There are also a number of international initiatives which are supported by governments and stakeholders but are not legally binding and cannot therefore be enforced. Their implementation relies on the commitment of concerned stakeholders, such as industry, politi-cal representatives, national and international organizations, and scientific organizations.
There are also a number of international initiatives which are supported by governments and stakeholders but are not legally binding and cannot therefore be enforced. Their implementation relies on the commitment of concerned stakeholders, such as industry, political representatives, national and international organizations, and scientific organizations.
A variety of non-binding international initiatives exist that affect the chemical sector and that aim at a more sustainable production and use of chemicals. These include SAICM, Resource Efficient and Cleaner Production (RECP), Green Industry, Responsible Care, Green and Sustainable Chemistry and Circular Economy.
Chemical Leasing is a means of supporting such international initiatives, as outlined below.
The Strategic Approach to International Chemical Management (SAICM) was adopted in 2006 by the International Conference on Chemicals Management (ICCM) to foster the sound management of chemicals around the world. SAICM provides a framework for efforts to achieve the 2020 goal set out in the Johannesburg Plan of Implementation. By then, SAICM aims to ensure that chemicals are used and produced in ways that lead to the minimization of significant adverse effects on human health and the environment. SAICM is supported by the Inter-Organization Programme for the Sound Management of Chemicals (IOMC), established in 1995 and now consisting of nine international organizations involved in chemical safety. A major focus of the IOMC today is to support countries in their efforts to implement SAICM.
Under SAICM, the following “emerging policy issues” that require cooperative action have been identified: lead in paint, chemicals in products, hazardous substance within the life cycle of electrical and electronic products, nanotechnology and manufactured nanomaterials, endocrine-disrupting chemicals, and perfluorinated chemicals and the transition to safer alternatives.
SAICM’s Overarching Policy Strategy sets out five key objectives:
SAICM is a well-established mechanism that holds the potential to kick-start Chemical Leasing projects. SAICM presents the opportunity to promote innovative projects that encourage the development of business cases for sustainable and green chemistry. Chemical Leasing can be applied in all areas identified by SAICM, as it is applicable across all industrial sectors. The only requirement is that the chemicals targeted in SAICM projects can be defined or “quantified” by means of a unit of payment rather than by their quantity. If this is the case, Chemical Leasing can support SAICM implementation.
The key objective of Sustainable Consumption and Production is to generate economic growth and welfare without depleting resources or degrading the environment. SCP must involve life cycle thinking about improving overall environmental performance. In addition, consumers need to make informed choices and create the demand for sustainable products.
Chemical Leasing supports SCP in several ways: production processes are optimized with the support of the supplier, and fewer chemicals are consumed.
Environmental protection in enterprises has been undergoing structural changes in recent years. The emphasis is shifting to preventive techniques that focus on the production processes themselves. RECP covers the application of preventive management strategies that increase the efficiency of the use of natural resources, minimize generation of waste and emissions, and foster safe and responsible production. Not only does this reduce the pollution load on the environment but it also makes good business sense.
The RECP Network established by UNIDO and UNEP supports all three pillars of sustainability by aiming at increased resource efficiency and risk reduction for humans and the environment. It also contributes to solving some of today’s global challenges, such as climate change, resource scarcity, decent jobs, and environmental degradation.
Chemical Leasing is based on the preventive idea of RECP. It contributes significantly to resource efficiency by:
Green Industry combines the ideas of industrial development and growth with sustainability and environmental protection. UNIDO’s Green Industry Initiative and Green Industry Platform support developing countries in their efforts towards Green Industry by capacity building and awareness raising.
By contributing to both economic viability and environmental protection, Chemical Leasing contributes importantly to the development of a green chemical industry. In addition, the service aspect of Chemical Leasing underpins its potential to generate jobs, because services are people-driven and enhanced by the exchange of know-how.
Responsible Production, an approach developed by UNEP, focuses on the prevention of accidents associated with chemicals in small and medium-sized enterprises (SMEs). In a systematic five-step approach, accident risks are identified and assessed, and risk reduction measures are suggested and implemented. Stakeholders such as chemical suppliers, equipment manufacturers, insurance companies, and local authorities are involved in the entire process. Experience has shown that chemicals handling is a major problem in SMEs, and that risk reduction measures often help to reduce chemical consumption. This approach corresponds to the objectives of Chemical Leasing.
The documentation of results obtained in RP and Chemical Leasing projects should be mutually supportive, as Chemical Leasing documentation may address improvements related to safety while RP documentation may address improvements that reduce the consumption of chemicals. The Chemical Leasing sustainability criteria might also be used for RP in an adapted version.
Responsible Care and the Global Product Strategy (GPS), two initiatives launched by the chemical industry, aim at enhancing the safe use of chemicals at company level. Both initiatives include elements such as worker training and equipment maintenance that are crucial for successful Chemical Leasing projects.
Although Chemical Leasing, as a preventive, service-based business model, goes beyond these industry initiatives, it is evident that a successful Chemical Leasing project also fulfils Responsible Care and GPS requirements, and that synergies in both directions are possible. Moreover, it is clearly in the industry’s interest to support Chemical Leasing along with Responsible Care and GPS, as the implementation of Chemical Leasing projects and sustainability criteria can raise the visibility of the industry initiatives, highlight companies’ commitment to the safe management of chemicals, and pave the way for future Chemical Leasing projects.
Green Chemistry has been an emerging area of sustainable design since its introduction in the 1990s. It is a concept that seeks to reduce and eliminate hazardous chemical substances through the improved design of chemical products and processes. The 12 Principles of Green Chemistry provide a framework for developing green chemicals, processes, and products. These principles are accompanied by the 12 Principles of Green Engineering. Implementing these two sets of principles will enable the chemical industry to become more sustainable from an economic, environmental, and social perspective (source).
Chemical Leasing addresses several of these principles, such as waste prevention and the use of less hazardous chemicals due to process optimisation and the coupled reduction in chemical quantities. The integration of innovative business models such as Chemical Leasing into green chemistry projects can help overcome barriers to the promotion of the green chemistry concept.
Sustainable Chemistry contributes to improving resource efficiency and minimising risk in the chemical industry, and it aims at an environmentally friendly production and use of chemicals. This includes, for example, preventing pollution and waste, considering the entire life cycle of a product, or enhancing a product’s recyclability and durability. It “encompasses the design, manufacture and use of efficient, effective, safe and more environmentally sound chemical products and processes” (Source: OECD). Thus, sustainable chemistry is essential for long-term sustainable development: it respects the need to improve the quality of human life within the carrying capacity of the world.
Chemical Leasing enables companies to engage in sustainable chemistry and to improve resource and energy efficiency, reduce waste, decrease risks caused by hazardous chemicals and lessen the negative environmental impacts of their processes. In addition, Chemical Leasing increases the competitiveness and profitability of the business partners.
Chemical Leasing can serve as an instrument for moving towards Sustainable Chemistry. The long record of successful Chemical Leasing case studies worldwide provides an excellent basis for including Chemical Leasing more prominently in the concept of Sustainable Chemistry.
Circular Economy aims to reduce the overall use of virgin materials by economies through the adoption of five strategies: improving the efficiency with which materials are used, extending the amount of time products are in use, using products more intensively during use, substituting service and software solutions for physical products, and recycling the materials contained in products at the end of their useful lives.
Chemical Leasing supports the implementation of circular economies by ensuring that chemical products are used more efficiently by industry (and other sectors such as the hospitality and agricultural sectors where the business model has been successfully used) and by allowing for a more efficient and effective recycling of chemical products once they are spent.
Chemical Leasing also supports circular economy implementation in a more indirect way. The experience which has been gained through Chemical Leasing in successfully creating contracts regulating the delivery of chemical services can be usefully applied in the design of similar contracts for other materials. It is believed that such contracts will play an important role in the adoption of circular economies.
Sustainable Chemistry and Circular Economy will both be important initiatives to help in the spread of Chemical Leasing in the future. Individual articles are dedicated to these topics in this book (see Circular economy; Sustainable Chemistry).
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The Chemical Leasing business model is intended to generate a sustainable business and to support long-term working relationships between the partners. It is therefore important to consider modifications and corrections if the business develops differently to expectations. It is also important to be flexible enough to adapt business activities continuously based on results.
Task 10 aims to manage this process, facilitating corrections and further optimizing chemical use in the company’s production process.
Monitoring is in principle a continuous process that needs to be performed once a Chemical Leasing contract is established. It provides both partners with data on:
Table 4 on baseline data collection can be extended and adapted for the recording of monitoring data (e.g. some companies might need to add process parameters such as temperature and pressure).
Monitoring activities should be agreed between the partners and the results should be shared in a transparent way in order to maintain trust and facilitate joint decisions on modifications.
The supplier should be able to confirm whether the producer’s report on the number of units to be paid corresponds to the real situation, e.g. if the company pays per cleaned pieces, the number of pieces cleaned should be verified.
Monitoring results must be well documented and communicated between the partners as they might form the basis for later contract modifications.
The evaluation should compare the baseline data (before implementation of the Chemical Leasing model) with current data to assess real achievements. The evaluation should answer the questions:
The result of the evaluation can be:
An evaluation schedule must be agreed between the contractual partners. A three- to twelve-month evaluation period is recommended. (Shorter periods require excessive effort and the results might not be stable. Longer periods might cause corrections to come too late.)
The company might want to present its achievements after a certain period of applying a Chemical Leasing model: this could be useful, for example, for the company’s annual report; for speeches and meetings with stakeholders; for ISO 9001, 14001, EMAS and CSR reports; for corporate news, leaflets and presentations; and for meetings with the supplier to discuss contract extension.
The results can be presented in different formats, e.g. in a “before and after” comparative table and photograph (see Figure 5) or in a short summary of the results achieved, as shown in Table 5.
Picture 5. The same packaging line before and after implementation of Chemical Leasing for conveyor lubrication
Table 5. Sample summary table of results
| Economic figures | Environmental improvements | Safety and health improvements |
|---|---|---|
| • Savings planned and achieved • Change in product output • Return on investments/Payback period |
Change in pollution intensity: Reduction in: • Consumption of chemicals • Hazardousness of chemicals • Water consumption • Waste water generation • Energy consumption • Waste generation |
• Reduction in accidents related to the handling of chemicals • Reduction in adverse health effects in workers due to exposure to chemicals |
| Intangible benefits (For example, The company can better control and predict the costs related to the target process.) |
||
Very often partners start by implementing the Chemical Leasing model in one particular line or area. With time, if the cooperation between the partners is positive and the user’s expectations are met regarding the costs, the results, and the quality of the products and services, the user can decide to extend the model to other production lines and areas.
Having finished Task 10 you are aware of results achieved and have developed a basis for continuous improvement.
In Task 1 you identified potential chemicals and processes for Chemical Leasing. Now, you need to pre-assess them to determine whether the Chemical Leasing business model would be relevant. This is the objective of Task 2.
Keep in mind that the change from your existing business model might require additional efforts and resources; therefore, it is important to determine whether there are economic or other reasons that justify implementation of the new model.
Also keep in mind that the decision to implement the Chemical Leasing model should be grounded on the following criteria for sustainability:
One company might have several processes and chemicals which could be “suitable” for Chemical Leasing implementation. For example, if the company is a beverage producer, it might use chemicals for lubrication, cleaning, disinfection and bonding, all of which are suitable/relevant for Chemical Leasing. Furthermore, different chemicals can be applied in the same process. These chemicals need to be pre-assessed individually.
Picture 1: Conveyor lubricationSome chemicals have hazardous properties and can have negative impacts on human health and/or the environment. You should consider these, as well as economic factors, when pre-assessing the chemicals. Each chemical should be analyzed (“pre-assessed”) based on three parameters: quantity consumed, cost and hazardousness.
Parameter 1 – Quantity consumed
Define the amount of the chemical consumed annually in a given process and assign the chemical “points” as shown in the chart below. The greater the quantity of a chemical used, the higher the general suitability for Chemical Leasing.
| Quantity of chemical X applied | Recommended criteria | Points |
|---|---|---|
| High | More than 100 tons/year | 5 points |
| Medium | More than 10 tons/year | 3 points |
| Low | More than 1 tons/year | 1 points |
Parameter 2 – Cost
Check the annual purchasing cost of the chemical and assign the chemical “points” as shown in the chart below. The higher the cost, the higher the general suitability for Chemical Leasing.
| Cost of chemical | Recommended criteria | Points |
|---|---|---|
| High | More than €100,000/year | 5 points |
| Medium | Between €100,000 and €10,000/year | 3 points |
| Low | Less than €10,000/year | 1 points |
Parameter 3 – Hazardousness
Most chemicals present some degree of hazard, such as toxicity, flammability, or corrosiveness. The greater the hazard associated with a given chemical, the greater the need to optimize its use or to consider substitution with a less hazardous/lower risk alternative. Identify each chemical’s hazardousness and assign the chemical(s) “points” as shown in the chart below. Information about a chemical’s hazardousness can be found on the product label. The detailed information can be found on the product Safety Data Sheet (SDS), which can be obtained from the supplier.
| Hazardousness of chemical X | Relevance | Points |
|---|---|---|
| High | Hazardous chemical of high or potential concern | 5 points |
| Medium | Chemical that have hazardous property(is) (for example, chemical is corrosive, flammable etc) | 3 points |
| Low | Non hazardous chemicals | 1 points |
Calculating the final score
Add up the points in the three charts to give each chemical a final score.
A company with a lubrication process consumes lubrication chemicals in high volumes, the costs are estimated as medium and hazardousness as low. The final score will be: 5+3+1=9
You may repeat this procedure for other chemicals and processes.
With this Task done, you have completed the pre-selection and pre-assessment of chemicals and processes which can provide you with promising Chemical Leasing cases.
Continue with Task 3 – Pre-defining the unit(s) of payment
The third task is to identify possible units of payment based on the services rendered by the chemicals.
As previously noted, Chemical Leasing is based on a shift from a volume based payment (e.g. $/t of chemical) to a benefit oriented payment (e.g. $/m2 cleaned surface). Table 2 provides examples of possible units of payment in different industry sectors and processes.
Table 2. Possible units of payment for different processes
| Categories of chemicals | Processes | Possible unit of payment | Sectors/Subsectors |
|---|---|---|---|
| Adhesives | Packaging/Bonding | • Number of bonded pieces • Bonded square meters |
• Food and beverage sector • Construction of buildings (e.g. for bonding of windows) • Manufacture of footwear • Manufacture of wood products |
| Labeling | • Packed (labeled) bottles • Bonded square meters of label |
Food and beverage sector | |
| Detergents, disinfection materials | Cleaning/ Washing |
Occupied room | • Accommodation (Tourism) sector • Healthcare sector |
| Number of cleaned (disinfected) bottles | Food and beverage sector | ||
| Solvents and detergents | • Cleaned pieces Cleaned area • Working time /operations (see note below) |
• Manufacture of fabricated metal products • Automotive industry |
|
| Detergents, disinfection materials | Laundry | Kg of laundry | • Accommodation (Tourism) • Healthcare sector |
| Oils, greases | Lubrication | Working hours | Mining and quarrying |
| Other types of lubricants | Lubrication of packaging conveyor | • Working hours of conveyor • Packed product |
Food and beverage sector |
| Powder coatings, solvent- and water-based paints, chemicals for phosphating | Surface protection | • Square meters of treated area • Number of pre-treated/painted products |
Manufacture of: • fabricated metal products • vehicles and machinery • wood products • electrical equipment • rubber and plastic products |
| Inks | Printing | Printed copy | Publishing and printing |
| Coagulants, Flocculants, defoamers | Waste water treatment | Cubic meters of treated water | Different sectors |
| Bore hole chemicals (Calcium bromide, zinc bromide, caesium formate) | Oil drilling | Daily fee | Oil and gas field services |
| Catalysts | Chemical reactions | t of synthesized product | Manufacture of chemicals and chemical products |
As the table illustrates, in some cases the unit of payment may be based on the operating hours (working time) of equipment rather than on the direct services rendered by the chemicals. For example, in the production of metal parts, there are many parts with different shapes and sizes. It would be difficult to apply as a unit of payment the number or surface area of cleaned parts, and would make more sense to relate the unit of payment to operating/working hours.
Picture 2: Different sizes and shapes of metal parts
Once the chemicals and units of payments are pre-defined, it is essential to check which measurement devices, equipment, and/or information are required to measure, monitor and verify these units of payment. In some cases, several options are possible. The supplier should be able to check whether actual results/outputs correspond to reported figures.
Example
For the lubrication process of a packaging conveyor, the unit of payment could be the number of working hours of the conveyer but also the number of packed bottles. To monitor the number of working hours, the supplier could install a counter on the packaging line (see Picture 3). To monitor the number of packed bottles, the supplier would need to have access to the production company’s database, to check how many bottles were produced.
Picture 3: A counter on the production line
Continue with Step 2 – Development and implementation
Task 4 is to create a committed internal working group that will develop and implement the Chemical Leasing model and will become a driving force in all of the developmental changes.
The group should at a minimum include members from the company’s production and purchasing departments. Ideally it should also include members from the R&D department, the quality assurance department, the legal department, the financial department, the health and safety and environmental department, and potentially members of the management board.
The importance of the working group cannot be overestimated. Success in modifying and optimizing the company’s processes will depend on the efforts of these people and their knowledge, efforts, and understanding of the company´s strengths, weaknesses and potential problems. A skilled team that collaborates well is an absolute necessity for successful implementation of a Chemical Leasing business model.
As soon as the internal team is established, it is essential to set-up the core Chemical Leasing team which should include the supplier(s) and eventually other partners. This will facilitate the further development of the Chemical Leasing model and the exchange of know-how.
Continue with the Task 5 – Establish a core Chemical Leasing team
As soon as the internal working group is established, task 5 is to set up a core Chemical Leasing team that includes the supplier(s) and possibly other partners. This team will facilitate the further development of the model and the exchange of know-how.
The role of the core Chemical Leasing team is to:
The process of creating the core team should begin with a discussion of the Chemical Leasing model with the supplier(s) of the chemicals and processes selected in Step 1. During the discussion you should present your ideas about possibilities for optimizing chemical use and also ask the supplier(s) for their ideas. If a supplier does not have the necessary knowledge and skills to support chemical optimization or is not willing to accept a Chemical Leasing business model, you might consider changing suppliers for the target process.
Under the Chemical Leasing business model, the supplier is intricately involved in process optimization, providing not just the chemicals but also know-how on how to optimize their consumption and/or replace hazardous chemicals with less hazardous/lower risk alternatives. Often the supplier can provide training on site and can recommend equipment changes, upgrades and/or installation.
When selecting a supplier for the core Chemical Leasing team, be aware that you may have the possibility of choosing between several partners (chemical manufacturers or distributors) in the supply chain. In addition, if your company has a procurement department, be sure to apply its internal policy, which might require you to initiate an individual or public bidding process for potential suppliers. Also be aware that other partners could be included in the core team, such as equipment and plant suppliers, recycling and disposal companies, and financial institutions.
Three models of interaction between different numbers of partners are shown in the diagram below. Model A illustrates the basic form of Chemical Leasing, with an intensified collaboration and knowledge exchange between a chemical supplier and user. Model B includes the equipment supplier in this exchange (and the option of “classical” leasing of equipment). Model C extends the collaboration to further partners such as recycling companies or financial institutes. As the leadership of such a group becomes more and more difficult, in practice joint ventures or consortia are typically formed.
Picture 4. Models of cooperation
Once the work plan is defined and concrete ideas have been developed for process optimization and/or substitution, the team should begin to collect data and define the baseline.
Continue with the Task 6 – Collect data and define the baseline