Indorama Ventures Public Company Limited (IVL) Earnings Call Transcript & Summary

Greetings, everyone. We're pleased to be with you this morning or this afternoon or this evening. It's my pleasure to moderate the session today. We're going to be talking about the pathway to sustainability and the transition to the circular economy, and we'll have conversations about both plastic circularity as well as climate change and the implications to chemicals. So with us, just really pleased to introduced Deepak Parikh. Deepak is the Chief Strategy Officer for Indorama Ventures; and also Bob Maughon, Chief Technology Officer and Chief Sustainability Officer for SABIC. So before we get into the conversation, let me just do a few housekeeping items. This is a live conversation. It will be recorded and available in 24 hours from now on the same link on which you registered. [Operator Instructions] And again, special thanks to Indorama Ventures for being a partner with us, promoting the dialogue and diversity of thought in a series of conversations and as being a sponsor. And with that, let's turn to the conversation of plastic circularity and climate change and what it means to chemicals. So I'm just going to mention a couple of items setting the context, and then we'll certainly get to our speakers. So first of all, plastics demand is a significant size market. Roughly 350 million tons per year of plastics are consumed globally and is growing at a multiple of GDP anywhere from 3% to 4.5% per year. It's important to the chemical industry because 50% of basic chemicals are consumed as a plastic, so vitally important to the chemical industry. The world, just a few sort of problem disruptive truce, if you will, the world will generate increasing amounts of plastic waste, as I just mentioned, and -- driven by population increases. Certainly, we've seen as population increases and prosperity increases in urbanization, the amount of waste generation actually increases. And much of the plastics is -- there's a high percentage of plastics that are in nondurable applications. So again, increasing the pressure to address the plastics waste issue. The progress to circularity creates higher economic barriers to recycling, and we'll talk about these issues as well. So as we advance the circularity, we actually reduce demand for fossil fuels, which then creates more economic, lower-priced linear plastics and just creates additional challenges and issues to address as we move towards circularity. Scale technology and the associated infrastructure, clearly an issue that -- for the circular piece that is evolving, but it is at a very low scale today, and I think we'll talk about that as well. Transition to circularity and to sustainability, we think, will generally be policy-driven. The industry is certainly responding to that. You'll hear that today. But the issue around policies that are so important is, often, they have unintended consequences, and the goals are at times unclear. We need a level playing field as participants in the industry certainly continue to compete in the market and provide value to customers in the market. So the approaches to the standards as we address sustainability and the adherence to claims in addressing that is really important to stakeholders and making sure we have clear direction. So that's a little bit of a context. Before we go into the Q&A, I think it would be quite helpful to -- for our speakers to maybe share a little bit of their perspectives. And if I may, Bob, may I just start with you on a few opening remarks, please.

Sure. Thanks, Dewey. Look, I think, first off, honored to be here. I appreciate the invitation to participate. And actually, for me, personally, great to see an old friend, Deepak, as part of the panel here. Look, I think this is a critical topic at a critical time. I think well time to bring this group together to discuss it. Both the circularity issue around plastics and carbon are critical pressures today for the industry. And I think, as we go through the dialogue, hopefully, we transition this discussion from -- away from the threat or the pressure and what the opportunity actually is for the industry itself. From a SABIC perspective, we have very clear sustainability priorities as a company, well aligned, and aligned with our CEO and the strategy of the company. When you look at our focus, it's around resource efficiency, it's around energy and climate change, it's around circular economy and it's around innovation and bringing more sustainable solutions to the market. We -- if you look at what's happening today, I think you can clearly see that from a pressure in the industry from the consumer and NGO groups, there's clear challenges, right, on both the carbon and the plastic waste issue. I think the issues are clear and apparent. I think there's really no debating the challenges that are there. I think, at the value chain level, there's a challenge, right? That pressure from the consumer and the NGOs and society in general is putting pressure on the brands in terms of what innovations they need to have, what solutions they need, and that's translating into -- trickle that effect throughout the value chain of what solutions are available, recognizing the gaps and pressuring for testing new solutions and innovations. And then if you take that for this, clearly, as you just highlighted that we have regulatory pressure as well that's emerging. And I think as an industry, it's important for us to not only be prepared to react to the regulatory pressure, but actually to help drive smart policy decisions to help enable the future. We're very committed to driving efforts across all those areas. I think as we get into the Q&A, we'll talk about the role of plastic waste that we've had, our engagement with the alliance, our own investments in chemical recycling and taking those [indiscernible] the market and the value chain response there, but, as well, our investments around carbon, renewable energy and driving efficiency on our assets. So hopefully, we'll have a great dialogue here. But a clear priority for us as a company to not only lead with innovative solutions and projects, but also to influence the industry and the policymakers on driving the right smart decisions for the future.

Thanks, Bob. Appreciate those comments. And Deepak, maybe you -- and I noticed you're on -- yes. So Deepak, maybe, if you would please share perspectives from Indorama Ventures.

Sure. Thank you, Dewey, and thank you, Bob. Great to be together with you. Let's go back in the perspective for a second. The event in Dow's this year early in the year. The only central theme was climate change, and that was not too long ago, and that was in early part of the year. Six months later, everybody's talking about the COVID, and the climate change is in the background. Not that it's gone, but it's in the background. And I reflect back another important event, March of 2019, when we had the World Petrochemical Conference. Lynn was a moderator, like what you're doing. And then I had Jim Fitterling with me on the stage with -- talking about the circular economy, what we're doing in the plastics waste and the solution thereof. And then subsequently, Bob Patel had a very nice overview, putting the things in perspective, the plastics where they're circling in the ocean is as the size of Texas. So that's kind of puts in perspective the issue is not gone by any means. It is just muted. So first of all, I really thank you for bringing this and keeping in front of all the leaders of the chemical industry, this issue, which needs far more attention, and it's an ongoing saga. And recently, Bill Gates put together very nicely one of the Gates Foundation forum speech that you gave. And I quote his words exactly that COVID-19 is awful, climate change could be worse, and there's a lot of data points given to that. And the point is that the mortality rate, what we've seen with COVID, is going to look much more lower compared with what could lead because of the climate change in the time frame of 2040 to 2050 time frame, depending on the temperature. And then the poorest of poor nation would probably suffer the most. And in the whole ecosystem, plastics is a component. It's visible. But the real issue at the heart is that climate change and the greenhouse gas effect, carbon neutrality. So the focus of the energy is not what we see, but some -- but it's almost like we're fighting the animals that we don't see sometimes. And the 51 billion ton of carbon is going in there. And the whole air were cleaned up during the month of April because of the 50% of the vehicles are off the road, no planes were flying. It reduced emission by 8 percentage only. We won't care or live like this, and what this shows is the ongoing effort. There's no time. It's a sense of urgency, and I really applaud the activities and the discussion today, just to have an excellent meeting of the minds and share some facts, figures, the policies and how can we navigate through this journey. Thank you. And just a couple of words on the IVL, Indorama Ventures Limited. It's a company that's probably some of you might not have heard it. It's based out of Thailand. It's a public listed company, about $13 billion in revenue, #28 in the chemical companies; 25,000 employees, 120 plants around the world in 33 countries. So it's a pretty global operation with a complexity size, and we are the #1 PET producer in the world. So world makes 600 billion, B, barrels a year, and we have about 23 percentage of the market share. So we virtually work with every major brands. You can name it, the Cokes and the Pepsis and the Danones and Nestlés and Procter & Gamble. So we are adding the tick of it, so part of the solution, and that's at the core of how we do business and what we do, and work with the partners like Bob and few other people in the ecosystem to drive it from cradle to cradle. Thank you.

Thanks, Deepak. And I think both of you mentioned a great point about -- I mean, there's a reason that plastics is such a major portion of the chemical industry and it's growing at the rate it is, it offers tremendous value. And Deepak, as you're mentioning, certainly, we're all living in this COVID pandemic. But I think, in this period of time, actually, plastics has shown itself for the value -- some of the values it delivers. We see the plastics waste, and it's certainly a critical issue for the -- for all of us as stakeholders, but we also see the value that plastics brings and how do we address the other issue that is there. As we -- so we talked about plastics and carbon. Just would be very keen to understand, and maybe Bob start with you, how do you assess the priorities that you have, plastics and carbon? And you look at this challenge, where is that from SABIC perspective and Indorama Ventures perspective as well as the industry? How do you see that in the agenda of everything that the company needs to do?

Yes. No. Great question. Look, I mean, as I kind of said in my introduction, right, and I think these 2 issues are really go hand-in-hand. And I think, at certain times, plastic waste is maybe being driven by consumer perspective as being the biggest issue. In reality, carbon is a huge potential issue as well. We have to tackle both of those at the same time. And in reality, a lot of the solutions around plastic waste are going to have implications on carbon as well. And I think that's why, from a SABIC perspective, we look at our road map across both of those and understand the intersection points, understand the implications this -- on both pieces, on near-term, midterm, long-term set of tactics that we can take. But short term on SABIC priorities, driving energy efficiency, driving reduced carbon emissions is a clear financial and smart business and smart sustainability priority, right? I mean we have the clear focus around energy efficiency, on sourcing more renewable energy, and that will help us become, again, more balanced in terms of our carbon footprint, but also help us sustain us from an economic standpoint going forward as well. So that's clearly a priority, driving efficiency, driving a better balance of renewable energy source. You might have seen announcements where we're converting our Cartagena polycarbonate facility over to full renewable power and significant announcements around investments in renewable energy in the kingdom as well. That will help drive near to midterm on our carbon footprint, coupled with developing innovative solutions for lowering the emissions beyond that for our existing and new technologies that we're bringing forward. And so a clear focus on what can we do today and what can we do in terms of our technology pipeline to bring a step change in carbon emissions to the future. In addition, on the plastic side, I think it's clear through our actions with our TRUCIRCLE platform that we have brought forward near-term actions that we could take today to address the plastic waste issue, demonstrating the first commercial [indiscernible] chemical recycling when it comes to the market to understand how we can move those products forward and to build the right sort of timing for a scale-up plan to meet the market needs for the future, and understanding the balance of chemical and mechanical recycling that we think the market will need. I think there's a lot of learning that has to go on here. In emerging geographies, in mature geographies, what's the right model, what's the right balance, what's needed in terms of the infrastructure to make those happen, but that's why it's such a high priority for us. I think, near term, we have high priority on both, but with clear tactics, for the short term of what actions we can take and clear support for our pipeline to develop solutions that can enable us for the mid to long term as well.

Thanks, Bob. Deepak, and you mentioned PET. One of the most recyclable plastics we have and some of the greatest success. So maybe you could talk more about those priorities, and you -- obviously, carbon, a critical issue.

So the parties wrote around the 2 key themes: the one is recycling. So as you said rightfully, Dewey, that plastics is one of the wonderful material. PET is one of the ones that is really unique in terms of the recyclable properties and so on. But aside from that, the key issue is how can we enhance the recycling. And what we've done is we put together as recycling as a core business. So it's not just making the PET polymer. But actually, recycling itself is a business, and that's where we have made a pledge through Ellen MacArthur Foundation that by 2025, we'll have $1.5 billion of investment into this area. So we are one of the largest business on the recycling itself. And put in perspective, about 15%, 1-5, of the plastics is recycled out of about 350 million metric tons that's produce globally. But for PETs, the rate is about 53% of recycling. And contrary to the thought process, 70 percentage plus is recycled in Asia. Even though the Asian [ brewers ] bring the plastics waste to the ocean, but the recycling, it is much higher. Where it is lower is in United States. So what we need to work on is on education, making sure that it doesn't end up in the landfill, but it comes back to the use. If we get the material back, we can do a whole lot more in terms of putting it back. So perfect example, we have recycled, so far, through -- we have 17 plants around the world where we do recycle PET. And we've recycled about 53 billion bottles in the last 7 years. Our goal is to get to about 50 billion bottles per year by 2025. So we're investing heavily into acquisition as well as into actually upgrading the plants that do recycling, bringing new technologies and the whole ecosystem. So that's where we made our personal pledge with respect to doing, and we are on the way -- our customers, the brand names, Cokes, Pepsis, Danones, they all have anywhere between 25% to 50% target in the next 3 to 5 years. They want to increase that recycled content anywhere from 25 percentage to 50 percentage, including some, when introduced some products, all the way up to 100% recycled. So our job is to provide them, and we already have quite a bit of assets that actually provide the blended rPET into the virgin material. So it's not just a profit, but it's a purpose of a profit and how we drive the recycling at the core of the business. That's number one. And second one is Bob did very well, so I won't elaborate much with carbon neutrality. How do we -- with 120 plants around the world, how do we use, number one, less energy and where we use energy, how can we go about using the energy, which is carbon-neutral, reduce the greenhouse gas effect as to the lowest denominator. We are #2 in the Dow Jones Sustainability Index in the chemical industry, and that comes with the action that we have taken over the past several years. And the old verbiage was cheaper, better, faster when it comes to manufacturing. I say the new verbiage for us is 3R: recycle, reuse and reduce with the plastics and then make the best of the fossil fuel that we use in making material. So those are the 2 key priorities in terms of how we put our activities with less money. Thank you.

Thanks, Deepak. Bob, you mentioned the alliance. As we talk about company initiatives, critically important, it starts with each company. But maybe as a characterization of some of the industry initiatives, perhaps, you could share a little bit sort of -- I know the alliance headquartered -- it's headquartered in Singapore with management structure now in place. Maybe you could elaborate a bit sort of initiatives in that regard.

Yes, absolutely. I mean I think, it's [indiscernible] is sort of behind the actual action. Even before the management team was in place, I've been just really impressed by the movement. The Board has driven projects, has driven investment, has moved going forward very quickly ahead of even putting that organizational structure in place. We're now set up with the right structure to help really drive this forward for the future to set the right strategy and tactics. But we've already seen clear focus on projects, which, to me, is good because we're taking action of investing capital to test concepts. I think the alliance is at a great stage right now of having an approach to testing clear models in different regions, different scale, different integration approaches. And I think that's what's critical right now. I think one of the things we have to recognize is that we don't have -- there's probably not likely going to be one solution to addressing this issue for all geographies. I think there are very different needs in the mature markets and the emerging markets. And even down to the locality and the scale of locality and the challenge, there will have probably a need for different solutions. So I think what the alliance has done a great job of in its initial phase is choosing carefully select projects. They can test these different concepts that have engagement of multiple parties in the value chain that are engaged with the local communities and government authorities and are testing not just the technology, which is important, but the business models at what's going to be required to be successful. And I think there's a balance we always discuss at the alliance Board meetings, which is we want to act, we want to show commitment to the space. But at the same time, we want to deliver sustainable, scalable solutions, right? So this is -- you can show lots of activity and do lots of projects, but if those projects don't lead to scalable solutions, they can have an impact to society, I think we've failed. And I think that, that appropriate balance is there at the alliance. When we're meeting, I mean, obviously, there is a lot of debate and a lot of topics that we work through. But at a decision-making level, I think the appropriate balance towards action, but smart action is being driven well by the alliance. We've also seen -- I think, the membership grow quite well. I think the priorities around, again, technology, infrastructure, education had all, I think, advanced really well to this point. I mean I expect much more in the coming year, but great progress to this point.

Yes. One thing I think the alliance has highlighted, and I think we all know, this is an issue and solutions that require every stakeholder to be involved. So it's not just the value -- the traditional linear value chain, but producers, processors, brand owners, retailers, governments are obviously involved in terms of policy, NGOs, public...

Waste [indiscernible].

Deepak, in terms of industry and multiple stakeholders, maybe you could talk a bit more about, again, PET has been -- was -- it's the most recycled plastic we have. Perhaps, you could talk a little bit more about that and the different stakeholders and how that's working.

Very good. Thank you, Bob. So among the 5 or 6 key plastics that make up 350 million metric ton, a, it is one of the molecules that allow easy recycling without degradation, unlike some of the other plastics, and that's a very important element. And when you look at it, the other alternate solutions of packaging for beverages and so on, it's paper, glass, aluminum. And depending on which one, one chooses, it is anywhere from 3 to 4x negative carbon footprint. So while plasma is sound recyclable, but by that and we go to 2,000 degrees C and melt and do the things, the whole carbon emission is significant anywhere from 1.5 to 4x higher. Paper is actually much more negative from the carbon neutrality point of view. So while -- and this will involve that Bob said about education, that becomes very critical is how do we educate everybody in the ecosystem. And overall, it is to make sure that we take as much we get hand on the material, bring it back and then recycle. That's one thing we can do. But in the process, we need to educate as many people as we can, work with all the associations, like NAPCOR in North America, and [indiscernible] in Europe or alliance with plastics waste, all the recyclers in the world, policymakers. So that way, it's not probably the bad water and increase the plastic stacks, which is not the solution. The solution is create the ecosystem where we encourage recycle by like direct deposit scheme, and we have the data points. We've seen it in the countries like Japan, Denmark, Germany, Switzerland where direct deposit scheme is used that every bottle you take back, you get EUR 0.10 to EUR 0.25 back. That one gives almost 85% to 90% recycling. So we need the right policies, right way we go about it and not just emotional or just the political way to drive this. And this is what we engage in this ecosystem, work with everybody and converters, brands and the raw material. So EcoVadis is another one together for success with our suppliers. So we get the whole ecosystem together.

Thanks, Deepak. We are -- [Operator Instructions] Let's talk a little bit about policy. Policy critically -- a critical element here and can have both intended and unintended consequences. And how -- so I'd be keen to understand from both of you, not only plastics policy, what kind of -- what are the driving forces for the policy, both from a plastics perspective as well as carbon because I think carbon is a little bit -- it's coming in from a different perspective and at a -- it's a bit of a different pace. So Bob, you want to talk about that first?

Yes. Look, I mean, I think the policy side of this is critical. And I think at the end of the day, policy will have -- if done correctly, will have the intended consequence of providing the right kind of business models that will help make us successful. If policy is aimed at delivering clarity on both the economic and social drivers for making the change, I think you can actually have a lot more ability to design the right solutions at the end. I think if we talk specifically about carbon and the reality for the carbon scenario, there has to be investment made, right? If we're going to solve the issue, it means investment in renewable energy. It means investment in new process technologies. It means investment in CO2 separation and removal technologies. All of these things are investments that have to occur in the value chain, either at the producer level or on the upside on the energy side or downstream in the value chain. And therefore, we have to think carefully, right, as we engage, are we sitting -- are we driving the right policies that incentivize the right decisions, are we bringing clarity on the true cost of carbon and what the implications are for the chain, are we using that to drive clarity so that companies can invest the capital with clarity of knowing the implications and the returns that they're going to see. And so I think this is an important time for us to engage at the policy level to drive for clarity. Like, at the end of the day, the pressures are there. We understand that. We understand that investment and action are needed. But the more clarity we can have, one, on how we value the carbon and the cost, which will help drive the investment; and secondly, that we're working at a -- at not a regional level, but there's broader coordination between geographies because the reality is there are implications around investment, and I think we want to do this in a way that levels the playing field and doesn't penalize companies for where they invest, but drives maybe a common understanding and a common set of goals. And so this is a tough dialogue because an initial response of the policy in a certain region could drive investment out of that region, but that necessarily won't solve the problem. It doesn't actually drive -- it doesn't really drive a solution for any of us. So to me, it's very important that we highlight, and I think this -- our company is trying to do, and I think Indorama and other companies in the industry, highlight what the implications are, what's needed to deliver against these carbon targets, be transparent about the risk, time frame for conversion and investment that's needed to go deliver those and have a logical dialogue around how we can use policy to help move the industry forward together because I think we share the purpose, we share the goal at the end. But if -- it's like the plastic example, right? If we have policies like simple banning of certain products and interconversion of certain products from plastics and other materials, that can have a near-term positive impact potentially, but it may drive the wrong solutions, right? It may drive that you actually use less-efficient materials that have maybe more carbon emission as a result. I mean, I think this is a great place where plastics and carbon are connected, right? The initial reaction to displace plastics, which was sort of the initial pressure that kind of came up everywhere from the regulatory and policy side could lead to materials that are much more inefficient and produce many more emissions that have -- that require much more water in their processing and produce more byproducts and wastes. [indiscernible] are heavier and far more transfer [indiscernible] and may therefore lead to more emissions. And so I think it's important that we do look at these things together at the intersection, that we try to have smart policies that are going to help enable the carbon targets, but at the end, also help transition the circularity in the plastics industry at the same time. And that's why I think it's why you brought the 2 topics together. I think we have a tendency to want to handle them independently because maybe the policy and regulatory drivers are a bit different. But I promise you at the end, it will have an implication on both. And if we don't look at it in a holistic way, we could actually make bad choices to solve one problem and create many more issues on the other side.

Thanks, Bob. Deepak, sort of staying on the same thing, you -- obviously, carbon is on your priority agenda as well. Just a couple of perspectives. We -- a large part of IHS Markit is our ESG group. So we actually engage with the investor community and we -- significant feedback is showing that the sustainability and where companies are on sustainability is actually becoming even more important in investors and in capital formation in terms of their encouraging, pushing, selecting companies that are active in that space, both sustainability for plastics as well as carbon. And just a quick example, our -- we've got scenarios that show carbon taxes potentially going from sort of maybe initial kind of base case views of $20 to $30 a ton to $150 per ton, so at least at a scenario level. So relative to carbon and plastics, how do you see -- how is the policy coming into your system in terms of the pressures that are coming in and the signals, I guess, for action?

Very good question on this one. The issue is all the policymakers around the world, it's about how do we go about reducing the emission, the reducing the greenhouse gas effect, which has been guide, too. The greenhouse gases, carbon dioxide being one of the major ones. So it's anything that promotes or goes or mandates the lesser emission in the air is the right thing to do. The 3 of the worst, if I may, not to pick on any industry, but 3 of the most prominent contributor are coal, cement and steel industries, where there's a maximum number of greenhouse gas problem that the industry where it goes in. And then the other big one is 95 million barrel oil getting used per day. That was pre-COVID. At the worst of the COVID, we were about 70-plus-million barrel. So more than half of them goes into some kind of transportation. So the alternate ways of having the less emission go because of the transportation is equally important. I said these 4 buckets that alone has a huge chunk of what's going on in the emission. So let's target, work with the lawmakers, the policy that direct the energy to the root cause of preventing that rather than something that is more visible, like plastics tax, which essentially is not going to make a dent in the grand scheme because, then, people are going to use the other material, which is actually more worse in terms of the greenhouse gas effect. So what's more important is the carbon tax, go to the root cause, common denominator and drive the policy towards zero emission or less carbon go forward. And then incentivize the whole recycling, renewable energy, clean energy, and I think that is the way to go, and we need to work in tandem with the lawmakers.

Thanks, Deepak. Sort of staying in the policy area, and this is sort of just a blunt question, where do you see we are as -- in this space in terms of the current state of sustainability policy development? And maybe a better way to say it is, where is the industry in terms of clarity of standards and adherence declines or performance relative to those standards? Bob, you talked about that of -- let's make sure the policies are -- drive the right behavior. So maybe you could talk a bit more about where do you think we are today along that journey.

To be fair, I mean, I think, as highlighted before, I think we're in the early stages of this journey still. I think there's lack of clarity on issues, like, I mean, for example, right, scope 1, 2 and 3 emissions, right? I mean I think we need to have a holistic view, [indiscernible] different scope of emissions to take into account, which will drive the right behavior, which will drive the reinvestment in renewable energy, will drive the investment in solutions that reduce downstream carbon production. I think we're not -- we're going to be in terms of understanding the effects for global companies and driving global investment in the right way. I think that we have a lot of work to go in terms of not only policy, but policy impacting investment in technology solutions that may or may not actually solve the issue. So look, I think this is a dialogue that we need to be front and centering, gauging with policymakers on more -- now more than ever. I think it's clear that we share the end goal of driving a circular around plastics, around driving net carbon reductions. But at the end of the day, that has to be influenced by what are the right solutions to drive that, what will incentivize the right behavior for companies and what will have meaningful impact. So again, I think it's -- to that point, simple things, like on plastics, I think, standardization and specifications around plastic materials and waste products and how they can be used in chemical and mechanical recycling is something that's needed. I think standardization on how we look at life cycle assessment and set goals as an area of opportunity. And I think, for sure, what we look at in terms of the scope 1, 2 and 3 emissions and how those all feed into the right targets for companies is key. One area that I think is a big opportunity for us to take as an industry is assessing the science-based targets initiative and looking at what's the right kind of framework for the industry in terms of targets, how do we let science-based targets influence the policymakers and -- which means we have to take some steps ourselves to be clear as an industry of the steps that we think are the right ones to take and be clear from communicating those, and that's part of this dialogue. I mean if we're not engaging transparently with the policy makers, we're not going to influence the policy side. So I think that's a step that I would also add, I think that's 2-way street, and I think that's something that we have to take as an industry on that front.

So thanks, Bob. Deepak, we talked about PET, a couple of times about the success there. Maybe you could elaborate a little bit more on why is PET -- what's been the pathway to success. What are sort of the successful initiatives, Asia recyclability much better than the U.S., for example? And could you share a bit sort of the Indorama Ventures journey in that regard?

Sure. Thank you, Dewey. I want to add one important element what -- on the previous point. I just want to take a few seconds there. I really want to highlight the example of Montreal Protocol. Many of us may not recall what it is, but it is the CFC, the refrigerant that went into the air and it created the big ozone holes, if you remember. Now how did that got controlled? It's like COVID has no boundary. Doesn't care for the nationality, doesn't care for anything. Same where this refrigerant, it didn't come from one country. It came from the -- from all the users, but that got prevented. CFC is gone. And so I think, in the back alley of our chemical industry, we collectively did it. And I just want to highlight the positive example that, united, we can make the difference, and that is example I won't forget. Lawmakers will do something. We need to educate, but also there are some other examples that we can collectively drive through the leadership and through interaction. So I just want to put in a proper perspective that where we all should be proud about what we did with CFC issue, and there are a few more things we can do together like that, and that's what the leadership comes together. Specific to PET and the success story, I am able to highlight a couple of things. For example, we put together a joint venture in Philippines with Coca-Cola with recycled PET. And that's one of the, what I call, a nucleus of a partnership with where it matters in the ecosystem. The second one is this 53 billion bottle recycling, which, again, sounds a pretty daunting number, but our entire team is excited when we hit the 50 billion mark, there was a huge celebration as if we won the $1 million lottery. So the pride across the people, we have -- and this is not to publicize any specific way, but it takes 12 PET bottle to make 1 T-shirt. And we have every Friday, casual Friday, that people -- our employees are -- they wear PET T-shirt made out of 12 bottles. And then -- and it says all the things like Nike swoosh, we put here, it's made out of the recycled PET. And now when you wear on your body, their ownership pride. And so it's, again, creating our ambassador through our own colleagues, our own people, our employees. And that, to me, is even far more important success factor. And one more thing we're doing on the finance side, there is some of the Mizuho Bank and Schroder Banks and Larry Fink of BlackRock was ESG and so on. So we work with the financial company very, very actively to ensure, number one, they understand what we're doing. Two is any kind of loan or any kind of financial activities we do, we try to go for the green loan. And we have quite a bit of -- several banks has given us a green loan. We are one of the first ones in Southeast Asia to get that within the chemical industry with the green loan. So these are some of the success stories that I wanted to share and pride about it. And PET is really helping us to recycle. We have -- our goal is to get about 750,000 ton by 2023 in terms of our recycled PET. So we can help our brand owners to meet their goals and exit their goals and work very closely with their sustainability officers and decimate kind of each of the brands. So we work with about 100 different companies around the world in terms of partnership. So active partnership, and that really is the core. We alone cannot do it. So want to talk and do the joint alliance with everybody in the ecosystem, raw material as what is in the finished goods.

Deepak, there's a number of questions coming in relative to that collaboration. How do you engage with collection, sorting, reclamation? Maybe you could just elaborate briefly on that as well, just how that is happening.

That is -- yes, then not to hog that out to Mr. Maughon about the forum as well quickly on this one. It is a complex issue. It is not just -- it's every local community has their own way to do it. Every country has their own way to do it, and that's one of the biggest challenge we have in North America. But as in Asia, because of some of the countries, the wages and so on drives it or their deposits can drive it, but the connection is where, I think, cost on education, like kids. Our kids are whole lot more in terms of their mindset of how to recycle, what are some other things. I'm looking at the millennials, and so many of them are interested in the green energy, making their career into the ESG-based financing and so on. So I think it's the generation also driving it. And the youth of the society is demanding more and more, the greenhouse of the world, if I may. And I think it starts with that, and better they are educated with what they want to do. And the teachers play a very role -- a very important role in this. The parents play important role. And I think it's the behavioral change is what we are trying to dial towards working with this -- with our brands and colleagues in the ecosystem.

Yes. I think that's really well said, Deepak. I mean just to build on that, I mean, I think, look, collaboration is going to be the core to success for all of these initiatives going forward. And I think -- so one is a collaboration at the industry level, right? That's been highlighted. I think examples like the alliance, examples like in the World Economic Forum, the low-carbon emitting technologies platform where we're working together in the industry and down the value chain. I think the other thing when it comes to the partnership upstream and sort of new parts of our value chain, like the waste side and collection, sorting and so forth, for me, the key to this is learning, right, in these different regions, in these different projects, what's going to work and what's not. I think the -- I gave a few examples earlier, the alliance taking some of those steps. But even on our side, on the SABIC side, we launched our TRUCIRCLE platform of products, which is a combination of mechanical recycling solutions of our certified circular polymer solutions as well as our certified bio-based polymer -- renewable polymer solutions and as well as the design for recycle theme. And in that, we've been engaging down the value chain with brands, with converters on the waste side and the conversion side as well and learning what works and what doesn't. I think we have to recognize as an industry right now that testing these models, learning from what has happened and other strings like in PET, where there's more success, learning from what's happened in other sectors like in aluminum and others, but testing the models here, especially because of the uniqueness of the geographic impact, that what's going to work in North America and Europe is likely going to be different than the kind of models that are going to work in Asia and other parts of Latin America and other parts of the world. It requires us to be comfortable trying collaborations that maybe were a little bit uncomfortable or a little bit different collaborations than we're used to taking, recognizing that we may fail at some of the models. But I think we're willing to learn from those and move forward. I think to me, this is a time where one player, one resin producer can't solve this problem. One brand can't solve this problem. One converter can't solve this problem. This is a requirement. They collaborate in a way that is more uncomfortable because of the way the local property and business and competitors operate, but it's going to be essential for us in this new future.

Bob, you mentioned mechanical versus chemical recycling and sort of the emergence to that. We're doing a lot of work on that as well sort of as an industry perspective. And some of the takeaways we've had is there's a -- mechanical recycling is the -- is sort of the most widely practiced technology today. Of course, lots of work occurring on development of chemical recycling technologies. I think we've screened -- there's over 120 now. We're doing economics of that. We're comparing the linear model versus those different technologies, what the economics look like, what the carbon footprint looks like. One takeaway that's been interesting is there -- it would appear at the plastics level that mechanical recycling works to -- for some end-use applications and then chemical recycling is needed to meet some of the -- even the current policy mandates. And then we're looking at scales, not at today's scale, 50,000 tons, 100,000 tons, but 1 million tons, equivalent to linear -- the current linear -- it's the scale up, which drives sustainable economics. Maybe could you talk a little bit about your perspectives on that evolution? You have a unique role as both Chief Sustainability Officer and Chief Technology Officer, so I appreciate your view.

Yes. No. Great question. I mean, look, I think at the end of the day, this is not an either/or topic, right? I mean I think that for the industry and for society, we're going to need a broader set of solutions. Like if you can -- take mechanical recycling. Like, if you -- from a carbon footprint perspective, it's going to be one of the lower impacted solutions we're taking things forward if you look at it from an LCA perspective. Also it's the easiest to implement in terms of the capital needed versus chemical recycling. The energy required, they're -- for the CO2 emissions. So it has a lot of advantages. It has some disadvantages, right? It has disadvantages on the purity of the waste stream coming in, right? What -- how much sortation do you have to do? How pure can that stream be? It also has some limitations on the markets and the products that they can serve, right, the performance that's required, the cleanliness and safety of the products that are involved. So at the end, I think what we recognize is there's a trade-off, right? You're trading off the stream content and quality versus maybe the energy and carbon footprints of some of the other solutions and also the end markets that we want to serve together. And at the end, it has to create whatever integrated solution you develop has to create value for all the players in the value chain. So from our perspective, I think that's why we -- when we launched TRUCIRCLE, it wasn't a chemical recycling solution or a mechanical recycling solution. It was aimed at all these pillars, including designing for recyclability, which is also a critical role that we have to serve, which is putting solutions into the market that will make it easier for the recycling to happen downstream. So from our perspective, I think we see that interplay. I -- It's hard to envision what the future holds. But I definitely, in my view, which I'm speaking for myself here, see that likely, at the end of the day, in larger areas where the collection is more easy to manage, I think you're going to see integrated solutions are going to make the most sense, that you're going to take a waste stream and the goal is going to be to get as much value out of that waste stream as possible for that part of the value chain, which means where I can easily separate high-value products that can be mechanically recycled to the good applications, that's going to be a clear focus. And then we can leverage chemical recycling a way to upgrade the value of the remainder of that stream and also deliver products that are needed for other parts of the value chain and other applications that require virgin material in terms of performance. For example, you're not going to want to take medical waste and packaging and move that into food packaging at the end, right? These are the kind of things that I think where chemical recycling has a key role to play because you're not going to sacrifice performance, quality, safety, cleanliness in a chemical recycling solution, which means that those very challenging applications that require those things, it's going to be a clear fit. But again, at the end, I think an integrated set of solutions will be needed because I think the goal has to be if we make the collection, sortation of the waste enough value in that pool to allow for investment. And I think, therefore, getting the most value of each of the pieces of that stream will require an integrated approach.

Thanks, Bob. There was a number of questions, Deepak, around how does plastic relate -- has it -- in terms of carbon footprint and economics to alternative materials, paper, aluminum? And this also has to do with carbon footprint in different technologies. Interested in your perspectives in that regard.

Sure. The very basic of this is the plastics versus, let's say, aluminum or -- so in the packaging, beverage industry, just for example. There's almost 1.2 trillion packages per year. Half of that is PET. Other half, except of the other materials. But when you look at the carbon footprint, the greenhouse gas effect for beverage, and that's where there's a huge delta in favor of PET. PET is much more favorable because of the way the material processes, the energy required to produce the product and so on. Also from the safety point of view, transportation. Then the -- also the safety of the handling of the products, material, beverages, that's where it makes a huge difference as well. And so when you look at choices of the greenhouse gas, what it contributes for every unit that you make, it's a far less positive carbon footprint with PET, and this is where the plastics is much more advantageous. And last 50 years, you look at it, our lives were significantly embedded with plastics. And this work-from-home culture has absolutely put plastics in the forefront. So-called single-use plastics was under the gun, but then look at it. What happened in the last 6 months? Packaging -- food packaging became -- gone through the roof. And why? Because when it comes to security, safety of the society, individual pantry loading, it went back to the common denominator. I need plastic. So it is so embedded in our day-to-day life, close that we were. It's polyester, PET. And it just imaging our lives without plastic doesn't exist, in my view, in today's environment. And millennials, everyone has far more needs. The electric batteries and so on, we go about it. But the challenge is like electric -- the cell phones, only 3 percentage of the batteries get recycled. Electric vehicle can be 50-some-percentage by 2030. You need copper. To make copper, what you need, a lot of chemicals. So the -- it's always -- I think common denominator is how much carbon you're using to make a unique product. And this is where I think we should focus the energy is from the materials point of -- and once material form is doing fantastic job in sharing this kind of information, and I really like to put it more as a science, evidence-based facts. And as Bob said, it's the 2 together. Chemical and mechanical has to coexist. Chemical will be holy grail in grand scheme, but the technical challenges are higher. So we put together -- and this is where I see the plastics is the ultimate solution. We just have to be wiser in terms of how we use it and how we fabricate, and not to make too many complex parts, but rather make it sure that we can easy to recycle and detach and put it back to the new products again.

Yes. So I think...

So one more question -- go ahead, Bob.

Just to say, Dewey, just on that point. I mean it's why I think we view this as signs for our recycle team as an important one, right? I mean I think we have to be -- not just in the plastics industry, but overall in all products, we need to be thinking in a different way about the product and how it's going to be used and how its end of use is going to be managed, right? And I think we sometimes, even in packaging applications, have built excessive complexity to manage all kinds of potential risk for the product downstream that are overdesigned for the use in the application. You can redesign a lot of these solutions to make them better from a recycling perspective to meet the needs of the product to maybe rethink how that value chain works. These are the kind of thoughts that I think we have to take forward, that we really think about the product's full life and design it for its purpose in a way that's different than we've done it in the past.

That's a great point, Bob. I was just thinking, Deepak, as you were talking, one of the deposition of plastics, PET -- after bottles PET, you've mentioned multiple times going into textiles, which is perfect. And then there's some mechanical recycling bottle to bottle. The end of life, of course, with textiles has been is concerned about macro fibers and so forth. So again, there's a robustness on the mechanical recycling and through textiles. Chemical recycling would close the loop completely. And it's a matter of both, it sounds like.

Absolutely because there's about 60 million tons of PET. Bottle uses about, give and take, approximately 24 million, 25 million metric ton. The remaining goes into carpets, fibers, clothes, and many of them are with pigmented. So that's where the chemical recycling becomes more important to take it to the whole life cycle analysis for the material. And that to me is the -- we will work on the both fronts, a clear solution, but also at the same time, some of the materials, which are more complex, but still needs to be recycled.

Yes. So we have about 5 minutes left. I'm going to ask this real simple question. I'll start with you, Bob. One of the key barriers to improve sustainable solutions, and I mean this could be ours, right, technology, infrastructure, sustainable economics. In a nutshell, could you maybe just elaborate on some of...

Yes. It's great. I thought you said a simple question, right? So look, I mean, I think there are a number of barriers, right? I mean I think as we talked about it, starting it my hat as a scientist, right, I mean, I think there's some technical barriers. I think Deepak highlighted that there's innovation that's needed. In -- whether it's on the carbon side and solutions to manage CO2, whether it's electrification of assets or investing in more renewable energy or changing process technologies to lower emissions, whether it's on the plastics side or things like chemical recycling, better sortation, sorting technologies to enable lower cost of mechanical recycling. There's clear needs in those spaces. Having said that, there are -- I think as we talked about earlier, I think there's some issues on the infrastructure side that has to be managed, right? We have to have the right investment in renewable energy in great capacity if we're going to invest in reduced carbon footprint. We need better investment in waste infrastructure and -- starting in the mature markets. I mean I think we have -- it's a sad state at the level of infrastructure that we have today to manage this, but also investing smartly in the emerging markets. There are policy challenges. We need clarity on the role of carbon and the cost of carbon and the implications going forward. I think we need smart policy that, to Deepak's point earlier, drives impact on both carbon and plastics in a smart way versus moving the problem from one bucket to another. And I think we need collaboration in a different way that we're used to. It's fine to try this out, but I think the alliance is a good example. I mentioned the World Economic Forum and other projects. But even in the value chain with different parties, I think we have to be comfortable collaborating in very different ways to solve this problem. So look, I think there are a number of barriers, right? There's technologies, there's policy, there's infrastructure, there's collaboration and financing, right, and how do you get investment for the transitions of capital needed to drive these changes from the financial markets where the pressure is clearly there, but it will require a risk, an investment of new approaches, new models and even new business models that are emerging, right? So how do you get -- how do you access capital to go make those investments as the models themselves are emerging? So there are a number of issues. I mean I think we have clear focus on what they are. I'm sure Deepak will have even more that he can highlight. But at the same time, this is something that has to move forward much more aggressively on all of those fronts if we're going to be successful.

Deepak, appreciate your comments as well, please.

Yes, and I look at not just as a barrier, it's also the opportunity. Glass is always half full, right? So that -- Bob may have highlighted it very well, so just to add in a very summation form is the rate of collection, anything we can do to get the stuff back in the hand, and that is very, very at the heart of it for everybody. Second one is knowledge gap. We need to invest into education. And so the saying goes, right, feed a hungry man a fish for the day, he won't be hungry for the day. Teach him how to fish the fish, he won't be on hungry. And I think the education is key, and it goes into entire ecosystem. If I can explain to my mother, if I can explain to my grandmother and to the kids, I accomplished the job. So it is societal education. And the third one is technology development and Bob touched on it with innovation. Innovation is at the heart of it. There's no shortcut here. And we talked about the complex society with materials. Functionality is increasing. The demand is increasing. And hence, the solutions are more complicated. So therefore, the recycling solution has to be even far more technologically driven, and that is an opportunity and challenge for both for our chemical and the plastics manufacturers as we go.

Deepak, thank you. I think we're nearing the end of the session, so let me just summarize. First of all, I would just say thank you very much to Bob and Deepak for insight from people in the game who are key participants to making things happen. Just a few comments just to amplify what our guests have shared. One is we -- I think both of you said it well. It's -- this is an opportunity. It's critical to the industry, to the very existence of the industry, but it's also an opportunity. It's -- shareholders will need to absorb new concepts, new business models, as both of you have shared, due alliances and collaboration. And what we are seeing is we are moving -- all the stakeholders are moving a bit from who is responsible to more of what is the role, what is my role and how can I collaborate across the value chain. So I think we're definitely seeing, Deepak, as you shared, a much more proactive. What do I need to do? And then how do I plug in to everyone else? I would say the other thing we are definitely seeing is the standards and competitive benchmarks will be different in the future as you have shared. So -- including issues such as do we move to standards such as mass balances to look at feedstock transition from fossil fuels. I think both of you mentioned that as well. So again, I just would like to say thank you to our speakers. Hopefully, we've answered many of the questions that have come in. We'll try to respond to some of those that we have missed. And with that, let me just finish. I think we have a slide that we'll just elaborate. So the conversation has been recorded, just to remind you. It will be available 24 hours from now. And again, thank you for joining us, and I hope you found this conversation quite helpful as we continue on our early part of this journey. Thank you, again. Buh-bye.

Thank you.

Thank you. Thank you, Dewey.

Thank you.

Thank you, [ Pak ]. Thank you, [ Andre ]. Bob, thanks for the partnership.

Yes. Thank you, buddy. Take care, and thanks to Dewey, to you and Pak as well.

All right. Let's schedule one again. Thanks.