2024 outlook: The sustainable future of industrial sectors

If we look for one word to describe 2023, the first that comes to mind is, unfortunately, instability. Regional recessions, low demand, and massive destocking spurred new challenges for the chemical industry; challenges that we will not recover from as quickly as we did following the supply chain crisis brought on by the coronavirus. But as we look forward, the future is green, giving us all something positive to focus on in 2024.

In my view, sustainability has moved past an industry trend in the chemical industry; it is a clear priority across the value chain. Last fall, we conducted an extensive customer survey to understand the sustainable priorities, motivations, and challenges of industrial sectors. Out of this came new industry data that allows us to better predict the needs of the market for the next three years and measure our sustainable progress with new industrial benchmarks.

We have just released our first-of-its-kind report on the ‘State of Sustainability’ sharing all the industry findings. Let’s explore the initial findings of how investment, differentiation, and greenwashing concerns will shape industrial sustainability in 2024 (and beyond).

It’s no secret that sustainable alternatives tend to be more expensive than their fossil-based counterparts. Despite this, 57% of our survey respondents said that they are willing to pay more if they can prove value to their business and measure sustainable impact. This data not only tells us that people are not afraid to invest, but also that they do not expect sustainable alternatives to be the same cost as their counterparts.

Furthermore, 27% are willing to pay more if their customer can absorb the end cost. We were under the impression that cost was a deterrent to sustainable adoption, but the data proves otherwise. In fact, only 6% indicated that budget would prevent them from the adoption of sustainable alternatives altogether, an issue that was most prominent for businesses with fewer than 100 employees.

Looking to 2024, we anticipate more meaningful and constructive conversations with both producers and customers around the budgets associated with sustainable alternatives. That said, we are realistic and understand that nothing will change overnight. In the meantime, we hope innovators and producers will be transparent in providing proof of the sustainable benefits of their products, like carbon footprint documentation and life cycle analysis data. This would take us one step further in proving the sustainable value the industry is searching for to make the investment jump.

Today, most chemical companies are working towards incorporating sustainable practices, and now we know why. Ninety-two percent of our survey respondents believe offering sustainable products helps differentiate companies from their competitors. Furthermore, respondents named competitive advantage as an added value in every category we asked about:

Percentage of respondents who use sustainable materials that chose competitive advantage as an added value (broken down by industrial sustainability category)

This tells us, quite clearly, that competitive differentiation is fueling sustainability. Yet, it begs the question: If everyone is doing it, will it continue to be a differentiator? Our answer is yes. We see differentiation being fueled by sustainable product innovation.

It is known that all innovations look different in every corner of the world. This is for two reasons: material availability and the need to stand out. Looking ahead, we expect that the properties of the materials used to vary greatly, but with similar end functionality. Therefore, those with new approaches will continue to stand apart from their competition.

As we have all seen in the last years, every exhibition booth and chemical magazine incorporates the words green, sustainable or some variation of these two. But this provokes us to ask, are all approaches presented sustainable? And what is the industry perception of these initiatives?

Our survey found that 26% of respondents reported being concerned that most of the sustainability initiatives they see are greenwashing. Another 54% said they think only some of the sustainable initiatives are legitimate but are still cautious. That suggests that four out of every five people in the industry have some level of concern about greenwashing.

While sustainability is not a new topic in the chemical industry, most of the alternatives are. That means that at this stage, many are not mature and/or competitive technically with their fossil counterparts. This is creating understandable scepticism in the chemical industry. 

Moving forward, we hope to see producers become more transparent, sharing research that supports the industry with product comparisons. When this sort of data is standardized and readily available, the chemical industry will make huge progress in sustainable adoption. Overall, we are eager to see what sustainable progress and innovation 2024 will bring. 

Dr. Fikri Alemdaroglu is the Business Group Director for Industrial Solutions. With a PHD in chemistry, Fikri has worked for more than 15 years in a variety of chemical positions, including chemical producers like BASF and Daikin in technical and commercial roles. At IMCD, he wears many hats, supporting the team in Germany as the Business Unit Manager of Industrial Solutions & Lubricants, as well as an International Product Manager.