Efficient business model

In their presentations the experts confirmed the prospect of success of such new business models among which the Chemical Leasing concept seems to be the most advanced and comprehensive one showing the highest potentials both in terms of resource efficiency as well as environmental compatibility. 

Chemical Leasing builds on the concept of the Cleaner Production approach as it is a preventive, environmental, service-oriented business model that aims at improving overall efficiency, enhancing environmental performance and increasing the competitive advantage of industry. 

Based on experiences obtained in Egypt, Mexico and Russia and to enable a systematic approach of the implementation of Chemical Leasing business models at company level, UNIDO has developed a first toolkit. It covers the main steps to be undertaken to ensure the smooth and efficient application of Chemical Leasing in the industries of different countries. An overview of the general content of UNIDO s Chemical Leasing toolkit is included in Chapter 8. 

The key player in any ChL business model is the supplier of chemicals. And it is essential that the supplier has know-how about the chemicals and their efficient application. In many cases the supplier will also be the producer, but... 

Specialised recycling companies might also be involved in the business model as further partners if they can help to improve the efficiency of use. 

Motives for the introduction of the new business model cost reduction more efficient process high quality product well skilled staff less liability environmental benefits ... 

In the interview relating to the experience of Chemical Leasing application the General Director of the service provider underlined that the new business model was beneficial for the company in respect of economic profit and opportunity for a most effective introduction of innovations and know-how. The Deputy Technological Manager of the company using the service indicated that the new business relationship was economically beneficial and provided the fastest and mostly efficient approach to solve environmental problems that the company had been facing before. 

The present toolkit intends to support the work of NCPCs and independent experts to ensure the high quality of Chemical Leasing business models and the efficient use of chemicals while reducing the risks of chemicals and protecting human health. 

First, let us recall the shortcomings of the sales concept in face of information asymmetries. As stated in section 2, the traditional selling of chemicals, firstly, does not prevent over-consumption. In a competitive market it is rather the aim of the sales concept to sell as much commodities as possible to increase the profits of the sellers. A sales contract consequently provides no incentives to reduce such adverse effects of chemicals on human health and the environment that are related to the quantity of chemicals in use. Secondly, the sales concept provides no incentives for transferring accurate knowledge on the efficient application of the chemical, as this lowers the profits of the sellers. In contrast, Chemical Leasing business models are capable to effectively deal with problems of information asymmetries. Based on the findings of Ohl and Moser (2007), both models introduced above (A and B) show comparative advantages as follows ... 

All in all, both models are able to reduce the over-consumption of chemicals due to information asymmetries between producers and users. If producers of chemical substances have advanced knowledge on the efficient application, disposal and recycling of produced chemicals the dissemination of this knowledge is neither required by REACH nor supported by the traditional sales concept. This poses additional risk to human health and the environment. These risks can be avoided by the introduction of Chemical Leasing business models, an innovative approach that delivers incentives for efficient application, disposal and recycling of chemicals. 

For further consideration it is essential that the new business model includes the performance of a service as well as the increase in efficiency of one or more subprocesses. 

Compared to business models run before Chemical Leasing was implemented, all cases showed remarkable increases in resource efficiency and environmental performance. 

We have explained why it is virtually impossible to grow out of the sector s performance problem. This, however, means it is mandatory to pursue excellence in operations, an area easily neglected in the days when growth was still the answer. In fact, operational efficiency is already high on the agenda of all major specialty chemical companies. Clariant, Degussa, and Schulman are only three among many companies that have embarked on efficiency improvement initiatives. Key for success will be to match the level of sophistication in each step of the business system with the business model(s) selected. 

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