Is Indian chemical industry ready for green march?

The Indian chemical industry, currently valued at $ 108 billion, has been growing at a robust rate. With manufacturing landscape shifting to Asia, India, which currently accounts for only 3% share of the global chemical market, has the potential to emerge as one of the major destinations for chemical companies worldwide. But for this to happen, industry will have to improve efficiency and adhere to global environment & quality norms. 
 
“Sustainable development is critical to foster the growth of the Indian chemical industry. It forms the central foundation for responsible corporate governance,” said Vipul Shah, Chairman, CEO & President, Dow Chemical International Pvt Ltd. He added, “Being an energy intensive industry, which touches various aspects of human life every day, the Indian chemical industry needs global, uniform standards in environmental administration. For maximum impact, sustainability must be central to the company strategy, engrained in the culture and embedded in the reward structure. The organisation should be cognisant of where the barriers are to delivering on the goals and where the strengths are to build on.”
 
On a green route
Economic growth has been focal point of the policy makers for overall development of the country. While this is true, there has been an increased need to do it in an environmentally benign way. Balancing ecology with economy is the way forward to ensure sustainable development. Globally, the chemical industry has been one of the early adopters of eco-friendly processing by investing in green technologies.
 
R Mukundan, Managing Director, Tata Chemicals Ltd, said, “From being limited to corporate philanthropy, sustainability now is firmly embedded into all the business areas and is one of the important strategic parameters for any business decision. Given the universe we operate in, it becomes imperative that we incorporate processes that are sustainable.”
 
The Five Year Plan document (2012-2017) for the chemical industry stresses on sustainability – particularly resource and environment sustainability. Water, environmental impact, raw materials, safety over lifecycle and energy use are some of the issues grappling the industry. Indian chemical companies will have to invest in innovative solutions to find appropriate answers to these challenges.
 
Prasad Chandran, Chairman, BASF Companies in India & Head South Asia, believes that the motivation for sustainability has changed over the years. “Shareholders demand enhanced value for their investments, consumers want better quality products, employees need conducive work-culture and the society supports industrialisation that is in harmony with the environment. The common thread that links them all is - sustainability. And, this I believe is a company’s ‘License to Operate’. Moreso, for the chemical industry as it is perceived to be an ‘enabling’ industry. It offers innovations and technological improvements, which aid the growth of almost every industry today, in a profitable and sustained manner,” he added.
 
Fuelling demand
As per the National Manufacturing Policy, the government aims to increase the share of manufacturing in GDP to at least 25% by 2025 (from current 16%). To achieve this ambitious objective, the Indian chemical industry will have to play a catalytic role.
 
The National Chemical Policy (NCP), which is currently under preparation, stresses on the importance of research and development, safety, sustainability and green chemicals. Sustainable development - one of the mainstays of the policy - focuses on four key areas - health, safety, quality and environment. Dr Joerg Strassburger, Managing Director and Country Representative, LANXESS India, “Sustainability is crucial in today’s business as well as for the future and is no longer obligatory or necessary only from a compliance point of view. It is noticeable that the consumer is increasingly placing higher importance on health, safety and environmental protection. This clearly emphasises the need to build a business model centered around sustainability.”
 

India to emerge one of the major powerhouses in future, it will have to optimally use the resources at hand without having adverse effect on the environment. In such circumstances, companies will be answerable not just to the Board of Directors, but also to society. Reducing carbon footprint in the supply chain will also be important mandate for the chemical manufacturers.
 
Dr Strassburger said, “Companies in the chemical industry need to be even more cautious and must behave responsibly towards the people and environment because in India, the industry has a negative image in this regard. Every stage of the business right from procurement, production, storage, distribution to disposal needs to be monitored, analysed and audited for further improvement. This can be in terms of reducing carbon footprint, reducing energy consumption, conserving natural resources like water and minimising effluents and wastes that are discharged. For achieving this, investment in technology and focus on innovation is key. Companies could also subscribe to global initiatives like Responsible Care (led by Indian Chemical Council) to improve their safety, health and environmental (SHE) aspects on an ongoing basis.”
 
Taking full responsibility

While there is an agreement in the Indian chemicals industry that manufacturers should act responsibly, experts feel that there is the need to differentiate such responsible companies through Responsible Care certification. The government should frame policies to incentivise companies, who are complying and acting responsibly, and not treat them at par with those who do not. With sustainability as one of the focus areas of the National Chemical Policy, it will encourage companies to seek Responsible Care certification.
 
Mukundan said, “Within the chemical industry, the Responsible Care Initiative is a huge step forward in the campaign to make sustainability as part of companies’ business decision. The Responsible Care initiative acts as an enabler for continuous improvement in SHE performance, together with open and transparent communication with stakeholders. The role of top management is vital in ensuring chemical industry appreciates people, planet and profit through same lenses across the supply chain. This will also aid in making the industry more organised, responsive and inclusive.”
 
Chemicals, the growth enablers
Regulatory developments in the end-user industries are also leading to adoption of green initiatives in the Indian chemical industry. K Jayaraman, Executive Director (Operations Consulting), PwC, India, said, “Today, the customer awareness on health consciousness and eco-friendly products has gone up. Manufacturing companies are looking at specialty chemical additives that help in improving the functionality of the product as well as reduce the environmental load either by achieving the same end product in minimum number of steps or consuming less amount of chemicals than before.”
 
In recent times, companies across the industries (such as textiles, home & personal care, etc) are setting up their sustainability goals. In such circumstances, specialty chemicals can play an active role in helping them to achieve their sustainability goals. Diane Kelly, Regional President for Dow Corning India/ASEAN/ANZ, said, “Sustainability is about more than just being ‘green’ on the surface. It is also about ensuring innovative solutions are durable over the long term – bringing huge commercial gains to customers, as well as affordability to their end consumers.”
 
Indian chemical industry has begun the journey on the green path and will have to pursue it with innovative solutions in future as well to emerge winner on the global map.