Chemicals

Risks and Opportunities

Chemicals production requires huge volumes of raw materials, particularly oil. Other feedstocks include natural gas, metals and minerals, salts and water. To a minor extent, alternative resources such as palm oil, vegetable oils, animal fats, starch, maize or waste are harnessed. The extraction and further processing of fossil fuels, metals and critical minerals has been linked to incidents of pollution and human rights violations which need to be managed accordingly. Documented cases comprise forced resettlements, disregard for the rights of indigenous people or undue exposure to hazardous substances affecting workers and local communities alike.

Health and safety concerns, and by extension environmental risks, cascade through the entire chemicals value chain, from raw material extraction to final disposal. The phase-out of harmful substances is therefore a main priority for the sector and has the added benefit of preventing several of the afore-mentioned detrimental impacts. The transition is markedly driven by heightened regulatory scrutiny in many jurisdictions. In 2020, the European Union adopted its Chemicals Strategy for Sustainability which outlines a roadmap for a toxic-free environment. It encompasses the ban of the most harmful substances in consumer products, the elimination of most PFAS, a revision of REACH and an increased focus on chemical mixture toxicity, among other measures.

Since chemical companies assume a linchpin role in the upstream value chains of many other industries, they can become critical enablers and multipliers of sustainable development. The shift from fossil fuel-derived, carbon-intensive chemicals to renewable feedstock-based manufacturing represents one of the sector’s key challenges. Product innovation can help companies tap into new markets, support the development of environmentally-friendly technologies, garner interest from sustainability-minded customers and forestall regulatory pressures. Still, a change of tack needs to be mindful of concomitant risks. In terms of renewable feedstock procurement they can relate to poor working conditions in agriculture and forestry, large-scale deforestation or the degradation of biodiversity. The sourcing of biomass in particular, ideally second or third generation, must occur in a responsible manner and pay heed to a range of environmental concerns. Adequate due diligence procedures are thus indispensable to prevent adverse supply chain impacts.

How IntegrityNext
can help

IntegrityNext provides a platform for comprehensive ESG supply chain risk management that allows you to meet due diligence requirements and improve your sustainability performance:  

1. Carry out a carbon footprint assessment and benefit from enhanced visibility into your suppliers’ emissions, reduction efforts and targets.
2. Analyse the most relevant environmental, social and governance risks as part of a five-step risk management process.

It includes an abstract country and industry risk analysis to deliver initial insights into your supply chain’s risk exposure. Based on more detailed pre-built assessments, which draw on authoritative international standards and conventions, you can monitor your suppliers with respect to the main ESG risks:

We help you identify suppliers with the most severe impacts so that you can develop a coherent strategy and target your preventive and remedial measures accordingly. The results gleaned from the assessments are synthesised in a GRI-certified report that can be readily used for your disclosures.