Bayer spinoff Covestro pitches chemicals for a circular economy
Thirty years ago, a U.S. offshoot of German pharmaceutical giant Bayer was just coming to grips with the environmental ills that can accompany production of industrial materials.
The operator of a 270-acre chemical plant in West Virginia, which came to be known as Bayer MaterialScience, was tasked in 1987 with undertaking corrective action to prevent "unacceptable exposure" to carcinogenic contaminants found in soil and water at the site, according to Environmental Protection Agency reports.
But that was then. In September, a newly independent version of the $12 billion Bayer materials business called Covestro was launched with a goal of pulling off a re-brand with sustainability at the core of 2,000-plus product offerings in industries including transportation, construction, electronics and textiles.
"This is an industry that has a legacy of damage to the environment," said Covestro Chief Sustainability Officer Richard Northcote. "It's a bit like, 'My name’s Richard, and I’m an alcoholic.' Until you say that, you’re never going to improve, but we are not the same industry we were 50 years ago."
The opportunity that Covestro sees in prioritizing sustainability is what many predict will be an upheaval in the materials that serve as the basis of the industrialized economy.
With business risks such as climate change and supply chain volatility reinforcing the urgency of using raw materials wisely and curbing emissions in the manufacturing process, the concept of a "circular economy" where component parts are cycled back through supply chains is one approach gaining traction.
For Covestro and chemical industry competitors such as Dow and BASF, that means putting more thought into both the energy used to produce new materials and how those materials will hold up over time. Add to those dynamics emerging technologies like 3D printing and increased demand for better life cycle analysis of consumer products, and the future of the chemical industry starts to look very different.
"We believe that in 15 to 20 years there will be a whole new range of polymers," Northcote said. "It’s been far too easy to avoid doing R&D in this area. We’re sitting now in the perfect storm."
Seeing that storm on the horizon, Northcote said the company is thinking about ways to better integrate climate mitigation into product development. Re-framing carbon emissions in terms of "return on carbon," rather than traditional financial metrics such as return on cash investments, is one area of interest.
"If we’re going to take a fossil fuel and we’re going to use it, we have to make sure we’re going to get a carbon return on it," Northcote said. "Not a cash return, a carbon return."
Along with the shift in metrics, Covestro has a new rainbow logo and tagline — "make the world a brighter place" — plus three recently identified values that leadership hopes will both guide a long-term makeover and prove useful in attracting and retaining talent: curious; creative; and colorful.
"This is the sort of thing you might see from Nike or Google," Northcote said. "For a 150-year-old chemical company, it’s creating a lot of interest."
One early sustainability project Covestro has taken on is the build out of a "flying laboratory" in the form of a sponsorship of the all-solar-powered plane Solar Impulse 2, which this week completed a record flight across the Pacific.
"When you start to operate as an independent company, you can operate very differently," he said. "This was an opportunity, with everything that’s going on in the world of sustainability, to focus or attention much more on how we are going to develop products that have a better carbon footprint, that are going to make vehicles lighter, that are going to make better insulation — energy-saving products."
The company already makes R&D decisions based on a triple bottom line theory, Northcote said, where new investment must benefit two out of three categories in the trifecta of people, planet and profit. Prospects that actively harm any of those three areas are also automatically ruled out, he said.
While several industries present big opportunities to introduce lighter, less carbon-intensive materials — such as transportation or construction — there is also the matter of factoring in downstream uses of advanced materials.
"I have a slight concern about electronics," Northcote said. "If I’m making materials that go into the product that have a lifetime of 7,500 years but the product has a fashion lifetime of 18 months, is that really a sustainable use of material?"
Moving forward, the company plans to have an active voice in the European Union's ongoing discussions about policies that could encourage circular economy thinking. Northcote's position, for example, recently was moved to Brussels to be closer to policymakers grappling with the issue.
Still, there are built-in limitations to current operating procedures, such as the trend toward large-scale mass production that tends to engender waste.
"This ability to supply smaller volumes I think is something that all industries are going to have to look at," Northcote said. "I think the days of the megaplants strategically sited for whatever region it might be — that is not sustainable either. There is going to be more and more manufacturing and production."