Continued from page 39
When we examine what drives the differences, several patterns emerge: • Size: Companies having a sustainability goal increases from 55% for small to 71% for mid-size and 90% for large. The same trend is reflected for publishing a sustainability report, having a dedicated sustainability team, and pursuing third-party certification. • SMEs lag behind larger companies, and private companies are considerably behind public ones when it comes to defining the goals and reporting.
• Smaller companies likely have lower resources to fund sustainability initiatives that will not have immediate payback; they are also not facing as much scrutiny as their larger competitors.
• This situation is expected to change rapidly, and smaller companies should use this period to define their sustainability strategy.
• Ownership: Public companies are further along in their sustainability journey. In our view, this correlates with the visible rise in use of sustainability-related metrics by financial and institutional investors as a tangible performance KPI alongside more traditional criteria. Such scrutiny, to which public companies are exposed more than their private peers, will drive the need to understand and credibly document companies’ current state, aspirations and strategies.
• Type of company/Value chain position: Although there is a less consistent pattern in responses, baseoil companies are edging ahead in terms of committing to specific goals, reporting and having dedicated teams. • One of the explanations could be the fact that base oil companies tend to be larger, hence more exposed to scrutiny from regulators and investors. But this is also a reflection of an objective reality that base oils are a key raw material for formulated products. Hence, any lifecycle assessment and impact mitigation across the lubricant value chain will require solving for the footprint of basestocks and other major raw materials. Another view is that the base oil industry has significant surplus supply, including supply of high quality/high performance basestocks. As a result, performance no longer offers product
40 LUBE MAGAZINE NO.169 JUNE 2022
differentiation as it did 5 or 10 years ago. In its place, low/net-zero carbon footprint or renewable sourcing of feedstocks is emerging as the key product differentiation factor.
• Packaging companies are an interesting case to this point: there is a strong commitment expressed by the respondents, as well as the highest share of responses, indicating the availability of dedicated resources vs. other types of lube value chain players. This could be down to the fact that packaging is a value chain step that is easier to diagnose and control. A bonus point for packaging efforts is the end-customer interface. Packaging is a “touchpoint” with both B2B and B2C customers, giving it a special significance as means of telling a sustainability story which customers can “touch and feel”.
Measurement Gap Third-party certification matters for two main reasons: • Firstly, one needs to measure before starting to manage (e.g. product and corporate footprint).
• Secondly, having certification from reputable sources is key for creating a credible communication and marketing strategy for customers, suppliers and other stakeholders, like investors and regulators.
From the scores in Chart 1, we can clearly see that all the respondents still have much to do in certification. SMEs report the lowest engagement (19%) among all groups in pursuing certification. It is not entirely unexpected, as managing the certification process, developing data and choosing relevant and credible external partners require dedicated specialist resources, which less than a quarter of respondents from SMEs claim to possess.
Metrics: Measuring product carbon footprint and life-cycle have been consistently mentioned as the most important metrics to measure sustainability improvements. This may be because reducing carbon- footprint is seen as the most concrete step towards sustainability.
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