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What tools are there to help professionals navigate the circular economy?
As the trend towards adopting and incorporating sustainability criteria into chemicals management programmes grows, Vanessa Zainzinger asks how software can help product teams manage an increasingly complex set of obligations.
Chemicals management has long been a core element of corporate Environmental, Social and Governance (ESG) strategies. But as we move closer to a circular economy, both regulators and the public expect companies to proactively limit the environmental impacts of the chemicals they use, store, and dispose of.
“Environmental issues have really become a core issue for the public, worldwide. And as such, the chemicals management elements of the ESG strategy have been brought to the surface,” says Randy Flinders, compliance specialist at California-headquartered software provider, Greensoft Technologies. “Is chemicals management a more prominent part of the ESG strategy than it has been? I don’t think so. Is it more visible? Yes.” To Mr Flinders, this comes down to two interconnected trends. First, the damage that poor chemicals management can inflict on the environment has become impossible to ignore. More than anything, this is down to global concerns over pollution from per- and polyfluoroalkyl substances (PFAS). The contamination of soil, water and food resulting from the production and use of many of these highly persistent substances has been widely covered in mainstream media and remains firmly in the public eye.
The second trend Mr Flinders notes is an expansion of chemical regulations worldwide. This includes new rules on PFAS, such as the expected ban on the entire group of substances that is currently being drawn up in the EU. In parallel, the EU’s Green Deal acknowledges that chemicals are the building blocks of the goods we use, and that paying attention to them is essential for a circular and climate neutral economy. The related chemicals strategy for sustainability is upping the ante on legislation that affects how all industries must manage the substances they use.
“Chemical management has become an integral part of corporate sustainability reporting strategies because the chemicals used in manufactured products impact society and the health and safety of workers and consumers,” says Kyle Schiber, group product manager at Wolters Kluwer-owned software provider, Enablon.
For a long time, chemical management was a compliance-driven initiative. But as ESG grows in importance and issues such as PFAS are putting the spotlight on chemicals, it’s not enough for companies to simply be compliant, Mr Schiber says.
“Companies must go beyond that. As a result, when it comes to corporate sustainability reporting, companies are under pressure to show they’re proactively phasing out hazardous chemicals and materials from the products they manufacture to limit environmental impacts,” he says.
Dealing with data
Professional EHS software now often serves as a central platform for collecting data on chemicals and reporting on sustainability metrics. Software providers say their customers use software tools to quantify greenhouse gas emissions from the use and release of, for instance, ozone depleting substances, and impacts of chemicals that are toxic to aquatic and terrestrial ecosystems.
Increasingly, companies are also relying on software to pre-screen chemicals during the regulatory approval process and flag potential candidates for substitution. And some combine chemical management data with waste data to gain insights on how substances are reused and disposed of, says Chris Michie, product marketing manager at Cority, a software provider based in Toronto, Canda.
“Tracking chemicals through their entire process is vital to achieving circularity goals and allows organisations to identify areas for improvement,” Mr Michie says. “Organisations are increasingly adopting procurement processes that consider factors such as reuse capability when making purchasing decisions for chemical products.” As circularity initiatives become increasingly prevalent across global industries, companies are wanting data that provides a more holistic view of their processes, Mr Michie says. “This includes gaining insights on material flows starting from procurement, consumption, reuse, and eventual disposal. There is also an increasing desire for automated systems to help identify materials for potential substitution.”
Bringing it all together
As sustainability reporting becomes more complex, it is crucial that software is able to comply with the key performance indicator (KPI) reporting frameworks – such as the Carbon Disclosure Project (CDP), Global Reporting Initiative (GRI), Dow Jones Sustainability Index and UN Sustainable Development Goals (SDGs) – says Markus Nörtemann, founder and managing partner at German software provider, Helasoft.
“The software should be able to communicate directly with other software platforms, especially to receive needed supplier data from them. Hence, it should include functionalities covering product carbon footprint needs, to get data at any point of the product lifecycle,” he says.
And increasingly, tools should be able to interact with platforms managed by regulatory authorities, such as Echa’s substances of concern in products (Scip) database, Mr Nörtemann says, to help companies comply with regulatory requirements.
Some companies may look for tools that go beyond chemical management and help them make sense of all their ESG obligations at once.
But Greensoft’s Mr Flinders cautions against trying to find an ESG tool that does everything, from greenhouse gas emissions to recyclability. “Those are all elements that go beyond just chemical content and no one software tool is going do all of these elements very well,” he says. “Companies are better served by identifying the core elements of their ESG processes or policies, and then deploying individual tools that meet those core elements best.
By using individual tools, companies can customise their reporting better, Mr Flinders says. And the specialised tools are more likely to stay on top of notoriously dynamic chemical legislation, such as the continuously changing exemptions under the EU’s Restriction of Hazardous Substances (RoHS) Directive, he adds.
Complexity increasing
The trend towards adopting and incorporating sustainability criteria into chemical management shows no signs of stopping, says Julian Moffatt, director of environmental solutions at Chicagoheadquartered software provider, VelocityEHS.
Mr Moffatt sees the investment community being the most important driver for comprehensive sustainability reporting over the next few years. “This directly impacts organisations’ prospects for future growth, regardless of their public visibility,” he says.
Software will ultimately be relied upon to manage these programmes by most medium-to-large organisations, he says, due to the inherent complexity of manual chemical management processes.
“For example, companies that are serious about reducing their greenhouse gas emissions will need to assess and quantify Scope 3 GHGs, which are emitted not from their own operations, but indirectly from associated supply chain activities,” Mr Moffatt explains. This can include emissions from offsite treatment of wastes, electric power and fossil fuel consumption by suppliers and distributors, and any number of ancillary operations up and down the supply chain.
“Due to the sheer complexity and lack of standardisation of data across global supply chain elements, Scope 3 GHG emissions have historically been a major challenge for companies to accurately track, aggregate and report. Fortunately, modern software makes accurate Scope 3 GHG tracking much, much easier,” he says.
Mr Moffatt advises companies that struggle with the complexity of sustainability reporting to define a scope and timeline for their sustainability programme that includes a progression from highest priority to lowest.
This means defining the target audience – such as investors, customers, shareholders, the executive team or employees – and the specific information needs and expectations of each group.
“It may not be possible to cover all needs in a comprehensive manner within a given programme year, but plan for annual expansion of your sustainability program to cover more priorities over time,” he says. “The software you rely on should accommodate this growth and automate many of the mundane and difficult information management tasks. Ask your software solution provider for detailed information on how they can help support your sustainability programmes and initiatives.
In the end, the biggest challenge companies face when they integrate chemical management into sustainability programmes may not be collecting the data, says Mr Schiber from Wolters Kluwer Enablon.
“A chemical management software system generates a good amount of data on the usage, disposal, and storage of those chemicals – but ultimately, an organisation then has to build a story around that data, to translate it into tangible progress,” he says.
Mr Schiber’s advice to companies is to involve stakeholders with different perspectives – from corporate sustainability, chemical management and product development teams – in establishing realistic, measurable targets that will illustrate how chemical management relates to sustainability.
“Once you have those targets set, you can leverage data from the software to identify a path to achieve them,” he says.
