The Global Chemical Industry: Catalyzing Growth and. Addressing Our World’s. Sustainability Challenges. Report for ICCA. March 2019

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OXFORD ECONOMICSOxford Economics was founded in 1981 as a commercial venture with Oxford University™s business expanding abroad. Since then, we have become one of the world™s foremost independent global models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic, social and business impact. Headquartered in Oxford, England, with regional centers in London, New York, and Singapore, macroeconomists and thought leadership specialists. Our global team is highly skilled in a full range of research techniques and thought leadership capabilities, from econometric modeling, scenario framing, and economic impact analysis to market surveys, case studies, expert panels, and web analytics. March 2019 All data shown in tables and charts are Oxford Economics™ own data, except where otherwise stated and cited in footnotes, and are copyright © Oxford Economics Ltd. ICCA and may not be published or distributed without their prior written permission. upon which Oxford Economics has relied in producing its report and forecasts in good faith. Any subsequent revision or update of those data will affect the assessments and projections shown. Sarah Scruggs:

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$5.7 trillionThe chemical industry™s total contribution to global GDP in 2017. Equivalent to seven percent of the world™s GDP that year. Executive summary The chemical industry has been an integral part of the global economic landscape for many centuries.1 in Europe during the industrial revolution, when chemical processes for making concrete and waterproof clothing were devised. Since then, the industry has evolved to become a bastion of productivity that permeates through nearly every Today, the chemical industry plays a crucial role in and in most sectors of those economies. As the and technologies, it is also central to achieving the global targets expressed in many of the United · products that play a crucial role in feeding a · ·roof and window coatings, used to improve insulation levels as part of climate change mitigation efforts. processes, for other manufacturing activities that ·water chemistry, enabling the treatment, delivery, and conservation of clean drinking water that is ·plastics used for packaging, which plays a major role in protecting fresh, processed and prepared · In addition to these products and processes, the chemical industry is committed to the sound management of chemical substancesŒŒas encapsulated by the adoption of the Strategic Sound management of chemical substances represents another way in which the industry is contributing to sustainable development around the world. Moreover, through ficircularfl initiatives, the chemical sector can more effectively recycle and reuse molecules to produce consumable products, while reducing waste and creating new value to society. a detailed assessment of the chemical industry™s activities across the globe, and to quantify their report paint an important picture of the industry™s contribution to the global economy, and in so many within its region. 04 EXECUTIVE SUMMARY 04 EXECUTIVE SUMMARY

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Our analysis focuses on two key measures of each year by the global chemical industry, and its contribution to the amount of gross domestic product sustainable economic growth, full and productive employment, and decent work for all. As well as directly creating jobs and economic activity in virtually every country of the world, the chemical industry sustains further employment and growth via fimultiplier effectsfl in the countries™ wider economies. economic impact assessment, which takes into account the industry™s impact across three channels of ·Direct impact industry™s own activities, such the number of people it directly ·Indirect impact employment supported in the industry™s broad supply chain, through its procurement of goods ·Induced impact when workers within the global chemical industry and its supply chain spend their earningsŒŒfor example, in local retail and leisure establishments.The economic value of the global chemical industry industry, its supply chain and payroll-induced impacts, made an estimated $5.7 trillion 120 million jobs. Its economic contribution was therefore equivalent to seven percent of the contribution was broadly on a par with the population of Mexico.Of this total, the chemical industry itself is million people. manufacturing sector, in terms of its direct annual the chemical industry™s direct and total employment impacts implies that, for every person directly employed in the industry, seven jobs are supported elsewhere in the global for every $1 generated by the industry elsewhere in the global economy. We estimate that companies in the chemical industry spent $3.0 the manufacture of their products. spent by chemical companies in the jobsŒŒspread across goods and services providers in a wide range of industries, from mining to wholesale trade. In addition, staff employed by the sector and the consumer economy, thus supporting further 120 millionTotal number of jobs supported by all aspects of the global chemical industry in 2017.This almost equates to the population of Mexico.EXECUTIVE SUMMARY 05

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supply chain and the consumer economy is added to in 2017. of the industry™s total annual economic value, and Fig. 1 made the next most important contribution globally, followed by North America.Finally, chemical manufacturers that this spending supported economic activity in that year alone.$51 billionTotal amount spent on R&D by the global chemical industry in 2017.This spending supported a $92 billion GDP contribution, and 1.7 million jobs. FIG. 1. Total global economic impact by region, 2017 EUROPE$1.3 trillion 19 million jobs supported AFRICA & MIDDLE EAST$550 billion 5 million jobs supported LATIN A MERICA & THE CARIBBEAN$374 billion 6 million jobs supported NORTH A MERICA$866 billion 6 million jobs supported ASIA-PACIFIC $2.6 trillion 83 million jobs supported [of which $1.5 trillion GDP and 60 million jobs in China alone] 06 EXECUTIVE SUMMARY

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The chemical industry™s contribution to sustainable development* Assembly of the United Nations in September while protecting the planet, stressing a vision of sustainable growth that encompasses economic, social, and environmental aspects. Sound management of chemical substances is consumption and production ŒŒand this is also the mission of the Strategic Approach to International framework to promote chemical safety around the the lifecycle of chemicals, and hence demands cooperation across actors throughout the supply sound management of chemicals and all wastes throughout their lifecycle, in accordance with agreed Since chemicals touch each aspect of development, their sound management supports the completion Sound chemicals management represents only a fraction of the industry™s contribution to . Many of the products and processes developed by the industry have substantial positive impacts on global development. · products that play a crucial role in feeding the global population, while also contributing to · to fibuild resilient infrastructure, promote · insulation levels as part of climate change mitigation efforts, and also contributing to the · delivery and conservation of clean drinking water, and therefore contributing to several availability and sustainable management of ·Plastics used for packaging, which plays a major role in protecting fresh, processed and prepared food, extending its shelf life and 08 INTRODUCTION08 INTRODUCTION

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Economic impact modeling: methodology Economic impact modeling is a standard tool used to quantify the economic contribution of an industrial sector, company, or investment project. Impact analysis traces the economic impact of a sector™s activities through three ·Direct impact ·Indirect impact services by the chemical industry. ·Induced impact workforce, and by the spending of workers in the sector™s supply chain. · ·Employment, the number of people employed, measured on a headcount basis. ·Income, the compensation paid to workers within the industry, the industry™s supply chain and induced wages paid to workers in consumer industries. FIG. 2. The three channels of economic impact DIRECT IMPACT INDIRECT SUPPLY CHAIN IMPACT INDUCED WAGE CONSUMPTION IMPACT TOTAL CORE IMPACT INTRODUCTION 09

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The total economic impact of the global chemical industryThis chapter describes the chemical industry™s total economic footprint across the world. To estimate this, we take into account not only the size of the industry itself (its direct impact), but also its indirect and induced impacts, which relate to economic activity in its supply chainŠincluding complex international linkagesŠand wage-funded staff spending, respectively. The chemical industry™s global economic impact in sustained through a combination of its direct, indirect, of scale, this impact was roughly equivalent to the three of the largest developing economies in the FIG. 3.The global chemical industry™s economic footprint in context, 2017 ($ trillion) 7.1 percent Proportion of global GDP supported by the chemical industry across the three channels of impact in 2017. Equivalent to the combined annual GDPs of India, Brazil, and Mexico. IndiaSouth Korea MexicoIndonesia Saudi Arabia Argentina THE TOTAL ECONOMIC IMPACT OF THE GLOBAL CHEMICAL INDUSTRY 10 THE TOTAL ECONOMIC IMPACT OF THE GLOBAL CHEMICAL INDUSTRY

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total of 120 million jobs both directly and through equivalent to the entire population of Mexico. the chemical industry supported an additional economy in 2017 the industry™s high levels of productivity, the sector™s employment multiplier is even greater. For every jobs are supported elsewhere in the global economy. industry, as is shown in channels of impact are accounted for, chemicals manufacturing generates the largest proportion of the FIG. 4. The global chemical industry™s economic footprint across the world, by channel of impact, 2017FIG. 5. The global chemical industry™s total GDP contribution by industry, 2017 ($ billion) GVA Employment InducedIndirect 5,708120 chemical products $1,098 and other business activities $369 activities $331Financial services $313Agriculture $301Mining and quarrying $780 $717All other global sectors $1,799THE TOTAL ECONOMIC IMPACT OF THE GLOBAL CHEMICAL INDUSTRY 11

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