Covestro's manifesto for a sustainable, clean economy
"Zero carbon is a complete and utter misnomer."
We've all heard the innuendo — it's not the size; it's what you do with it that counts. It's less often that you hear the same argument applied to greenhouse gases. But as Richard Northcote, chief sustainability officer at chemicals giant Covestro, argued, simply reducing the carbon emissions in the lifecycle of a product won't do.
"Everything is carbon — we are carbon — so this whole idea of decarbonization doesn't make any sense at all," he said. "It's what we do with carbon that's important."
After all, a company can reduce its emissions as much as it likes, but its overall impact will still be negative unless its products are climate-friendly. That, in a nutshell, is Covestro's manifesto for a sustainable, clean economy. "What we want to do is keep carbon alive, because the problem at the moment is that we are pushing carbon where it shouldn't be," Northcote explained in his Scottish burr. "We want to use it and keep it alive."
While it may not be a household name, many people will have encountered Covestro's work in one way or other. At its core, the company produces two main products: polyurethanes and polycarbonates. The former are used in thermal insulation, adhesives, electrical housings, fridges and as a key component of footwear, mattresses, upholstery and even 2014 official FIFA World Cup footballs.
The latter are mainly used as robust, lightweight replacements for glass. For example, Covestro's raw materials were used for the windscreen of the Solar Impulse 2, the aircraft which flew around the world powered entirely by solar energy, or, more mundanely, as casing for laptops and phones.
With such a vast array of uses for its raw products, the company certainly has the clout to make its mark on the global economy. Having spun out from German multinational Bayer in 2015, Covestro is a $17.33 billion independent enterprise which during its short existence already has climbed into the 30 biggest German corporates trading on the Frankfurt Stock Exchange, according to the DAX index.
"One of the great things about Covestro is that we are a [$17.33 billion] company based on two chemistries," Northcote said. "So we don't have the expansive portfolio that many of our competitors have. We're not involved in single-use use plastics, for example, or anything that we deem to be damaging to society or the environment."
Having started his career as a goalkeeper for Ayr United before going on to edit The Engineer, Northcote certainly hasn't taken the usual route into the sustainability sector, if there is such a thing. But after Bayer poached him to work in their communications department, Northcote really began to explore his interest for tackling environmental issues through business — a passion he has harnessed in pushing forward Covestro's sustainability ambitions.
"Anything that generates extra profit that actually has a worse environmental benefit, we would not get involved in," Northcote claimed. "That was our guiding principle when we were still Bayer."
Having hit a number of previous green targets well ahead of schedule, Covestro is on course to cut its 2005 emissions in half by 2025. It also has committed to aligning 80 percent of its research and development budget with the U.N. Sustainable Development Goals (SDGs) by 2025, and is already around the 50 percent mark. That target is included in its innovation pipeline, meaning nearly all Covestro R&D projects must contribute to achieving the SDGs.
But perhaps most interesting is the firm's goal to ensure all its suppliers comply with strict sustainability requirements, on which they are all assessed. Keep in mind that nearly all of Covestro's products are made from derivatives of oil. So when the company told its suppliers last year it wanted bio-based alternatives for all of its feedstocks by 2025, it "raised a few eyebrows," Northcote admitted.
"We didn't want this just to be about us, we believe we have a big influence on the value chain," he explained. "That goes right back to the oil majors in many cases, so it's quite interesting to see as they start to develop their sustainability positions."
Does that mean by 2025 Covestro's currently oil-derived products will be made entirely without oil? "We have thrown down the challenge," Northcote replied, pointing out that Covestro is trying to develop its own bio-based alternatives. "Like all of the targets that we set, we don't know how we are going to do them. If you set a target and you know already how to achieve it, that is not a real target in our view. That's fine for financial targets, but for non-financial targets you really have to stretch yourself and keep pushing. I believe we should have zero negative impact through all of our processes — that has to be our target, at the end of the day."
Even so, the fact this multi-billion dollar company is pushing oil majors to shift towards lower carbon business practices is only half of the story. As well as upstream, Covestro is also pushing for sustainability to be embedded downstream in its value chain - the company is confident the vast array of uses for its products means it is very well positioned to have a significant impact on the wider economy. Indeed, its customers include some of the world's biggest car, sportswear, electronics and furniture manufacturers.
That client base brings with it huge green business opportunities. Northcote highlights Prime Minister Modi's ambitious drive to build 50 million energy-efficient homes in India by 2022 as an example of the growing demand for insulation products throughout the world. Elsewhere, Covestro's lightweight materials have numerous applications in helping to reduce vehicle emissions, while the firm is also involved in a project to provide farmers in developing countries with solar-powered systems to dry their fruit so that it keeps for longer.
In addition, the company hopes the idea of "keeping carbon alive" can improve the sustainability of numerous everyday consumer products. For example, since 2016 Covestro has been using carbon dioxide to manufacture polyols, which are used to make foam for mattresses. As a result, 20 percent of the crude oil traditionally used in producing polyol at its Dormagen site in Germany has been replaced by CO2 that according to the firm is chemically bound and cannot leak out, creating a new product named cardyon.
Northcote describes the project as a "breakthrough" for Covestro's scientists, and the company believes CO2 potentially has plenty many more applications within its product portfolio, such as making car seats, detergents, and coatings. But it doesn't stop there - the company has also teamed up with 14 organizations on a part EU-funded project to explore the capture and use of emissions from the steel industry to manufacture robust plastic and insulation materials.
"It's just opened up this whole new world of chemistry," says Northcote. "Where a lot of people talk about CCS [carbon capture and storage], which has a limited impact, we honestly believe CCU [carbon capture and utilization] is where the future lies. This keeps carbon alive, and that's the whole point. If we can keep carbon molecules living forever, then we really do address some of the world's major problems."
Northcote and Covestro believe that, while the ultimate aim is to move away from fossil fuels altogether, it is in the meantime crucial to get as much as possible from what is extracted from the ground. But, in order to get the most out of carbon, you first have to be able to measure what you are actually generating from it.
"One of the worst things you can do with fossil-based fuel is stick it in the engine of a car and burn it, as you're getting almost nothing out of it except for CO2 emissions," Northcote explains. "But if at the end of the life of a product, if you can capture the carbon of a product and put that back into something, that is much more like biomimicry. That basically is how we started thinking about the whole carbon productivity idea."
He is referring to a consortium of companies and NGOs - of which Covestro is a member — that last year launched a new metric at New York Climate Week aimed at helping companies measure the value created from fossil carbon resources, just as 'capital productivity' tracks the financial return on an investment.
The Carbon Productivity Consortium argues that in order to meet the aims of the Paris Agreement the world must and can get 10 times more value out of the carbon it extracts from the ground than it does at present. Its measurement tool has picked up interest and support from the UN and the EU Commission, among others.
"We honestly believe it is a missing metric, and if it is picked up and used alongside LCAs [life cycle assessments] and Science-Based Targets for example, then it gives you a much clearer picture," Northcote argues. "You can continuously improve carbon productivity by improving the durability of the product. If you can start to substitute fossil fuels with bio-based alternatives, that improves your carbon productivity as well. The end result is to leave the oil where it is, instead of taking it from where it should be and putting it where it shouldn't - into the air."
It may not grab the headlines or be top of the list of sustainable brands among consumers, but Covestro is perfectly positioned — working with fossil fuel majors at one end, and myriad low and higher carbon markets at the other — to push sustainability and low carbon innovation to the fore, with the potential to have a ripple effect on the wider economy. And all this catalyzing of the green economy from just two core products.
"We have a vision, and I think it is starting to take hold in our industry," Northcote contends. "If we can make the products that are valuable to society that can help to combat climate change, but make them without fossil fuels, that's the big breakthrough. Can you imagine in 2050, for example, that we're not touching oil as an industry, but we are basically taking CO2 out of the air and we are creating all these products? Then you have an industry that is totally circular. That is the dream. We are not anywhere near that, but if you start looking at what you can achieve when we start really harness AI and other things, who knows where we could get to in terms of chemistry?"