Chemicals

Explore our chemicals web page for insights on M&A, talent retention, sustainability, and navigating the dynamic chemical sector landscape.

To manage environmental impacts, improve energy efficiency, contribute to circular business models, and meet rising demand, the chemicals sector is turning to smarter solutions. Cleaner production processes, advanced recycling technologies, and a shift toward bio-based and renewable materials are transforming the way chemicals are made and used. By embracing innovation and prioritizing sustainability, the chemicals sector can reduce its carbon footprint while delivering the high-quality products that people and businesses rely on.

As the sector continues to evolve, collaboration and innovation will be crucial. These factors will help companies adapt to changing market conditions and deliver value to their stakeholders.

At PwC, we create value for our clients in the chemicals sector by offering tailored solutions that drive innovation, enhance operational efficiency, and support sustainable growth.

Chemical companies that are paying attention to current trends are reinventing themselves as champions of the circular economy. That’s increasingly important as the world moves towards sustainability and tackles efforts such as reducing plastic waste.

This requires fundamental changes in the way that chemical companies operate, the products they develop for customers and the organisations they collaborate with across supply chains and the broader economy.

To move in the right direction, the sector must understand the value that it can create and deliver, not just for itself but for users downstream. This includes financial value, as well as value through improved sustainability or lower carbon emissions. Chemical companies will need better data to do this, which requires digital transformation. They will also need to explore new partnerships, even with competitors, to develop new methods for extracting and recycling chemicals from existing materials.

Succeeding in the future economy will require chemical companies to proactively manage ESG expectations. The sector is in a unique position, finding itself sandwiched between increasingly strict industry regulations on one hand and rising customer demands for sustainability on the other. Technology – digitisation in particular – will be critical for this.

The chemical industry is energy intensive and relies heavily on fossil fuel inputs. It will need to innovate rapidly to reduce its carbon emissions. Companies that adopt sustainable processes and technologies will enjoy an advantage in a global economy that’s shifting rapidly to net zero.

Transforming its use of energy will require the chemicals sector to reduce consumption, increase efficiency, replace carbon-based energy sources with renewables and find ways to recover energy from end-of-life products.

Chemical companies also have an opportunity to improve ESG performance across value chains. They can do this by changing inputs and processes to create lower-carbon products, or by making it possible to recover and recycle critical materials from their products after use.

As they pursue transformation, companies in the chemicals sector need to become much more customer- and application-centric. This means developing and delivering innovative products and solutions that address customer and consumer needs.

Producing more sustainable materials and processes is costly – and it’s part of the reason that many chemicals companies have struggled to get a return out of both digital and sustainability initiatives. Overcoming such challenges will require the industry to redefine value across its broader value chain, and to innovate in collaboration with other parties. This will help put the sector on the path to adding value sustainably and will provide a competitive edge to companies that currently worry about losing business to rivals.

Compared to other industries, the chemicals sector has not kept pace with digitisation. Its future sustainability depends on technological transformation that can support new business models.

While many chemicals companies have digitised some aspects of their business, these efforts have often been aimed at specific areas, such as supply chain and production, with the goal of improving the bottom line. A more holistic approach is needed to innovate and mitigate risk for the future.

Improving digital channels and the workforce’s digital skills will help companies retain customers who increasingly expect 24/7 service – including self-service – as well as shorter order lead times and immediate access to the information they need. Analytics and artificial intelligence will provide insights to make better decisions, optimise operations and reduce customer churn. 

Multiple trends are reshaping the industry

Data-driven innovation

With more data insights into supply chains, customers and end consumers, chemical companies have the opportunity to better understand the sustainability of their operations and decarbonise their business models by innovation. They can also use analytics to improve decision making around the value – both financial and non-financial – that they create for stakeholders and partners downstream.

Data analysis of customers and supply chains will also help companies identify sustainability trends and preferences across industries. This opens the door to opportunities to respond to market needs by innovating new, more sustainable processes and materials.

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Volker Fitzner

Volker Fitzner

Partner, PwC Germany