The path to net-zero
Conrad Keijzer, CEO, Clariant, speaks to GPCA Insight about the challenges and opportunities on the path to net-zero and the company approach to the circular economy and plastic recycling
Almost two years on after becoming Clariant’s CEO, what were some of the key challenges you faced in the job, and what is your plan for the company going forward?
My key challenge coming in as a new CEO was to get the company back on a growth trajectory after a long period of declining revenues. In my first year we defined our new purpose-led growth strategy: “Greater chemistry – between people and planet”. It aims at emphasising customers, inclusion and empowerment to get to a growth mindset, while executing on the sustainability Scope 1, 2 and 3 targets we had recently communicated. And all of this while the coronavirus (Covid-19) pandemic was still in full force.
Can you tell us more about your new organization set up and what does it aim to achieve?
In 2022, we changed our operating model to better set up the company for organic growth. We created a flatter organization with three newly defined business units reporting directly to the CEO. This has brought our leadership team closer to our customers and the frontline closer to decision makers, while we see increased engagement levels and created more empowerment for our front line business leaders. Currently we are working on the roll-out of our new values to foster a true customer centricity and growth mindset.
How do you anticipate the energy transition to play out considering the ongoing energy security challenges in Europe and what would this mean for the chemical industry, and Clariant?
For the coming winter the energy security challenges in Europe should be largely covered by the high storage levels for natural gas. More challenging will be the next year as the storage no longer can be filled with Russian gas. This requires an LNG infrastructure in the short term. In the long term, it will lead to an acceleration of the energy transition as well as energy diversification since Europe needs to decrease its dependence on any one energy source.
Clariant participates in the energy transition through catalysts that lower the energy consumption and enable the transition to a green hydrogen economy. Another example are alternative fuels that we produce with our 2nd generation bio-ethanol technology.
You reported some healthy financial results in 2022. Do you anticipate this trend to continue into 2023, and how would your business be affected by a dip in consumer demand and the projected economic slowdown?
We are pleased with our YTD Q3 2022 performance with 29% growth versus the prior year, 18% coming from pricing and 11% from volumes, of which 8% was from organic growth and the rest was inorganic. We are affected by the slowdown in volumes which we already saw in Europe in Q3. We are confident to outperform our overall markets due to continued strong demand for sustainability-driven solutions. For example, our flame retardants which are used in the battery housings for electrical vehicles remain in very high demand as this subsegment in the automobile industry continues to experience robust growth. In the US we see growth for our adsorbents, which are used in the pre-treatment of renewable diesel, a market that is experiencing strong tailwinds from the inflation reduction act, or from bio-based and biodegradable coatings. Beyond the sustainability driven areas, also in our catalyst business we see a recovery supported by strong demand for propane to propylene catalyst.
How do you approach the circular economy and plastic recycling at Clariant?
One example is a cross business initiative called EcoCircle which aims at supporting the transition to a circular economy. One outcome was our recent announcement of specialized catalysts and adsorbents designed for chemical recycling which were developed to upgrade pyrolysis oil generated from plastic waste and fit for use in crackers.
Our additives also support mechanical recycling. Our pioneering cross-industry collaboration brings the resin manufacturer, the ink manufacturer and the brand owner together to design a 100% recyclable cosmetics packaging. It uses a standard technology which is already deployed at larger recycling facilities across Europe.
What does the path to net zero in the chemical industry look like?
Becoming climate neutral will be the license to operate in the not-too-distant future. First it requires efficiency increases. Energy has been very inexpensive and the associated carbon emissions have mostly come at no cost at all. An increased energy focus is crucial as a starting point. Then it’s about switching to green electricity, replacing fossil fuels for example with biofuels (e.g. biomethane) and electrifying operations with green electricity. Conceptually this is simple. The key is to take this into consideration when investing into infrastructure that will be around in 30 years’ time – as by then we will need to be climate neutral. We, as a company, have committed to being net zero in our GHG emissions by 2050 at the latest. A much larger problem is becoming net-zero in Scope 3 emissions which stem from supply chains. We are actively working with our suppliers to reduce their carbon footprint, backed by scope 3 upstream reduction targets. This decarbonization challenge opens up opportunities for innovation driven companies. Our customers are also confronted with the challenge of becoming carbon neutral. We can help them reduce their emissions either by delivering them low carbon products or by offering them products that decrease their emissions, for example catalysts. In additives and adsorbents we are enabling mechanical or chemical recycling or the purification of renewable fuels.
What are some of the challenges to industry decarbonization?
We need a global level playing field for legislation that enables companies to remain competitive while they are transforming. Climate policy must provide a robust system of protection against carbon as well as investment leakage. Any commitments that we make should be science-based, realistic and with clear timeframes for implementation. In addition, up until recently the way of calculating product carbon footprints was not well defined and allowed for very different values depending on the approaches. This has recently changed thanks to the guidelines published by the “Together for Sustainability” (TfS) organization. And we have introduced our automated product carbon footprint calculator which provides product carbon footprint data.
What would you like to add in conclusion?
Addressing climate change represents many challenges for society, for politics and for the industry. The chemical industry is uniquely placed to actively fight climate. Beyond that, we also need a global framework to be successful, including a clear commitment from policymakers and a functioning coordination across all jurisdictions. That is an enormous global task. We must therefore approach this challenge all together – industry, politics, investors, and civil society alike.