A study conducted by Santiago Advisors for the German Chemical Industry Association (VCI)

The dominant megatrend that will impact the business of the chemical industry's most important customer industries (Transport, Housing, Electronics, Consumer Goods, Food, Energy) over the next 10-20 years is, according to the 60 interviewed experts, "ecology and sustainability", followed by compliance with "ethical and social standards" and "digitalisation".

These megatrends are giving rise to new requirements from end customers (consumers), who are currently exerting considerable pressure to change in the customer industries of the chemical industry. Some of the changes are so fundamental that the business models of entire industries are at stake (e.g. combustion engines in the course of electromobility). The customer industries pass this pressure for change on to their upstream suppliers, such as the chemical companies, so that these will face considerably different requirements in the years ahead.

10 requirements for the Chemical Industry

1. „Intensify thinking in solutions“

The customer industries want the chemical industry to pay even more attention to their individual problems and to develop and provide solutions for them. One example is the declining acceptance of plastics. This means an existential danger for many customer industries. Appropriate solutions – from recyclable plastics to high-quality recyclate and plastics based on natural raw materials – would have to be increasingly provided.

2. „Think more from the consumer point of view“

From the point of view of the customer industries, the industry could have anticipated the decline in acceptance of certain products of the chemical industry, if it had thought more from a consumer rather than customer point-of-view. The positioning in the added value chain could be an explanation for the fact that trends relevant to end customers are partly only perceived belatedly by the chemical industry. The customer industries would like to see further development in order to be better prepared for future discussions – from microplastics to solvents to titanium dioxide.

3. „Enable circular economy“

The establishment of a closed circular economy is an important issue for many customer industries. This includes the "technical" dimension – from the collection infrastructure to the reconditioning industry – as well as the "chemical" dimension of the composition of the raw materials. The customer industries would like to see a higher contribution from the chemical industry here. One example are adhesive that debond on demand, which could facilitate the recycling of electronic products and composite materials, e.g. in cars.

4. „Establish life cycle perspective“

In addition to the establishment of a closed circular economy, many customer industries see significant potentials in ecological optimization across the added value chains and the life cycle of products. As an important upstream supplier, the chemical industry is requested to interact and cooperate more closely with upstream suppliers and customers and to be more transparent.

5. „Guarantee transparency“ 

However, transparency is not only a prerequisite for the ecological optimization of added value chains. Transparency is "the" core requirement of the customer industries in many industries close to end customers. End customers increasingly want to know "what" they are consuming. Companies must meet this demand and request the necessary information from their upstream suppliers. The chemical industry must find a way to meet this requirement.

6. „Avoid hazardous substances“

There is a cross-sector requirement to bring economy and nature closer together and to live "toxin-free". This desire for more naturalness results in the requirement for the chemical industry to avoid or substitute hazardous substances as far as possible.

7. „Comply with ethical and social standards“

Almost all surveyed companies have sustainability strategies that require compliance with ethical and social standards over the entire supply chain. The chemical industry as an important upstream supplier must guarantee compliance with these standards in its supply chain/production. There is a particular need for action in the extraction/utilization of critical raw materials.

8. „Produce more flexibly“

Customer industries increasingly want solutions for their individual problems. This will result in a more differentiated product landscape – with corresponding impacts on the production architecture. Smaller, more flexible plants will have to supplement large, existing plants. Medium-sized structures could be superior to large-scale industrial solutions in some cases.

9. „Rethink business models“

In addition to the need to make production more flexible, there are several other aspects from the point of view of the customer industries which suggest that the business model of the chemical industry should be questioned or further developed. For example, at least a partial conversion of the added value chains to natural raw materials is expected. At the same time, the introduction of closed cycles will often only be possible via new business models in the customer industries (e.g. leasing/sharing models), which in turn will reduce the sales volumes of the chemical industry. There is also a need here to look for alternative businesses. Power-to-X could be one of those fields. In this context, the customer industries recommend that the chemical industry cooperates more closely with start-ups.

10. „Improve communication“

The performance and added value of the products of the chemical industry are undisputed from the point of view of the customer industries. However, they are virtually not perceived by the public (e.g. in the plastics discussion). Here the customer industries see a need for the chemical industry to catch up. They would like to see significantly improved communication within the industry, not only to the public and politicians, but also to customers and suppliers. Essentially, the aim is to make the added value of its own products more understandable for the layman.