INDUSTRY INSIGHT

Driving value chain sustainability in the chemical industry

In order to achieve the objectives and targets of UN Sustainable Development Goals (SDG) and GCC national visions, sustainability thinking along value chains is imperative for GCC chemical producers

Supply chains are perhaps the most important aspect in the movement of goods and people. They help connect the world’s population, enable trade and boost the economic output of nations. If built well, transport infrastructure has the ability to last for decades. Globally, transport infrastructure investment is projected to increase at an average annual rate of about 5% worldwide over the period of 2014 to 20251. In the GCC region, mega projects such as Riyadh Metro, New Doha Port, Dubai Al Maktoum International Airport and rail linkages are key investment avenues.

This impressive growth brings significant attention to the Green House Gas (GHG) emissions that are generated by transportation. The transportation sector represents the fastest growth for GHG emissions and is expected to increase from 8.3 Gt COE in 2010 to 11.19 Gt COE in 20302.

On 25th of September 2015, under the umbrella of the United Nations (UN), countries adopted a set of 17 goals as part of a new sustainable development agenda, to be achieved by 2030. Three of these goals have a direct impact on the sustainability of transport and its infrastructure:

  • Goal 9: Build resilient infrastructure, promote sustainable industrialization and foster innovation
  • Goal 11: Make cities inclusive, safe, resilient and sustainable
  • Goal 13: Take urgent action to combat climate change and its impacts
“Globally, transport infrastructure investment is projected to increase at an average annual rate of about 5% worldwide over the period of 2014 to 2025. In the GCC, key projects include Riyadh Metro, New Doha Port, Dubai Al Maktoum International Airport and rail linkages.”

Key targets set under these goals include:

  • Develop quality, reliable, sustainable and resilient infrastructure, including regional and cross-border infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all
  • By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities
  • Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries
  • Integrate climate change measures into national policies, strategies and planning

Countries in the GCC are not immune to these challenges and have been active in making sustainable development the central pillar of their national visions and transformation strategies that address protection of the environment, resource management and air quality, while seeking to find a balance with economic diversification and prosperity. These visions and strategies are aligned with global agreements.

The GCC petrochemical and chemical industry plays a key role in the region’s economic diversification drive. Regional producers, all of whom are members of GPCA, are increasingly adopting more sustainable practices in the manufacturing of their products. The regional industry significantly improved its average production CO2 intensity by 22.6% from 2013 to 20163. Recently, the industry has started to concentrate more on enhancing the sustainability performance of the chemical transportation sector. This requires working jointly with partner Logistics Service Providers (LSPs).

In 2014, GPCA launched a program that aims to improve the EHSS&Q standards of the regional chemical transportation sector. The Gulf Sustainability and Quality Assessment System (SQAS) has grown by 87% CAGR from 2014 to 2017, indicating the leadership role and collaborative approach of the regional industry and LSPs with regards to product stewardship. By submitting their environmental performance, nine regional LSPs have now also achieved Responsible Care® company status.

“Organizations can no longer work alone to achieve a truly sustainable operation. Collaboration along the value chain with customers, suppliers, regulators and even competitors will ensure elimination of waste at key intersections, along with quality and service enhancements.”

Although environmental performance is a major focus globally under sustainability, it is important to note that sustainability also focuses on social and economic benefits. There are various ways and means to achieving a truly sustainable supply chain. These include: sourcing locally, waste minimization and management, business process re-engineering, total supply chain process optimization, adoption of renewable energy, enhanced transport efficiency through weight reduction and aerodynamics, design thinking, digitalization, etc.

In order to achieve the objectives and targets of UN SDGs and GCC national visions, sustainability thinking along value chains is imperative. Organizations can no longer work alone to achieve a truly sustainable operation. Collaboration along the value chain with customers, suppliers, regulators and even competitors will ensure elimination of waste at key intersections, along with quality and service enhancements. This will require a change in the mind set of organizations, looking beyond their scope of operations and addressing the wider interconnected value chain, creating the potential to provide a demonstrable competitive advantage.

The topic of supply chain collaboration and recognizing excellence will come under the spotlight during GPCA’s 10th Supply Chain Conference and 3rd GPCA Supply Chain Excellence Awards on 8-10 May in Dubai. Held under the theme ‘Collaboration for growth: A cultural transformation’ the conference will address topics of organizational health and culture, and focus on collaboration as a key driver of growth and a cornerstone of supply chain transformation.

To learn more about Sustainable Value Chains, read GPCA’s white paper here.