The profitability-sustainability trade-off in complex chemical value chains

The industry and transportation sectors account for more than 35% of global CO2 emissions and there is increasing pressure on industry to reduce emissions. To remain competitive in their markets while reducing their emissions, companies need to re-optimise their entire value chain focusing not only on traditional costs, related to manufacturing and transport, but also on emission reduction targets. In this work, we propose a linear program to optimise a deterministic multi-objective value-chain problem aimed at minimising CO2 emissions and maximising a company’s total contribution margin. We test the model on a real-world dataset, provided by a multinational chemical company, to determine the main sources of emissions and their geographical distribution. Moreover, we analyse how much emissions can be reduced at a negligible impact on the total contribution margin and describe what the best strategies are to achieve the targeted emission reduction. We find that it is beneficial to move production to less polluting production sites, even when that increases the transportation in our setting. It is therefore advisable to jointly address the reduction of production- and transportation-related emissions, rather than separately.