Q & A: ‘To go far, go together’

A strong belief in the urgent need to defossilise the chemical industry and the realisation this would be possible only through a collaborative innovation approach led to the formation of the Global Impact Coalition (GIC) in 2023. A spin-off from the World Economic Forum, GIC was founded by seven of the world’s leading chemical companies. Sustainable Plastics talked to Charlie Tan, CEO at the GIC, about its mission and goals. “Innovation in the context of collaboration will be core to a company's business model as we all move towards a low-carbon future,” he emphasised.

The GIC started out as the Low Carbon Emitting Technologies initiative of the World Economic Forum and later transformed into the Global Impact Coalition. Tell me a little about why and how that happened.
When the Low Carbon Emitting Technologies initiative was launched under the World Economic Forum in 2019, the idea was to bring several of the largest chemical companies together to explore the potential for collaboration. We wanted to establish whether companies would be willing to undertake the journey towards net zero together with their competitors.
The founding companies, which include BASF, Sabic, Covestro, Clariant, LyondellBasell, Mitsubishi Chemical, and Solvay (now Syensqo), aimed to create an enabling platform for a collaborative approach to innovation. The Global Impact Coalition brings all these leading chemical companies together to codevelop innovative business models and technologies to advance the sector towards net zero.
For us, the question is, now that we have these big companies in the room, how to move to tangible action? The answer is that as a platform, we play a facilitating role. We enable these companies to incubate and ideate on the creation of new business models in a safe and supported space.

Why start under the World Economic Forum?
It seemed like a logical place to start, because it was there that the top global CEOs convened to discuss pressing issues such as decarbonisation of the chemicals industry. The chemicals industry represents 6% of total global emissions, so this is an issue that really needs to be tackled. We are seeking ways to move forward towards targets, not as individual companies but as an industry.

Our goal was always to become independent, with our own operating structure and governance, while retaining close links with the World Economic Forum.

GIC is now an independent entity?
Yes, we spun off into a standalone Swiss association in November of 2023, so while we are still very young, we are independent. The industry has responded very positively. We've already attracted new members, including Siemens Energy and the largest conglomerate in Turkey, Sabanci Holdings, which shows our impact. It also speaks to one of our core goals, especially now in the early days, which is to expand globally in terms of geographical reach and in terms of value chain representation.

So while we started as a group of big chemical companies, we realise we need a far broader scope  if we really want to have an impact. We are now looking to bring new companies from across the value chain into the GIC to help us to achieve our mission.

What do you think makes the Global Impact Coalition work?
I think the GIC has really been able to create a unique environment of trust between peer companies, where they feel safe knowing that ideas can be shared and discussed in a confidential way. And in fact, one of the goals of the platform is really to allow and encourage conversations about new ideas that could then turn into tangible business opportunities.

That’s interesting. How was it possible to create trust between companies who, more often than not, are competitors?
In all honesty, it took time to develop. It wasn't an overnight success. It took a top-down approach. Remember, this is a CEO-led coalition, which means you are dealing with the top level, so the internal barriers can be broken down very quickly when it comes to getting things done. The governance structure we have in place also helped to foster this trust. We have an executive committee, which is comprised essentially of CEO delegates from each of the companies, including some chief technology officers and some presidents of different departments. As a team they have an interest in setting the strategic direction of the Coalition. Over time, with the level of trust we’ve built, these executive committee meetings feel like we're all actually speaking from the same company. And I think this is very, very rare to find, especially when you're dealing with peers who, by nature, could be reluctant to operate in that space.

We have found that members buy into the mission and understand what it will take and the time needed to achieve this. And obviously, nothing will be achieved unless there's a strong element of trust in place. And it’s a trust that we’ve seen survives the changing of the guard, so to speak. It’s something that is independent of who the CEO happens to be.

Can you talk about what has been achieved since 2019?
We have some very exciting proof points. For example, we have established a research and development hub for plastic waste processing, a project that was initially created under the auspices of the GIC, but that has now spun off into a standalone, co-funded project between seven core member companies. The focus of the project is to look at some lower TRL (Technical Readiness Level) plastic waste technologies for both mechanical and chemical recycling. The group is currently examining several possibilities, from sorting technologies to solvolysis for composite recycling and several projects are due to come out in the next couple of months.
This project was incubated under the coalition, then was spun out once it reached a certain point, and is now hosted by TNO, a leading research institute in the Netherlands.
We also have a circular plastic refinery project aimed at redirecting plastic waste from incineration and using it as recycling feedstock. We should be announcing more about this in the coming months.
Another great example of what can be achieved through collaboration is the recently inaugurated first electrified steam cracker furnace. Two of the partners in that project – Sabic and BASF – are GIC members. 
We have around 25 other projects in the pipeline, and we've brought in a very strong team from Boston Consulting Group who are now working very closely with us on defining these business models.
There are several new members who are looking to join now as well, who may have interesting projects that were too big to finance or which lacked the human resources and expertise to implement. These are the types of projects we can bring to life now.

Did legislation play a role in launching the GIC?
Yes, the regulatory landscape will play a major role in how the industry transitions, and how quickly, especially looking at the cost to drive down emissions. The EU’s Green Deal, for example, will require the industry to cut greenhouse gas emissions by over 180 million tonnes over the next 30 years. This will involve large capex costs and large standstill costs as companies work on retrofitting or rebuilding plants, which will lead to new ways of operating within those frameworks. In other words, innovation, not just in technologies but also in the context of collaboration must be core to a company's business model, as we move towards carbon net-zero.

Referring to the costs of transitioning towards carbon net-zero – how do these weigh up against the cost of the consequences of not making the transition?
This is essentially why we are coming together to put this in place: the cost of not doing something is too high. We must act now. And I think this is also one of our differentiators. Obviously, here are numerous other initiatives out there focussing on, let's say, reporting requirements or standards setting – just having that thought leadership piece. For us, the focus is on these tangible outputs. These tangible business models and steel in the ground projects.

What do you see as the most challenging issues for the chemical industry?
There are many, but one of the biggest is ensuring chemical companies do not fall behind in the race to deliver more innovation on more fronts. If they fail to keep up, they run the risk of not being able to exploit the major growth opportunities that will be created by the shift in demand we are now seeing. Today, we see a growing number of start-ups in the chemical industry filling the innovation gaps left by the traditional industry players. Many of these new players are pursuing leading edge and disruptive innovations. What's more, many of these smaller, more nimble companies can collaborate and learn from each other – which is crucial to the industry transition. This is why GIC stresses the need for strong links between the start-up and entrepreneurial space and the research and scientific space, as well as with the more traditional chemical producers who are really leading parts of this industry.
Another challenge is to keep net zero as a short-term priority in the minds of the CEOs, keeping them engaged. If we are to transition as an industry, we must go on this journey together.
There are also big opportunities for chemical companies in general. Positioning the industry for growth will depend on recognizing trends and realigning the focus of investments accordingly.

You said earlier that it was that it was really essential that other industries also buy into this idea. Can you elaborate?
It is simply that I feel very strongly that to have real impact and innovation we must bring a broader group of people from within the industry, from the industry’s subsectors and from outside the industry all-together. So, true value chain representation would include, for example: OEMs, downstream players, brands, waste companies, or even the public to some extent. It is really a joint effort.

How do you organise the projects?
We start with 7 global impact topic clusters based on themes that address the industry’s biggest challenges to drive down emissions and promote circularity. We ideate on new projects aligned with these clusters, which include topics such as the circularity of polymers, or the decarbonisation of processes, or alternative carbon sources.
We are now working on around six or seven different projects. For example, we are looking to set up an automotive plastic disassembly and recycling consortium to develop a recycling process for plastics. Why is this interesting? Because cars on the road today are not really designed for circularity. Yes, the metals are largely recycled, but the various plastic materials – which make up much of the car parts- mainly end up in landfill or incineration.
So, can we develop a network through global impact coalition? Can we develop a network with the OEMs in the scrap industry to whom GIC members could bring their technical capabilities to pilot engineered plastic recycling? If so, what would that look like? What sorts of automotive circularity can be achieved?
It’s not a project one company can do alone. It requires a group of companies who have unique interests who are willing to contribute in different ways to put this project together.
Another example: we're looking to develop an R&D hub or joint funding program for start-ups to advance CCU through investments while providing technical advice and support through capacity commitments. Why is this important? Again, because a shift from fossil to renewable carbon – both as feedstock and energy source- is needed to achieve net-zero emissions - and CCU will play a crucial role. The GIC members already have the technical expertise to capture, handle and reuse CO2 in their factories. Can we establish a network with innovators to accelerate the most promising solutions in this space?

These are just some examples of some of the projects that we're working on now.

How are these projects funded?
As I mentioned, GIC is a small non-profit coalition, so we don't fund any of the projects. Also, there are several gates that a project needs to pass through to get to steel in the ground.  Can the company not do it alone? Does it make sense to do it under the GIC umbrella? Is the project sustainable and viable?
These are all questions that need to be answered before the project moves to the stage where actual funding is provided. Then, prior to a final investment decision, the project is spun off from the GIC, becoming, say a multilateral venture between the member companies involved. It is up to them to decide how best to address issues like funding and risk.

What about the European horizon programme – can that be involved in any way?
Some projects - perhaps the larger, more transformative ones – might involve a higher capex because of the innovative nature of the project. There will then be a need to bring in public funding support into this conversation at some point. I think that's a given.

Have the announcements of the past year of some petrochemical companies to intensify the focus on profits rather than carbon neutrality affected or impacted the GIC in any way? How do statements like these affect the credibility of the sector?
I strongly believe that companies that prioritise sustainability are more likely to be resilient and competitive in the long run. And I think there's some proof of that. Currently, more than half the GIC members who were big players back in 2000 are still the largest today. Like us, they understand the need for a collective approach towards sustainability and are the ones that have that longevity. Prioritising sustainability is always going to be crucial. I think the saying is: to go fast, go alone, but to go far, go together. That really resonates with us.
Joining the GIC means signing up for a long-term commitment to this collective striving for a common goal beneficial to everyone.
Obviously, there is always competition for the investable cash that any company can deploy. That's just that's just how things are. But that's why it's important that when we talk about building sustainable business models, it has to make sense:  there has to be a payoff at some point, too. So, it's very important that we manage expectations. We all want to be sustainable, but the investments in sustainability must make sense.

Last question: net zero by 2050. Is that a feasible goal?
It's not only feasible, it’s essential. The question is not just is it feasible but rather what is needed for the net-zero goal to be feasible. I think it will require significant investment, significant innovation, and a significant amount of collaboration across the industry. And this cannot be done by just the private sector, but it will need the support of policymakers and other third-party risk investors, because it is bigger than just a core group of companies.
It will require agile R&D and technology teams, with innovation linked more to KPIs for running the business. I think this is very key.

Finally, I would add that it's also really a mindset shift. Luckily, we're beginning to see this shift happen. Now, especially the last couple of years, we are starting to see a willingness to trust and to explore innovation together. The GIC is emerging as a platform where trust combines with a real focus on impact and execution. And that constitutes a real basis for what we're trying to do.

This article first appeared in the July/August edition of Sustainable Plastics.