Chemical Distribution Companies Need to Speed Up Their ESG Journey

Find the chemical distribution ESG ranking of 2023 in the download
Chemical Distribution Companies Need to Speed Up Their ESG Journey
Publ. date 8 Nov 2023
The ESG landscape has been evolving at a remarkable pace. The Corporate Sustainability Reporting Directive (CSRD) has set the stage for more comprehensive ESG disclosures, reflecting the growing demand from stakeholders for accelerated sustainability efforts. According to Finch & Beak's yearly chemical distribution study, the industry’s maturity on sustainability reporting lags behind. It's time for chemical distributors to rise to the challenge and speed up their ESG journey.

Finch & Beak ‘s ESG benchmark study delves into the practices of the 34 largest European chemical distributors, assessing their future preparedness and vulnerability across various ESG indicators. The results provide a revealing ranking. Download the ranking to see how your company stacks up in this benchmark.

CSRD readiness: Room for improvement

First and foremost, the study's results reveal a need for improvement in the field of CSRD readiness. Only 44% of the companies assessed disclosed a materiality assessment. This is a significant gap that needs to be addressed, especially considering the increased transparency expected by the European Sustainability Reporting Requirements (ESRS). Furthermore, only 26% of the companies in the study provide information on their emissions across all three Scopes of greenhouse gas emissions, a fundamental aspect of ESG reporting. To make matters even more challenging, only 5% have set science-based targets for the reduction of GHG emissions. This lack of commitment to science-based net-zero targets is particularly concerning in light of stakeholders growing focus on reducing carbon footprints.

 

TCFD: A complex challenge

The study also sheds light on another critical aspect of ESG reporting: the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). TCFD is essential for understanding how climate-related risks can impact a company in the long-term and provides insights into how a company can capitalize on climate-related opportunities. However, while the focus on climate issues is growing, companies continue to struggle with the implementation of TCFD recommendations, since only 15% disclose partially information on TCFD Governance, Risk Management, Metrics & Targets and or Metrics & targets. This area requires greater attention and action to effectively address climate risks and opportunities, also in the light of ESRS reporting.

Social dimension improvement: Accident rates and diversity

The chemical distribution industry, historically male-dominated and heavily reliant on road activities has been making strides in addressing key social matters, specifically in accident rate disclosure and workforce diversity. In 2021, only 11% of the companies disclosed their accident rates, but this figure increased to 20% in 2022.

Parallel to these safety measures is the progress in diversity. In 2021, 21% of companies disclosed statistics regarding women in the workforce, and in 2022, this increased to 38%. Additionally, more companies are recognizing the importance of participating in the Responsible Care initiative , a platform for companies to exchange and accelerate their ESG performance.

This is also observed in how well, compared to other KPIs, the companies score on EcoVadis, with 3 Platinum and 8 Gold certificates. Hence, chemical distribution players value ESG engagement across their value chain and see it as an important tool to interact with partners. As a result, there might be more companies with pertinent sustainability data points in place than what is presently evident in publicly available information. Nevertheless, this highlights that the industry can still increase its public reporting to become more transparent.

Overall, metrics, targets, and initiatives related to critical ESG issues like climate change, diversity, and the circular economy are only partially in place within the chemical distribution industry. To meet the demands of evolving ESG regulations and stakeholder expectations, the industry must make significant strides in these areas.

Join the virtual Escape Room to learn from ESG best practices

The benchmark study is more than just a snapshot of the current state of ESG in the chemical distribution industry. It’s a valuable roadmap, pointing out areas where the industry must accelerate its ESG efforts. The accompanying Escape Room adventure offers a fun and engaging way for chemical distributors to explore, in teams of 2-3 colleagues for 30 minutes, more data points coming from the research. It's an opportunity to raise awareness within your company, learn ESG strengths and weaknesses across the industry, as well as identify best practices to improve.

The future success of the industry depends on its ability to embrace ESG and take decisive action to meet the demands of the present and the expectations of the future. To support you on your journey towards ESG excellence and improve your ranking in the study, five concrete steps and action points can be downloaded on top of the page.

Want to have access to all the data? Experience our Virtual Escape Room and register for our webinar on 30 November. You can also reach out to Josephin Schulz (josephin@finchandbeak.com) for a presentation of the results.

About Josephin Schulz

Ambitious professional aiming to make sustainability understandable and accessible for everyone. | josephin@finchandbeak.com

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