From planning to execution and reflection – steps to initiate your journey
By Raine St.Claire
Environmentally friendly practices are not typically aligned with the manufacturing industry.
Whether driven by demands from stakeholders, regulations, environmental concerns, or financial motivations, one fact is evident: The importance of sustainable manufacturing is crucial.
Manufacturers can no longer confine environmentally sustainable practices to the simple act of outlining ambitious goals in their annual reports. The significant repercussions of upholding the status quo have reached a tipping point where environmentally sustainable practices must take precedence over conventional approaches. To make considerable headway in promoting sustainability within the manufacturing sector, it is imperative to transform intentions into tangible actions.
The manufacturing industry is seldom associated with environmental best practices. Yet, perceptions can be misleading. In reality, manufacturers worldwide are reaping significant financial and environmental rewards from embracing sustainable manufacturing.
Recent research conducted by Deloitte highlighted the advantages of this approach for the manufacturing ecosystem.
Nearly half of the 750 executives who were surveyed reported that their environmental sustainability initiatives had a quantifiable positive impact on their corporate financial performance.
Andreas Müller, Georg Fischer’s Group CEO, a global industrial manufacturer recently acknowledged by The Wall Street Journal as a top ten sustainable company, agrees. In an interview with Deloitte Switzerland, he stated that sustainability undeniably propels economic success. He stressed the growing significance and impact of solutions addressing societal sustainability needs in the market. Demand for these products is notably high. Moreover, they often enter the early stages of their lifecycle, leading to higher profit margins.
This applies not only to manufacturers of industrial and consumer products but also to those in technology, healthcare, and process manufacturing sectors.
Five crucial sectors have been pinpointed where implementing sustainable practices can yield tangible improvements across the manufacturing value chain:
- Engineering: Sustainable engineering practices can lead to more eco-friendly product designs and production processes.
- Sourcing: Responsible sourcing of materials can reduce environmental impact and support sustainable supply chains.
- Production: Implementing eco-efficient production methods can minimise waste and energy consumption.
- Transportation: Sustainable transportation options can lower carbon emissions in the movement of goods.
- Aftermarket: Post-production services and recycling efforts can contribute to reducing environmental footprints.
In spite of the significant progress achieved so far, there is still a considerable amount of work ahead, particularly for organisations committed to reaching their net-zero carbon emissions targets by 2050.
It is evident that meaningful environmental improvements within the manufacturing sector can only be realised through unified industry initiatives, a recognition of the imperative for change, and a willingness to shoulder personal responsibility.
Now, more than ever, industry leaders must come together to harness their collective strength, demonstrating unwavering commitment to solidifying sustainable practices in manufacturing.
Here are a couple of ways to start taking steps towards a sustainable journey:
- Assess your current state: Measure your facilities’ carbon profiles and product performance to establish an environmental baseline. Examples include monitoring utility usage, analysing manufacturing waste reduction, optimising distribution routes, and tracking fuel consumption. This helps identify where to focus efforts for maximum impact.
- Refine your strategy: Clearly define your strategic choices from goals to execution. Develop a roadmap and action plan that considers market differentiation, acquisitions, partnerships, and process redesign for sustainability integration. Effective strategies rely on scenario planning to navigate uncertainties.
- Set targets and prioritise: Based on your strategy, set programme milestones, leverage use cases and external lessons, and explore various decarbonisation paths. Use tools for asset-level projections and adjust plans as uncertainties resolve into trends.
- Consider financial and tax aspects: Integrate carbon considerations into capital allocation. Explore funding sources like green bonds, ESG funds, tax incentives, carbon trading, equity funding, and partnerships.
- These are some important questions to consider:
- Sustainability Metrics: What sustainability measures is the company expected to achieve?
- Business Opportunities: Is there a strong and supported business opportunity to meet these sustainability expectations?
- Focus Areas: Where should you concentrate your efforts to make the most of your strengths and see tangible financial benefits?
- Required Capabilities: What skills and resources are needed to execute this strategy, and will you develop them internally or seek external partnerships or investments?
- Technical Alternatives: Have you explored all feasible technical options to achieve your sustainability goals?
- Financial Factors: How much of your financial success depends on grants, subsidies, incentives, or tax benefits?
- Regulatory Impact: If regulations change, how might this impact your overall business plan?
5. Address cultural imperatives: Establish sustainability as a top-level priority, gain buy-in, and implement change management. Align sustainability with your corporate agenda and engage executives through experiential training and performance-linked incentives.
- Define Roles and Responsibilities:
Appoint roles like a chief sustainability officer to lead initiatives. Secure senior leadership support to make sustainability a core corporate priority.
- Make Strategic Investments:
Assess sustainability metrics, business opportunities, core strengths, required capabilities, technical alternatives, and potential regulatory changes. Consider financial impacts, incentives, and changing regulations.
- Form Ecosystems to Overcome Barriers:
Overcome barriers through partnerships involving manufacturers, associations, providers, and regulators. Address obstacles like regulations, financing, customer acceptance, and cultural resistance.
- Measure Progress and Communicate: Use accurate measurement systems to not only track progress but also create a compelling narrative for stakeholders, investors, and consumers, improving transparency.
- Shape the Dialogue: Proactively collaborate with associations to shape industry opinions on sustainability rather than waiting for public sentiment to sway against you.
- Consider Unintended Consequences: Analyse potential downsides of decisions made to enhance environmental performance. Consider life cycle impacts and take incremental actions towards advantageous future outcomes.
Incorporating long-term outcomes, collaboration with stakeholders, and a deliberate approach empowers manufacturers to achieve substantial benefits on their sustainability journey. These extend beyond efficiency gains to reduced costs, risks, and the creation of lasting social value.
A coordinated approach can drive meaningful change.