Analysis
Let’s be real. Iconic images of manufacturing don’t evoke green or sustainability; rather, images of rivers burning, the Love Canal superfund site, smog eliminating visibility, and environmental destruction have made the national consciousness. While these stories are heart-stopping, manufacturing has improved its efforts to reduce environmental impacts and is working to become part of the solution. The iconic images of the future may be of clean energy farms, recycling advances in mining and metals, and bio inventions harnessing the power of plants from consumer goods to pharma.
Let’s explore how companies are working toward a much greener future.
Investing in a Greener Future
Environmental, social, and governance (ESG) standards have changed the game to create visibility for investors to put their wallets (and their clients’) alongside their values. U.S. Securities and Exchange Commission (SEC) existing and proposed rules make it much easier for investors to assess the climate impact of companies. While the market has been on a roller coaster ride this past year, sustainable investing grew in 2021. JP Morgan found that ESG funds grew 55% in 2021, with over $500 billion flowing into those funds, and the firm expects the trend to continue.
Cleaning Up Carbon Footprints
Twenty percent of global carbon emissions come from manufacturing. The World Economic Forum, with Siemens and Capgemini, launched “Industry Net Zero Accelerator” to get companies to net zero operations by 2050. Several manufacturers have signed on to accelerate their emissions reduction plans.
Microsoft is committed to reducing more carbon emissions than they emit by 2030 to be carbon negative. They are also committed to shifting to 100% renewable energy by 2050. Beyond work in their own facilities, Microsoft is also working to help its customers reduce their carbon footprints.
Sustainability Throughout the Entire Chain
Outside of their own facilities, companies are also scrutinizing their suppliers. Apple recently announced that it's reviewing suppliers to get to its goal to decarbonize all operations. Trane Technologies views its entire value chain as part of its sustainability goals. Suppliers must agree to the targets set by Trane. Additionally, Trane has a program to help smaller suppliers meet these goals, such as energy reduction targets, to help its whole value chain improve.
Our 2022 study, “Delivering on Carbon Neutral Goals” found that only 28% of manufacturers are expanding initiatives beyond the factories to encompass suppliers. These challenges in Scope 3 emissions seem to be addressed by very large companies, but not in the near-term achievable activities for those companies earlier in their decarbonization efforts (Scopes 1 and 2). The same study also found that the top challenge to advancing carbon footprint goals is the “inability to measure all related factors.” This is where new technologies can make the difference.
Transparency Helps Companies See Improvements
Digital technologies allow companies to track emissions, share information, and make smarter, data-driven decisions. Often these initiatives aren’t solely focused on sustainability. Having greater data transparency drives efficiency, scalability, and customer experience improvements that all drive growth. And this data provides critical insights that drive environmental efforts as well.
Mercedes-Benz used Microsoft’s data platform to transform vehicle production and the global production network. The carmaker can now create a virtual replica of its manufacturing process and combine insights from several departments, which allows the company to optimize the process and adjust for more operational efficiencies and energy savings. Additionally, the system helps with supply chain resilience, reducing the ecological footprint, and allowing more workers to have access to real-time data for faster changes and better communication.
Global baked goods company Grupo Bimbo turned to Microsoft’s cloud solution to get a single holistic view of the company’s progress on its sustainability goals. They system streamlines data collection, integration, analysis, and reporting allowing Grupo Bimbo to examine Scope 1, 2, and 3 emissions. The company piloted the project in Latin America and built out a roadmap to deploy to other locations. Additionally, they can help their suppliers make progress on sustainability goals, ensuring a regenerative supply chain.
As technologies improve and manufacturers continue to adopt digitalization, the opportunities for reducing production’s climate impact also grows.
Are you a sustainability leader at a large manufacturing company? See how Manufacturers Alliance can help accelerate your efforts.
Learn how partnering with Microsoft can help your manufacturing company accelerate innovation and achieve your sustainability goals. Thank you to Microsoft for being an underwriting partner of Manufacturers Alliance.