The BRSR Barometer 2023 report, a landmark collaboration between ECube and StepChange, sheds light on the ever-evolving landscape of corporate sustainability in India. This insightful analysis delves into 1,000+ Business Responsibility and Sustainability Reports (BRSR) from across 13 key sectors. By examining more than 50 Environmental, Social, and Governance (ESG) metrics, the report serves as a critical benchmark for businesses committed to transparency and accountability.
In today's business environment, stakeholders are demanding greater action on sustainability. The BRSR Barometer 2023 empowers companies to assess their sustainability performance and identify areas for improvement. This comprehensive resource provides a unique opportunity to benchmark against industry peers and gain insights into best practices across ESG metrics.
In this series titled "BRSR Barometer 2023 Series," we will delve into each of the 13 sectors analyzed in the BRSR Barometer 2023. Each installment will explore the unique challenges and opportunities within these sectors, emphasizing their specific ESG metrics and implications for sustainable practices.
This series will cover these thirteen sectors: Automotive, Cement, Chemicals, Construction, Financial Institutions, Information and Communication Technology (ICT), Fast-Moving Consumer Goods (FMCG), IT/ITES, Metals, Manufacturing, Pharmaceuticals, Power and Textiles.
Through this series, we aim to provide a detailed examination of how each sector is addressing its sustainability challenges, the effectiveness of current practices, and how certain companies are tackling these challenges head-on. Join us as we uncover the critical findings of the BRSR Barometer and explore how businesses can leverage these insights to enhance their sustainability efforts in a rapidly evolving regulatory landscape.
Industry Overview: Sustainability in the Indian Chemicals Sector
The chemicals industry in India is currently navigating a transformative phase characterized by steady growth and an increasing focus on sustainability. As of 2024, the sector is projected to reach a market value of USD 29.7 billion, with a compound annual growth rate (CAGR) of 3.26% from 2024 to 2029. This growth trajectory positions India as the sixth-largest chemical producer globally, benefiting from significant foreign direct investment (FDI), which has cumulatively reached USD 21.7 billion from April 2000 through September 2023.
This market encompasses a wide range of products, including specialty chemicals, agrochemicals, petrochemicals, and polymers. The sector is not only diverse but also crucial to the Indian economy, contributing approximately 12% to total exports. The overall output of the chemicals sector is anticipated to be around USD 143.3 billion, growing at a CAGR of 2.71% over the next five years
The industry is poised for significant growth, driven by several key factors including increased export demand, rising domestic consumption, and proactive government initiatives.
Export Market Expansion:
The "China 1" strategy, aimed at diversifying global supply chains away from China, has positioned India as a natural alternative for companies in the US, EU, and Japan. As these countries seek reliable suppliers, India benefits from its large labor pool, technical expertise, and cost-effective manufacturing capabilities. This shift is anticipated to enhance India's market share in the global chemicals sector significantly.
Domestic Consumption Surge:
With a burgeoning middle class and rapid urbanization, the demand for specialty chemicals in India is on the rise. Products such as personal care items, household cleaning agents, and water treatment chemicals are witnessing increased consumption. Additionally, construction chemicals are in high demand to support infrastructure development aligned with urbanization goals.
Government Initiatives:
The Indian government actively promotes the chemicals industry through initiatives like "Make in India" and "Atmanirbhar Bharat." These campaigns focus on specialty chemicals as a priority area and include incentives such as the Production-Linked Incentive (PLI) Scheme to encourage local manufacturing. Efforts to reduce import dependence on critical raw materials are also underway, bolstering domestic supply chains and supporting research and development in specialty chemicals.
The industry has entered a new phase of growth, where the world is acknowledging the tremendous potential, it carries to become one of the crucial sectors contributing to the expected 9% growth rate of the economy, which would drive India's quest towards its $5 trillion goal. The growth and development of the sector are crucial as it is the mainstay of industrial and agricultural development in the
country, providing building blocks for downstream and upstream-related industries like textiles, paper, fertilizers, pharmaceuticals, and others.
Despite its growth potential, faces several significant sustainability challenges. Historically linked to high energy consumption, water usage, generation of hazardous waste, and regulatory compliance is increasing the pressure to adopt greener practices.
The industry stands at a crossroads where it must navigate significant sustainability challenges while capitalizing on growth opportunities. By adopting innovative practices, embracing circular economy principles, and focusing on responsible sourcing, companies can mitigate their environmental impact and enhance their competitiveness in a rapidly evolving market landscape. The journey toward sustainability will require collective action from all stakeholders involved—government, industry leaders, and consumers alike—to ensure a cleaner, healthier future for both the sector and society as a whole.
BRSR Barometer Findings in the Chemicals Sector
The BRSR Barometer 2023 report analyzed 171 BRSR reports from chemicals companies - 14 companies under NIC Code 19 (Manufacture of coke and refined petroleum products, 117 companies under NIC Code 20 (Manufacture of chemicals and chemical products), 40 companies under NIC Code 22 (Manufacture of rubber and plastics products.)
The BRSR Barometer report analyzed data across the 171 companies' reports across 50+ ESG metrics. Here’s a deep-dive into some of them:
Environmental Metrics:
Scope 1 and 2 Emissions
The BRSR Barometer 2023 report finds that the median Scope 1 and 2 emissions intensity by revenue was 37 tCO2e/Cr. For every INR Crore of revenue generated, the chemicals industry produced approximately 37 tons of CO2 equivalent emissions.
Scope 1 emissions are direct GHG emissions that occur from sources owned or controlled by the company. In the chemicals industry, these emissions primarily arise from two main categories: Stationary combustion and Process emissions.
Stationary Combustion includes emissions from burning fuels in stationary equipment such as boilers, furnaces, and generators used for healing and power generation. The combustion of fossil fuels in these processes releases significant amounts of CO2 and other pollutants. For instance, Ammonia production is responsible for the highest share of emissions accounting for 45% of emissions from primary chemical production, followed by methanol (28%) and high-value chemicals2 (27%).
Process emissions are a result of chemical reactions or physical changes during industrial operations. For example, during the production of methanol and ethylene, CO2 is released as a byproduct. Process emissions contribute ~33% of total GHG emissions in the chemicals industry. The production of high-value chemicals (HVCs), including ethylene and propylene, also generates substantial CO2 emissions as a part of their manufacturing processes.
Indirect emissions, or Scope 2 emissions arise from the electricity consumed during manufacturing, often come from plants that burn fossil fuels for energy. The report points out that the median energy intensity by revenue for the chemicals sector was 311 GJ/Cr.
This primarily arises from the industry’s reliance on non-renewable energy sources for electricity generation. In fact, on average, only 0.06% of the total energy consumed by the sector was renewable and 71 companies (of the 171 analyzed) reported an increase in energy consumption from renewable sources compared to the previous year.
One of the most electricity-intensive processes in the chemicals industry is the production of chlorine and caustic soda through electrolysis which requires substantial electrical energy to separate chlorine from saltwater (brine). Chlorine production alone accounts for a significant portion of the electricity consumed in the sector, with estimates indicating ~4380 kWh of electricity is required per tonne of chlorine produced.
Process heating and cooling also use electricity extensively in chemical manufacturing including in heating reactors, distillation columns, and other equipment essential for chemical transformations. Electrification of these processes, along with pumping and compression for liquids and gasses requires power and energy.
BASF India, for example, is actively engaged in reducing its Scope 1 and Scope 2 emissions through various innovative initiatives and partnerships. Its 25-year Power Purchase Agreement (PPA) with Clean Renewable Energy KK 2C Private Ltd to secure 2.7 MW of renewable power for its manufacturing unit in Mangalore, Karnataka is expected to lower its Scope 2 emissions. BASF has set a global target to reduce its GHG emissions from production processes (Scope 1) and energy purchases (Scope 2) by 25% by 2030, compared to a 2018 baseline. This goal is part of their broader strategy to achieve net-zero greenhouse gas emissions by 2050. The company is committed to implementing energy-efficient technologies and optimizing processes across its operations.
Pidilite Industries is a prominent player in the Indian chemicals sector, known for its commitment to sustainability and reducing its environmental impact. It has established Zero Liquid Discharge (ZLD) status at several of its manufacturing units aiming to minimize water usage and prevent wastewater discharge, which are crucial for reducing environmental impact and enhancing resource efficiency.
These are just two examples of how enterprises’ efforts can position them as a leader in sustainable practices within the sector, aligning with global sustainability goals while driving long-term value for stakeholders.
Scope 3 Emissions.
The BRSR Barometer 2023 report goes on to highlight that Scope 3 emissions accounted for a staggering 79.93% of the total emissions when combined with Scope 1 and 2 emissions in the chemicals industry.
Scope 3 emissions are indirect emissions that occur in a company’s value chain, both upstream and downstream. In the chemicals sector, these emissions arise from various activities that are not directly controlled by manufacturers but are nonetheless integral to the overall environmental impact of their operations.
Scope 3 emissions in the chemicals industry are a critical aspect of understanding a company's total environmental impact, often representing the largest portion of its carbon footprint. These emissions, categorized as indirect, arise from activities both upstream and downstream of a company's direct operations. Addressing these emissions requires a comprehensive understanding of the entire value chain and strategic efforts to minimize their impact.
Upstream emissions encompass all activities related to the company's inputs, including the extraction, production, and transportation of raw materials and feedstocks. A significant source of these emissions falls under "Purchased Goods and Services," where the carbon intensity of suppliers can greatly influence a company's overall footprint. For instance, if a polyethylene producer relies on ethylene sourced from a supplier with inefficient production processes, the associated emissions could be substantial, as demonstrated by the realistic example of 15,000 metric tons of CO2e annually from a 10,000-ton purchase of ethylene.
Downstream emissions stem from the use and end-of-life treatment of a company's products. These emissions can be particularly challenging to manage due to the diverse ways products are used and disposed of by consumers. For example, a fertilizer manufacturer must account for the nitrogen oxide released when their urea-based fertilizers are used in agriculture, potentially amounting to a significant contribution of downstream emissions. Similarly, the end-of-life treatment of plastic packaging through incineration can create another substantial source of emissions, emphasizing the importance of promoting recycling and sustainable disposal practices. By identifying and quantifying these key sources of Scope 3 emissions, chemical companies can develop targeted strategies to mitigate their overall carbon footprint and strive toward greater sustainability.
Hindustan Unilever Limited (HUL) is a leading player in the Indian chemicals industry, recognized for its commitment to sustainability and reducing its environmental impact. The company has implemented various initiatives aimed at addressing Scope 3 emissions, which encompass indirect emissions from both upstream and downstream activities in its value chain.
HUL is dedicated to achieving net-zero emissions across its entire value chain by 2039. This ambitious target reflects the company's recognition of the urgent need to combat climate change and its commitment to sustainable practices. To address Scope 3 emissions, HUL focuses on engaging with suppliers and customers to promote sustainability throughout its operations.
One of the primary sources of Scope 3 emissions for HUL comes from the raw materials it purchases. In response, the company has developed partnerships with suppliers to improve their sustainability practices. For instance, HUL collaborates with farmers through initiatives like the Sustainable Agriculture Initiative, which promotes sustainable farming practices among over 130,000 smallholder farmers in its supply chain. By providing training and resources, HUL helps farmers adopt techniques that enhance productivity while minimizing environmental impact, thus reducing emissions associated with agricultural inputs.
On the downstream side, HUL is focused on reducing emissions generated during the use of its products. The company’s Project Shakti empowers women micro-entrepreneurs to distribute HUL products in rural areas, thereby enhancing livelihoods while promoting sustainable consumption patterns. By encouraging responsible usage of products and raising awareness about sustainability among consumers, HUL aims to mitigate the environmental impact associated with product usage.
Water Consumption
Water is a critical resource in the chemicals industry, serving various essential functions throughout the production process. According to the BRSR Barometer 2023 report, the median water consumption in the chemicals sector was 194 kiloliters per crore of revenue (KL/Cr). This statistic highlights the industry's significant reliance on water, indicating both a potential environmental impact and an opportunity for improved sustainability practices. Water is used extensively across various processes in the chemicals industry including in cooling and heating, solvent preparation, cleaning, and preparing equipment.
UPL Limited is a leading player in the agrochemical sector, recognized for its commitment to sustainability and responsible water management.
UPL has established a comprehensive water conservation policy that focuses on responsible and effective water usage aimed at minimizing freshwater consumption. One of the key strategies includes the installation of advanced rainwater harvesting systems, which can harvest up to 10,000 cubic meters of rainwater during the monsoon season.
Additionally, UPL has achieved a 60% Zero Liquid Discharge (ZLD) system across its manufacturing sites, ensuring that wastewater is treated and reused rather than discharged. By implementing advanced effluent treatment technologies such as Forward Osmosis and Moving Bed Biofilm Reactor (MBBR) systems, UPL is able to efficiently recycle water for various operational needs, thereby significantly reducing its overall water footprint.
UPL develops innovative products that promote water efficiency in agriculture. One notable product is Zeba, a natural cornstarch-based material that absorbs water up to 400 times its weight. This helps improve soil moisture retention and reduces irrigation needs, supporting sustainable farming practices.
UPL actively engages with local communities to promote sustainable water practices. The company has been recognized for its "Sujalam Sufalam Jal Abhiyan" initiative in Gujarat, which enhances rainwater conservation efforts in rural areas by developing ponds and other projects.
Through its robust water conservation initiatives and innovative solutions, UPL Limited demonstrates leadership in addressing water management challenges within the chemicals industry. By focusing on sustainability and community engagement, UPL sets a benchmark for responsible water usage in agriculture.
Waste Management
The chemicals industry faces significant challenges regarding waste management, as highlighted by the BRSR Barometer 2023 report. The report reveals a median non-hazardous waste intensity of 1.15 metric tons per crore of revenue (MT/Cr) and a median hazardous waste intensity of 0.25 MT/Cr. These figures underscore the importance of effective waste management strategies to minimize environmental impact and enhance sustainability practices within the sector.
Non-Hazardous Waste
Non-hazardous waste in the chemicals industry primarily includes materials that do not pose a significant risk to human health or the environment. This can encompass a variety of by-products generated during manufacturing processes.
Take scrap materials as an example. During chemical production, various raw materials may become waste due to inefficiencies or excess. For example, a plant producing fertilizers might generate excess packaging materials or have unused raw chemicals. There are also packaging materials for the transportation of the chemicals produced which contribute to substantial non-hazardous waste.
Hazardous Waste
Hazardous waste, on the other hand, poses a greater risk due to its toxic, corrosive, and/or reactive nature. This category of waste includes spent solvents, chemical residues and other materials that require special handling and require special handling and disposal methods. For example, a facility producing pesticides may generate hazardous waste in the form of leftover chemicals that cannot be reused.
The BRSR Barometer 2023 report underscores the pressing need for effective waste management strategies within the chemicals industry, highlighting both non-hazardous and hazardous waste generation. As companies strive to improve their sustainability performance, addressing these challenges through innovative practices and responsible management will be crucial for minimizing environmental impact and enhancing overall operational efficiency. By adopting circular economy principles and engaging in proactive waste management strategies, leading Indian companies are setting benchmarks for sustainability in the chemicals sector.
Social Metrics
Female : Male Employee Ratio
The female-to-male employee ratio in the Indian chemicals industry is notably low, with a median ratio of 0.06, compared to the overall median of 0.09 across various sectors. This disparity highlights the ongoing gender imbalance within the industry, reflecting broader societal and structural challenges. Understanding the reasons behind this imbalance and identifying current factors influencing it is essential for promoting gender diversity in the workforce.
Several factors contribute to this low representation, including cultural norms that discourage women from pursuing careers in male-dominated fields, a lack of awareness and accessibility to relevant education and training, and perceptions of a challenging or unsafe workplace environment. While societal biases and stereotypes play a role, the industry's historical perception as male-dominated can also deter women.
Currently, several factors are influencing this landscape. India's economic growth necessitates greater female workforce participation, and government initiatives are encouraging inclusive hiring practices. Additionally, companies are increasingly recognizing the benefits of diverse teams and implementing diversity and inclusion policies.
To improve female representation, the Indian chemicals industry can adopt targeted recruitment initiatives, establish mentorship and training programs, and implement flexible work policies. Companies like Tata Chemicals, Hindustan Unilever Limited (HUL), and BASF India are leading by example through policies that promote equal opportunities, mentorship programs, and initiatives supporting women's leadership. By addressing systemic biases, promoting inclusivity, and creating supportive work environments, the Indian chemicals industry can attract, retain, and empower more women.
Female : Male Wage Ratio
The female-to-male wage ratio in the Indian chemicals industry is notably low, with a ratio of 0.29 for key personnel. This indicates that women earn only 29% of what their male counterparts make in similar roles, highlighting significant disparities at higher levels of responsibility. However, the median wages for female employees overall are more comparable to those of their male peers, suggesting that while wage gaps exist in leadership positions, they may be less pronounced in general employment.
Meghmani Organics Limited provides a compelling example of a company taking significant steps to improve gender representation and address wage disparities. With support from the International Finance Corporation (IFC), Meghmani has actively worked to create an inclusive workplace at its newly built Meghmani FineChem Limited (MFL) plant in Dahej, Gujarat.
Initially, Meghmani had no female employees across its four factories due to traditional norms and legal restrictions on women working night shifts. To overcome these barriers, the company redesigned its facilities to accommodate female workers, including dedicated restrooms and locker rooms. They also implemented targeted recruitment efforts to attract women into formal employment roles.
As a result of these initiatives, Meghmani successfully employed women in 7% of the initial workforce at the MFL plant, marking a significant step toward gender equality in a traditionally male-dominated sector. The company’s commitment not only fosters a diverse labor pool but also enhances community relations and boosts its reputation as a progressive employer.
The low female-to-male wage ratio in the chemicals industry highlights the need for targeted initiatives to promote gender equality. Companies like Meghmani Organics Limited are leading by example, demonstrating that with thoughtful policies and a commitment to inclusivity, it is possible to create equitable workplaces that empower women and enhance overall organizational performance. By continuing to address wage disparities and improve representation at all levels, the chemicals industry can move toward a more balanced and fair workforce.
The BRSR Barometer 2023 report paints a comprehensive picture of the Indian chemicals industry's sustainability journey, highlighting both progress and persistent challenges. While the sector is poised for significant growth, driven by factors like export expansion, rising domestic consumption, and government initiatives, it must concurrently address its environmental and social responsibilities. Key findings from the report underscore the need for immediate action, particularly in reducing Scope 1, 2, and 3 emissions, improving water management, and promoting gender diversity and equitable wage practices.
Companies like BASF India and Pidilite Industries are setting examples in emissions reduction and water conservation, respectively, demonstrating that sustainable practices can be integrated into core operations. Hindustan Unilever Limited (HUL) exemplifies a commitment to Scope 3 emissions reduction through robust supply chain engagement and sustainable product initiatives. Addressing the staggering contribution of Scope 3 emissions, requires collaborative efforts across the entire value chain, from raw material sourcing to end-of-life treatment of products.
Moreover, the report reveals significant disparities in gender representation and wage equity, emphasizing the urgent need for targeted interventions to create more inclusive workplaces. The chemicals industry can learn from companies that are proactively implementing policies to promote equal opportunities, provide mentorship, and ensure transparent pay structures.
Overall, the BRSR Barometer 2023 report serves as a call to action for the Indian chemicals industry to embrace sustainability as a strategic imperative. By leveraging the report's insights, companies can benchmark their performance, identify areas for improvement, and drive meaningful change toward a more environmentally responsible and socially equitable future. The journey toward sustainability requires collective action from all stakeholders – government, industry leaders, and consumers alike – to ensure a cleaner, healthier future for the sector and society as a whole.