Bio-Based Economy
»Bio-based economy« refers to efforts that make the economy sustainable by using biological resources, for example, by replacing fossil materials with biomass.
Currently, around 95 % of all industrially manufactured goods rely on fossil resources. However, governments worldwide have set targets for environmental and climate protection. Low carbon materials, such as biomass or other biomaterials, play a decisive role as alternatives.
The bio-based economy is increasingly recognized as a way to live within the limits of our planet. Tomorrow’s economy depends on today’s shift to the bio-economy, and this shift comes with a responsibility: to harvest and process biological resources efficiently in a way that preserves ecosystems and biodiversity and that respects human rights. Clariant has taken on this responsibility.
Management approach
Within Clariant, Group Biotechnology will become part of Business Line Biofuels & Derivatives. The Global Innovation and Sustainability Council (GISC) and the Board of Director’s Innovation and Sustainability Committee oversee the topic.
The business units manage opportunities and engagements with stakeholders, create business opportunities, and initiate new product designs. The business unit Research & Development centers find bio-based solutions and develop products.
Clariant is going to enhance its corporate management approach to the bio-based economy in 2022. This will include a review of all policies and goals.
Bio-based economy policies
The company has recently defined the bio-based economy as one of its four Innovation Arenas based on three pillars: procuring raw materials, increasing the use of bio-based materials, and developing products that support a bio-economy (e.g., processing waste oil into fuels).
Clariant’s focus on a bio-based economy is a distinguishing feature within the chemical industry. The company improves the sustainable profile or supports the improvement of Scope 3 at customers.
Clariant has set Scope 1, 2, and 3 emission reduction targets for 2030 in accordance with the Science-Based Targets initiative. Bio-based products and materials play a central role in achieving these objectives, as they often have a favorable emission profile.
In December 2021, Clariant published its Global Policy on Sustainable Palm Oil, which sets forth commitments for the sourcing of sustainable palm oil, i.e., transitioning to source 100 % certified palm-based materials according to the Roundtable on Sustainable Palm Oil (RSPO) certification or equivalent. The policy also focuses on supplier requirements such as complianceComplianceCompliance is a key element of Corporate Governance. It refers to compliance with the law and directives as well as with company codes and ethical business practices and behaviors. with the No Deforestation, No Peat, No Exploitation (NDPE) approach. Achieving the commitments is facilitated largely by increased transparency in the 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., which Clariant encourages actors along the 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. to pursue. Through the RSPO Mass Balance allocation system, Clariant currently draws more sustainable palm products on the market. Its ultimate goal is to shift all palm-related purchases to sustainable alternatives.
Since 2013, Clariant has been a partner in the Bio-based Industries Consortium (BIC). BIC represents the private sector in two public-private partnerships with the European Commission: the Bio-based Industries Joint Undertaking (2014–2020) and its successor, the Circular Bio-based Europe Joint Undertaking (2021–2027). They set goals to establish and demonstrate new sustainable circular and bio-based value chains.
Clariant has participated in the initiative »Sustainable Palm Oil and Traceability in Sabah« (SPOTS). During its participation, Clariant implemented action plans regarding the sustainability of its palm oil supply chain. They include working on the transparency of supply chains and providing support services to independent smallholders to improve their income and quality of life.
Research for sustainable materials
Clariant has established Research & Development centers and biotechnology facilities to test a variety of different feedstocks and to turn them into high performing, sustainable solutions. Within Clariant, Group Biotechnology will become part of Business Line Biofuels & Derivatives. It also partners with experts in its value chains to sustainably source and process plant ingredients. It also produces second-generation bioethanol under the sunliquid® brand. In October 2021, the construction of the first full-scale commercial cellulosic ethanol plant for sunliquid® in Podari, Romania, was completed.
In 2021, the Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. Natural Resources continued its search for sustainable raw materials with an improved carbon footprint or toxicity profile. The Exolit® OP and Licocene® Terra ranges, for example, are based on certified renewable ethylene and propylene from biomass feedstock such as non-food-competing residue oils, helping to reduce the consumption of fossil resources.
Certifications
Clariant considers bio-certifications when buying raw materials, especially the International Sustainability & Carbon Certification (ISCC) and the REDcert certifications. Palm-based materials are evaluated using the RSPO Mass Balance certification.
Business Unit Industrial & Consumer Specialties obtained an RSPO Mass Balance certificate, and relevant production sites are certified globally, i.e., products can be sold as being RSPO certified. The business unit’s site in Gendorf (Germany) also received an ISCC Plus certification. ISCC is a globally applicable sustainability certification system that covers all sustainable raw materials. This includes agricultural and forest biomass, circular and bio-based materials, and renewable energy. The plants of the Business Unit Additives in Knapsack and Frankfurt (both in Germany) received the REDcert certification for the mass-balance approach used in the production of product ranges containing biomass. In Germany and Europe, REDcert2 is one of the leading certification schemes for validating the chain of custody and traceability of sustainable biomass, biofuels, and bioliquids in production processes. In addition, the Business Unit Additives also received an ISCC Plus certification.
Contribution to value creation
Clariant expects that regulations will increasingly stipulate the use of bio-based products. Moreover, there is also a high customer demand for sustainable bio-based products in Clariant’s key markets, such as the personal or home care markets. Consumers are increasingly aware of climate change and related issues, and are willing to pay a premium for sustainable products. This demand for bio-based chemicals will even grow in the coming years. Clariant is ready to meet this demand by protecting nature and maintaining high social standards.
To this end, Clariant considers the complete 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. – from the raw material feedstock to basic chemical manufacturers and the company’s direct customers. For example, using waste streams from bio-based product processing is a promising way to connect industries and to avoid trade-offs.
In 2021, Clariant executed two M&A transactions linked to the bio-economy: In July, the company announced its joint ventureJoint ventureJoint ventures are all activities in which Clariant is involved with another partner. The accounting method applied for joint ventures depends on the specific conditions of the participation. with India Glycols to become one of the leaders in green ethylene oxide derivatives. In August, it acquired the Brazilian personal care specialty company Beraca, which offers a broad portfolio of natural and organic certified ingredients. These transactions will further enhance Clariant’s presence in the bio-economy market and contribute to sustainability-driven innovation.
Portfolio and procurement
Sustainability-driven innovation will support Clariant’s average annual growth by approximately 1 %, with a focus on bio-based products, on decarbonization, and on circularity. At the end of 2021, 20 % of Clariant’s portfolio was bio-based, enabled bio-based processes, or supported the transformation of bio-based raw materials. This spans most of Clariant’s businesses, including care chemicals, bio-based additives, bioethanol production, and vegetable oil purification. With the Portfolio Value Program (PVP), Clariant continuously screens its portfolio based on 36 criteria, including bio-economy, to ensure that it aligns with sustainability principles.
Across all business areas, Clariant procured more than 8 000 different raw materials. In 2021, only 17.1 % of purchased raw materials stemmed directly or indirectly from crude oil. About 32.8 % were derived from natural raw materials such as bentonite, and 4.5 % were made of renewable raw materials. The remaining materials were either base or specialty chemicals or nonchemicals. The most frequently purchased bio-based raw material was vegetable oil (e.g., palm oil and palm kernel oil), followed by wood pulp, starch, and bioethanol. In 2021, purchases of these products amounted to CHF 178 million, representing 7.15 % of direct spend.