On 30 November 2023, Finch & Beak, part of SLR, hosted a webinar on the ESG challenges and trends in the chemical distribution industry. During the session, ESG expert Josephin Schulz explained the status of chemical distribution companies and the preparedness to new regulatory requirements and gave interesting insights on how to accelerate the ESG journey. In addition, guest speaker Maria Almenar, Group SHEQ & Sustainability Director at Azelis, talked about some of her company’s sustainability best practices. This article summarises the webinar’s highlights and includes a download with four suggestions to overcome ESG challenges.

For the second consecutive year, Finch & Beak conducted a comprehensive benchmark study focusing on Environmental, Social, and Governance (ESG) practices within the chemical distribution industry. The largest 34 European chemical distribution companies have been selected based on sales generated - above 335 mil USD. The research shows that the industry’s maturity on sustainability reporting is inadequate, even though some improvements have been made for instance in Scope 1, 2 and 3 emissions reporting.

At the beginning of the session, Josephin shared key elements of the new methodology used for assessing chemical distribution’s ESG status, such as the introduction of the topic of biodiversity. This assessment employed the Portfolio Sustainability Assessment, consisting of two critical dimensions, assessed on publicly available data:

• ESG vulnerability: detecting the risks and opportunities of the environmental footprint and social handprint of the assessed company based on quantitative reported data.
• Future preparedness: to identify benefits or challenges that a company faces from a market perspective, including the risks and opportunities arising in the value chain. This was based on qualitative data.

Main 3 findings of the chemical distribution benchmark study

After the explanation of the research methodology conducted and the elements assessed, three main challenges for chemical distribution industry were explained:

• Readiness to changing regulatory landscape, therefore, to comply with CSRD/ESRS requirements which will become mandatory for large companies from 2025 and for smaller in the following years.
• Climate action, leading to the problem of commitment to Net Zero emissions and the alignment to SBTi targets.
• Lacking supply chain engagement, however this topic especially is relevant looking at CSDDD and sustainable procurement.

Moreover, the study reveals that only 26% of the companies report on all the assessed elements, such as Supply Chain Management, Scope 1-3 emissions and Biodiversity and 44% of the companies have a sustainability strategy in place, translated in a commitment, framework or clear agenda. A clear sign that companies often make statements on ESG strategy but the reporting and the transparency of the data is still lacking.

Strategic sustainability in chemical distribution: Azelis

In the second part of the webinar, Maria Almenar, Group SHEQ & Sustainability Director at Azelis, explained and brought some successful examples of ESG strategy from her company, which ranks as number one in Finch & Beak’s, part of SLR, chemical distribution benchmark study for the second year in a row.

Maria explained that Azelis started its ESG journey in 2015 with very simple steps and then in 2021 they launched a successful and more ambitious sustainability strategy, called Action 2025. At first, Azelis created the CSR & Sustainability Steering Committee and then developed a CSR program. Moreover, the company leveraged the importance of the materiality assessment by using it as a starting point for enhancing the company’s sustainability strategy and to engage with stakeholders.

As part of its “Action 2025”, Azelis’s ESG strategy is based on 4 pillars: People, Products and innovation, Governance, and Environment. In addition, Azelis is currently working to develop the company’s first double materiality assessment.

How Azelis gets ready to the new ESG regulation?

In addition to the explanation of the KPIs to 2025 for Azelis’s sustainability strategy, Maria also explained the 4 steps her company is taking to be ready for the upcoming regulations.

1. Gap assessment against the EU CSRD & ESRS. Identify the topics that are either mandatory or material, and missing policies, actions or disclosures.
2. Double materiality assessment: Identify the ESG related material topics including impacts (internal & external), risks and opportunities.
3. Define the roadmap and the action plan. Ensure compliance by prioritising actions.
4. Implementation and data collection. Not an easy task as seen before.

Acceleration tips for chemical distribution companies

To conclude, the majority of chemical distribution companies are at the very start of the ESG journey, and as explained from both Josephin and Maria, double materiality assessment can be a driving force for leveraging sustainability strategy. In the end of the webinar, Finch & Beak shared four acceleration tips that allow chemical distributors to speed up their ESG journey. In the download section of this article, you can find the acceleration tips.

You can view the full webinar recording here: