Covestro sees going green as good for business and climate
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COVESTRO, a German-based high-tech polymers company, has suggested companies consider carbon productivity as a measure of success, rather than just financial performance, to balance economic growth and climate impact.
Return on investment is the traditional measure of a company’s performance, but carbon savings are an important guide to how “green” a company’s operations are, says Richard Northcote, Covestro’s Chief Sustainability Officer.
Companies worldwide struggle to reduce carbon emission to ensure more climate-friendly production, but the issue is not eliminating carbon, it is how to use carbon sustainably, he says. Last year, Covestro won applause for producing polymers from carbon dioxide on an industrial scale, which enabled consumers to buy mattresses made from CO2 at the same prices as those made from traditional petroleum-based polymers.
This year, the company has started trials on processing methane into carbon used in broader applications.
Cutting carbon emissions is politically, technically and financially motivated. Governments and companies are shifting to lower carbon-consuming ways, fearing losing out to competitors or being hit with penalties.
China has pledged its consumption of coal should be cut to below 58 percent of total energy use by 2020 from 64 percent in 2015, by boosting the use of renewables such as solar and wind.
India’s Central Electricity Authority said no coal-fired power stations will be built over the next decade beyond those already in the pipeline. Siemens last week launched an environment monitoring application to help cities analyze and reduce the source of carbon emissions.
Northcote said carbon should not be ruled out of the game completely.
“The conventional way how people use carbon is wrong, we burn carbon in engines and furnaces, causing emissions, “ he said.” Are there no better ways ( to use carbon)?”
Last month, Covestro teamed up with the United Nations to start a competition named “Young Champions of the Earth.” It will give six “champions” aged 18-30 US$15,000 each for their ideas to protect the environment.
Such actions “will motivate people to be more creative,” Northcote says. “We will think of smarter ways to make use of resources while saving them.”
Covestro pledges to spend 80 percent of its research funds on sustainable development by 2025 and the company’s carbon emissions will be halved from 2015 levels over the same period after it upgrades its technology.
“We can in fact easily reach such a target by importing electricity from countries such as Sweden, whose energy comes 80 percent from hydropower,” Northcote says. “But that doesn’t fit our vision to make the world a brighter (smarter) place.”
The smarter way to judge how a company is contributing to the environment could be counting on how much carbon it saves.
Covestro has long been proud of an insulation foam it developed for refrigerators. The foam helps cut carbon emissions 15-fold throughout the fridge’s lifetime compared with conventional insulation.
While investors evaluate the value of a project from the returns it makes, in future they could factor in carbon savings.
“Once carbon savings are priced, financial values derive to boost companies’ profit,” Northcote says.
Such a proposal could drastically change how carbon emissions are priced, given their costs are decided by how many carbon quotas companies are assigned by governments and how many the market needs.
Carbon emissions trading worldwide has been sluggish since the 2008 financial crisis which dampened energy demand.
Since then, “carbon prices have been low, leaving little profit space for companies with high energy efficiency,” says Sigrid Bollwerk, manager at the Energy Research Center of the Netherlands. “New ways should be developed to activate the pricing mechanism.”
Such prospects could spur Covestro’s progress.
Over the past decade, Covestro has invested 3.1 billion euros (US$3.5 billion) in China to build up production as well as R&D facilities. Last year it shelled out 259 million euros on research and development covering applications for electric vehicles and bio-based products.
Last year, Covestro’s 795 billion euros net profit ranked it among the best performing blue-chip stocks, with share prices jumping 94 percent over the year.
“Our work suggests a promising trend that could replace the traditional ways,” Northcote says.
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