The business case for sustainability

In the current environment where many companies are struggling with uncertain supply, rising costs and an increasingly complex policy environment, it’s really important to understand your highest sustainability priorities and how they add real value to your customers and your corporation. Having an effective governance structure in place with executive level ownership is critical in managing these priorities against the many other corporate priorities.

We have defined an integrated sustainability strategy, with 20 strategic metrics each with related annual milestones that guide us towards our 2030 ambitions, and a supporting governance structure. However, in today’s environment, we cannot progress against all of those metrics at the same pace. Safety is always our highest priority followed by delivering what our customers need from us. Our other high priorities include reducing our operational emissions through a transition to renewable energy and implementing cost effective strategies to reduce our scope 3 emissions, which means all indirect greenhouse gas (GHG) emissions that occur across the value chain, both upstream and downstream. I’m delighted to say that in 2025, compared to a 2018 baseline, our scope 1 and 2 emissions intensity fell by 11% and scope 3 emissions were reduced by 9%. We are also working to lower our product carbon footprint (PCF) and investing in our workforce to ensure people are engaged and getting the personal development support they need.

The Infineum organisation still operates from a global perspective and our sustainability ambitions apply at that global level. Having said that, regional policies obviously impact project economics and may drive us to invest in one plant over another. For example, EU ETS carbon tax may drive us to invest in decarbonisation first at our site in Koln, Germany rather than our site in New Jersey, USA. Certainly community relations factor into these decisions as well and we really rely on local teams to understand and manage such issues.

While we actively monitor the regulatory environment and prepare for changes affecting our industry, for us the strongest driver for our sustainability effort comes from our customers’ expectations, where we see varying levels of maturity. Most of our customers expect updated PCF data and increasingly robust due diligence on our upstream supply chain. However, our customers’ views on the role of lower carbon products are more varied, reflecting the additional costs involved and the challenges many of them face in monetising these solutions with their own customers. We are nevertheless seeing encouraging developments, in particular with the adoption of chain of custody approaches, such as mass balance, which is allowing us to deliver lower carbon solutions in areas where customers see the greatest value.

A winning strategy in our sector is the use of re-refined base oil (RRBO), which has proven very helpful during the recent base oil supply shortage.  We have doubled the use of RRBO in our production processes, which is not only helping to reduce our scope 3 emissions in a cost effective way but also is attractive from a supply security perspective. In addition, where it makes economic sense, we are pursuing targeted investments in renewable energy sources to help reduce operational emissions and manage energy risk. For example, our Vado Ligure manufacturing plant recently signed a long-term biomethane purchase agreement, and we are developing an 18 megawatt solar farm at our Koln site.

We’ve made the transition to renewable energy at our sites where we control the sourcing. I’m certainly no expert on how data centres will impact the future cost and availability of renewable energy but it’s certainly one factor that is leading us to pursue longer-term Power Purchase Agreements. On the other hand, we’re learning how to use AI and some of the new IT tools now available to improve the quality of our sustainability data and hopefully the quality of our related decision-making.

When we set our corporate sustainability strategy a couple of years ago, we did a high level assessment of the financials to show a positive return. But, of course, we had to make a number of assumptions. Six months ago, we updated and refined this model to demonstrate that not only our overall strategy delivered a positive return but so did all of the major individual investments as well. We did this using effectively the same approach we use for other strategic projects such as capital investments based on cash flow and return on investment. The challenge of course is assigning a value to things like brand image, customer share of wallet and employee retention. What matters most is honestly what delivers cash and/or reduces risk, although even the latter is tricky if it can’t be clearly valued. That doesn’t mean you shouldn’t keep things like brand image and employee retention on the table – you should. This just may be heavily discounted in the final assessment.

If you look back 5 years, the companies in our sector were busy setting their long-term scope emission ambitions along with a number of other sustainability targets. We now understand much better what it will take to deliver on these ambitions and a number of companies have reset their targets or their timelines. So in the next 5-10 years, we’ll be focusing more on those ambitions that add the most value for our customers and our corporations.  I think we’ll also need to be more flexible and agile based on what happens with geopolitics and policy. 

When I started my career, back in the late 1980s, everything was about quality, which has since been seamlessly built into everything we do. My hope is that sustainability attains that same status in 20 years. However, I now fear it may take a bit longer. For Infineum, longer-term resilience means diversifying our business beyond the current core, which largely enables the efficient operation of internal combustion engines for transportation. This may be less of an issue for diversified chemical companies, but everyone will need to listen closely to their customers’ needs, focus on creating value and be prepared to pivot quickly when policy and market incentives change.