BASF Aims To Contribute To The Circular Economy Through Efficiency, Smart Waste Management

The director of the Applied Sustainability group of chemical manufacturer BASF, Talke Schaffrannek, recently presented the corporation’s plan, policies and direction of sustainability efforts to BASF employees and associates. In her address at the recent CIEX conference, she explained BASF’s commitment to contributing to a more sustainable model of general economic activity.

Specifically, the economic model that BASF aims to aide is called the “circular economy”. The concept it relatively simple, and Schaffrannek boiled it down to two central concepts: keep it simple and close the loops. Keeping it simple involves maximizing the efficiency of both product and process, while closing the loops refers to the process of turning waste back into useful resources.

Schaffrannek explained that the Applied Sustainability group at BASF has spent several years categorizing the corporation’s 60,000 products into four different sustainability levels: accelerator, performer, transition, challenged.

The evaluation process says that an accelerator is a leading contributor to the circular economy value chain, a performer follows market standards, a transition product is performing below the market standard, yet actively being resolved, and a challenged product is one whose sustainability concern has been identified, but is not being actively addressed. She says more than 97% of BASF’s products are accelerators or performers.

Evaluation is only half the battle, of course, and Schaffrannek goes on to explain the other half of the battle: implementing new and more sustainable processes and products. In terms of a single product, she explains that the “keep it smart” process is as simple as identifying the challenge, researching and creating an action plan, and launching the superior product.

The “close the loops” process is a little more difficult, she says, because it requires behavioral change for the firm as a whole rather than for a single product. It’s all about streamlining production and eliminating waste. A model which BASF has worked under and continues to follow is called verbund, which requires connecting separate plants to maximize resources.

But that’s not all BASF can and will do to close the loops. Another new business model which BASF now has their eye on is biomass balance. This three step process calls for adding a renewable feedstock to chemical production, using verbund during the production process, and allocating the original renewable feedstock to certain products at the end of product life. It’s a little harder to envision, but she says it essentially requires monitoring of the renewable feedstock throughout the product’s lifespan.

Schaffrannek admits that changing business processes is an arduous task, and implementation could be far off. However, she emphasizes the importance of continuously taking steps forward to develop the circular and sustainable economy within the firm.

The full BASF presentation on “Circular economy: Keep it smart, close the loops” is available to view below:

Editor’s note: The next CIEX conference will be held on Sep 19-20, 2017 in Frankfurt, Germany. Visit: http://www.ciex.-eu.org to reserve your seats!

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Expert Advice on the Sourcing of Sustainable Chemical Feedstock

Each decade has its own set of well-loved, overused, business buzzwords. The 80’s gave us ‘low-hanging fruit’ and ‘bottom-line’, the 90’s ‘streamline’ and ‘leverage’, whilst the 2000’s gave us ‘synergy’.

One of this decade’s top buzzwords is ‘sustainability’. But unlike most buzzwords, the word ‘sustainability’ is overused with good reason. That being that we live in a world with diminishing natural resources, and a growing population.

As a result, the UN is reporting that, “2016 is slated to be hottest year ever, with record-breaking emissions and melting Arctic ice.” While the WWF states that, “A new economic path towards sustainability is both a necessity and a huge opportunity.”

It is this necessity and opportunity that is directing the chemical industry’s thinking.

Take for example, the fact that the chemical company Henkel, includes sustainability as one of four main criteria for supplier selection (the others being price, on-time delivery and product quality). Given that Henkel is a very successful company, with 50,000 employees, and an €18 billion turnover, which operates brands such as Persil, Fa, Schwarzkopf, Pritt, Locktite and Dial, then other chemical companies would do well to follow their lead.

In fact, given the number of suppliers Henkel cooperates with, chemical traders or manufacturers need to source their feedstock wisely if they wish to do any business at all.

This is a point that Christine Schneider, Head of Global Sustainability in R&D in Laundry and Home Care at Henkel, made clear in her presentation at CIEX Europe 2016, a unique platform created for R&D and innovation experts from the consumer, industrial and specialty chemical sectors.

You can watch her full video presentation below (30 mins):

Here she opened up about some of the challenges chemical companies face in improving sustainability, and talked about the processes Henkel had in place to achieve their targets.

Sustainability Targets
Indeed, one of the first steps to success in sustainability is establishing targets, with Henkel setting out in 2010 with a simple goal to triple sustainability over the next 20 years. They aim to achieve this by increasing sales by 50% in that time, while halving the footprint of raw chemical material sourcing.

The second step a chemical company needs to take is analysis; the need to study a product’s environmental impact. This should take into account all the stages of its life, including the resources used during the product’s (even domestic) consumption. Schneider gave the example of washing detergent, and explained how much of this product’s impact was in packaging or in heating the washing water. As a result, a ‘life cycle assessment’ of detergent showed the phase that causes the biggest carbon footprint was ‘usage’, which creates 81% of a detergent’s ‘ungreenliness’.

As is evident in the graph, much of the challenge in making many domestic products more sustainable is that the largest carbon footprint process is out of the manufacturer’s control. If Henkel could persuade its customers to wash their laundry at 30°, instead of 40°, then the brand Persil would reduce CO² emissions by 500,000 tons a year.

But by analysing the data, any efforts to make Persil a more sustainable product can now focus on the heart of the problem. Without analysis, any sustainability drive may focus on the wrong goal, and any success would be immeasurable.

The third step towards sustainable chemical products was traceability. This was achieved by tracking where a raw material originated from, how it was sourced, how it was transported and refined, and knowing who was involved in each process. This traceability includes following the route that waste products take, as well as what happens to chemical products after they have been used and are at the end of their lives.

To do this, Henkel recommends working closely with suppliers, building long-term understandings, and sharing information about sourcing and sustainability issues. Co-operating with NGO’s, such as WWF and Greenpeace, also allows companies access to advice and helps with the sharing of ideas and efforts towards a mutual goal. This not only allows for ‘sustainability credentials’ to be openly verified, but also saves money, as the company can adopt a ‘one audit’ process, that is used by both chemical supplier and manufacturer to confirm the sustainability of feedstock.

Schneider also stated that, “Another very good initiative is [that we] reward our suppliers; one example being Novozyme, who won Henkel’s ‘Best Sustainability Award in Laundry and Home Care’. [They won] for their work in producing a better enzyme mix, with more high performing enzymes which could reduce the surfactant content, which is a driver when it comes to counting carbon footprint.”

The issuing of awards was also part of a concerted effort to establish a public commitment towards sustainability. This acts not only to promote the company’s efforts in a positive light, but also makes the public aware of the issues at hand. This could lower wastage, help recycle packaging, lower wash temperatures etc, as well as help guide the company towards its goals, as sustainability becomes a public and declared intent.

This is why Henkel has joined the initiative of ‘Zero net deforestation by 2020’, in an attempt to reduce the impact of the company’s sourcing of palm oil.

To the future, Henkel is looking to innovation to improve its sustainability. The use of fossil fuel alternatives, such as coconut oil, lignite or algae oils are being studied, but may be as far as 20 years from becoming a core chemical feedstock.

Despite all these efforts, the fact remains that sustainability is a hard nut to crack. It will require a lot of time, effort and money from everyone involved with chemicals if the industry is to become what it needs to become. But given the health of the planet, given the public’s desire for sustainable products, given the moral obligation chemical traders and manufacturers have to source responsibly. Isn’t doing good a necessary evil?

This blog is written by Simon Hilton and originally posted on Spotchemi blog.
Photo credit; SINCHEM Luca Cervone, Monica Palmirani

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Creating Opportunities from Raw Material Price Volatility

Volatile commodity and raw material prices are affecting every industry from chemicals, supermarkets to white goods, electronics and automotive. Volatile and unstable global markets have widespread implications for manufacturing organizations. From rising energy costs to unexpected fluctuations in raw material prices and currencies, unforeseen obstacles are threatening to destabilize supply chains and make it difficult for manufacturers to manage their sourcing costs.

This is especially the case with the specialty chemicals industry as explained by Mr Wouter Hut, VP Procurement, Akzo Nobel Specialty Chemicals at the 2016 CIEX Europe conference held in Frankfurt, Germany. Hut sees the specialty chemicals market volatility mainly driven by oil price fluctuation and margin battles.

Wouter Hut speaking at CIEX Europe 2016

Innovating procurement processes
However, according to Hut, raw material price volatility can also be an opportunity if managed well. To take advantage of varying raw material prices companies need to innovate and adapt their procurement processes. This starts with the introduction of decentralized procurement functions that use new processes and tools and are more closely aligned with business needs.

Falling prices for one material do not necessarily translate into savings explains Akzo Nobel’s VP for Procurement, using the example of Ethylene. Even though prices for oil have dropped, the price of ethylene has not come down due to a continued underinvestment in new ethylene cracking capacity and also due to lower asset integrity of existing ethylene cracking units globally. This discrepancy in pricing is increasingly hard to explain and justify with customers.

Feeding price forecasts into margin management
Price forecasting has become a critical part of Akzo Nobel’s business processes. The company even took the step of making its 18 month advance price forecasting a KPI for its business units. Through a tight integration of PMM diagnostics, pricing methodologies and improved tools & processes, price points, margins and ultimately EBITDA can be managed and improved. To do this effectively, Akzo Nobel forecasts its entire chain using a combination of Stoichiometrics, Demand/supply mapping and market intelligence.

Even today, many manufacturers lack the flexibility to respond to market volatility. Hut recommends a two-pronged strategy that focuses on short-term mitigation of risk as well as a long-term sustainability goal. To achieve this, procurement departments need to become agile and adept in the full gambit of derivative instruments. Additional strategies can be the complete review of supply chains, with a focus on proximity to raw material and their value-to-sustainability quotient. Upstream investments can also be considered if capital permits. Last but not least, waste minimization technologies and programs can also create compelling cost savings.

Watch the full presentation at CIEX 2016 here (Wouter Hut, VP Procurement, Akzo Nobel Specialty Chemicals)

Editor’s note: Don’t forget to mark your calendar for CIEX 2017 taking place on 20-21 September, 2017 in Frankfurt! Let’s continue our discussions online on our CIEX Linkedin Group.

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