Manufacturing Impact Report: Chemicals Edition, Q1 2025

Chemical Safety Reforms and Trade Policy Resilience Drive Industry-Wide Transitions

This comprehensive analysis examines how the chemical industry is undergoing a significant shift, with 3M and other leaders announcing the phase-out of PFAS substances by 2025. The research examines how this decision aligns with broader regulatory trends, as organisations across various sectors, including technology, food service, and consumer goods, are targeting the elimination of PFAS, creating significant implications throughout chemical manufacturing value chains.

The report additionally highlights how recent tariff volatility has disrupted sustainability transitions for 59% of chemical manufacturers particularly affecting green chemistry innovations and circular material flows.

Call to Action: Chemical manufacturers should develop regionalised production networks and implement flexible innovation portfolios that can adapt to trade policy fluctuations ensuring regulatory compliance remains achievable despite economic uncertainties.

The report examines how PFAS regulations impact both financial materiality considerations, including potential compliance costs, and materiality dimensions, such as environmental health outcomes and supply chain transformations. Companies that implement thorough materiality assessment processes demonstrate enhanced awareness of these dual considerations, establishing frameworks that address both shareholder and broader stakeholder interests in alignment with evolving double materiality principles.

This analysis reveals significant disparities in strategic preparedness across the sector, with data indicating that 38% of firms lack viable transition plans for key chemical substances subject to regulatory scrutiny. This gap in planning represents material risks as policy frameworks become increasingly stringent across jurisdictions, necessitating sophisticated governance approaches and strategic foresight throughout chemical manufacturing operations and supply networks.

The report examines how circular economy principles are transforming the chemicals sector, with the industry addressing three critical challenges: raw material dependency, complex supply chains and chemical complexity. Companies implementing innovative approaches to renewable feedstocks, collaborative materials tracking, and product redesign are establishing new standards while addressing growing regulatory requirements under frameworks such as the CSRD and various national chemical management directives.

Looking toward future regulatory landscapes, the report identifies key developments that will reshape compliance requirements in 2025, including the European Chemicals Agency's focus on imports and online sales, the updated Classification, Labelling and Packaging (CLP) Regulation, which requires hazard classification for endocrine disruptors, and evolving REACH frameworks across jurisdictions. Companies implementing comprehensive chemical management strategies aligned with SDGs for responsible production are demonstrating enhanced preparedness for this complex regulatory environment.