The industrials and chemicals ecosystem is a critical part of the global economy, producing materials that are essential in our everyday lives. Many of the most carbon-intensive industries – such as steel, cement or plastics – are also the most difficult to decarbonise. They require very high heat or rely on processes that produce carbon dioxide, and they are manufactured in expensive facilities built to last for decades.1
Nonetheless, industrials and chemicals businesses will need to substantially cut their emissions if the world is to remain in sight of the 1.5°C temperature limits targeted under the Paris Agreement. To reach net zero by 2050, the industrial sector’s total direct emissions – which account for 30% of the global total2 – would, on current projections, need to fall by almost a quarter by 2030, or about 3% per year, according to the International Energy Agency.3
To understand how businesses in this sector are responding to this challenge, HSBC worked with research company Kantar to survey 375 companies globally across the industrial ecosystem, including steel, chemicals and plastics, construction materials, other metals and mining, paper, forestry and glass.
The survey is the latest in HSBC’s Transitions Pathways programme, which examines heavy-emitting industries. Our pathway explains how companies in the industrials and chemicals sector are approaching the transition, where they are on their journeys to reach net zero, and their related financing strategies.
Transition planning and reporting
The survey shows that companies in the sector see the transition to net zero as important for their bottom lines. Almost all respondents (98%) said the transition was commercially important. That is especially true for business-to-consumer (B2C) companies, with more than half (53%) saying transitioning to net zero is their top priority, versus 34% of business-to-business (B2B) firms, underlining the importance of consumer pressure in driving action.
This level of strategic importance is reflected in transition planning. Over three quarters (78%) of respondents consider themselves to have a transition plan in place or are developing one, with both B2C and larger companies – those with turnover of USD2.5 billion or more – the most likely to have formal plans.
Businesses in the survey are also developing a clearer picture of their carbon footprint. 82% of respondents say they are reporting scope 1 emissions (those produced directly and scope 2 emissions (those generated indirectly, such as by the energy the company uses). In the US, where the securities regulator has proposed mandatory reporting of carbon emissions4, the proportion of companies doing so is even higher, at 94%.