Boosting Innovation and Growth in the European Chemical Industry

SAFE AND SUSTAINABLE BY DESIGN: DRIVING INNOVATION AND GROWTH IN EUROPE'S CHEMICAL INDUSTRY An article prepared by CEFIC (European Chemical Industry Council), of which the Turkish Chemical Manufacturers Association is a member, titled "Safe and Sustainable by Design: Driving Innovation and Growth in Europe's Chemical Industry" emphasizes that accelerating the development of Safe and Sustainable by Design (SSbD) chemicals is one of the growth opportunities for the chemical industry within the framework of the Chemicals Strategy for Sustainability, and seeks answers to questions such as what Safe and Sustainable by Design means and how we can benefit from this opportunity.

Safe and Sustainable by Design: Driving Innovation and Growth in Europe's Chemical Sector

This article does not contain detailed information on the subject and does not represent our final views on Safe and Sustainable by Design. Rather, it is a work in development and invites you to engage in discussion on the concepts, criteria and the way forward in SSbD.

Summary

The Chemicals Strategy for Sustainability (CSS) was launched on 14 October 2020 by President Von der Leyen and Vice President Timmermans as a key element of the European Green Deal. Alongside a challenging regulatory agenda, CSS also presents opportunities. The European chemical industry views the Safe and Sustainable by Design (SSbD) approach in CSS as a lever to create business opportunities and growth. Given appropriate conditions, an environment can be created in which industry can transition while remaining the world leader in safe, innovative, climate and environmentally friendly chemical production. Predictability of targets within ambitious but achievable timelines, and availability of financial and non-financial resources, are critical success factors. For this reason, CEFIC has identified four main areas of supportive measures when implementing the SSbD approach: 1. A clear and predictable strategic direction and pathway, embedded in a wider CSS framework and an inclusive vision, with clarity on definitions of concepts and criteria and targeted chemicals, coordinated across European Commission Directorates-General along the value chain and elaborated in close dialogue with industry partners. 2. Innovation support provided by the European Commission that encourages and supports collaboration across value chains and addresses application-specific priorities collectively and more rapidly, going beyond competitive boundaries. 3. Market uptake of safe and sustainable chemicals in product applications should be encouraged within the single market and fair competition guaranteed with less sustainable incumbents. 4. As a global standard-setter, the EU should assume a global leadership role to create a level playing field between different geographies and ensure the enforcement of EU legislation applicable at its borders. These are the views of the European chemical industry on the concept and how it should be approached and implemented. This is not the industry's final word on the subject, but rather signals an ongoing engagement to make it work. This article is the first in a series and provides a foundation for further engagement.

Background

The European Commission's vision for Safe and Sustainable by Design is linked to the broader sustainability journey on which the chemical industry has embarked and many companies are advancing. We have already begun to strive toward a future where "chemicals are produced/used in such a way as to maximize their benefits to society without harming the planet and people, and where the production and use of safe and sustainable chemicals in Europe becomes a global benchmark," as we have set out in the Chemicals Strategy for Sustainability. Chemicals are part of our daily lives and play a fundamental role in most of our activities. They are recognized as the building blocks of low-carbon, zero-pollution and energy and resource-efficient technologies, materials and products. Most chemicals have inherent hazardous properties (for example, irritant) but only some can harm human health and the environment through exposure based on their serious hazardous properties and uses. To ensure safe use, it is important that the well-established scientific risk assessment concept remains a central element in the application of the precautionary principle and in decisions on chemical management. While CSS sets a vision for EU chemical policy to strive for a "toxic-free environment," Safe and Sustainable by Design calls for a transition to chemicals. Defining what is safe and sustainable and how to assess it will boost investor confidence in Europe and reduce investment risk in less harmful alternatives, alongside intellectual property protection. The Safe and Sustainable by Design concept can be transformed into a driving force that is commercially logical, promotes innovation and attracts tangible investments in the chemical sector as well as in the value chains we serve. If well designed, it can accelerate the transition to SDGs in general and specifically to the Green Deal's goals of circularity, climate neutrality and a "toxic-free environment."

Definition of the Concept

Nearly all industrial ecosystems depend on chemistry to achieve the globally applicable Sustainable Development Goals and to enable Europe's Green and Digital transition, which is a major concern of the European Chemical Industry. Innovating toward safe and sustainable chemicals is one of the chemical industry's key contributions to these goals, and future business success will depend on these developments. The concept of sustainable chemistry and sustainable products is not new. The OECD1, ISC32, UN Environment3 have defined the concept of sustainable chemistry and many policy initiatives such as Ecodesign, Green Public Procurement, Ecolabels, etc. refer to sustainable products. However, there is a need for a holistic approach that brings together all ongoing initiatives and policy objectives within a single framework and immutable criteria. Indeed, "it should become a guiding principle across all development chains in key sectors of the economy that accelerate the transition to safe and sustainable chemicals, products, materials and technologies." Principles Advancing the Concept The chemical industry has identified the following principles to advance the concept: 1. Chemical safety for people and the environment cannot be compromised. And compliance with existing regulations is a requirement. 2. SSbD is an iterative process that directs innovation toward new chemicals and processes, replacing the existing portfolio with more sustainable and largely cost-effective solutions. SSbD has the potential to accelerate innovation in chemicals with high positive impacts on human health, quality of life and ecosystems, as well as in climate neutrality and circularity. 3. Chemicals that have a proven concern for human health or the environment, or that prevent the recyclability of materials, should be gradually prioritized for innovation in alternatives while maintaining or improving performance and avoiding or improving other sustainability dimensions. 4. Since benefits and sustainability performance are in the final product and can emerge at any time throughout the lifecycle, chemical products must always be evaluated in relation to the application or use stage. 5. When defining assessment criteria and evaluating product applications, distinction should be made between industrial use, professional uses, consumer use and other uses (such as pharmaceutical components, R&D). 6. Safe is defined on the basis of a product's hazards, together with exposure and risk to users and environmental impact, ensuring that a scientifically validated threshold is not exceeded. In doing so, the SSbD approach is compatible not only with existing requirements under REACH, but also with expected revisions in REACH and CLP. 7. When evaluating and designing chemical products, a full life cycle perspective should be taken, including raw materials and end-of-life considerations. 8. SSbD aims to respect at least one or more principles of the circular economy: design out waste and pollution, keep products and materials in cycles, and regenerate natural systems. 9. SSbD is rooted in science. In addition to existing data requirements in REACH, it will require further data collection and making relevant datasets publicly available. 10. Assessment of different sustainability dimensions should use existing methodologies, tools and standards where applicable (GHG protocols, LCA ISO standards, etc.), while also embracing emerging science and new tools. These assessments will be made transparent. Assessment methodologies may be qualitative or quantitative depending on needs in the development process and market needs. 11. A balance must be struck between improving the Environment, Health and Safety (EH&S) profile, reducing lifecycle impact and maximizing function and performance requirements. From Concept to Assessment Framework and Criteria To successfully advance the Safe and Sustainable Design concept, it will require a set of harmonized criteria and an assessment framework jointly accepted by all stakeholders (across value chains, policymakers, etc.). The chemical industry has developed an initial proposal based on the expertise of industry champions assessing the sustainability of product portfolios. The Chemical Industry Methodology for Portfolio Sustainability Assessments, launched by the World Business Council for Sustainable Development (WBCSD) in 2018, and other relevant work are of particular interest. Portfolio Sustainability Assessment is an industry-wide methodology that enables companies to direct and improve their product portfolios toward improved sustainability outcomes at the individual product level. Innovation for SSbD is a phased process that begins with the definition of functional and performance requirements for the intended product-application, followed by mapping the possible impacts throughout the lifecycle of the examined solution. During the innovation process, more data is collected to enable assessment of sustainability performance against key safe and sustainable dimensions. The final step is to assess impacts against safe and sustainable goals; these may be minimum criteria or other comparison points.

Towards Design Criteria

CEFIC proposes 4 steps to define criteria that can be used to assess the impact of a new or alternative process or product during an innovation process. 1. Identify Existing Criteria 2. Assessment Framework 3. Key Criteria for Assessment 4. Tool and Data Inventory

4-Step Process for Defining Criteria

Step 1: Identify Existing Criteria The chemical industry aims to meet a performance need defined by customers, market and society when designing products and bringing products to market. In doing so, the chemical industry faces numerous criteria and requirements. In the current regulatory context, safety-related criteria are already quite developed and clear, and further development is ongoing. Companies are increasingly competing on the sustainability performance of their processes and products, driven by the company's sustainability targets or by enabling their customers to fulfill their sustainability commitments to meet the UN Sustainable Development Goals. Identifying these criteria forms the first step in developing an SSbD approach. Step 2: Organize Criteria in a Structured Framework To reach a workable framework, criteria are structured around the core dimensions of safety and sustainability assessments. The safety component is based on minimum regulatory safety requirements and will be complemented by functional, environmental, social and economic considerations, taking into account all lifecycle stages and integrating circular thinking. Step 3: Identify Key Criteria for Assessment In the next step, criteria must be assigned for safety and core sustainability dimensions, which requires some methodological choices. 1. Key criteria are assigned for specific product-application combinations. 2. Regulatory safety requirements should be regarded as minimum requirements. 3. Criteria must be material to the product application under review and to the value chain (for example, a surfactant in a consumer detergent released to the environment to produce a monomer to produce polymers). 4. Criteria differ at different stages of the product or process innovation phase; qualitative approaches are justified in the early stages of development and for well-known and non-critical applications. 5. Consumer-professional-industrial uses will result in a different set of assessment criteria.

Step 4: Assessment Tools, Data Inventory and

Third-Party Verification There are many tools available today to assess the impacts of products and processes in the different areas identified. The chemical industry seeks to build as much as possible on widely accepted methodologies and guidance (ISO standards, GHG Protocol, voluntary certification programs, WBCSD PSA Methodology and Social metrics, etc.) to allow fair comparison of sustainability claims and facilitate implementation. Depending on the development stage, expected impact and other factors, a choice can be made between a qualitative or quantitative approach in the application of guides and methodologies. SSbD in Practice Chemical innovations in Safe and Sustainable by Design are the future of chemistry. The European chemical industry invests approximately EUR 9 billion annually in research and innovation. Through ChemistryCanRespond, we aim to demonstrate the results of these investments and how they contribute to the EU Green Deal. Safe and Sustainable by Design is a theme covering four areas: • Becoming climate neutral, • Driving the Circular Economy, • Improving quality of life, • Growing digital and technology.

How to Ensure that the SSbD Concept Provides a Competitive Advantage for EU Industry?

Safe and Sustainable by Design is an innovation process for bringing to market chemicals, materials, products and technologies that are safe, deliver environmental, economic and/or social value in their applications, accelerate the transition to a circular economy and a climate-neutral society, and prevent harm to human health and the environment. Leading companies consistently affirm that adopting an SSbD approach is better for business performance. However, working toward this triple objective represents an unprecedented challenge for the chemical industry. It will be important to support this transition toward the vision of "safe and sustainable chemicals" by providing policy measures to ensure predictability of targets within ambitious but realistic timelines and by providing the necessary—financial and non-financial—skills and resources. For this reason, the SSbD concept should be explained and implemented in a way that will be commercially meaningful and will direct real tangible investments. For this reason, CEFIC has identified four main areas of supportive measures when implementing the SSbD concept: 1. A clear strategic direction and pathway should be set by European institutions well-coordinated between European Commission Directorates-General and in close contact with industry partners. This should be embedded in a wider CSS framework and have an inclusive vision to understand how everything comes together. Timely definition of what safe and sustainability mean, along with intellectual property protection, an open and easy-to-apply methodological framework for defining criteria and prior understanding of their use and further application throughout regulation, will increase investor confidence in Europe and ensure that investments in alternatives are de-risked. This includes clarity on targeted substances for which alternatives are prioritized for innovation. Also, to maintain the competitiveness of the EU chemical industry, SSbD assessments should not lead to delays in product launches to market. 2. Innovation support should support and encourage collaboration across the value chain and address application-specific priorities collectively and more rapidly, beyond competitive boundaries, as determined by the market and civil society. Innovation support should connect all partners early in the development stage, include user and consumer needs, and encourage joint skills development. Innovation is an iterative process and knowledge becomes increasingly accessible in development stages. Scaling innovation requires sufficient time, and time pressure can lead to suboptimal substitution of chemicals, products and materials in applications. Sustainable use of chemicals requires, in addition to impacts on people and the environment, consideration of the benefits and cost-effectiveness of all lifecycles and uses. It would be beneficial to jointly prioritize innovation support by sectors with high potential to contribute to circularity and climate-neutral goals or by applications that identify and eliminate certain unacceptable risks. 3. Market uptake of safe and sustainable chemicals should be encouraged within the single market, be application-specific, and guarantee fair competition with less sustainable incumbents. Since products scoring higher on the sustainability ranking may be more expensive in the short term or create additional technical and administrative barriers for our downstream users, market pull tools and financial incentives may be considered to facilitate market uptake. Reducing regulatory burden and, for example, accelerated procedures may also be considered. 4. As a global standard-setter, the EU should assume a global leadership role to create a level playing field between different geographies for similar product-application combinations. At this level, particularly with regard to imports, an effective enforcement mechanism should be established built on widely accepted definitions, criteria, methodologies and tools, testing and evaluation methodologies to measure compliance.

Looking Forward: Opportunities for the Chemical Industry

In recent years, the world has faced major, global and disruptive crises: economic and financial crisis, a health crisis and increasingly we are seeing signs of climate and even nature crisis. Long-term sustainability is our way out of the next crises. The Safe and Sustainable by Design approach brings together all challenges such as climate, security, ecosystems, resource scarcity. The European chemical industry provides solutions in different applications to most industrial ecosystems and understands the important role it can play in providing sustainable solutions. Through our products and processes, we can make significant contributions by positioning ourselves well above any ecosystem. Setting sustainability standards in consumer products will provide an even stronger market signal for sustainable products. For this reason, we eagerly await an SSbD approach that provides clear policy signals and rewards a European industry moving toward new innovative products for a sustainable future. With full support for the SSbD transition approach, we invite all stakeholders—political authorities, our downstream users and civil society representatives—to join us in a pilot study to exchange views on determining and defining the SSbD process, its criteria and thus the scope of outcomes for all participants in the industrial ecosystem. A common approach is needed to bring valuable changes to the current functioning of society. Substance (REACH Definition): Means a chemical element and its compounds in the natural state or obtained by any manufacturing process, including any additive necessary to preserve its stability and any impurity deriving from the process used, but excluding any solvent which may be separated without affecting the stability of the substance or changing its composition. Mixture (REACH Definition): Means a mixture or solution composed of two or more substances. Chemicals: Refers to such substances and mixtures. Material: A term used to refer to substances or mixtures that may not yet be able to meet or satisfy an article definition under REACH and may be of natural or synthetic origin. Product: Means any product, whether new, used or repaired, that is intended for consumers or is likely to be used by consumers under reasonably foreseeable conditions, even if not designed for consumers, and that is being evaluated for provision during a commercial activity or for the provision of a service, including in the context of providing a service. With regard to Safe and Sustainable by Design products, this report only covers products that can also be defined as chemicals or materials (as defined above). Therefore, in the context of Safe and Sustainable by Design, the term "product" is used as part of the term "chemical product" or "material product," meaning chemicals and materials that are intended for or likely to be used by consumers. An example of a "chemical product" is paint and an example of a material product is "impregnated wood." The "chemical product" or "material product" as defined in this report should always be understood and evaluated as a product-application combination, as the same chemical product can be used in various applications resulting in different safety and sustainability assessment outcomes. References: 1. OECD, https://www.oecd.org/chemicalsafety/riskmanagement/sustainablechemistry.htm 2. ISC3, International Sustainable Chemistry Collaborative Center, https://www.isc3.org/en/about-isc3/sustainable-chemistry.html 3. UN Environment Green and Sustainable Chemistry: Framework Handbook, https://wedocs.unep.org/bitstream/handle/20.500.11822/35312/GSC_ES.pdf?sequence=1&isAllowed=y 4. Mapping study for the development of sustainable design criteria, 2021, European Commission, Research and Innovation, https://ec.europa.eu/info/publications/mapping-study-development-sustainable-design-criteria_en

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