Growth Opportunities from Sustainable Products and Solutions
There is an increasing demand for sustainability in all industries that Clariant serves. With its focus on innovative, sustainable, and bio-based chemicals, the company is in an excellent position to benefit from this ongoing shift. Its products and solutions also help customers to achieve their targets for the reduction of greenhouse gas emissions.
In line with its new purpose, »Greater chemistry – between people and planet,« Clariant develops growth opportunities from sustainable products. The company links innovation and sustainability to enable future growth. New products launched in 2021 show explicit sustainability benefits. These ambitions also gained external recognition: In 2021, Clariant was listed in the Dow Jones Sustainability Index (DJSI) with a best-in-class innovation score.
The Global Innovation and Sustainability Council shapes Clariant’s agenda on sustainability-driven portfolio transformation. To emphasize the necessary link between innovation and sustainability, Clariant additionally established a new Sustainability Transformation department in 2020. It is responsible for fully integrating sustainability in the company’s products and processes.
Since January 2021, the new service unit Group Innovation and Sustainability (GIS) has bundled both topics under one roof. Its primary task in its first year was to align Clariant’s innovation management practices with its sustainability programs. GIS establishes Group-wide innovation and sustainability policies, strategies, and standards, and coordinates their implementation. As of 2022, Clariant even strengthened the integration of innovation and technology by introducing a Chief Technology & Sustainability Officer, reporting directly to the CEO.
While business units remain responsible for developing new business opportunities, GIS provides service and support on best-in-class innovation approaches and emerging technologies and systematically evaluates the sustainability profile of innovation projects.
Sustainability transformation has also become a key topic for which Clariant sets five-year strategic priorities and targets. It has also become a cornerstone of Clariant’s Strategic Management ProcessStrategic Management ProcessClariant’s Strategic Management Process (SMP) is conducted by the business units in collaboration with Corporate Planning & Strategy. The SMP ensures that Group-level as well as businessunit-level strategy development is an iterative process that addresses the relevant megatrends observed by Clariant. (SMP), through which the company continuously monitors the performance of its management system and identifies improvement potential.
The innovation and sustainability progress towards the strategic targets is reviewed on a quarterly basis in the Global Innovation and Sustainability Council (GISC), comprising the members of the Executive CommitteeExecutive CommitteeManagement body of joint stock companies; at Clariant the Executive Committee currently comprises four members., the innovation heads of the business units, as well as key functions. The conclusions are further reported to the I&S committee, a board subcommittee tasked with the oversight on innovation and sustainability matters, including climate risk management.
Clariant engagement in the public policy dialog
Public policies are increasingly driven by sustainability imperatives, as is the case under the Green Deal program at the EU level and in other important economies on the global stage.
As a responsible corporate actor, Clariant aims to ensure an open and transparent dialog with policymakers, business associations, as well as NGOs, in a number of strategic policy areas, including sustainable chemistry; climate change and the energy transition; clean mobility; the bio-economy; and the circular economy.
The engagement of Clariant representatives in business associations and sustainability fora supports strategic alignment across the industry and provides an opportunity to exchange industry perspectives and best practices.
Acknowledging the urgency of accelerating the transition to a safer, low-carbon, and more circular economy, Clariant supports ambitious, science-based policies. Clariant is actively contributing to address regulatory and societal expectations by bringing forward innovative and sustainable solutions. It is therefore key that such solutions are supported and valorized under adequate policy frameworks.
Within Group Innovation & Sustainability, a dedicated team of government affairs and advocacy professionals coordinates external policy-related engagement supported by an internal Advocacy Forum. The Advocacy Forum consists of representatives of Senior Management from both corporate functions and business units and acts as a sounding board for reviewing policy developments and recommending Clariant positioning.
To foster internal knowledge, advise on Clariant strategy, and expand our engagement with external stakeholders, the company has also established Clariant Policy Dialogs in 2021, a webinar series featuring external policy or sustainability experts (value chainValue chainThe value chain describes the series of steps in the production process, from raw materials through the various intermediate stages to the ﬁnished end product. players, industry associations, academics, and NGOs) presenting their perspectives and recommendations. In 2021, five Policy Dialogs were organized, focusing on key themes such as the EU Chemical Strategy for Sustainability, industry’s role in supporting a hydrogen economy, how companies can contribute in closing the plastic loop, how to support a sustainable bio-economy, and on innovation and R&D programs at the EU level supporting the climate and energy transition.
Growing demand for sustainability solutions
Consumer and customer demand for sustainable products accelerated again in 2021. In accordance with this development, Clariant continuously brings forward sustainable solutions that do not compromise on performance or on the company’s commitment to fulfilling customer needs. That is why Clariant’s innovation portfolio has shown particularly robust performance over the past few years and the total sales from innovation have increased.
Consumers especially consider the ingredients and the sustainability performance of products such as cosmetics, electronic gadgets, and home construction materials. In a recessionary environment, demand for these items often decreases, while essentials come into sharper focus. During the pandemic, however, demand for hygiene products and home electronics was robust, a trend that may endure in the future.
Clariant’s customers face challenges surrounding climate change, plastic waste, and overall circular economy needs. Clariant’s sustainable products help them to achieve their sustainability targets, decrease their environmental footprint, and comply with existing and anticipated policies and regulations.
For Clariant, open communication with customers is critical to address emerging needs and trends in its business environment. During the pandemic, Clariant’s digital capabilities and channels – including e-commerce – have become increasingly important. In 2021, customer dialog revealed a growing demand for innovative and sustainable solutions to meet efficiency goals. Demand for products with a lower carbon footprint and favorable hazard profile was strong, particularly in emerging sectors like electric vehicles or renewable energy.
Sustainable growth policy
As a part of its strategic pillar »Add value with sustainability,« Clariant’s target is to generate 1 % annual growth from sustainability-driven innovation by 2025 by developing bio-based products, enabling defossilization, and promoting circularity. Currently, the company focuses on reducing the use of hazardous substances and on promoting alternatives that are safer than required by regulation. This approach is particularly important in regions where regulatory action is lagging.
In 2021, Clariant set itself new sustainability targets for climate protection. Additional targets relate to activities in circular plastics and the bio-economy. An outstanding example of enhancing circularity is Clariant’s Tailings Management program, which started in 2021. It offers multiple technology platforms to improve efficiency and sustainability in the mining industry. Thus, reusing products at the end of their respective life cycle while closing material loops offers new business opportunities.
Clariant’s main policies and guidelines relating to growth opportunities from sustainable products and solutions are:
Clariant aims to divest those parts of its business most impacted by commoditization and to focus on sustainability. Where possible, it replaces or phases out unsustainable products, while low-carbon and circular-economy-compatible solutions gain traction. In 2021, Clariant developed products that meet customers’ sustainability and performance needs while also controlling costs to compensate for pandemic-related challenges.
Portfolio Value Program (PVP)
Clariant’s business units work together with Product Stewardship and Sustainability Transformation to identify products that offer growth potential because of their sustainability performance. Through the Portfolio Value Program (PVP), they uncover sustainability improvement opportunities and identify best-in-class and unsustainable products. Subsequently, they develop and maintain roadmaps with clearly defined milestones to determine how and when to enhance or replace products and, thus, drive innovation in the product portfolio.
By now, Clariant has screened 78 % of its products through the PVP. It rescreens EcoTain® products every two years and sustainable products every five years. In addition, Clariant compared the sustainability performance of its products with their financial performance in 2021. Data showed that, on average, sustainability excellence goes hand in hand with superior financial performance: The compound annual growth rate of EcoTain® products is 1.5 times higher than that of the total portfolio (2015–2020 CAGR of total portfolio 3.8 %, of EcoTain® portfolio 5.9 %).
The best-performing products in the PVP are awarded the EcoTain® label by a panel of Sustainability Transformation, Product Stewardship, and regional sustainability functions. More than 200 products carry the EcoTain® label by now. In 2021, they accounted for 9 % of total sales, considering continuing business. By 2025, 15 % of innovation sales are projected to derive from products carrying the EcoTain® label.
In 2019, Clariant launched its sustainability designators, which enable customers to identify products with key sustainability advantages. Designators were assigned to 128 products in the reporting year. By 2021, customers increasingly appreciated the transparency given by the designators.
Clariant increasingly uses biomass as a renewable feedstock. This development is in line with the growing demand for sustainable products from customers and consumers. Clariant also anticipates a stricter regulatory environment.
Clariant’s suppliers offer more sustainable solutions as well. The company cooperates with them to identify sustainable feedstock sources and lower-carbon footprint raw materials, such as ethylene and ethylene oxide. Particular emphasis is also on the responsible sourcing of conflict minerals. Clariant always investigates allegations of violating its sustainability commitment in the supply chain.