Company leaders around the globe are more focused than ever on sustainability. The trend has been driven not only by an innate human desire to "do the right thing," but also because investors and environmentally conscious consumers are demanding that companies evaluate how their operations are affecting the world and make positive changes to reduce unwanted impacts.
"This is just by far the hottest discussion point at the senior management or executive level at energy companies, as well as chemical companies. They're investing as fast as possible to become ‘sustainable.' There are several reasons, but the biggest is investment pressure and stock price pressure," said Ron Beck, market strategy director at Aspen Technology Inc., a provider of enterprise asset performance management, monitoring, and optimization solutions.
AspenTech recently commissioned a study on sustainability, which was conducted by ARC Advisory Group. The analysts surveyed more than 200 energy and chemical industry professionals from around the world and found that 90% of their companies have sustainability initiatives in place. The researchers noted, in general, energy companies tended to focus on the transition to a lower-carbon future, while chemical companies often place more emphasis on producing sustainable products. Regardless of the objective, however, Beck said improving energy efficiency can have the biggest impact on most companies' sustainability metrics. "If you reduce your energy use, you increase your profitability," he said. "It's a net-net positive."
Somewhat surprisingly, when ranking sustainability goals, survey respondents said improving operational safety was their top priority, above such things as implementing net carbon reductions, reducing emissions, adopting cleaner energy sources, and reducing waste and water use. The report says, "Process safety incidents impact environment, personnel, brand, profitability, and the ability to grow a company." The study suggests leaders know very well that one major safety incident can limit a company's license to operate, and therefore, they consider safety of utmost importance to sustainability.
Another interesting finding from the study was that 75% of respondents said digital transformation is extremely important or very important for achieving sustainability goals. ARC's analysts said digital technology that "augments people and knowledge" is already actively being used "to improve both business and environmental performance and sustainability."
"One of the objectives of digitalization is to measure, and measure in real time," Beck told POWER. "Instead of taking all year to put together your annual sustainability report, if you actually want to take actions to avoid unpleasant surprises at the end of the year, executives need the data now. ‘Why is this plant performing worse than that one? What is it doing wrong? Let's investigate or let's send the team that's doing the best to teach everybody else what they're doing.' I mean, it's sometimes as simple as that," he said.
So, what's holding back sustainability initiatives? The majority of survey respondents identified a "lack of capital or resources" and "aging assets" as top barriers to meeting sustainability goals. The report says: "While most companies have a chief financial officer, chief legal officer, and other traditional leadership roles; there is not usually a chief sustainability officer. Since sustainability decisions are made by whoever controls the asset, those decisions are often made without considering the secondary effects of climate emissions. Furthermore, even at those companies with sustainability leadership, there is often a disconnect between the sustainability leadership and operational roles such as plant operations, engineering, or supply chain."
ARC recommended three actions companies could take to more effectively meet their sustainability objectives. First, rethink short-term goals in light of COVID-19 disruptions. However, it said leaders must not let the pandemic distract them from longer-term business and sustainability objectives. Secondly, make targeted investments in supply chain and process optimization technologies, as well as in predictive and prescriptive analytics. Lastly, invest in people and develop a culture of waste elimination, with the ultimate goal of efficiently delivering environmentally friendly products safely. That's were true sustainability resides.
–Aaron Larson is POWER's executive editor.