Global warming, water scarcity, plastic waste, and the spread of microplastics – these are all serious environmental concerns on the minds of consumers, investors, and policymakers alike. While consumption is a key component of these global issues, it either causes or takes an economic downturn for consumers to consume less. Therefore, the responsibility to find solutions to the problems we all create is often placed on the shoulders of brands and industry. Many of these solutions involve materials and the processes used to create them. It is not enough for companies to make empty promises or half-hearted attempts at sustainability, either. With greater transparency in the digital age, companies are being held to their commitments and being measured by these commitments.
As we look back on 2020, we provide a breakdown of the most important developments materials-related developments regarding the sustainability imperative:
Sustainability is now a major factor in investment decision-making. Boards and executives of chemical and material companies are being pressured to implement more sustainable practices, as minimizing the negative externalities of operations is being viewed as essential for ensuring an organization's long-term health.
- BlackRock announced it would divest from stocks that face climate risk, driven by its belief that "sustainability-integrated portfolios can provide better risk-adjusted returns to investors." Moreover, the company joined the Ellen MacArthur Foundation to further its support of the circular economy.
- Goldman Sachs pledged $1.1 trillion for environmental causes, including financing, advisory services, and investments for initiatives that fight climate change. The bank also updated its internal framework to rule out financing of projects that will drill for oil in the Arctic or create new thermal coal plants or thermal coal mines.
- BASF issued the chemical industry's first green bond for financing projects to ensure they are used for eco-friendly programs.
- Schneider Electric launched a first-of-its-kind sustainable share-convertible bond. The bonds don't have any restrictions on how the funds will be spent. Instead, the company has agreed to pay out a fee to investors if it fails to reach a set of sustainability goals.
Industry contributes a significant amount to global greenhouse gas emissions, and there are a number of solutions and technologies that could be adopted to bring emissions down. These solutions range in complexity from simply making efficiency improvements to making more significant changes like replacing fossil fuels with hydrogen for combustion. There is no one-size-fits-all path forward, and it will take a mix of technologies to meet the targets set by the Paris Agreement.
- SABIC announced that its polycarbonate facility in Cartagena, Spain, would become the first large-scale chemical production site of its kind to be run entirely on renewable power. The step only accounts for the plant's electricity consumption, and not process heat; typically, electricity is only about 10% to 20% of the total energy use of a plant of this type.
- Iberdrola announced that it is working with fertilizer producer Fertiberia to build a $175 million 100 MW photovoltaic plant in Puertollano, Spain, by 2021 to produce hydrogen through electrolysis for ammonia production.
Choosing more sustainable material inputs can be one of the most important choices companies can make to manage the impact of their products. Packaging is often a particular focus, as it creates further ill effects when it becomes waste, but inputs for the product itself can also be improved.
- Mattel announced the limited release of Mega Bloks made from Braskem's bio-based polyethylene.
- Diageo (parent company of the Johnnie Walker brand) formed a JV called Pulpex to develop 100% plastic-free paper-based bottles, starting with Johnnie Walker spirits in 2021.
- L'Oréal partnered with LanzaTech and Total to launch a cosmetic plastic bottle made from industrial emissions.
- P&G licensed breakthrough technology to Cargill for the production of bio-based acrylic acid.
While reusable packaging is not new or novel, it is making a comeback with the circular economy and the rise of players like TerraCycle. In 2020 and 2021, fast-food chains will be testing the waters to see if their customers are willing to participate in such schemes for the sake of the environment.
- McDonald's, Burger King, and Tim Hortons all partnered with TerraCycle's Loop platform to trial reusable containers; the companies will work on deposit-based schemes without any digital markets or gamification tactics. TerraCycle will also bring its Loop platform to retail stores.
- BASF announced it was teaming up with Security Matters on an additive for plastics traceability, with the potential to provide valuable insights into the paths plastics take after they leave the shelf. The company also expanded its blockchain pilot project to improve its circular economy efforts in Canada.
- Industry players collaborated on combining sustainability and 3D printing, bringing together a strong complete ecosystem with printer makers, material companies, software developers, and users.
Around 80% to 90% of wind turbine components can be recycled or sold, but turbine blades present a different story – culminating in a flurry of announcements in 2020. Viable end-of-life solutions could improve the economics of wind, generating some positive value.
- Vestas announced its plan to produce zero-waste wind turbines by 2040.
- European wind and chemical industry partners (WindEurope, the European Chemical Industry Council, and the European Composites Industry Association) announced a project to convert decommissioned wind turbine blades to cement.
- The U.K.'s National Composites Centre announced a three-part plan for wind turbines focused on improving recycling technologies and enabling better end-of-life solutions, using more sustainable materials to manufacture the turbines, and changing the overall design to a more modular-based one.
In 2020, we wrote about and saw firsthand the direct implications that climate change can have on the materials and chemicals industry. Recognizing the long-term implications for people, the planet, and profits, we also saw a doubling down on sustainability for investors and the rise of investment vehicles to reward good actors. While the COVID-19 pandemic delayed key legislation for mitigating plastic waste, it did not stop consumers from thinking about sustainability – with some enjoying less traffic and cleaner air but noticing more plastic waste. As we look to 2021, sustainability will continue to be a buzzy word used across multiple industries. While it is a contentious term that often amounts to a haze of hype and little substance, it important for clients to consider how their company's reputation and financial performance could be impacted.
In addition, the Lux Materials Team curated the following "Analysts' Choice" for further reading on the Sustainability Imperative theme.
- Bioleathers emerged as a hot area of innovation, propelled by fundamental technology improvements and sustainability motivations.
- The future of bioplastics is in doubt, as their sustainability is increasingly suspect.
- Both the plastic recycling space and the consumer packaging sector were forced to navigate a turbulent landscape in 2020.
This blog is part of the Lux Materials Team's Year in Review series examining the highlights and key developments of the materials industry in 2020. For an overview of the other storylines in the accelerating materials innovation program, keep an eye out for our upcoming blogs and subscribe to our newsletter.