Why industry must engage with climate policymakers

by

Chris Jahn, president and CEO of the American Chemistry Council (ACC), has a strong message to legislators on Capitol Hill about how the industries he represents can best reach emissions reduction goals.

"We can partner with government to make these things happen. We really need to work hard together to solve this problem," Jahn said at the World Petrochemical Conference 2022 in Houston. "If you care about climate change, you can't solve that problem without us. So, how do we work together?"

Jahn emphasized the importance of supply chain on meeting climate goals.

"We need the resiliency of the supply chain," he said. "If you want to make this transition, this is how we need to do it in the time period it needs to be done, and here are the resources we need to do it."

Lori Ryerkerk, CEO of Celanese, said she agreed with Jahn's stance on cooperation.

"It's really engaging your voice at all levels of the organization," Ryerkerk said. "We talk very openly about what we're trying to do. Whether you're a plant operator or in the research group, everybody has a role to play [in the discussion]."

Ryerkerk said her experience has been that when leaders communicate transparently about corporate intentions and responsibilities, employees and stakeholders respond positively.

"When we're really clear with people when we [say], 'This is what we're trying to achieve, this is why this is good for the company, your community and the world,' people are really energized to get that. They're excited," she said. "We've seen some really amazing innovation and ideas come out of it. When we said we wanted to set an aggressive goal for 2030, the ideas coming out of the woodwork were amazing."

Having a relatable, open environment where people are encouraged "to just throw things out on the table" inspires dialogue, she said.

Ryerkerk referred to this advantage of communication among all parties in a company as the "secret sauce."

"For me, and for our company, the 'secret sauce' is our employees and having that level of innovation and engagement at all levels," Ryerkerk said.

Keep those lines of communication open

Adriano Alfani, CEO of Versalis, said he agreed with Ryerkerk's definition of "secret sauce" and that it drives an organization.

"Its people are the greatest capital a company has. Some days, we might have a dollar more and some days we might have a dollar less, but we always have people," he said.

Alfani said he and his colleagues at Versalis "strongly believe" in building a culture that supports free exchange and input from the company's workforce.

"We believe in what we are doing, because 'believe' means commitment and 'commitment' means speed of execution.

"We're starting to engage with universities now more than we have in the past," Alfani said. "The new generation of chemical engineers are growing with this mentality [of addressing global climate change]. If people don't believe in it, you can add a lot of money, but you won't necessarily execute."

Bruce Chinn, CEO of Chevron Phillips Chemical (CPChem), emphasized the importance of innovation as being another essential ingredient to the "secret sauce" recipe that spurs transition.

"All throughout our history as a company, and other people's histories as companies, innovation has always been what's kept us competitive and what's come up with the ideas that not only make money for us, but also make us better corporate citizens," he said. "Once you put the ideas and challenges in front of an organization, it's always amazing to see what people are able to do."

Chinn said he has confidence in his colleagues at CPChem "to continue to make progress" in ameliorating the climate crisis.

"We're running as fast as we can to catch up with it," he concluded. "We're going to do great things in this space, and it's all because of our people."

Working with policymakers

Earlier in the year, the Security and Exchange Commission (SEC) published a 534-page document focusing on proposed climate disclosure guidelines.

Jahn said the ACC will be paying particular attention to the guidelines' input on materiality standards that will be important throughout Scope 3 initiatives.

"The other thing we're really going to pay a lot of attention to is this idea of the 'one-size-fits-all' approach," he said. "It seems like this kind of a typical government, top-down, one-size-fits-all direction is where we are going. All of the companies in our industry do things different ways in different places, and make different products in different places."

Accordingly, the ACC counseled the SEC "from the beginning to not go down that road," Jahn said. "So, I fear we could end up in a process that could be costly and burdensome, which doesn't actually create real value for anyone who is consuming those disclosures," he added.

Going forward, the ACC is going "to really encourage SEC to take a fresh look, and take their time," he said. "This sounds really basic and almost fundamental, but take your time, get it right the first time and don't worry so much about the politics. Let's get the policy right."

Jahn encouraged industry leaders and policymakers to share the attitude that getting the policy right is the common goal of both camps.

"Work collaboratively, and do it in a way that makes sense so these folks can put their best efforts forward in terms of disclosing materiality for the investments we make. Then, we can make progress," he said. "I'm always cautiously optimistic that we can get there, but I'm not blind to the obstacles that lay ahead of us."

Take your time, do it right

Jahn said he believes it is vital for policymakers "to get the policy right, enable folks to do what they need to do, and then get out of way."

The most important thing the petrochemical industry can do is to impress upon policymakers that industry leaders are "energy intensive and trade focused" so that when government officials make policy decisions and rules, they understand the reach of those decisions, Jahn said.

"These policies are made in a lot of different places, but if you want them made as clean as possible under environmental and safety laws that are among the strongest in the world, then 'we can put you in a Corvette,' so to speak," Jahn said.

Jahn also encouraged climate efficacy policymakers to better understand the idea of parity with other sectors "that have gotten a lot of attention so far."

The transportation and electricity sectors "are obviously two sources of emissions, going forward. As we look at those government resources to help us make that transition, we need to make sure that chemical manufacturers are included in the conversation, as well," Jahn said.

Worldwide operations

Ryerkerk pointed to the fact that regulations vary globally, which can result in some countries being less competitive than others.

"That's a situation we face today with our existing air, water and emissions regulations," she said. "We are a global company, and we are represented in all regions of the world. The decisions we make are not based on the regulations, but on where our customers are, what the supply chains are and what those investments to supply those countries are."

Often, Ryerkerk said, supply chain costs can overcome regulations and other costs.

"Our belief is that countries eventually catch up, so we're making long-term decisions about investments more based on where we think the business is going to be in the future," she said. "We are actually trying to set a higher standard for our plants everywhere in the world [beyond just adhering to] existing regulations, because we know it's only a matter of time before these regulations catch up."

Regarding consistency across countries and data measurements, Jahn said his organization records sustainability metrics that are gathered from and shared with ACC's membership.

"Those metrics are internal and we don't share them publicly, but over time we are able to track progress on some of these issues well beyond climate, so there's still a lot of work being done there," Jahn said.

Ultimately, Chinn said he believes industry leaders "just have to be out there" and be engaged with policymakers.

"There are things we can influence and there are some things we can't control - I think it's part of our job to understand the direction of where things are going and put our businesses into the best competitive position possible, given where the policy and regulations will go," he said.

"People will make the best of a crisis, things will get pushed back, and there will be some unintended consequences that we don't like, but we have to manage our way around them," Chinn concluded. "We've got to have our eyes wide open, and we've got to be willing and bold enough to engage the policymakers not just individually but collectively as an industry, no matter where we are in the world."

Tags

by