Henkel Sees Opportunities from a New Shade of Green
9:58 AM MST | February 20, 2009 | By ANTONIO TRIUS, CEO OF COGNIS
The global sustainability trend is still gaining pace. “Green”, environmentally conscious products are more in demand than ever before – and the chemical industry is adapting to this reality.
Today’s consumers are understanding more and more that the choices they make impact the environment, and in order to be a good citizen and do what is “right”, they are opting for products that are healthy and good for the environment. In the past, environmental products often meant sacrificing convenience and performance, yet today it is very possible to live a “green” lifestyle and be environmentally responsible using “green” products that really work and make life easier. These so-called “New Green” consumers see their environmentalism not as a sacrifice they make, but as a way to positively enrich their lives. Being “green” is no longer considered an eccentricity, but a smart lifestyle choice – and the consumer goods that serve these trends are no longer niche products, but very much part of the mainstream.
Mounting pressure and new market opportunities
Retailers around the world are also becoming more interested in the environment. For example, major retailers in the US and the UK are making environmental commitments, tightening the policies that govern which products they stock, and offering extra loyalty points to customers who make eco-friendly purchases. “Green-ness” is now an important selling point, especially in the personal and home care segments, where purchase decisions are influenced by labels making claims such as, “natural”, “eco-friendly”, and “biodegradable”. However, manufacturers who claim that their products are good for the environment must be able to back this up with hard evidence – and of course, products have to perform as well as if not better than their conventional alternatives.
Sustainable strategies are also increasingly finding favor with the capital markets. Ecological and social criteria now weigh in the decisions of both fund managers and private investors alike, and inclusion in ethical stock indexes such as the COOL Climate or the Dow Jones Sustainability Index (DJSI) World is very beneficial to a company’s image. In the past, investing according to ecological and social criteria has proven to be a good investment strategy: For example, between 2001 and 2007, the DJSI grew by 33% whereas the Morgan Stanley Capital International (MSCI) World stock index, grew by just 15%. Moreover, a study by Frost & Sullivan called “European Green Investments Market – Investment Analysis” (2008) showed that the European market for “green” investments is predicted to grow at an average rate of 18% annually, with a total volume of 572.9 billion euro in 2014.
A natural advantage
For decades, the chemical industry has often been regarded as an “enemy” of the environmental cause, primarily due to the pollution associated with the production of many of its products. But in fact, “green” behavior is something chemical companies are already doing – because it is in their own interests to optimize the efficiency of their production and engineering processes in order to lower their consumption of feedstocks and energy, and to help their customers comply with ever-tighter environmental, safety and emissions standards. Also, the chemical industry has a major role to play in developing innovative and sustainable solutions that are needed in order to succeed in the markets of the future. R&D activities carried out by chemical companies are a major source of new “green” technologies and convenient, natural-based products. Modern consumers want products that offer excellent performance and wellness benefits, without any adverse social or environmental side-effects – and this is exactly what natural chemistry seeks to deliver.
But what makes a “green” product “green”? A major way that the principles of sustainability can be put into action is by using renewable raw materials. This has many advantages including:
Nature provides a remarkably wide range of renewable raw materials, with a huge variety of properties and chemical compositions. For example, vegetable oils/fats and plant extracts are important renewable resources used in a lot of industrially produced goods. With a high proportion of natural, renewable raw materials, environmental acceptability, biodegradability and enhanced user compatibility are always part of the package. Such substances combine top performance with impeccable sustainability credentials. Furthermore, products which contain a high level of natural ingredients are considered healthier, safer and more trustworthy.
Nature is an amazing teacher and chemists are particularly interested in finding substances that have the same effect in man-made products as they do in nature. Applications of these include cosmetics, skin and hair care products, cleaning agents, coatings and paints, printing inks, agrochemicals, lubricants and hydraulic oils, food ingredients and dietary supplements.
Green chemicals – on a natural high
The chemical industry plays a key role in the development of innovative, high-performance solutions, technologies and products and in converting the increasing global demand for environmentally compatible manufacturing processes and end products into tangible market success. The public debate on sustainability and the shift in priorities that has occurred in recent years mean that businesses and society find themselves confronted with an array of new challenges. The companies that succeed in the future will be the ones that make a wholehearted commitment to tackling these challenges. Sustainability is not just an end in itself – it is an instrument of value creation, and a decisive factor in the struggle for market share.
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