Climate: And Action

Written by: Lynette Chung

The COP 27 just ended on November 20. If I look at the COP 27, I have mixed feelings.

On the one hand, we can see a breakthrough agreement: for the first time “loss and damage” funding will be provided for vulnerable countries hit hard by climate disasters. This commitment is something that makes me personally happy. With that step, the COP underlined its relevance. The industrialized need to support the poorest countries that have been damaged by a natural disaster.

On the other hand: there was no big solution, no further action to stop the global warming. The COP 27 confirmed the 1.5 degree target and the need to abandon coal. Oil and gas are, however, not included in the formulation. The delegations could only agree on the objective already achieved in Glasgow. The big shot failed to materialize. So it is up to us to push sustainability. And in this regard, I can see positive developments: While the formal negotiations gave little outcomes beyond the loss and damage fund element, there was much happening at and beyond the COP and many initiatives in the real economy are driving progress. So is our industry.

The chemical industry has a lot of touchpoints with and needs for sustainability. It is one of the largest emitters of greenhouse gases - responsible for around 3.5 percent of global greenhouse gases. But: 95 percent of all manufactured goods depend on chemicals. Our materials and application solutions are found in nearly every area of modern life. From solar panels, wind turbine towers and electric vehicles to matrasses and refrigerators.

But let’s be clear: We use resources based on fossil based feedstocks, we need electricity and gas. It is our responsibility to reduce that and the environmental impacts that come with them. Therefore, we at Covestro committed ourselves as a company to circular economy and drive the change to a more sustainable business and society. Our vision is to become fully circular and in the long-term use 100% alternative raw materials, breaking away from the current use of fossil fuel and raw materials.

Circular economy and sustainability in times of crisis

While a lot is taking place right now – the Russian war in Ukraine, energy security issues, increasing energy prices in Europe, inflation putting pressure on the economy…. – we need to maintain a strong focus on sustainability. More than ever. We need to work full steam ahead toward a sustainable future by making the circular economy the global guiding principle. The current situation shows us more than ever that we need to move away from fossil fuels and dependencies and build out renewable energy infrastructure and capacity fast. Sustainability and the need for integrating social and environmental aspects has long since moved into the economic spotlight. To remain competitive, it is increasingly important to identify and develop future markets and opportunities. Driven by the challenges and opportunities of sustainability, because that is how we create sustainable value and prosperity.

Sustainability drives growth

Sustainability is not a nice add-on but a business crucial strategy. Establishing a circular economy means high investments in new processes and infrastructure for companies. Legal certainty and predictability are a must for this. The financial and capital markets have particular roles to play. What we need to leverage the potential are openness for different technology options and innovative financing models for the demonstration and use of new technologies, such as contracts for difference for start-up financing.

Additionally, sustainable products need functioning markets with specific supply and demand mechanisms. This is where brand manufacturers, among others, are needed. We need to strengthen the growing trend toward a more ecologically sustainable lifestyle. Long-lasting products with lower energy or resource consumption that protect the climate are increasingly being considered in purchasing decisions. Driving this trend forward, in times of energy crisis and inflation, also means above all that sustainability must be affordable.

This is where politics comes into play. The high cost of energy in Europe is placing a considerable burden on the ongoing transformation in the chemical industry and on our ambitious sustainability goals. We need to meet the large energy demand from renewable sources at competitive prices. Policy incentives can help transform and create markets for more sustainable products. Tools such as recycling quotas, mandatory sustainable content requirements, and product labelling can help stimulate demand for circular products. They should take into account the entire value chain and support raising customer awareness, including building trust and acceptance among consumers.

What now after COP 27?

Let’s don’t forget the positive signs. Yes, maybe COP 27 did not come up with a decisive jolt. But let’s don’t give up there. What we saw in this year at the K Fair in Düsseldorf was really encouraging: all was about circularity, sustainability and what the industry is doing to progress. We must close the loop and thus emerge from the crisis stronger. However, we cannot go down this path alone. Politics, business, society, the capital market and investors must rethink and work together. The world needs us and our will to change in order to protect our planet.

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