Circularity in action: an innovative marketing approach for Covestro
From singular to circular
The circular economy is important for helping to build a sustainable future. The plastics manufacturer Covestro is pursuing the vision of becoming fully circular and offers a continuously growing range of circular products. However, implementing the circular economy vision requires not only innovative products, but also a fundamental rethink of marketing to help ensure the economic viability of sustainable transformation. Together with Deloitte Germany, Covestro has developed a holistic new framework for this purpose and successfully implemented it in pilot projects – customer-focused, value-driven and highly cooperative. In doing so, the company is playing a pioneering role in the industry and has laid the foundations for further scaling the capability within the company.
The situation
From value chain to value circle: A circular economy means that the traditional value chain becomes a sustainable cycle – for example, through consistent recycling, the use of renewable raw materials, and efforts to reduce the carbon footprint. The chemical industry can play a pivotal role in this transition, as nearly everything in our daily lives and modern civilization is based on chemical products.
The circular economy is a top priority for Covestro and lies at the heart of the company's vision. The global materials manufacturer, which operates from its headquarters in Leverkusen, Germany, goes far beyond the legal requirements: Covestro is already actively working on a transition to a circular economy and aims to achieve climate neutrality (including scope 3) by 2050. In doing so, the company is living up to the chemical industry's focus on the sustainable transformation of the manufacturing industry, which it supplies with important basic materials.
Covestro has long offered sustainable products under the “CQ” label. The company utilizes alternative raw materials, newly developed recycling technologies, and innovative services to enable the manufacturing industry to gradually become more sustainable. However, turning the circular economy into reality takes more than sustainable products - it also requires customers who are willing to choose them. But how can customers be convinced that more sustainable material options, which are often more expensive to purchase, also provide them with tangible added value?
Monetizing circular products can require an innovative and scalable marketing approach. It should be customer-centric, demonstrate the specific economic advantages of the circular product, and also take into account the end consumers' perspective. After all, with such materials, processing companies can in turn offer sustainable end products for which there is specific market demand. In addition to a customer-centric approach, there should be increased collaboration along the value chain. The high complexity of the circular economy can only be tackled through close collaboration with other stakeholders across the value cycle, who can benefit in return. This transforms the product business into a solution-driven one. In a strategic and ecosystem alliance, Deloitte supported Covestro with its knowledge and cross-industry network to help put this into practice.
“For a circular economy to be successful, companies should forge mutually beneficial alliances and create shared platforms. At Deloitte, we provide support through our network and offer the appropriate infrastructure.”
Dr. Amadeus Petzke, Partner and Offering Lead for Sustainability Pricing,
Deloitte Germany
"Circular solutions will only prevail if they are profitable. To achieve this, we need clear economic incentives that motivate rather than impede progress. Circular thinking and a stable framework provide teams with orientation and tools to drive business development in the circular economy."
Sucheta Govil, Chief Commercial Officer, Covestro
The solution
To monetize the circular economy, Deloitte specialists worked closely with Covestro to develop a scalable framework and implemented it in pilot projects with three objectives: First, to achieve concrete use cases and success stories. Second, to generate momentum within and beyond the respective business units to emulate these positive experiences – and third, to build a standardized curriculum for monetizing circular economy at the corporate level and to make it available globally across all divisions, while continuously expanding its scope.
Three real pilot projects with sustainable products from Covestro were selected, covering various materials and application industries. In addition to the central Circular Economy unit at Covestro, the individual business units responsible for the respective product were also involved. The project, which lasted nine months, did not follow a conventional consulting approach. Instead, Deloitte focused on enablement with an innovative lab format: interactive lab sessions, divided into a total of 12 steps in four phases, helped to build the necessary new skills within the company and to anchor them in the operational units. The full-day lab sessions, with presentations from internal and external specialists, took place at intervals of several weeks. In between, the Covestro teams implemented the planned steps and received support in the form of individual coaching from Deloitte specialists.
Throughout the project, the marketing approach for the pilot products was aligned with the circular objective. This included early interaction with corporate customers to help identify the need for sustainable solutions, analysis of the relevant material cycles, and definition of corresponding product segments. Deloitte contributed client insights from its cross-industry network, which provided a valuable database and contacts to other companies in the respective value circles.
It was particularly important to establish holistic thinking in the value creation cycle. The focus was no longer just on the technical product functions, but also on the applications and, above all, their added value for potential customers from different industries – from the construction industry to telecommunications to the consumer goods industry. At the same time, this required communication with new stakeholder groups, for example in product management. Instead of traditional cost-based pricing, value-based pricing mechanisms were developed that help quantify and reflect the added value of sustainable circular products. In addition, value propositions and storylines were developed for an optimal market positioning of these products – another aspect in which the circular marketing framework differs from conventional B2B monetization.
The impact
With the new “Monetizing Circular Economy” framework, Covestro now has the tools for an economically sustainable and successful circular economy. In the future, the framework can be scaled across the organization and beyond. The viability of the approach has been validated in practice in the pilot projects.
One example is the recycling of waste materials. Covestro is looking at numerous industries and selects the most promising. The deciding factors are whether the recycled materials are in demand, whether they fit the market demand, and whether they are economically viable for Covestro and its partners. The Covestro team has already developed an innovative circular material and won its first customer, who is now using it for its own sustainable products. This is a major step towards a successful and environmentally friendly future. In addition, relationships have been established with other companies to successfully shape the corresponding value circles together. This can result in further positive network effects.
To enable similar circular successes across the organization, Deloitte and Covestro have also built a global circular economy knowledge platform. It provides learning content and toolboxes for value creation and business development in the circular economy and a forum for Covestro's internal circular economy community, which already comprises hundreds of employees. This project, with its significant ecological and business impact, has garnered widespread interest within the industry – and it has also captured the attention of the media: at the end of 2024, leading German business news organization WirtschaftsWoche presented the project with the “Best of Consulting” award in the chemicals, pharmaceuticals and healthcare category.
The collaboration between Covestro and Deloitte is an important step in working together to further advance the circular economy. Covestro's innovative strength and commitment to sustainability, combined with Deloitte's circular economy and ecosystem skillset, create a powerful momentum for sustainable progress. As a successfully proven approach, the “Monetizing Circular Economy” framework can also support other companies and industries on their journey to a circular economy.
Real connections. Real impact.
“It's not about selling recyclable products, but about working with organizations and customers to create sustainable added value along the value chain. Designing an end-to-end framework based on Covestro's specific industry projects has been an exciting project. Winning the award is a great honor and shows that we have succeeded in doing so.”
Bozidar Radner, Partner and Energy & Chemicals Lead, Deloitte Germany
Awards and Recognition
Deloitte rated Positive in the Gartner Sustainability Assessment 2024
Deloitte is a Leader in the 2024 Verdantix ESG & Sustainability Consulting Green Quadrant!
Deloitte ranked #1 consulting services provider worldwide by revenue in Gartner Market Share report
Named 2024 “Best of Consulting” in chemicals, pharmaceuticals and healthcare by leading German business news organization WirtschaftsWoche
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