From the Sector

Indorama Ventures Public Company Limited, a global sustainable chemical producer, was upgraded to "A" from "BBB" in MSCI’s ESG rating, reaffirming the company’s effective management of sustainability related risks and opportunities.

MSCI (Morgan Stanley Capital International), an independent provider of research-based indices and analytics, ranked Indorama Ventures among the top 14% of 65 companies worldwide in the commodity chemicals industry. The rating has placed it in the top quartile for opportunities in clean tech, water stress, corporate governance, and corporate behavior.

Indorama Ventures is committed to reducing water intensity by 10% by 2025 and 20% by 2030. It developed a Water Risk Assessment Report on its contributions to achieving sustainable management of water targets and the United Nations Sustainable Development Goals (UN SDGs). For improved corporate governance, the company provides whistleblowers with protection from retaliation, and has policies on business ethics and anti-corruption. Relating to opportunities in clean tech, Indorama Ventures’ is investing in recycling technology and biomass feedstock under its Vision 2030, and is also investing in operational efficiencies, carbon capture technology, renewable energy, and phasing out coal to reduce Scope 1 and Scope 2 greenhouse gas emissions.

MSCI ESG Ratings aim to measure a company’s resilience to long-term ESG risks. Companies are scored on an industry-relative AAA-CCC scale across the most relevant key issues based on a company’s business model. Investors, including pension funds, sovereign wealth funds, endowments, and asset managers, commonly consider the ratings to assess financial risks in the investment process.

Stahl announces that its near-term greenhouse gas (GHG) emissions reduction targets have been validated by the Science Based Targets initiative (SBTi). Stahl is one of the few coatings companies to receive this validation. To date, 145 companies in the chemicals sector have submitted an emissions reduction target to the SBTi, of which 61 have had their targets validated.

Stahl’s science-based targets, which reflect the company’s commitment to the 2015 Paris Agreement goals, are:  

• Stahl Holdings B.V. commits to reduce absolute scope 1 & 2 GHG emissions 42.0% by CY2030 from a CY2021 base year.*
• Stahl Holdings B.V. commits to reduce absolute scope 3 GHG emissions 25.0% by CY2030 from a CY2021 base year.

The SBTi classifies emissions reduction targets according to two potential temperature pathways: 1) limiting global temperature rises to 1.5°C above pre-industrial levels, and 2) limiting temperature rises to well below 2°C. The SBTi has determined that Stahl’s Scope 1 and 2 target is in line with a 1.5°C trajectory, while Stahl’s Scope 3 target has been validated in line with the well-below 2°C pathway.

Maarten Heijbroek, CEO of Stahl: “The validation of our Scope 1, 2, and 3 emissions reduction targets by the SBTi is an important milestone on our ESG journey as we strive to limit our contribution to global warming, in line with the Paris Agreement. Our targets are ambitious, and rightly so. Realizing our goal to help create a more responsible coatings value chain starts with being accountable for our own environmental impact, and taking concrete steps to reduce our emissions wherever possible.”

A clear strategy to reduce GHG emissions
Stahl’s approach to realizing its near-term emissions reduction targets is outlined in the company’s Environmental, Social, and Governance (ESG) Roadmap to 2030. This strategy defines the specific metrics against which progress on the company’s ESG commitments will be measured.

Stahl’s Scope 1 and 2 GHG emissions reduction targets, as submitted to the SBTi, cover emissions from all manufacturing sites where Stahl products are produced, as well as the company’s largest non-manufacturing locations. Stahl aims to lower these emissions by reducing its overall energy consumption and increasing the use of renewable energy at its sites. To achieve this, the company plans to increase its self-generated electricity capacity (using solar power, for example) and continue investing in more energy-efficient equipment.

Stahl plans to reduce its Scope 3 upstream emissions primarily by replacing fossil-based raw materials in its products with renewable alternatives, such as bio-based and recycled-based feedstocks. In addition, the company plans to introduce more low-impact raw materials into its product design.

* The target boundary includes biogenic land-related emissions and removals from bioenergy feedstocks.

Highlights Q1 2023 (compared with Q1 2022)

• Revenue up 5% and up 8% in constant currencies1
• Pricing up 7%, more than offsetting increase of raw material and freight costs
• Volumes 3% lower; Europe showing resilience, China rebounding
• Operating income at €182 million (2022: €232 million); adjusted operating income2 at €218 million (2022: €230 million); ROS3 at 8.2% (2022: 9.1%)
• Net cash from operating activities negative €50 million (2022: negative €102 million)
• Intended acquisition of Chinese Decorative Paints business from Sherwin-Williams announced in April 2023; completion expected in the second half of 2023

2023 Outlook
AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on organic volume growth. The company will focus on margin management, cost reduction, working capital normalization and de-leveraging.
Cost reduction programs are expected to mitigate the ongoing pressure from inflation in operating expenses for 2023. AkzoNobel expects declining raw material costs to have a favorable impact on profitability.
Based on current market conditions, AkzoNobel targets to deliver €1.2 to €1.5 billion adjusted EBITDA.
The company aims to lower its leverage ratio to less than 3.4 times net debt/EBITDA, including the impact of the Kansai Paint Africa acquisition, by the end of 2023 and return to around 2 times post-2023.

Fibre Extrusion Technology Ltd (FET) of Leeds, UK participated in the “Green Textile and Innovation Technology Forum and Exhibition” in Hong Kong, taking a small booth to support the event and FET’s official agent in the region, Chemtax. This was the first in a series of international exhibitions that FET will be attending in 2023.

The interactive exhibition was organised by the Hong Kong General Chambers of Textiles, with over 20 industrial experts and 300 guests in discussion forums and meetings. The major themes explored were sustainable solutions, new technologies and future trends in green textiles. The region is committed to improved sustainability in textiles, with China in particular setting ambitious targets for high performance fibre self-sufficiency, developments in biodegradable material and increased production capacity in recycled fibre.

This fits perfectly with FET’s ethos, having long been a leading exponent of sustainability in fibre technology. The FET range of laboratory and pilot Melt Spinning extrusion lines is suited for both process and end product development of sustainable materials, enabling customers to undertake process development in-house. All FET systems are designed to be material efficient, can be bespoke designed and offer both flexibility and a high level of processing capability.

On 30 March 2022, the European Commission presented its vision for the future of the textile industry. The strategy mainly focuses on reducing the environmental footprint and promote sustainability and transparency in the value chain.

EURATEX has welcomed the publication of the strategy, as it recognises the strategic importance of the European textile industry, and its core competitive values of quality and creativity. At the same time, the association has warned that translating that vision into reality is a delicate process, as the industry needs to reconcile sustainability with competitiveness. Making the green (and digital) transition should make companies stronger; the benefits should outweigh the costs.

This premise had a serious blow by the Russian war in Ukraine, which erupted at almost the same time when the strategy was launched, and has dramatically changed the economic context. Energy prices increased by a factor of 10 (!), putting the European industry at a significant disadvantage with its global competitors, leading to company shutdowns or relocations. Extended lock downs in China and defensive trade policies in the US and elsewhere have further generated uncertainty on the market and disrupted supply chains.

Today, one year after its publication, EURATEX remains carefully optimistic about the implementation of the strategy, but needs to warn against some important pitfalls on the road ahead.

1. Despite these turbulent times, the Commission is moving ahead “swiftly” in translating their EU Textile Strategy into (draft) legislation. At present, at least 16 pieces of legislation are on the table, which will turn the textile industry into a strictly regulated sector. The quality of this new regulatory framework is critical to the success of the strategy: upcoming rules need to be coherent, technically feasible and enforceable, and have a minimal cost for SMEs. EURATEX calls for a realistic timetable and “competitiveness test” for each piece of legislation before it is adopted.
2. Textile companies need to be informed and supported to comply with this new framework. This requires substantial funding which should be earmarked exclusively to the sector, covering areas of innovation and digitalisation, skills development, support to start ups and internationalisation, as well as access to affordable energy. In this regard, EURATEX calls on the Commission to translate the current “good intentions” into concrete decisions.
3. The EU strategy will not work if there is no demand for sustainable textiles, both from individual consumers and public authorities (procurement). Concrete measures need to be taken to offer a competitive advantage to sustainable and high quality textile products, e.g. through a different VAT rate, strict procurement rules, closer cooperation between the brands/retailers, producers and consumers.
4. The EU strategy could also fail, if the global dimension of the textile industry is ignored. Up to 80% of clothing products are produced outside the EU; these products need to comply with the new framework, but it remains unclear how to ensure that level playing field. Market surveillance needs to be stepped up massively – also targeting on line sales – but this would require significant efforts from member states, which are not available as of today.

Despite these important challenges, EURATEX remains committed to the successful implementation of the EU Textile Strategy. Director General Dirk Vantyghem commented: “We want to be a global leader in sustainable textiles, building on the entrepreneurship, quality and creativity of nearly 150,000 European textile companies. Creating this new framework is an incredible challenge, requiring a close dialogue between the industry and the regulator. But if well designed and carefully implemented, it can set a new era for the European textile industry”.

National Council of Textile Organizations (NCTO) Chairman David Poston delivered the trade association’s State of the U.S. textile industry overview at NCTO’s 19th Annual Meeting on March 30.

Mr. Poston’s speech highlighted the impacts of macroeconomic factors on the U.S. textile industry and the resilience of the U.S. textile industry; trade and investment data showing growth in the sector across the board; and NCTO’s policy priorities for domestic textile manufacturers.

“The U.S. textile and apparel industry faced challenging macroeconomic conditions throughout the year,” Poston states in the speech. “Despite these challenges, there were also many positive trends that helped offset some of those pressures, including softening inflation towards the latter half of the year, coupled with a surge in onshoring and nearshoring that led to historic investments, commitments and expansion in the U.S. and the Western Hemisphere.”

Click here for his full remarks.

• Harmful PFAS chemicals, used in thousands of consumer products, are shaping up to be the big environmental and health threat of our time. The EU is now the first in the world to propose a broad ban on these chemicals.
• Consumer brands worth more than €130 billion support the ban on PFAS.  
• Investors with assets in PFAS-producing companies are calling for an end to production.

Many companies are taking a stand against PFAS chemicals as the EU invites the public to give its opinions on the proposed ban on these harmful chemicals.

108 companies dedicated to phasing out PFAS chemicals from products and processes have joined the PFAS Movement, an advocacy campaign initiated by environmental NGO ChemSec that calls for comprehensive regulation of PFAS in the EU. The members comprise many well-known brands, such as Inditex, Urbanears and the Cookware Company, representing various industries— fashion, home goods, food, and personal care. The members are worth more than €130 billion in total revenue.

“A European ban on PFAS chemicals will have huge repercussions for all manufacturing industries and require much work for companies in the global supply chain. However, some parts of the industry oppose this ban, claiming that the change is too big to be justified. That’s why the support for a ban from such influential consumer brands as those in the PFAS Movement is so important. It’s a strong sign that businesses want to eliminate PFAS chemicals in products and processes”, says Anne-Sofie Bäckar, Executive Director at ChemSec.

A Hollywood Helping Hand
ChemSec’s PFAS Movement is not only supported by the brands but also by Hollywood actor Mark Ruffalo who became a PFAS activist after his involvement in the film Dark Waters. The film depicts the real-life events following the massive uncovering of PFAS contamination in the USA. As a result, several PFAS producers in the USA are now involved in multimillion-dollar lawsuits.

The health and environmental threats of PFAS, along with all the lawsuits, have also created attention among another influential group: institutional investors. Last year, 47 institutional investors with US$8 trillion in assets sent a letter to 54 chemical companies named by ChemSec, calling for them to halt the production of persistent “forever chemicals”.

The EU ban on PFAS
The proposed EU ban on PFAS is extensive and the first of its kind worldwide. The idea was initially initiated by Sweden, Denmark, the Netherlands, Germany and Norway, who have spent almost three years mapping the implications of a ban on PFAS chemicals in a dossier that expands over nearly 2000 pages. The proposal shows, among other things, that the emissions of PFAS were 75 000 tonnes in 2020. If this continues, the emissions are expected to sit at 4.4 million tonnes in 30 years. The emissions originate from the production and use of the many products that contain PFAS; furniture, cosmetics, electronics and many more.

Garment fitting pioneer Hohenstein has conducted the first ever measurement series on babies and toddlers. The data will aid the pattern development and fit assessment that is particularly challenging for children's clothing. The new database will help brands and manufacturers design their children's clothing in an accurate, efficient and more sustainable way using fit testing and pattern optimisation.

Hohenstein has been taking body measurements for all target groups since 1957. Based on regular serial measurements taken with 3D body scans over 20 years, data is continuously updated. With the measurement of toddlers and babies, Hohenstein is now closing a large gap in the German market for the first time. 5626 girls and boys in sizes 56 to 182 were measured. This means that 3D scans of infants are available for the first time. The 3D body data form an indispensable basis for customer-specific measurement tables, child-friendly patterns and gradings, optimal fits as well as 3D children's avatars for the simulation of clothing.

Hohenstein offers a wide range of tests for safe children's clothing from a single source. In addition to fit and pattern, Hohenstein carries out risk assessments and safety tests for children's clothing (e.g. cords according to DIN EN 13682), UV protection according to different standards, tests for harmful substances according to OEKO-TEX®, among others. Toy testing is also part of the portfolio.

The Global Organic Textile Standard is pleased to announce the release of GOTS Version 7.0, which features an expanded scope of environmental and social criteria while maintaining a standard that is practicable for industrial production and appropriate for a wide range of products. During the regular year-long revision process, international stakeholders with expertise in organic production, textile processing, textile chemistry, human rights and social criteria, as well as representatives from industry, NGOs and civil society organisations, contributed to the new Version 7.0 through multiple consultation rounds. Final decisions were made by the multistakeholder GOTS Standard Revision Committee.

GOTS Version 7.0 provides a comprehensive solution for companies who want to produce organic textiles ensuring compliance with environmental and human rights due diligence along the entire supply chain, from field to finished product. With full traceability from origin to destination, GOTS certification provides an efficient means of verifying genuine sustainability efforts. GOTS 7.0 introduces new requirements to conduct risk-based due diligence of Certified Entities’ own operations and their supply chains based on the UN Guiding Principles for Business and Human Rights and the OECD guidelines. The Social Criteria section was substantially revised to include a broader human rights-focused approach. GOTS 7.0 now allows recycled organic fibres as additional materials. Key requirements, such as certified organic fibre content, a general ban on toxic and harmful chemicals such as PFAS, conventional cotton and virgin polyester restrictions, and social compliance management, are maintained in GOTS Version 7.0.

Some of the changes in Version 7.0 include:

• GOTS and the Manual for the Implementation of GOTS were restructured, and sections were grouped to reflect the standard’s scope.
• New due diligence criteria ensures that Certified Entities address their actual and potential negative impacts on human rights and the environment.
• GOTS Environmental Criteria, Product Stewardship, and Environmental Health and Safety (EHS) requirements will also apply to the subcontractors of chemical formulators.
• Criteria for the incoming organic material have been made stricter.
• Quinoline is included among the prohibited substances and some existing restrictions have been made tighter such as of “aniline, free”, residue limit is decreased to 20 mg/kg from 100 mk/kg.
• GOTS 7.0 reduces the permissible quantity of recycled synthetic (polymer) fibres in its certified products, taking into account the disadvantages associated with recycled synthetics, such as microplastics and poor quality.
• In the pursuit of circularity, GOTS will allow use of recycled GOTS Goods waste as an additional fibre in its certified products.
• GOTS Human Rights and Social Criteria will now require Certified Entities to respect internationally recognised human rights protocols, including the International Bill of Human Rights and other international human rights treaties.
• Criteria concerning Discrimination, Violence and Harassment were revised to make them more comprehensive and include the International Labour Organisation (ILO) Violence and Harassment Convention (C190).
• Certified Entities are now required to develop a plan to cover the living wage gap.
• GOTS Occupational Health and Safety criteria were revised to consider best international practices and recommendations from the ILO.

For more information, see the following documents:

• GOTS Version 7.0
• Change Log GOTS 7.0
• Change Log Manual for the Implementation of GOTS 7.0
• Guideline for the new structure of GOTS 7.0

AkzoNobel has published its digital Report 2022, which gives details of the company’s ongoing transformation during a challenging year of persistent worldwide uncertainty.

The Report 2022 website includes coverage of AkzoNobel’s financial results and key business developments, while the company’s progress on its sustainability ambitions is highlighted throughout.

The online report offers a wide range of interactive content and infographics. Visitors can also make use of various tools to compare key data and download tables.

Meanwhile, the Sustainability statements – traditionally one of the most visited sections – has been revamped and is themed around the key areas of climate change, circularity, and health and well-being. Several case studies also feature prominently.