Sustainability Imperatives in Manufacturing Companies

Introduction

Sustainability Management imperatives are taking more prominence due to environmental concerns and will continue to be in focus in the coming days with increased awareness on the subject from governments, business & society at large.

Businesses have a significant role to play & sustainable practices are considered a corporate responsibility with leading companies taking sincere initiatives to measure and minimize environmentally unfriendly operations and to address various stakeholders’ (internal & external) priorities:

• Brand reputation – As companies introduce sustainable methods in their manufacturing systems, their reputation among investors, stakeholders and consumers improves
• Operational efficiency – Reduced usage of energy and other resources leads to reduction in costs which eventually leads to improved operational efficiency
• Societal impact – Creating a strong image with sustainable methods sends out a strong message to the society and this in return creates a positive impact on consumers’ minds
• Transparency from Business Partners – Companies are expecting from their partners Sustainable business engagement & moving away from ties with partners at risk
• Shareholders – Beginning to use ESG scores as one of the criteria to make investment decisions
• Regulatory Requirements: These are becoming more stringent
• Customer perspectives – Becoming more conscious about sustainable Products & Practices & do not like Greenwashing

The manufacturing industry is setting ambitious and sustainable targets for improving the planet with meaningful environmental changes. Intricately connected with this are corresponding opportunities for technology companies. According to recent surveys, the sustainability market size for green technologies is expected to grow significantly with a Compound Annual Growth Rate (CAGR) of >25%, with market size expanding to almost $45b+ by 2028. The management of greenhouse gas emissions, energy consumption, waste management, green product development, and water conservation—is seen no longer as a cost but as a critical value differentiator.

Challenges faced by manufacturing companies:

Operational Inefficiencies

• Manual Method of collecting sustainability data & transformations leading into errors
• Auditability/ Traceability issues due to manual methods of operation
• Deficiencies in ability to do basic analysis on the data

Newer Asks:

• Suppliers following the organization’s environmental standards – Whether the suppliers are complying with the organization’s green standards with the components that they are providing
• Lifecycle assessment of products – Assessing the sustainability footprint of the product (e.g., from cradle to grave)
• Climate Risk Analysis (e.g., while setting up new units – Challenges of setting up new factories as per climate standards and how these setups are going to affect the environment)
• Evolving regulatory frameworks & higher reporting frequencies

These challenges need to be intrinsically addressed by a digital solution to improve efficiencies, enable auditability, reduce non-compliances & make the enterprise future-ready.

Conclusion

When it comes to sustainability in manufacturing companies, a remarkable change is afoot, resulting in more significant thinking—especially on the factory floor and value chain partners. Manufacturers prepared to adopt the change will find opportunities for innovation—with sustainability targets inspiring green design, manufacturing, sourcing and novel technology applications. The time has come for data platform solutions for ESG and other newer asks that are emerging.

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Author:

Sandip Mitra, Business Consulting Group, ITC Infotech