Practitioner's Section - Shaping Digital Sustainable Development in Chemical Companies - CHEM4CHEM
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Shaping Digital Sustainable Development in Chemical Companies Practitioner’s Section Shaping Digital Sustainable Development in Chemical Companies Wolfram Keller* and Nadine Bette** * CHEM4CHEM, Vösendorfring 44, 64380 Roßdorf, Germany, wkeller@chem-4-chem.com ** CHEM4CHEM, Vösendorfring 44, 64380 Roßdorf, Germany, nbette@chem-4-chem.com DOI: 10.17879/22139568338; URN: urn:nbn:de:hbz:6-22139569180 Both, digitalization and sustainable development are two megatrends with signifi- cant impact on the chemical industry in Germany through to 2025, according to a recent survey among 60 chemists. Digitalization is as seen a driver for sustainable development, even though there is no quantitative correlation in the importance of the two megatrends. When implementing Corporate Digital Sustainable Re- sponsibility (CDSR) chemical companies need to find the right balance between business, technology, society, responsibility and mindset-related facets that chem- ical practitioners refer to when arguing in favor of digitalization being a driver for sustainability or against it. 1 Introduction 2 Progress of sustainable development in the chemical industry Germany’s chemical industry has taken a leading role in Responsible Care (VCI, 2011) – The origin of sustainability is closely con- nowadays referred to as Sustainable Develop- nected to major accidents, e.g. at Seveso ment (Sachs, 2015) – since about 25 years. Digi- (Kramer et al., 2019), Bhopal (Eckerman and talization, a second, steeply evolving mega- Børsen, 2018), Houston Chemical Complex (U.S. trend, is not new either. However, its break- Department of Labor, 1990) and Exxon Valdez through in the chemical industry has begun (Cohen, 1995) in the 1970s and 1980s. In the mid only recently, marking the beginning of Digital -1980s, the global chemical industry took coun- Sustainable Development (DSD) (RNE, 2018). An ter action in response to these disasters and to empirical survey among 60 chemists identifies gain back its ruined trustworthiness. Today, some preconditions and obstacles for sustainability is subject of numerous multi- “Corporate Digital Sustainable Responsibility”, stakeholder initiatives like Responsible Care the extended corporate governance (Werder, (VCI, 2019, I, II; Delmas and Montiel, 2008; King 2018), Digital Sustainable Development, the and Lenox, 2000), Together for Sustainability process to make it happen, and ultimately the (TfS, 2019), Chemie3 (Chemie3, 2019), Platform desired Sustainable Development Goals (United for Accelerating the Circular Economy (PACE, Nations, 2015). 2019) and Alliance to End Plastic Waste (AEPW, 2019), and an integral element of the strategy of many big chemical companies (BASF, 2019; Clariant, 2019; Evonik, 2019; Linde, 2019; Wack- er, 2019, I). In this decade, chemists and chemi- Journal of Business Chemistry 2020 (1) 1 © Journal of Business Chemistry
Wolfram Keller and Nadine Bette cal engineers have developed first technically mical industry can be defined “an embryonic and – at least partially - economically feasible concept aiming at seamlessly integrating the industrial-scale approaches for product rede- two time-shifted and often independently ma- sign, reuse, mechanical and chemical recycling naged approaches of CSR and CDR in order to (Werner and Mertz, 2016; Johnson, 2018; Stark, resolve de facto and potential conflicts of inte- 2019; Stephan, 2019; Strathmann, 2019). The rest to achieve a company’s SDGs”. Here are chemical industry is on a good way to achieve some examples of these conflicts: the desired Sustainable Development Goals A blockchain system negates the risk of and by 2050 will likely be able to be carbon trusting a single organization through dis- neutral (VCI, 2019, III). tributed ledgers and reduces overall costs and fees of all kind of transactions by cut- 3 Progress of digitalization in the ting out intermediaries and third parties. chemical industry However, its required resources have signifi- cantly increased in the last few years. It cur- rently consumes more energy than many Unlike Sustainable Development, digitaliza- countries, such as Denmark, Ireland, and tion in the chemical industry is still in its early Nigeria (Binance Academy, 2019). stages. Since about 5 to 10 years, bigger rather Super computers offer a quantum leap in than mid-size chemical companies have begun computing power, e.g. 1 to 2 quadrillion floa- to leverage information and communication ting-point operations or 1 to 2 petaflops per technology, electronics, and the experience of second. However, its electricity consumption automotive industries with digital technologies at full capacity is approximately 600 kilo- and applications (DECHEMA, 2016). Many of watts, and the water-cooling system requi- them have appointed Chief Digital Officer(s) res up to 60,000 liters of water per hour whose primary task is to define and execute (BASF, 2018). their company’s digital transformation road- A simultaneous digital and sustainable map (Schmidt-Stein, 2018; Wacker, 2019, II; Bu- transformation impacts a chemical com- sinessTech-Company, 2019, I to VI). Still, the pany’s future revenue and profit, but also emphasis of the digital transformation road- public reputation, core values, culture, busi- map is often on technical aspects. True Corpo- ness model, technologies, products, services rate Digital Responsibility (CDR) needs to go far and employees, i.e. financial and non- beyond, e.g. including compliance with legal financial dimensions. If mainly financial key obligations, digital ethics, interactions with performance indicators, e.g. the Return on society, chemical suppliers and customers, and Investment (ROI) for the transformation and the enablement of employees for chemical in- the Return on Capital Employed (ROCE) for dustry 4.0 with its modified jobs and compe- the ongoing business, remain the bench- tences (Keller, 2018; BAVC, 2018; Lade, 2019). mark for investors and shareholders, busi- ness cases are instrumental, however rarely 4 Corporate digital sustainable suitable to base not primarily financial deci- responsibility, a feasible composite? sions on. Can CDSR facilitate chemical companies to The authors have undertaken an empirical exploit potential synergies between the two survey among 60 chemists in the chemical in- megatrends, sustainability and digitalization, dustry in Germany to identify the relative im- while striving to fulfill their Sustainable Develo- portance of sustainability and digitalization by pment Goals? In this context CDSR in the che- 2025. They look at mutual interdependencies Journal of Business Chemistry 2020 (1) 2 © Journal of Business Chemistry
Shaping Digital Sustainable Development in Chemical Companies and potentially missing competences required In addition, 53 data sets including values for to pursue CDSR . each of the three hypotheses were sorted in Participants represent different levels of declining order choosing “Digitalization is a education (Bachelor, Master, PhD), years on driver of sustainability” as lead parameter, duty, company size (corporation, big, mid-size shown as solid line in Figure 2. The depending and small company) and management level (1 parameters “importance of digitalization” and through to 4). The survey is hypotheses-based, “importance of sustainability” are displayed as with respondents indicating their degree of radar charts underneath. The heterogeneity of agreement with each proposed hypothesis, u- the diagram corresponds well with poor corre- sing a percentage scale. lation coefficients of -0.10 in case of digitalizati- The first hypothesis “By 2025 Digitalization on and +0.07 regarding sustainability. will play a major role for chemists and engine- ers” achieves 83% level of agreement (sample size 56). The distribution of responses is surpri- singly homogenous. There is no trend between the responses and the level of education, years on duty, company size, and management level. 78% level of agreement (sample size 56) is a clear indication that also “Sustainability will play a major role by 2025 for chemists and engi- neers”. The pattern of responses is almost iden- tical with that of the role of digitalization by 2025. The average level of agreement that “Digitalization is a driver for Sustainable Deve- lopment” scores at 70% (sample size 53, Figure 1). This view is very consistent within each and across all clusters. Figure 1 Degree of agreement to the hypothesis „Digitalization is a driver for SustainableDevelopment” depending on the level of education, management level and company size (source: own representation, 2019). Journal of Business Chemistry 2020 (1) 3 © Journal of Business Chemistry
Wolfram Keller and Nadine Bette Figure 2 Lacking correlation between the importance of digitalization as a driver for sustainability . and the importance of digitalization and sustainability by 2025 (source: own representation, 2019). To understand the full bandwidth of related Business cluster: Key arguments that comments from 100% euphoria to 100% skepti- “Digitalization is a driver of sustainability” in- cism, all comments made were classified in five clude the better control of sustainability- clusters: business, technical, society, responsibi- related technical and management processes lity and mindset. Within each cluster responses and energy management, all leading to higher were distinguished by supporting and impe- technical and human resource efficiency and ding notions. The number of comments in each bottom-line improvements. Major concerns (sub-)cluster was divided by the total number address data availability, format, integrity, and to calculate comments’ relative frequency. security and management decision-making (Figure 3). timeliness and effectiveness. Figure 3 Hypothesis “Digitalization is a driver of sustainability” Distribution of supporting and impeding arguments by cluster and overall (source: own representation, 2019). Journal of Business Chemistry 2020 (1) 4 © Journal of Business Chemistry
Shaping Digital Sustainable Development in Chemical Companies Technical cluster: On the positive side, be- Mindset cluster: Only 12% of all comments nefits through big data and artificial intelli- address the attitude of managers and gence to drive sustainable processes, products employees. Leadership by example and indivi- etc. dominate by far. Excessive energy con- dual freedom to act are seen instrumental for sumption, high dependency on state-of-the-art DSD. The biggest concern addresses low wil- IT infrastructure and the ability to handle giant lingness and readiness across all levels of the quantities of data are the top concerns. company, from shop floor to C-level, to cope Society cluster: Respondents are – with few with change associated with DSD. exceptions - aware of the driving role of poli- In summary, regardless which role digitali- tics, educational institutions and the chemical zation and sustainability will play by 2025, 58% industry in defining and providing boundary of the participants (degree of agreement ≥ conditions for DSD. There is considerable skep- 67%) are strong believers that digitalization is a ticism that educational institutions assume key enabler for DSD, 32% (agreement between sufficient responsibility by not including digita- 34% and 66%) have mixed feelings, and 9% lization and sustainability comprehensively (agreement ≤ 33%) see no or a limited driving enough in their curricula. role of digitalization. Responsibility cluster: Respondents consider DSD is significantly affecting chemists’ job clear responsibilities instrumental for DSD. On- profiles, required skill sets and training needs. ly 20% see their company in charge, not a clear Training needs in the context of digitalization vote for “corporate responsibility”. The lack of (Keller, 2018; Gruß, 2018; Lade, 2019) and those commitment to digitally enabled sustainable addressing sustainability (Keller and Knoll, chemical and management processes and ma- 2020; ILO 2019; Graf and Reuter, 2017; ILO and nagement’s hesitation to invest in required CEDEFOP, 2011) have been defined. Contrary to training are the two main concerns. 80% of digitalization skills, respondents consistently respondents believe DSD responsibility is pri- claim (degree of agreement between 48% and marily with politics and educational organiza- 62%, Figure 4) that there is no single highest tions. priority for sustainability-related training. Instead, training covering requirements, specifi- Figure 4 Hypothesis “This specific Sustainable Development area represents the highest training need”. Degree of agreement in % for each individual answer, not additive (source: own representation, 2019). Journal of Business Chemistry 2020 (1) 5 © Journal of Business Chemistry
Wolfram Keller and Nadine Bette cations, methods, applications, attitude and https://bericht.basf.com/2018/de/ options to act for each area - society, company serviceseiten/downloads/files/ and individual chemists, is required. 68% of the BASF_Bericht_2018.pdf, accessed at 18 October participants request their company to take pri- 2019. mary responsibility for subject specific training BASF (2108): Digitalization in R&D - Meet in the context of Sustainable Development, Quriosity, available at https://www.basf.com/ which stands in conflict with the low overall global/de/who-we-are/innovation/our-way-to- responsibility (20%). innovations/supercomputer.html, accessed at 18 December 2019. 5 Conclusions BAVC (2018): Mithalten durch Mitarbeiter, available at https://www.chemie- By 2025 digitalization (83% agreement) and arbeitgeber.de/digitalisierung/lernen-fuer-die- sustainability (78% agreement) will be even digitalisierung/, accessed at 18 October 2019. more instrumental elements of Sustainable Binance Academy (2019): Blockchain Advan- Development in Germany’s chemical industry tages and Disadvantages, available at https:// than today, as the results from the empirical www.binance.vision/blockchain/positives-and- survey among 60 chemists suggest. 70% agree- negatives-of-blockchain/, accessed at 18 De- ment to the hypothesis “Digitalization is a dri- cember 2019. ver of sustainability” and the in-depth evaluati- BusinessTech-Company (2019, I): Wie setzt on of respondents’ comments reveal key input der BASF CDO die Digitalisierung um?, Chief- for Corporate Digital Sustainable Responsibility. Digital-Officers.com, available at https://chief- Firstly, there is no quantitative correlation digital-officers.com/de/wie-setzt-der-basf-cdo- between the importance of digitalization and die-digitalisierung-um/, accessed 18 October sustainability by 2025 and the ability of digitali- 2019. zation to drive sustainability. Secondly, che- BusinessTech-Company (2019, II): Wie setzt mists already have an extensive repertoire of der Henkel CDO die Digitalisierung um?, Chief- ideas supporting Corporate Digital Sustainable Digital-Officers.com, available at https://chief- Responsibility and counter arguments impe- digital-officers.com/de/wie-setzt-der-henkel- ding it. Thirdly, there are major concerns regar- cdo-die-digitalisierung-um/, accessed 18 Oc- ding scope and maturity of digital and social tober 2019. responsibility competences required for BusinessTech-Company (2019, III): Wie setzt Sustainable Development. der Bayer CDO die Digitalisierung um?, Chief- A balanced technology-, people-, and society Digital-Officers.com, available at https://chief- -oriented Corporate Digital Sustainable Respon- digital-officers.com/de/wie-setzt-der-bayer-cdo sibility is required to drive the process of Digital -die-digitalisierung-um/, accessed 18 October Sustainable Development, which, in turn, helps 2019. to achieve Digital Sustainable Development BusinessTech-Company (2019, IV): Wie setzt Goals. der Merck CDO die Digitalisierung um?, Chief- Digital-Officers.com, available at https://chief- digital-officers.com/de/wie-setzt-der-merck- References cdo-die-digitalisierung-um/, accessed 18 Oc- tober 2019. AEPW (2019): Alliance to End Plastic Waste, BusinessTech-Company (2019, V): Wie setzt available at https://endplasticwaste.org/, ac- der Linde CDO die Digitalisierung um?, Chief- cessed at 18 October 2019. Digital-Officers.com, available at https://chief- BASF (2019): BASF-Bericht 2018, available at digital-officers.com/de/wie-setzt-der-linde-cdo- Journal of Business Chemistry 2020 (1) 6 © Journal of Business Chemistry
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Wolfram Keller and Nadine Bette Appendix Table A1: Digitization and Sustainability questionnaire (source: own representation, 2019). Journal of Business Chemistry 2020 (1) 10 © Journal of Business Chemistry
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