analysis As governments, retailers, manufacturers and other end-users demand more environmentally responsible products through policy, procurement requirements, and individual purchasing preferences, IHS enables chemical companies to estimate the greenhouse gas emissions associated with specific production processes, such as the manufacture of polymer-grade propylene by the catalytic dehydrogenation of propane. The analysis allows the user to specify the plant s location and fuel source (natural gas, fuel oil, or coal). In addition, customers can compare the carbon footprints of different routes to the same chemical. Responsible Sourcing Combining proprietary supply chain data on the costs and availability of key input materials, IHS knowledge of the social and political contexts in which feedstocks are manufactured, and the environmental properties associated with chemical production processes, IHS can assist customers in determining where social, environmental, or economic factors influence feedstock selection or chemical processing technologies. The IHS Chemical Process Economics Program s Greenhouse Gas Yearbook, which assesses the carbon footprint and carbon emissions of hundreds of chemical processes, along with IHS Chemical s Carbon Footprint Initiatives, are key components to assessing, reporting and reducing carbon emissions. Review of Third- Party Investments As chemical companies pursue strategic investments in businesses and technologies that help address the world s most challenging problems, IHS provides independent evaluation of potential investments. These include a commercial and technical review of the technology or process, as well as an assessment of the organization s financial, political and legal background and legitimacy.

12 Calculating & Communicating Impact Social and Economic Impact Analysis Regardless of the stage of implementing a sustainability strategy, IHS can help companies quantify and qualify their regional contribution, including economic, health, and broader social impact. For example, chemical regulation has advanced to the point that in many jurisdictions (such as the European Union), companies need to demonstrate that risks of continued use of a chemical substance can be adequately controlled and that the socio-economic benefits outweigh the risks for human health and the environment. As a leading source of information, insight, and analysis on the chemical industry, IHS economic benefit analyses, alternatives assessments, and health and socio-economic impact analyses help chemical companies analyze the benefits and risks of using a particular chemical substance. This type of impact analysis can not only be used to meet regulatory requirements such as REACH, but also to demonstrate how a company s capital investments and operations in a region benefit the local community and/or support governments to achieve regional social and economic development goals. These include the creation of high wage jobs, improvements in productivity, and innovation. Often integrated into market entry negotiations or broader corporate communications campaigns, IHS helps customers calculate and communicate how their investments and operations create regional social and economic impacts. Induced national economic activity (consumer spending, wage impacts, etc) Indirect spending with local supply chain and services providers Capital and operating expenditure that directly enters the economy as spending on local goods and services Source: IHS Chemical Impact on Reputation and Brand In addition to measuring the impact on society, many companies also need to understand the impact of sustainability investments on business performance, including reputation and brand. By combining advanced economic modeling techniques with social media analytics to reveal communities, identify influencers and measure sentiment, IHS helps customers to determine how their sustainability investments influence the company s public perception and reputation, thereby increasing brand value and ultimately market share. CONTACT Mark Morgan Director, Chemical Consulting Mark.Morgan@ihs.com Elizabeth Redman Cleveland Global Lead, Sustainable Customer Solutions Elizabeth.Redman@ihs.com Marilyn Johnson Senior Director, Corporate Sustainability Marilyn.Johnson@ihs.com ABOUT IHS IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today s business landscape. Businesses and governments in more than 150 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs about 8,800 people in 32 countries around the world TB-0315