30/06/2017 1 BUSINESS VALUE OF LCA Ashok Menon SABIC Research and Technology Pvt. Ltd. 21 June 2017 No. 1 WHY COMPANIES INCORPORATE SUSTAINABILITY & LCA IN THEIR BUSINESS STRATEGY COMPANY STRATEGY PORTFOLIO CLASSIFICATION PRODUCT DIFFERENTIATION REGULATORY RISKS ü EU ETS ü INTERNAL CARBON PRICING ADVOCACY SUSTAINABILITY PORTFOLIO ü GROWTH ü MARGINS SUSTAINABLE OPERATIONS ü BOTTOM LINE SAVINGS RISK MANAGEMENT | RETURN ON CAPITAL | GROWTH Marketing and Sales M&A CAPEX STRATEGY INNOVATION ACK; ACK; Mckinsey Mckinsey No. 2 2025 STRATEGY – EMBEDDING OF SUSTAINABILITY Technology & Innovation Manufacturing & Operations Large Capital Investments Supply Chain & Logistics Sales & Marketing Sustainability is embedded across various processes & functions No. 3 HOW IS LCA OF USE TO SABIC? Technology development Feedstock strategy Marketing of sustainable products Product development - Ecodesign Megaprojects – sustainability assessment Branding & Communication Regulations & Advocacy Production of petrochemicals via non-conventional routes, technologies (Cradle to Gate, Gate to Gate) Evolving long-term feedstock strategy: e.g. coal vs. oil crude vs. natural gas vs. shale gas Product environmental brochures and datasheets based on detailed critical reviewed LCA studies Design new materials or combination of materials for metal replacement in automotive. Forecasting of Sustainability KPIs (Energy, GHG, material loss & water intensities for new production plants in comparison to SABIC targets / baselines. E.g. Data generated by LCA studies on SABIC products are published in sustainability reports, product brochures. E.g. LCA studies can provide early indications of project risks related to environmental regulations. Examples: No. 4 0 1 2 3 Qualitative -Life Cycle Thinking Non-ISO Industry, lit data & info Hotspots, Project & portfolio steering Quantitative – Screening LCA Broadly based on ISO Mostly industry, lit data Hotspots, improvement ops Quantitative – Screening LCA Broadly based on ISO Industry, lit data, some primary Project screening, gate decisions Customer discussions Quantitative – Full LCA Fully ISO compliant* Primary data, high DQI External Claims Major investment decisions * With critical review for external comparative claims LCA LEVEL INTERNAL EXTERNAL No. 5 THE QUALITATIVE ASSESSMENT (SCORECARD) Environmental Score -5 0 +5 > 50% worse neutral >50% better Economic Score Societal Score Scoring by technologists 6 - 10 hours of training & extended support Product / Process vs Incumbent Dimensions How much better or worse compared to incumbent? 3 1 2 Comparative Environmental Scoring 5 Life cycle stages 6 Impact categories
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30/06/2017
1
BUSINESS VALUE OF LCAAshok MenonSABIC Research and Technology Pvt. Ltd.21 June 2017
No. 1
WHY COMPANIES INCORPORATE SUSTAINABILITY & LCAIN THEIR BUSINESS STRATEGY
COMPANY STRATEGYPORTFOLIO CLASSIFICATIONPRODUCT DIFFERENTIATION
REGULATORY RISKSü EU ETSü INTERNAL CARBON PRICINGADVOCACY
10% lightweighting can result in higher environmental savings compared to 50% recycled content or 10% higher recycling rates.
No. 10
GRANTA – CES MATERIAL SELECTION TOOL
E.g.: Exploration of material universe to identify material alternatives for Aluminum in automotive cross-beams. This tool also allows assessment of sustainability features
Evaluation of this tool for material selections for specific applications based on cost, functional properties & sustainability
No. 11
TRAVEL AT THE SPEED OF LIGHTER
SABIC innovations are reducing weight in nearly every interior area of the aircraft
1 KG REDUCTION PER AIRCRAFT= 2300 tons of fuel = 7200 tons of CO2
Typical f igures.
-12%versus PPMA/PVC
-40%versus Metal
-25%versus solid
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No. 12
FINANCIAL IMPACT OF THIRD PARTY’S EVALUATION
CUSTOMERS VALUE SUSTAINABLE SUPPLYCHAIN, AS SEEN VIA CUSTOMER INQUIRIESTHROUGH CDP, ECOVADIS AND ‘’TOGETHER FORSUSTAINABILITY (TfS)’’ INITIATIVES.HIGHER SCORE = HIGHER CHANCE OF BEING APREFERRED SUPPLIER.
*
* TfS is a subgroup of chemical companies that uses EcoVadis
No. 13
No. 14
LEGAL DISCLAIMER
The products and services of SABIC are sold and rendered subject to SABIC’s standard terms & conditions of sale(GTCS), which are available free of charge upon request, by post or digital. Standard terms & conditions other thanthe GTCS are dismissed and do not apply. Although any information or recommendation contained herein is given ingood faith, SABIC makes no warranty or guarantee, express or implied, (i) that the results or specifications describedherein will be obtained under end-use conditions, or (ii) as to the effectiveness or safety of any design incorporatingSABIC’s products, services or recommendations.
This presentation or document does not contain any calculation, estimate or other warranty or representation thatcustomers and third parties may rely on. Customers and third parties are responsible for making their own determination asto the suitability of SABIC’s products, services or recommendations for the customers’ particular intended use throughappropriate end-use testing and analysis, and compliance with applicable laws and regulations.
Except as provided in SABIC’S GTCS, SABIC shall not be responsible for any loss or damage resulting from any useof its information, products or services described herein and SABIC assumes no liability whatsoever in this respects.
Nothing in any document or oral statement shall be deemed to alter or waive any provision of SABIC’s GTCS or thisDisclaimer, unless it is specifically agreed to in a writing signed by SABIC.
No statement by SABIC concerning a possible use of any SABIC product, service or design is intended, or should beconstrued, to grant any license under any patent or other intellectual property right of SABIC or as a recommendationfor the use of such product, service or design in a manner that infringes any patent or other intellectual property right.