Executive Briefings

Sustainability Still Critical for Chemical, Energy Industries

Analyst Insight: Companies competing in the chemical and energy industries continue to place a high priority on sustainability and environmental responsibility. The high visibility of these factors in today's society certainly helps make the case for sustainability and environmental responsibility in terms of maintaining a positive brand image. However, leading firms are also recognizing that efforts to drive sustainability and protect the environment are also helping to deliver additional value beyond brand image. - John Santagate, Research Manager, IDC

Sustainability Still Critical for Chemical, Energy Industries

Several factors, including global population growth, urbanization, depletion of natural resources, environmental awareness, and regulatory/compliance, contribute to the need for companies in the chemical and energy industries to place significant emphasis on sustainability and environmental responsibility initiatives.  Each of these issues forces the chemicals and energy industry to innovate both in terms of product and process. Such innovation not only leads to improvements in sustainability and environmental responsibility, they also help firms to drive product innovation, generate revenue growth, improve profitability, and ultimately improve brand image.

Population Growth - The UN forecasts that the global population will exceed 9.5 billion by 2050. Such population growth will increase demand for products and drive an increase in energy utilization. To support such an increase in population, firms in the chemicals and energy industries are working on innovating product and process to meet an increasing need for products while limiting the impact that increased production to meet the demand of tomorrow will have on the environment.

Urbanization - The percentage of the world’s population residing in cities is increasing to the point where it is expected that by 2050 66 percent of global population will reside in urban centers. A more concentrated population is driving the need for chemical companies to create innovative products capable of supporting a more urban population. Additionally, energy companies will need to innovate in terms of energy generation and delivery to support the new environment.

Depletion of Natural Resources - Depletion of natural resources is of significant concern for firms in chemicals and energy. Leading firms continue to innovate in their production facilities to reduce the amount of natural resources utilized in the production of product. Innovation has led to the increased use of sustainable and renewable energy sources in the production of chemicals and energy.

Environmental Awareness - The chemicals and energy industries are under constant pressure to reduce the impact of their products and processes on the environment. Firms today must be vigilant in their approach to waste, storage and ingredients in order to limit the impact on the environment.

Regulatory and Compliance - In addition to responsible business practices aimed at protecting the environment, regulations and compliance play a role as well. Regulations such as REACH (EU), TCSA (US), and Energy Policy Act (US) are in place to protect consumers and the environment from the potential negative impacts of the chemicals and energy industries. Such efforts have led to firms improving business processes, and leaders striving to exceed compliance requirements.

The Outlook

Over the years, the chemical and energy industries have evolved in response to issues such as population growth and demands for environmentally responsible and sustainable operations. This evolution has led to product and process innovation which has helped leading firms to drive revenue, profitability and an improved brand image. Moving forward, expect to see continued emphasis on driving sustainability and environmental responsibility as well as product innovations that support these efforts.

Several factors, including global population growth, urbanization, depletion of natural resources, environmental awareness, and regulatory/compliance, contribute to the need for companies in the chemical and energy industries to place significant emphasis on sustainability and environmental responsibility initiatives.  Each of these issues forces the chemicals and energy industry to innovate both in terms of product and process. Such innovation not only leads to improvements in sustainability and environmental responsibility, they also help firms to drive product innovation, generate revenue growth, improve profitability, and ultimately improve brand image.

Population Growth - The UN forecasts that the global population will exceed 9.5 billion by 2050. Such population growth will increase demand for products and drive an increase in energy utilization. To support such an increase in population, firms in the chemicals and energy industries are working on innovating product and process to meet an increasing need for products while limiting the impact that increased production to meet the demand of tomorrow will have on the environment.

Urbanization - The percentage of the world’s population residing in cities is increasing to the point where it is expected that by 2050 66 percent of global population will reside in urban centers. A more concentrated population is driving the need for chemical companies to create innovative products capable of supporting a more urban population. Additionally, energy companies will need to innovate in terms of energy generation and delivery to support the new environment.

Depletion of Natural Resources - Depletion of natural resources is of significant concern for firms in chemicals and energy. Leading firms continue to innovate in their production facilities to reduce the amount of natural resources utilized in the production of product. Innovation has led to the increased use of sustainable and renewable energy sources in the production of chemicals and energy.

Environmental Awareness - The chemicals and energy industries are under constant pressure to reduce the impact of their products and processes on the environment. Firms today must be vigilant in their approach to waste, storage and ingredients in order to limit the impact on the environment.

Regulatory and Compliance - In addition to responsible business practices aimed at protecting the environment, regulations and compliance play a role as well. Regulations such as REACH (EU), TCSA (US), and Energy Policy Act (US) are in place to protect consumers and the environment from the potential negative impacts of the chemicals and energy industries. Such efforts have led to firms improving business processes, and leaders striving to exceed compliance requirements.

The Outlook

Over the years, the chemical and energy industries have evolved in response to issues such as population growth and demands for environmentally responsible and sustainable operations. This evolution has led to product and process innovation which has helped leading firms to drive revenue, profitability and an improved brand image. Moving forward, expect to see continued emphasis on driving sustainability and environmental responsibility as well as product innovations that support these efforts.

Sustainability Still Critical for Chemical, Energy Industries