Chart Industries, A Global Manufacturer
Written by: Paula Araya, James Dickey, Faith Hopperton, Tim Sterling, and Nicole Neals
Climate change stands as one of the most detrimental risks facing humans to date. The current and projected impacts have been proven to show effects across virtually all facets of society, including the environmental, economic, and social sectors. Per the Intergovernmental Panel on Climate Change, climate change has been induced by humans and has caused significant widespread damages to nature and people, “beyond natural climate variability” [1]. The panel also states that as our emissions continue to rise at an unsustainable rate, “current plans to address climate change are not ambitious enough to limit warming [above the] threshold scientists believe is necessary to avoid even more catastrophic impacts” [1].
While there are several sources of GHG emissions, it is important to note that a significant portion of global emissions can be attributed to the corporate sector. Corporations such as Chart, a global manufacturer of highly engineered equipment, not only contribute to GHG emissions but are also impacted by climate change. Therefore, it is imperative for large companies as such to contribute as much as possible to decarbonization efforts.
What is Chart’s Business Model?
Chart Industries Inc. is a global manufacturer of equipment servicing multiple applications in the Energy and Industrial Gas markets. Chart’s product portfolio is used in every phase of the liquid gas supply chain, providing technology, equipment and services related to liquified natural gas, hydrogen, CO2 capture and water treatment.
Chart’s business segments can be divided into 4 parts: Heat Transfer Systems (such as Air Cooled Heat Exchangers and Axial Fans), Cryogenic Tank Solutions, Specialty Markets (such as Hydrogen Fueling Stations, Nitrogen dosing and Water Treatment), and Service & Leasing. The company’s original business model encompassed the first two segments in the list, but the last few years has seen a transition of their focus to become a global leader in “clean power, clean water, clean food, and clean industrials”. A category which they have coined as the “Nexus of Clean” [2]. In order to do that, they have acquired different companies to expand their scope of supply to have a broader and more circular approach. Some of the companies that they have acquired are BlueInGreen (Gas Dosing for water treatment), AdEdge Water Technologies (Treatment solutions for Drinking Water), and Earthly Labs (Carbon Capture).
How Climate Change Affects The Business Model and The Most Applicable SDG Goals
Chart’s business model may be affected by climate change in various ways. Some of the impacts we will discuss include regulation, customer demands, manufacturing viability (both physical and cost), and via supply chain impacts.
As a global corporation, Chart is required to be within compliance of several governmental agencies. Across the world, governments are considering or enacting regulations related to climate change such as emission cap and trade systems, carbon taxes, and grid mandates. Chart is also held to standards set by their consumers, including the corporations that purchase their equipment and ultimate end users. There is a growing public concern surrounding climate change, which can change consumer decisions. Manufacturing viability may be impacted by extreme weather events due to climate change, resulting in unexpected costs with the potential to significantly impact business operations. Lastly, all of the aforementioned impacts also apply to Chart’s supply chain, both up and downstream of their operations, further increasing the associated risk of each.
Steps Chart takes to leverage opportunities
Chart’s vision is to be the global leader in (what they have termed) the “Nexus of Clean”. This idea falls into place of several sustainable development goals (SDGs) mainly including good health and well being, clean water and sanitation, affordable and clean energy, industry innovation and infrastructure, responsible consumption and production, and climate action [3]. Within these categories, Chart puts more focus on SDGs 7 and 8 (Affordable and Clean Energy and Decent Work and Economic Growth respectively). [2] Below outlines how Chart fulfills its relevant SDGs:
SDG 6: Clean Water and Sanitation
ChartWater BlueInGreen, a Chart company, uses supersaturated dissolved oxygen (SDOX) technology to sanitize polluted water. They use SDOX technology to treat water in Brazil which lead to the establishment of ChartWater in May 2022, introducing their water Treatment-as-a-Service (TaaS) business model. This water treatment technology can treat per- and polyfluoroalkyl substances (PFAS).
SDG 7: Affordable and Clean Energy
Providing liquid natural gas for power plants all over the world. Although it isn’t technically “clean energy”, it fortifies energy security across the globe by providing people with cheap electricity to light their homes and power their lives.
SDG 8:Decent Work and Economic Growth
Incorporation of training and mentorship for all of their employees alongside the implementation of large diversity and inclusion programs to enhance the working experience at the company.
SDG 12: Circular Economy and Carbon Capture (SDG 12: Responsible Consumption and Production)
Sustainable Energy Solutions (SES) Cryogenic Carbon CaptureTM (CCC) technology eliminates most emissions from fossil fuels while enabling better use of intermittent renewables through grid scale energy storage. Carbon dioxide is frozen out from the exhaust gasses and the solids are separated from the gasses prior to the latter being vented to the atmosphere.
Earthly Labs CiCi® technology is another example of a way that Chart’s technology is removing carbon from operations processes. It is used by breweries to capture waste carbon dioxide produced during fermentation, purify it and reuse it to package beer. Moreover, wineries, dry ice and other businesses are using the same technology for similar purposes.
SDG 13: Climate Action
In 2022, Chart began tracking and planning for water recycling initiatives within the organization. Additionally, in line with its focus on ESG performance, they started monitoring the amount of
waste recycled. Because this is a new initiative, not all sites and facilities were prepared to disclose waste and water performance.
Since 2012, Chart’s site in Gablingen, Germany, has used solar panels to generate its own power. In 2022, for the first time, the facility generated more electricity than it used during the year. Excess electricity was sold back to the grid. For the purposes of this exercise, electricity consumption at that site was recorded as net zero.
Chart’s measurement, reporting, and rating for its carbon performance
Chart has committed to a framework that allows them to be transparent on their measurements, reports, and rating of their carbon performance. The framework that’s used to produce their ESG report was developed by the Task Force on Climate-related Financial Disclosure (TCFD) to inform and report climate related risks and opportunities. Chart utilizes a Materiality assessment which is facilitated by third-party consultants to assess the rating of the report and their performance. Moreover, Chart uses standards from SASB and Global Reporting Initiative (GRI) to inform their assessment. To measure materiality and identify stakeholders for reporting, they map this out in a materiality matrix. An explanation of their performance metrics and how they were measured is provided on page 23 of the report. There is a display of full transparency about measurements, reporting, and alignment with high standards for performance.
Additional actions we recommend that the organization should consider implementing
As an aspiring “Nexus of Clean” industry leader, Chart needs to consider several solutions to address climate change. A leading strategy for addressing emissions is the deployment of on-site renewable generation, such as rooftop or car-port solar. Another option for emissions reduction could be facility energy efficiency projects such as building envelope improvements, LED lighting upgrades, and heating, ventilation and air conditioning upgrades. Such projects would result in significant energy savings and carbon emission reductions. There are also energy saving opportunities in process/manufacturing operations to consider, such as compressed air system upgrades which may include leak-detection/correction, conversion to variable speed operation, or system replacement with higher efficiency equipment.
Chart could also commit to the Science Based Target Initiative, and as a result determine their science-based targets based on “emission reductions through direct action within their own boundaries or their value chains” [4]. Avoided emissions and offsets are not counted towards SBTs, and offsets are only considered an option for companies aiming to fund additional emission reductions beyond their SBT [4]. With this in mind, Chart should aim to avoid carbon offsets at this time and instead focus on emission reduction techniques directly within the company’s boundaries and value chain.
Sources:
[1] International Panel on Climate Change, “2016 Climate Change Report,” 2016. [Online]. Available: https://www.ipcc.ch/report/ar6/wg2/downloads/report/IPCC_AR6_WGII_FullReport.pdf.
[2] Chart, “2022 Sustainability Report,” April 2023. [Online]. Available: https://drive.google.com/file/d/1j9qxZ0fw_1RGA8dYyyPf-wUxZu1l9kLS/view. [Accessed 13 February 2024].
[3] The United Nations Department of Economic and Social Affairs, “Sustainable Development,” [Online]. Available: https://sdgs.un.org/goals. [Accessed 16 February 2024].
[4] Science Based Targets Initiative, “FAQs,” [Online]. Available: https://sciencebasedtargets.org/faqs#does-the-sbti-accept-all-approaches-to-reducing-emissions. [Accessed 16 February 2024].
