Intellectual Capital

Intellectual capital is treated implicitly across the Corporate Performance section in this report, but in this chapter, we focus on how SABIC strives to deliver differentiated and sustainable product and application solutions to meet the needs of our customers and the value chain over the near, mid, and long-term horizons. We engage with emerging megatrends, such as the exabyte, wellbeing, net zero, bio-growth, and circular economies, to unlock growth potential and position SABIC as an innovation leader within the industry.

PRODUCT INNOVATION

AUTOMOTIVE SEGMENT

Electrification, sustainability, and vehicle automation, three sector-specific trends in transportation, determined the overall direction of our T&I efforts. The largest trend is the emphasis on electrification worldwide with countries banning or limiting the use of internal combustion engines by 2035. This trend accelerated due to the increase in the price of oil in 2022. Furthermore, the higher level of automation in vehicles has resulted in improved sensing technology for both RADAR and LIDAR mapping systems requiring increased transparency and reduced lot-to-lot variability of exterior trim.

SABIC develops new solutions and products for electrification (presented under the trademark BLUEHERO™) and new sustainable products (presented under the trademark TRUCIRCLE™) to address these efforts.

SABIC’s TRUCIRCLE™ portfolio and services contain our circular innovations made with recycled and repurposed material or produced in a manner to help protect natural resources to give manufacturers access to more sustainable materials.

Our new BLUEHERO™ initiative seeks to expand the ecosystem of materials, solutions, expertise and programs to accelerate the world’s energy transition to electric power and support meeting global goals on climate change. In its first year, BLUEHERO™ focused on supporting the automotive industry’s mission to create better, safer and more efficient EVs emphasizing the optimization of structural battery components with unique flame-retardant materials and solution development expertise.

Two cross-functional dedicated teams in T&I closely cooperated with marketing, commercial and communication teams to deliver and commercialize unique new products and innovations supported by promotional efforts like technical presentations that allow us to establish a strong presence and brand recognition in the marketplace. A highlight of the year was a dedicated exhibition of our solutions for electrification at the K-show in Dusseldorf, Germany.

In 2022, we released five new products to complement our material portfolio of flame-retardant plastics with very high fire performance (capable of withstanding flame exposure to 1,000° C for 15 minutes or more). In addition, we submitted 8 new patents on new solutions for the electrification sector, bringing the total number of patents and applications in this sector to 20. Extensive research is being carried out on new products that use variable contents of post-consumer mechanical recycle and on the viability of using renewable feedstocks. Additionally, five new products were released to complement the TRUCIRCLE™ portfolio. Our global SABIC Technology Centers also established new laboratory capabilities for testing flame performance in 2022.

The Automotive team initiated multiple technical partnerships with customers, value chain partners and academia from around the world. In 2022, our groundbreaking work was honored with two Silver Edison Awards including one for the use of our unique fire protection technology in a battery pack cover.

From an automotive electrification perspective, our extensive efforts on building the right competencies and market developments have helped us gain significant momentum with our customers on solution development, using thermoplastic materials and validation of the same for various internal components and large battery part enclosures parts. We also filed several new patent disclosures, a result of our high level of research in automotive electrification areas and new collaborations with automotive OEMs.

PIPE SEGMENT

As a result of green electrification, thousands of kilometers of new high-voltage power lines are to be installed over the coming years, many of them underground. High stringent and specific cable ducts made of high-density polyethylene (HDPE) protect the power lines and facilitate cost-efficient installation. To meet this new trajectory, SABIC's Pipe Segment recently launched a first-of-a-kind 4-in-1 grade solution: PE100 + RC + LS + RT. It offers superior thermal stability that allows replacing the power cable by a new cable at the end of its lifetime, leaving the duct in the ground and fit for state-of-the art trenchless and sandless installation.

SABIC Pipe & Utilities and Technology & Innovation segments have been actively collaborating with RTP value chain players to develop and qualify material solutions for the energy sector including the H2 pipeline. As a result, our pipe grades HDPE P6006NA, P6006N, and P6006AD have gone through extensive testing based on industry standards (API 15S). This achievement will support the energy sector's efforts to cut operating costs, reduce greenhouse gas emissions, and develop sustainable pipelines, which are in line with SABIC's goals.

FLEXIBLE SEGMENT

In our flexible segment, three product innovations during 2022 are worth highlighting. First, our stand-up pouches for dishwasher tabs are a mono-PE solution designed for recyclability, supporting circular economy goals. Our second product is a wet tissue flow wrap packaging that is easy to recycle, with a duplex BOPE laminate at the core with all layers created from PE polymer grades. This enables flexible packaging solutions to be recycled in a single stream, without having to separate the individual layers. Both these products are available as certified circular and renewable. Our third product is the result of a collaboration between Covestro and SABIC: a new heat-resistant coating resin technology for BOPE films, engineered specifically for recyclable, mono-material stand-up pouches. It is a viable solution to replace PET or PA laminates in stand-up pouches.

PRODUCTION AND PROCESS INNOVATION

Our intellectual capital also extends to delivering cost-advantaged process and production innovation, allowing us to employ our assets, feedstocks, and natural resources more efficiently. Several groundbreaking initiatives in areas like cracker electrification, carbon capture and utilization, and blue and green hydrogen are covered under environment capital as part of our progress towards carbon neutrality by 2050. But our production and process innovation also cover initiatives that can be considered quick wins and production optimizations, i.e., efficiency improvements that are continuously being developed and implemented across our sites as part of our culture of building organizational tacit knowledge and continuous improvement. Important examples of these kinds of initiatives in 2022 included:

– Multiple process optimization initiatives at ethylene-based PK Butene-1 plants, which reduced steam consumption by 0.15 MMBtu per ton, equivalent to lowering the energy intensity by 3.5% compared to plant design.

– Optimization initiatives at the United LAO plant, which improved the overall plant performance in terms of production capacity and raw materials consumption, resulting in reducing solvent and additive consumption by 50% and 75%, respectively.

– Optimization initiatives utilizing SABIC ethoxylate reaction, production and development know-how in addition to advanced process control strategies, process modeling and simulation at the Ethoxylate plant in Saudi Kayan. The result was an enhanced plant production capability with 50% increment in the batch size for all PEG grades and a tangible reduction in overall plant sustainability indices compared to last year including energy intensity (19% lower than 2021) and GHG emission (17% lower than 2021).

PARTNERSHIPS FOR PROGRESS

We are constantly looking to create synergies and partnerships that matter to drive our efforts in circularity and sustainability. This year, we initiated several vital collaborations: signed a strategic MoU with PepsiCo with a focus on circularity and developing an ecosystem of sustainability in Saudi Arabia; formed the “Film Fabrication Association” jointly with Jinming and Bolsas de los Altos to further our footprint in the Americas region around polyolefins developments; conducted a carbon neutrality workshop at our SABIC Technology Center in Shanghai with Bosch, Volvo and other value chain partners; and collaborated with process and catalyst technology licensors to further improve techno-economics of Styrene and BTX production.

TECHNOLOGY LICENSING

SABIC acquires licenses of technologies it does not own from third-parties, selecting the vendors’ technologies only after a rigorous assessment. We also actively deploy our own proprietary technologies by selling licenses to our affiliates and growth projects as well as licensing to third-parties. All licenses include the ability to apply the latest technologies to meet sustainability targets; in this aspect, SABIC aims to include its proprietary CO2 technologies where possible. The Licensing Organization within T&I checks that all license agreements include use rights and that the associated process design packages contain the latest capabilities related to sustainability with stipulations to include future improvements where sustainability is concerned. They also work with Ventures to enable the access of sustainability related technologies from target venture companies by creating an agreeable licensing structure that allows access expediting of the related knowledge.