• Climate
  • General Sustainability
  • Supply Chain
  • Chemicals

Decarbonization as a growth strategy in the chemical sector

Reading Time: 7 mins

Why decarbonization isn’t a trade-off – it’s a path to competitive advantage

Decarbonization as a growth strategy in the chemical sector

In brief:

  • The chemical sector’s vast environmental footprint makes it a high-impact player in the decarbonization transition especially across scope 3 emissions.
  • Procurement is emerging as a strategic lever enabling faster, cost-effective emissions reductions by targeting high-impact, high-influence suppliers and materials.
  • Collaborating with strategic suppliers to cut emissions doesn’t just improve performance – it builds the kind of trust that makes future innovation and risk-sharing possible.
  • Embedding carbon data into sourcing decisions helps companies manage exposure to tightening carbon pricing regimes like the EU Emissions Trading System (ETS) and the upcoming Carbon Border Adjustment Mechanism (CBAM).
  • Shifting to renewable feedstocks such as biomass, algae and agricultural waste is increasingly commercially viable and strategically necessary.
  • Addressing upstream emissions and nature-related risks together builds supply chain resilience, protects margins and positions businesses for long-term success.

The chemical industry is a foundational part of the global economy, touching nearly every product and sector from agriculture and pharmaceuticals to mobility, electronics and construction. But that reach comes with a cost: a significant environmental footprint, much of it embedded across sprawling, complex supply chains.

For years, decarbonization in the sector has been seen as a costly necessity a trade-off between environmental responsibility and economic viability. Today, that view is being challenged. A growing number of chemical companies are demonstrating that reducing emissions isn’t just about compliance it’s a strategic lever for improving efficiency, managing risk and creating long-term business value. Done right, it can also drive down procurement costs, improve supply security and future-proof operations against tightening regulations.

From compliance to competitive edge

While many chemical companies have made progress in decarbonizing their direct operations, scope 3 emissions – from upstream raw materials to downstream product use – still account for the majority of the sector’s climate footprint. Upstream emissions in the chemical sector are mainly driven by fossil-based feedstocks like naphtha and natural gas, along with GHG emissions from other chemicals, purchased goods, transport and other supplier activities before production begins. Reducing these GHG emissions entails directly engaging with the supply chain – starting with the suppliers and materials that have the highest climate impact.

 For chemical companies, that makes upstream decarbonization one of the most effective and necessary levers for meaningful progress. These emissions are deeply embedded in complex global supply chains that depend on petrochemical derivatives, agricultural feedstocks and other carbon-intensive inputs.

In response, leading companies are rethinking how they operate and procurement is emerging as a powerful lever to drive progress. By embedding emissions into sourcing decisions from solvents to supplier contracts they’re targeting the points where carbon and cost converge. Some are redesigning their supply chains by focusing on the categories that matter most like fossil feedstocks, catalysts and third-party utilities to cut emissions, reduce costs, manage price volatility and secure access to essential materials in an increasingly constrained market.

Embedding carbon data into procurement decisions gives companies clearer visibility into their scope 3 emissions and their exposure to tightening carbon pricing regimes such as the EU Emissions Trading System (ETS) and the upcoming Carbon Border Adjustment Mechanism (CBAM). This enables them to take early action, like reducing supply chain emissions, to avoid rising compliance costs as carbon prices increase.

To support this shift, Quantis and Inverto have partnered to help chemical companies take a more strategic approach to procurement. By combining deep sourcing expertise with science-based carbon analysis, the goal is to help businesses make decisions that reduce emissions and improve resilience without compromising cost or competitiveness.

Scaling impact across scope 3

Few sectors face a scope 3 footprint as complex or as full of opportunity as chemicals.

The most effective companies are focusing their efforts where they can make the greatest impact: measuring the carbon footprint of raw materials and production processes to identify high-emission inputs like ethylene or ammonia. They’re also shifting to renewable feedstocks – transitioning from fossil fuels to renewable resources such as biomass, algae and agricultural waste, which are increasingly ready for commercial-scale deployment.

These strategies deliver fast, measurable returns reducing emissions while strengthening financial performance.

To sustain this momentum and scale impact, companies are embedding sustainability into procurement policies and supplier evaluation criteria. Those making the fastest progress are aligning procurement with high-impact decarbonization levers like energy efficiency, circularity and renewable power. Many of these levers are mature, cost-effective and ready to implement making them low-hanging fruit for cutting emissions while capturing financial gains.

From carbon to nature: What’s at stake for chemicals

Many of the supply chain hotspots that drive emissions such as land use, water intensity and raw material sourcing also carry significant nature-related risks. Addressing these issues through a carbon lens often delivers co-benefits for biodiversity and ecosystem resilience, aligning climate and nature goals in a single effort.

Take water, for example — a critical operational input for the chemical industry. According to CDC Biodiversité, around 70% of the sector’s ecosystem dependency is tied to surface and groundwater use particularly for catalytic cracking and distillation. In regions facing climate-related water stress, nature-based solutions like constructed wetlands or regenerative sourcing practices offer not only environmental benefits, but business continuity and cost savings.

When integrated into procurement strategies, these approaches become part of a broader set of levers companies can deploy from redesigning specs to switching to bio-based inputs or partnering with lower-impact suppliers. These measures don’t just reduce emissions; they enhance resilience to nature related risks, improve regulatory alignment and strengthen social license to operate.

The chemical industry’s path forward

The path to decarbonization in the chemical sector is complex but it’s proving to be a catalyst for stronger, more resilient business.

Companies that treat emissions as a strategic KPI not just a compliance metric are finding new ways to reduce risk and strengthen relationships with suppliers. In doing so, they’re not just reducing risk they’re unlocking more agile operations and deeper supplier relationships, building the trust to enable future innovation and risk-sharing.

What’s more, many of the same pressure points driving carbon impact also shape exposure to nature-related risks. Addressing them together strengthens both the credibility and resilience of corporate sustainability strategies.

Decarbonization isn’t about checking a sustainability box it’s about rethinking how companies buy, build supplier relationships and align product choices with future-fit performance metrics. Sustainability is no longer a side initiative. It’s becoming the foundation for how the chemical industry will operate, compete and grow in a climate-constrained world. The companies moving now aren’t just meeting expectations they’re defining the future of the sector.

Discover how Quantis helps chemical companies reduce emissions, rethink sourcing and stay ahead of shifting market and regulatory pressures.

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Author(s):

  • Global Fashion & Sporting Goods + Chemical Lead

    Philipp Meister

  • Principal Strategist

    Alice Joubay

  • Chemicals + Industrials Lead, Germany

    Tilmann Vahle

  • Sustainability Expert

    Mohamad Ghareeb