Scott Bader: Doughnut Design Case Study

01 | Brief Summary and Key Facts

Scott Bader is an employee owned global chemicals manufacturer which employs 800 people across 8 manufacturing sites and 19 global offices. Scott Bader has £300 million annual turnover.

They manufacture structural adhesives, advanced composites such as resins and coatings, functional polymers and 3D printing resins for markets around the world. A registered charity, Scott Bader Commonwealth, holds all the shares in Scott Bader Company Ltd.

Highlight of their unique approach 

Scott Bader’s basic purpose, as defined in their constitution, is to provide the best possible service as a corporate body to humankind. They are currently working towards a net positive impact from all their global operations by 2036 and examining how Doughnut Economics can provide a compass for this work.

Highlight of their unique design 

Scott Bader’s employee-owned model allows them to operate as a profitable and expanding large chemicals company whilst balancing the generation of profit with the provision of wider benefit to society and the environment.

“With no external shareholders or investors we are free to make decisions which further our goal of serving humankind as best we can. This allows us to redistribute up to 40% of our profits to charitable purposes and our employee owners rather than investors, and invest the remaining profit back into the business.” – Kevin Matthews CEO

02 | Founding Story

Scott Bader was one of the world’s first employee-owned companies. 

Their pioneering approach can be traced back to founder Ernest Barder who, in 1951, gifted Scott Bader to its employees in the form of the Scott Bader Commonwealth, a charitable trust wholly owned and controlled by its employees.

This farsighted act was inspired by Ernest’s appreciation of the importance of social responsibility in business thanks to his Christian and Quaker principles, as he said: 

“The division between capital and labour encourages selfishness and greed 
and that until the two are united for a common purpose there will be no peace.”

03 | Industry Context

The chemical industry is a key contributor to planetary boundary overshoot, particularly climate change. The European chemical sector is around 15 times beyond the climate boundary threshold due to the energy intensive nature of the sector.

This makes Scott Bader’s vision both extremely challenging and globally essential in providing industry leadership.

04 | Regenerative Strategies and Actions

Scott Bader aims to have its business decisions driven by its purpose and guiding principles, which are interpreted and expressed collectively by both colleagues and management, rather than shareholder pressure or market trends. 

The company is reducing its carbon emissions. achieving a 25.9% reduction in Scope 1 & 2 emissions from 2021 to 2022 which contributes to their aim of being carbon neutral by 2028 (Scope 1 & 2) without using any offsetting, which is typically considered essential for carbon reduction in the chemicals sector.

To support their ambition to incorporate Scope 3 emissions, Scott Bader requires all suppliers to be accredited with Ecovadis sustainability ratings by the end of 2024, with 50% accredited by mid 2024. Their supply chain consistently rates well above average; scoring 59.7 vs the Ecovadis benchmark of 44.0 in 2021. The company itself has won Ecovadis Gold rating for two successive years.

Looking beyond carbon emissions, Scott Bader is replacing toxic and hazardous chemicals in their supply chain with bio-based materials. 

They are also attempting to embed circular economy principles into their products and processes. This includes working towards sourcing all raw materials from recovered, recycled materials or by-products, with fresh input streams coming from renewable, plant-based sources.

This drive is evident across their entire product range. They have recently launched two 100% bio-based resins, derived from sugar cane waste, in their composites range. They have also established a bio-based range of thickeners for cosmetic formulations, Texique, within their functional polymers range. Within adhesives they have developed Crestabond® M1-04SL specifically designed for battery cell bonding in EVs. 

Composite materials are essential in the transition to a low carbon economy due to their low weight and durability and are deployed in wind turbine blades and electric vehicles, but are difficult to recycle. This has led to Scott Bader becoming pioneers in the circular economy, such as researching polymer systems that enable easy repair, embedding design for disassembly in large composite structures and adopting Life Cycle Analysis processes to continually challenge their thinking.

05 | Distributive Strategies and Actions

Recognising that enhancing social capital is both their reason for existing and essential to their success, each year Scott Bader distributes between 5% and 40% of their profits through charitable grants and employee dividends. 

They awarded charitable foundation grants totalling £332,000 in 2021 with an equal amount distributed to employees via their Group Staff Bonus, which awards every member of the team an equal portion of the bonus pot, regardless of location or seniority.

One specific figure shines out as a beacon of their distributive approach: they publish the ratio of CEO pay to company average, currently a remarkable 10.8:1 (based on UK only and total compensation).

06 | How the Deep Design Enables Strategy and Action

The company articulates its purpose as providing the best service to humankind. This purpose, alongside their employee ownership model helps drive their pursuit of a strategy to transform their products and processes.

They believe that everyone in the company can contribute to and be involved in the business activities and the sharing of the wealth created. This means that employees are involved in business decisions by either sitting on a Board or through representative local councils or regional forums which combine globally via the Global Members Board. 

The day to day running of the business is managed by a Group Board of Executive & Non-Executive Directors, who are answerable to the Commonwealth Board and the Global Members Board. The Global Members board is made up of elected representatives of the employee-owners of the business. The governance structure combines to direct the Group’s broader strategy, including its business strategies, acquisitions and the distribution of profits.

Scott Bader is actively working with others, creating a network of change, such as leading work across the composites supply chain to develop a vision and roadmap for sustainable composites, and contributing to a variety of industry and regulatory bodies on sustainability.

The company’s constitution also mandates a long-term approach, ensuring that the company stays in business so they can keep providing benefits to the environment and society. This has helped the Group Board to prioritise investments in product design for instance, which may not yield maximum returns over the short-term.

07 | Reflections and Lessons for other Businesses

Relieved of the pressure to meet shareholder expectations for growth and returns, Scott Bader is able to invest long-term, share profits with employees and remain committed to their purpose. Whilst deploying a strategy that differs from many in their industry, they have continued expanding their global presence and market share.

One key difference between Scott Barder as an employee-owned business, and many of its peers is the commitment to the employees and the communities it benefits. The company has not been bought out or relocated its core operations in pursuit of cost savings. Its ownership model has kept it independent, allowing it to retain its facilities and jobs.

The chemicals industry is essential to the transition to a safe and just future. Whilst there is a long way to go for both the company and industry, Scott Bader is showing it is possible to transform the impacts the industry has on workers, communities and the planet in this crucial segment of the economy.

This case study was researched and written by Tim Frenneaux in collaboration with DEAL.