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GLOBALIZATION'S TRENDS EXPLORED The symposium topic was globalization, but a major subtext was sustainable development RUDY M. BAUM, C&EN WASHINGTON
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event symposium at the Ameri can Chemical Society national meeting in Boston was quite spe cific, if a bit unwieldy: "The Im pact of Globalization and Consolidation on the U.S. Chemical Industry with Special Emphasis on Research." So the question that immediately arose at the end of the session was, Why did four top executives of major chemical compa nies and one high government official concerned with science and technology policy focus so much of their talks on the topics of sustainable development and cor porate responsibility? Perhaps the answer is this: Globaliza tion is an economic fact. The chemical in dustry—like the banking, aerospace, in formation technology, communications, and many other industries—is now a glob al industry Globalization cannot be de railed by economic considerations. The question that hangs over global industries is whether societies will accept their exis tence and the power they wield. The lead ers of global industries know they have to work to achieve that acceptance. Take, for example, this passage from the report "Innovation, Technology, Sustainability & Society" from the World Busi ness Council for Sustainable Development (WBCSD): "Today, innovation is based not only on the challenges, problems, and needs but also on the social, political, and cultural conditions prevailing in the prospective market. People fear the unknown—espe cially when they believe that it could ad versely affect their health or established social systems. "Life expectancies have increased, the availability of natural resources has more than kept pace with demands, and food supplies have defied Malthusian logic. Nev ertheless, the by-products of modern civ ilization cause legitimate concerns like in creased carbon dioxide levels in the atmosphere, threatened ecosystems, and persistent bioaccumulating toxins. Al HTTP://PUBS.ACS.ORG/CEN
though innovation and creativity are still highly valued, many wonder whether new technologies will bring greater downside risks than upside benefits. "Our challenges in business are to create the major innovations necessary to enable a sustainable human existence and to ensure their acceptance by society. No easy task." At the symposium, DuPont Chairman and Chief Executive Officer Charles O. Holliday Jr. focused on the WBCSD re port. DuPont is one of 160 international companies that make up WBCSD, and Holliday cochaired, with Aventis Chair manJurgen Dormann, the working group that produced the report. WBCSD is one of the in numerable nongovernmen tal organizations that par ticipated in the recently concluded United Nationssponsored World Summit on Sustainable Develop ment in Johannesburg, South Africa; "Innovation, Technology, Sustainability & Society" was one of WBCSD's contributions to the summit. Holliday CYNICS MIGHT argue that Holliday and the other speakers at the sym posium—Dow Chemical President and CEO Michael D Parker, Rohm and Haas Chairman and CEO Raj L. Gupta, Bayer Vice Chairman Helge H. Wehmeier, and Deputy Secretary of Commerce Samuel W Bodman—have merely learned to talk a convincing and reassuring line, that their commitment to sustainable development is nothing more than a necessary response to a growing barrage of criticism aimed at globalization from many quarters. Perhaps. But the actions being taken by these companies suggest that their com mitment to sustainable development— and to changing the very dynamic of in novation—is real. Holliday, for example, argued strongly
that the views of "nontraditional stake holders" must be considered during the development process. "We are used to the idea that the process of innovation must in clude market feedback," Holliday said. "What we now realize to be equally im portant is that nontraditional stakeholders have a role to play in that feedback process if our innovations are to respond to a full range of global market signals. ... If you leave with only one action item from this report, I hope that it is to find a place for engaging nontraditional stakeholders in your innovation process." Parker noted that Dow Chemical's com mitment to sustainability has been recog nized by three Green Chemistry Awards from the Environmental Protection Agency and by the Dow Jones Sustain ability World Indexes, which for the past two years has named Dow the "Corporate Leader" for the global chemical industry Parker maintained that "a sustainable de velopment mind-set can fuel geographic growth, mergers and acquisitions, and the creation of new innovative businesses," and he gave examples of each. As one such example, Parker pointed to the joint venture formed in 1997 with to
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Parker Cargill to produce polylactic acid, the "first commercially viable plastic made from an nually renewable resources." At maturity, Parker said, Cargill Dow is expected to generate sales in excess of $1 billion. Earlier this year, EPA awarded Cargill Dow a Green ChemistryAward for PLA (C&EN, July 1, page 26). Like Holliday and Parker, Rohm and Haas's Gupta sees the challenges of glob alization and consolidation as opportuni ties for growth. "Because of its ability to create new technology and products, the chemical industry has been involved in nearly every scientific breakthrough recorded in the past 100 years," Gupta told the symposium. "^et, sadly, there are those today who think that this time ofgreat disC&EN
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BUSINESS covery might be over, that our industry is mature, that consolidation maybe the only route to future success. "I refuse to accept that thinking," he continued. "Time and time again, the chemical industry has proven that we are capable of achieving far more than anyone anticipated. Creativity innovation, and the ability to rise to the challenge have helped us improve the quality of life for people around the world. And, along the way, we have been able to continually transform the way we operate in order to adapt to evolving social imperatives such as the environmental movement, Responsible Care, and sustainable development." Globalization is also about corporate responsibility according to all of the speak-
Gupta
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ers at the presidential event. Wehmeier, in particular, stressed that the chemical industry needs "to be seen as an industry that can be counted on to do the right thing." With missionary zeal, 'vvferimeier described the chemical industry's Long-Range Research Initiative (LRI) (C&EN, July 30, 2001, page 32). THROUGH LRI, the chemical industry is funding—to the tune of $25 million per year on a three-year rolling commitment from American Chemistry Council members—independent research focused on three areas: • Improved methods to evaluate potential risks of chemicals to the public health and environment. • Identification of vulnerable groups, including children, and characterization of factors that may place them at risk. • Chemicals in the environment, including how they move and change along pathways from sources to humans and wildlife.
Industry groups in Europe and Japan, Wehmeier said, are kicking in another $9 million per year to advance LRI. Wehmeier emphasized the lengths to which the industry has gone to ensure the independence of LRI, to answer "society's inevitable question: 'Why should we believe the chemical industry?' "The answer, he said, is that "the entire LRI process is open and transparent." Wehmeier noted that LRI governance, planning, and oversight functions involve 30 public participants, or 20% of the leadership positions. Among these nonindustry members are former assistant EPA administrators and EPA advisory committee chairs. "In addition," he said, "authority for the design and conduct of LRI stud-
Bodman ies is vested in the individual researchers. The investigators, not the industry, own the data they generate." No company may edit, review, or otherwise influence the publication of LRI-sponsored research, Wehmeier said. "The chemical industry is doing the right thing," Wehmeier concluded. "We are acting out of enlightened self-interest, not from regulatory enforcement. We are voluntarily helping to build a stronger scientific foundation for more rational and more effective public policy" Not every step on the path to a global chemical industry is a smooth one, as was made clear by Bodman. In his presentation, Bodman outlined the importance of the chemical industry to the overall U.S. economy and its place in the world economy He also observed that many economists expect the U.S. chemical industry to run a trade deficit in 2002 for the first time in memory Bodman also addressed the European
Commission's white paper on future regulation of chemicals (C&EN,June 24, page 24). The white paper, Bodman pointed out, "outlines a new regulatory regime for the registration, testing, and, in some cases, use authorization of chemicals in Europe. In our opinion, it also outlines what appears to be a costly burdensome, and complex regulatory system, which could prove unworkable in its implementation." The EC's proposal is a departure from the current regulatory structure that distinguishes between existing substances and new chemicals, with different testing requirements for each, Bodman said. "Because of the change in approach, the new system will retroactively cover an estimated 30,000 chemicals currently in the European market, requiring new data and testing information for each substance," he observed. THAT'S PROBABLY not acceptable to the Bush Administration. "The U.S. fully supports the {European Union's] objective to protect human health and the environment, but we have serious concerns about the strategy's impact on innovation, competitiveness, and trade," Bodman concluded. "In March, we forwarded a text to the commission that expressed our specific concerns about the proposed system, including the costs to industry, impact on jobs, possible discrimination, and consistency with [World Trade Organization} regulations." As all four of the chemical company executives made clear in their talks, a commitment to sustainable development in no way disavows a company's commitment to turning a profit. In discussing the need for a more flexible approach to intellectual property that takes into consideration social needs, for example, Holliday also insisted that "companies won't do research if they can't make money on it." In his talk, Parker discussed Bow's efforts to mitigate the effects of layoffs at the complex at Buna SOW Leuna in eastern Germany and in the U.S. as a result of DoVs merger with Union Carbide. In responding to a somewhat hostile question about such layoffs, Parker said: 'As executives, we have a responsibility to make our companies as efficient as possible. There is no such thing as a perfect answer. We have no choice but to move forward honestly and respectfully" •
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