Shaping digital sustainable development in chemical companies

Practitioner’s Section

Wolfram Keller, Nadine Bette

Abstract

Both, digitalization and sustainable development are two megatrends with significant  impact on the chemical industry in Germany through to 2025, according to a  recent survey among 60 chemists. Digitalization is as seen a driver for sustainable  development, even though there is no quantitative correlation in the importance  of the two megatrends. When implementing Corporate Digital Sustainable Responsibility  (CDSR) chemical companies need to find the right balance between  business, technology, society, responsibility and mindset-related facets that chemical  practitioners refer to when arguing in favor of digitalization being a driver for  sustainability or against it.

 

1 Introduction

Germany’s chemical industry has taken a  leading role in Responsible Care (VCI, 2011) –  nowadays referred to as Sustainable Development  (Sachs, 2015) – since about 25 years. Digitalization,  a second, steeply evolving megatrend,  is not new either. However, its breakthrough  in the chemical industry has begun  only recently, marking the beginning of Digital  Sustainable Development (DSD) (RNE, 2018). An  empirical survey among 60 chemists identifies  some preconditions and obstacles for  “Corporate Digital Sustainable Responsibility”,  the extended corporate governance (Werder,  2018), Digital Sustainable Development, the  process to make it happen, and ultimately the  desired Sustainable Development Goals (United  Nations, 2015).

 

2 Progress of sustainable development  in the chemical industry

The origin of sustainability is closely connected  to major accidents, e.g. at Seveso  (Kramer et al., 2019), Bhopal (Eckerman and  Børsen, 2018), Houston Chemical Complex (U.S.  Department of Labor, 1990) and Exxon Valdez  (Cohen, 1995) in the 1970s and 1980s. In the mid  -1980s, the global chemical industry took counter  action in response to these disasters and to  gain back its ruined trustworthiness. Today,  sustainability is subject of numerous multistakeholder  initiatives like Responsible Care  (VCI, 2019, I, II; Delmas and Montiel, 2008; King  and Lenox, 2000), Together for Sustainability  (TfS, 2019), Chemie3 (Chemie3, 2019), Platform  for Accelerating the Circular Economy (PACE,  2019) and Alliance to End Plastic Waste (AEPW,  2019), and an integral element of the strategy  of many big chemical companies (BASF, 2019;  Clariant, 2019; Evonik, 2019; Linde, 2019; Wacker,  2019, I). In this decade, chemists and chemical engineers have developed first technically  and – at least partially – economically feasible  industrial-scale approaches for product redesign,  reuse, mechanical and chemical recycling  (Werner and Mertz, 2016; Johnson, 2018; Stark,  2019; Stephan, 2019; Strathmann, 2019). The  chemical industry is on a good way to achieve  the desired Sustainable Development Goals  and by 2050 will likely be able to be carbon  neutral (VCI, 2019, III).

 

3 Progress of digitalization in the  chemical industry

Unlike Sustainable Development, digitalization  in the chemical industry is still in its early  stages. Since about 5 to 10 years, bigger rather  than mid-size chemical companies have begun  to leverage information and communication  technology, electronics, and the experience of  automotive industries with digital technologies  and applications (DECHEMA, 2016). Many of  them have appointed Chief Digital Officer(s)  whose primary task is to define and execute  their company’s digital transformation roadmap  (Schmidt-Stein, 2018; Wacker, 2019, II; BusinessTech-  Company, 2019, I to VI). Still, the  emphasis of the digital transformation roadmap  is often on technical aspects. True Corporate  Digital Responsibility (CDR) needs to go far  beyond, e.g. including compliance with legal  obligations, digital ethics, interactions with  society, chemical suppliers and customers, and  the enablement of employees for chemical industry  4.0 with its modified jobs and competences  (Keller, 2018; BAVC, 2018; Lade, 2019).

 

4 Corporate digital sustainable  responsibility, a feasible composite?

Can CDSR facilitate chemical companies to  exploit potential synergies between the two  megatrends, sustainability and digitalization,  while striving to fulfill their Sustainable Development  Goals? In this context CDSR in the chemical industry can be defined “an embryonic  concept aiming at seamlessly integrating the  two time-shifted and often independently managed  approaches of CSR and CDR in order to  resolve de facto and potential conflicts of interest  to achieve a company’s SDGs”. Here are  some examples of these conflicts:

  • A blockchain system negates the risk of  trusting a single organization through distributed  ledgers and reduces overall costs  and fees of all kind of transactions by cutting  out intermediaries and third parties.  However, its required resources have significantly  increased in the last few years. It currently  consumes more energy than many  countries, such as Denmark, Ireland, and  Nigeria (Binance Academy, 2019).
  • Super computers offer a quantum leap in  computing power, e.g. 1 to 2 quadrillion floating-  point operations or 1 to 2 petaflops per  second. However, its electricity consumption  at full capacity is approximately 600 kilowatts,  and the water-cooling system requires  up to 60,000 liters of water per hour  (BASF, 2018).
  • A simultaneous digital and sustainable  transformation impacts a chemical company’s  future revenue and profit, but also  public reputation, core values, culture, business  model, technologies, products, services  and employees, i.e. financial and nonfinancial  dimensions. If mainly financial key  performance indicators, e.g. the Return on  Investment (ROI) for the transformation and  the Return on Capital Employed (ROCE) for  the ongoing business, remain the benchmark  for investors and shareholders, business  cases are instrumental, however rarely  suitable to base not primarily financial decisions  on.

The authors have undertaken an empirical  survey among 60 chemists in the chemical industry  in Germany to identify the relative importance  of sustainability and digitalization by  2025. They look at mutual interdependencies and potentially missing competences required  to pursue CDSR .

Participants represent different levels of  education (Bachelor, Master, PhD), years on  duty, company size (corporation, big, mid-size  and small company) and management level (1  through to 4). The survey is hypotheses-based,  with respondents indicating their degree of  agreement with each proposed hypothesis, using  a percentage scale.

The first hypothesis “By 2025 Digitalization  will play a major role for chemists and engineers”  achieves 83% level of agreement (sample  size 56). The distribution of responses is surprisingly  homogenous. There is no trend between  the responses and the level of education, years  on duty, company size, and management level.

78% level of agreement (sample size 56) is a  clear indication that also “Sustainability will  play a major role by 2025 for chemists and engineers”.  The pattern of responses is almost identical  with that of the role of digitalization by  2025.

The average level of agreement that  “Digitalization is a driver for Sustainable Development”  scores at 70% (sample size 53, Figure  1). This view is very consistent within each and  across all clusters.

In addition, 53 data sets including values for  each of the three hypotheses were sorted in  declining order choosing “Digitalization is a  driver of sustainability” as lead parameter,  shown as solid line in Figure 2. The depending  parameters “importance of digitalization” and  “importance of sustainability” are displayed as  radar charts underneath. The heterogeneity of  the diagram corresponds well with poor correlation  coefficients of -0.10 in case of digitalization  and +0.07 regarding sustainability.

 

 

To understand the full bandwidth of related  comments from 100% euphoria to 100% skepticism,  all comments made were classified in five  clusters: business, technical, society, responsibility  and mindset. Within each cluster responses  were distinguished by supporting and impeding  notions. The number of comments in each  (sub-)cluster was divided by the total number  to calculate comments’ relative frequency.  (Figure 3).

Business cluster: Key arguments that  “Digitalization is a driver of sustainability” include  the better control of sustainabilityrelated  technical and management processes  and energy management, all leading to higher  technical and human resource efficiency and  bottom-line improvements. Major concerns  address data availability, format, integrity, and  security and management decision-making  timeliness and effectiveness.

 

 

Technical cluster: On the positive side, benefits  through big data and artificial intelligence  to drive sustainable processes, products  etc. dominate by far. Excessive energy consumption,  high dependency on state-of-the-art  IT infrastructure and the ability to handle giant  quantities of data are the top concerns.

Society cluster: Respondents are – with few  exceptions – aware of the driving role of politics,  educational institutions and the chemical  industry in defining and providing boundary  conditions for DSD. There is considerable skepticism  that educational institutions assume  sufficient responsibility by not including digitalization  and sustainability comprehensively  enough in their curricula.

Responsibility cluster: Respondents consider  clear responsibilities instrumental for DSD. Only  20% see their company in charge, not a clear  vote for “corporate responsibility”. The lack of  commitment to digitally enabled sustainable  chemical and management processes and management’s  hesitation to invest in required  training are the two main concerns. 80% of  respondents believe DSD responsibility is primarily  with politics and educational organizations.

 

 

Mindset cluster: Only 12% of all comments  address the attitude of managers and  employees. Leadership by example and individual  freedom to act are seen instrumental for  DSD. The biggest concern addresses low willingness  and readiness across all levels of the  company, from shop floor to C-level, to cope  with change associated with DSD.

In summary, regardless which role digitalization  and sustainability will play by 2025, 58%  of the participants (degree of agreement ≥  67%) are strong believers that digitalization is a  key enabler for DSD, 32% (agreement between  34% and 66%) have mixed feelings, and 9%  (agreement ≤ 33%) see no or a limited driving  role of digitalization.

DSD is significantly affecting chemists’ job  profiles, required skill sets and training needs.  Training needs in the context of digitalization  (Keller, 2018; Gruß, 2018; Lade, 2019) and those  addressing sustainability (Keller and Knoll,  2020; ILO 2019; Graf and Reuter, 2017; ILO and  CEDEFOP, 2011) have been defined. Contrary to  digitalization skills, respondents consistently  claim (degree of agreement between 48% and  62%, Figure 4) that there is no single highest  priority for sustainability-related training.  Instead, training covering requirements, specificdocations,  methods, applications, attitude and  options to act for each area – society, company  and individual chemists, is required. 68% of the  participants request their company to take primary  responsibility for subject specific training  in the context of Sustainable Development,  which stands in conflict with the low overall  responsibility (20%).

 

5 Conclusions

By 2025 digitalization (83% agreement) and  sustainability (78% agreement) will be even  more instrumental elements of Sustainable  Development in Germany’s chemical industry  than today, as the results from the empirical  survey among 60 chemists suggest. 70% agreement  to the hypothesis “Digitalization is a driver  of sustainability” and the in-depth evaluation  of respondents’ comments reveal key input  for Corporate Digital Sustainable Responsibility.

Firstly, there is no quantitative correlation  between the importance of digitalization and  sustainability by 2025 and the ability of digitalization  to drive sustainability. Secondly, chemists  already have an extensive repertoire of  ideas supporting Corporate Digital Sustainable  Responsibility and counter arguments impeding  it. Thirdly, there are major concerns regarding  scope and maturity of digital and social  responsibility competences required for  Sustainable Development.

A balanced technology-, people-, and society  -oriented Corporate Digital Sustainable Responsibility  is required to drive the process of Digital  Sustainable Development, which, in turn, helps  to achieve Digital Sustainable Development  Goals.

 

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