The Way to Net Zero: Reducing Emissions Takes Teamwork

As chemical sector giants BASF and Henkel pursued transformations to make good on net-zero pledges, they unlocked new strategies by collaborating.

- By Martin Glaum, Alexander Gerybadze, Thomas Müller-Kirschbaum, and Ralph Schweens

Whether driven by regulation or by conscience, many large companies have made commitments to reduce their greenhouse gas emissions as part of worldwide efforts to limit global warming. Doing so is particularly challenging for industrial companies that have energy-intensive production processes or sell products that consume a great deal of energy during their use.

European Union programs and directives have put the identification, monitoring, and mitigation of carbon emissions unequivocally on the corporate agenda. As compliance with those regulations compels EU-based organizations to tackle the transition away from fossil fuels with greater urgency than many of their peers in North America, advances in practice are emerging.

Our study of two of Europe's largest chemical companies, BASF and Henkel, reveals that even in an especially challenging industrial context, it's possible to achieve meaningful progress on reducing greenhouse gas emissions. In this article, we'll show how high-level climate goals, set at the corporate level, can be translated into policies that are implemented in companies' divisions and business units — and, importantly, be achieved in collaboration with partners in the value chain.

The Chemical Sector's Carbon Problems

According to the International Energy Agency (IEA), the chemical sector is the largest industrial energy consumer and the third-largest producer of direct CO2 emissions among industry subsectors. While chemical companies' high dependence on energy-intensive processes plays a significant role, the IEA has also noted that about half of the subsector's oil and gas use is for raw material inputs rather than as a source of energy.