Chemicals make up virtually everything we use, consume and ultimately throw away. For SABIC, ensuring a shift toward a #CircularEconomy that returns valuable substances to the production process—rather than letting them fester in a landfill—is crucial.
Watch as Neil Cameron, head of our new sustainable packaging fund, talks to Aruna Subramanian, managing director at SABIC Ventures, about how the petrochemicals giant is adopting this new paradigm in raw materials and packaging.
- Regulation is playing a huge role, especially in Europe.
- Working with innovative startups can supercharge the sustainability transformation.
- Electrification and renewable energy in the chemicals industry is a must-have going forward.
Transcript:
Neil Cameron (00:00):
Welcome to this conversation hosted by Emerald Technology Ventures. In this episode, we asked the question, what about circularity in the petrochemical industry? Joining me is Aruna Subramanian, managing director of SABIC Ventures. My name’s Neil Cameron. So let’s dive right in. Because SABIC is perhaps the world leader in the production of things, you produce 60 million metric tons of stuff every year, or more. And once upon a time, one would produce the polymer, throw the polymer over the fence, customer buys the polymer, and turns it into a thing. That is not where we are any more at all, especially if we’re going to talk about the circularization of those polymers. So what’s changed? What’s the massive paradigm shift that you’re living with?
Aruna Subramanian (00:45):
Well, I think the sneeze in our industry, to use a term I heard today, has been obviously the regulation change and particularly driven by Europe. And the regulation and the media surrounding it has also changed consumer preferences. So between the customer and the government, I don’t think we had much choice, or the industry doesn’t have much choice but to evolve. And on top of that, you obviously have the climate change, I guess the threat upon all of us. And it brings to question what all the manufacturing industries are going to do. So for us, circularity is no longer a nice business unit. It is the way forward for us.
Neil Cameron (01:23):
A must have.
Aruna Subramanian (01:24):
A must have. Absolutely.
Neil Cameron (01:25):
A must have. So you are responding to regulatory requirements, but it sounds like there’s an element of altruism in there too. It’s not just responding to regulatory requirements. It’s not just responding to economic requirements. It’s also doing the right thing.
Aruna Subramanian (01:43):
Yes. But I’d also like to think, and I’m sure most of my colleagues in other companies would also agree, that altruism is kind of necessary for business now. It also makes business sense. So, I don’t know. Altruism and company selfishness, I think, more or less becomes the same thing now. We all have to do the right thing if we are going to be around tomorrow.
Neil Cameron (02:02):
Sure. You are based in the Middle East, or headquarters is in the Middle East. You, yourself, are based in Europe. SABIC has operations around the world, Europe, North America, and Asia. Surely, addressing those different markets with essentially the same product must be different on a region by region basis. Are there major differences in how those different geographies are adapting or adopting circularity?
Aruna Subramanian (02:26):
For sure. It’s no secret that the regulatory drives are very different in each region. So Europe certainly is leading. China is making a lot of changes, but particularly with the new strategy revolving around materials. The US is probably a little bit slower, but I think the signs are that it is inevitable, that we’re all going to be following fairly stringent standards across the world. But as a business, yes, we have regional variations. It’s not always easy to adapt, but that’s why I think our matrix of how we are organized as a market facing organization with the different industries that we serve and regional buyers, because we have technology centers in the US, in Europe, as well as in Shanghai, and in the Middle East, so that helps us address the nuances between the different customer drivers.
Aruna Subramanian (03:20):
So if you look at how we traditionally used to be organized it, we had a PP business, we had a PE business and, yeah, I don’t know, engineering thermoplastics business. But now, apart from the fundamental polymer focus, our biggest change in our organization is having these market facing segments. So as a business, we realized that that’s the way to go. We have to listen to the customer, and then you would have seen all the focus we are giving on a true circle business. So circular polymers are the way to go.
Neil Cameron (03:50):
I mean, I think you probably have the best job in all of SABIC because…
Aruna Subramanian (03:53):
Yes, I do. Don’t tell anybody.
Neil Cameron (03:55):
… not only do you have this where you can get to participate in this business model change from being just a raw materials supplier, essentially, but instead to becoming a market facing company, which is solving people’s problems, but you get to mediate all of that relationship by having relationships with the innovation community. It’s the innovation community that is providing you with tools to interact directly with your business units.
Aruna Subramanian (04:24):
Correct.
Neil Cameron (04:24):
Do you see major changes there?
Aruna Subramanian (04:27):
I think we’re seeing a lot of activity in the plastics recycling, both chemical and mechanical at the moment. So if I take a step back and look at that true circle business, we obviously have feedstocks, which I think to a smaller or greater degree, we have technologies not quite to the scale of the volumes that we produce. Then we have our, I guess, the recycling arm of it. So whatever we put on it, give it… At least not bring it from cradle to grave too fast but extend the lifetime of the plastics we have. And last but not the least, is a design for reuse and recycle. So if you look at each one of these, that addresses from source, the feedstock that we use. What are we going to do with the products, so we are not putting it in a landfill very soon or too early?
Aruna Subramanian (05:14):
And then at the end, can we make our products working with our value chain partners in a way that recycling becomes easier? And yes, for sure, I have the best job in SABIC. Keep that quiet, but yeah. It’s fun to work with the startup community, because if you look at where we are with true circle or the circular economy, I think, as you would have seen in Emerald, the signs were already there several years ago. Companies were already starting to work on technologies, maybe not in the mad pace that we see them now but, certainly, you could see the indications. You see that with digital. You see that in automotive, or the EV space. We get to see the trend before the corporates start to react and that’s, certainly, an amazing place to be.
Neil Cameron (05:58):
And we get to catalyze that change, right?
Aruna Subramanian (06:00):
Yes.
Neil Cameron (06:00):
It’s delivering a solution that our stakeholders need, and they know they need it.
Aruna Subramanian (06:06):
Absolutely, absolutely. And that, certainly, I think that’s something SABIC, I see also in the last three years, has taken very seriously. So if you look at where ventures sits now, we work directly with our colleagues in corporate R&D, directly with corporate sustainability. So as you said, catalyzing the change along with our business partners.
Neil Cameron (06:25):
And it’s neat that you say this is a behavior change over the last three years or so. I think that’s probably when we started first talking about circularity in your business, you and I. I would ask you to cast your eye forward, not necessarily specifically, but SABIC, but in the petrochem industry generally, what does the next five or 10 years look like? 2030. I mean petrochem today in the court of public opinion has a fairly negative…
Aruna Subramanian (06:53):
Press.
Neil Cameron (06:54):
… press, yeah. But, I mean, in many respect, it’s totally unfair. 10 years hence, what does SABIC look like, or what does petrochem look like? I should say.
Aruna Subramanian (07:03):
Well, maybe it’s not going to be petrochem, but it’s going to be some alternative chem. I think it would be hard to say that plastics are not going to exist anymore, because if you look at a comparable, a sustainability development goal on zero hunger, we are going to need food. World population is growing, transport needs are growing, so plastic and packaging… I hate to say, I think everyday life, we probably touch 200 objects a day that revolve around the polymer industry.
Aruna Subramanian (07:34):
But if I look forward 10 years, what I would like to see is we are going to have electrified crackers with feedstock at a scale, which is not just from fossil fuels but from alternative sources of whatever they may be at this stage. And I would like to see that these polymers are much easier for recycling. I’d like to say that all our plants are also powered by clean electricity. What else can I say? I guess, obviously, then that automatically reduces the waste heat we are going to produce, but if any, then it should be in a closed loop back into the system. And, yeah. And I hope that we don’t have these regulation discrepancies between the region. So uniformly, we should all be doing the same thing. So, at least, that’s my fantasy for 2030.
Neil Cameron (08:23):
That the winds of change have affected us to point were-
Aruna Subramanian (08:26):
A change to stay.
Neil Cameron (08:27):
Yeah.
Aruna Subramanian (08:27):
Yeah.
Neil Cameron (08:28):
Well, that’s a very positive way to end our conversation. Aruna, thank you so much for sharing your expertise and your thought leadership in this space.
Aruna Subramanian (08:34):
Thank you, Neil. It’s a pleasure to be here.