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Time for industries to prioritise sustainability: 5 steps for evolving the industrial business model

Author : Ali Haj Fraj, Schneider Electric

31 January 2023

While sustainability has become a key industrial concern, the sector has found it difficult to make significant progress. Operating sustainably means industrial companies must simultaneously meet environmental, economic and social measures.

Schneider Electric’s recent research with Omdia found that in efforts to meet the environmental dimension of sustainability, 57 percent of industrial organisations are putting carbon-neutral targets in place to completely offset their greenhouse gas (GHG) emissions. 

However, many are struggling to identify where to take action to meet their targets, with almost half (48 percent) yet to deploy any sustainability initiatives.

As we move into a new era of industries, human and machine activity must blend and become complementary, with more emphasis placed on sustainability. Schneider’s research outlines five recommendations for the industrial sector to meet ambitious environmental sustainability targets.

Commit to sustainability
Manufacturing companies know that sustainability matters and are pledging action. Their success relies on a commitment to the process and setting specific targets to measure success. Key motivators for sustainable change are corporate responsibility (41 percent), improved performance (26 percent), and cost savings (23 percent). 

Although reduced energy use and waste will result in savings, the sector must go beyond implementing sustainability initiatives that only focus on return on investment. Industrial companies should think in terms of return on value and commit to sustainability projects where benefits will evolve over time and extend beyond direct financial return. 

In terms of targets, these should be integrated across business functions and owned at all levels of the business to drive organisation-wide commitment. One key piece of advice from Omdia in the findings of the report is for industrial companies to consider short and long-term targets by identifying quick wins and more challenging projects ripe for investment.

Support with technology
29 percent of manufacturers state that legacy assets and infrastructure are a major challenge in implementing the technology needed to meet sustainability targets. Industries often measure asset and infrastructure replacement rates in decades, which can slow progress. 

However, while some legacy assets cannot provide enough data to support efficiency improvements, technology is at the heart of a shift towards sustainability, from the most basic level with the replacement of inefficient motors to the application of Industrial Internet of things (IIoT), sensing, artificial intelligence (AI), analytics, and digital twins. 

To measure current and future performance, companies can combine additional sensing with connectivity and data visualisation tools. Using this data, they can leverage AI and analytics to optimise energy use and increase quality output. 

For products and processes, digital twins feed into design, reducing material use and eliminating prototyping, while simulation of processes allows for optimised performance and minimised energy consumption, waste, and emissions. 

According to the study, 54 percent of manufacturers are already using digital twin tools to design plants, factories, and facilities. At the same time, efficient automation and energy management systems top the list of the biggest impact on sustainability initiatives.

The benefits of implementing new technology can be seen in the recent digitisation of Kunming CGE Water Supply (KMCGE). While primarily implemented to ensure a safe, stable and more efficient municipal water supply, digitalisation was critically important to reducing overall operating costs and driving sustainability in water distribution systems. 

Through the partnership with Schneider Electric and AVEVA, KMCGE’s digital core has been reshaped, reducing leakage and energy waste and improving operational and maintenance efficiencies, allowing it to continue supplying high-quality drinking water to a growing urban population.

Have a data-led approach
One-fifth (21 percent) of industrial companies identified a lack of access to the right data as a key roadblock to sustainability progress. This lack of data makes it impossible to find and measure areas for improvement. 

Tracking performance metrics such as energy use, material consumption, and waste across the manufacturing process supports the improvement and evolution of targets. Dashboards can simplify analysis of the carbon footprint of individual assets, processes, and facilities. 

For instance, many organisations do not currently track scope 3 emissions, as this requires transparency across every touchpoint of the supply chain. Quantifying these emissions is not required, however, there will be more demand to address this sizable concern in the future, increasing pressure to address data shortfalls. 

It can be difficult to manage solutions across departments because there is often no digital thread, limiting businesses’ ability to analyse organisation-wide sustainability data. Data integration and elimination of silos increase interaction between departments, giving a vital view of datasets, helping to inform decision-making, and understanding how to prioritise investments in sustainability projects.

Partnerships are important
Going beyond internal changes, manufacturing companies need to hold their ecosystem partners to the same sustainability standards that they have set for themselves. Real change can only be made when the entire value chain acts, and it is vital to engage all stakeholders in new sustainability initiatives.

Extending visibility across the supply chain will become necessary as organisations start to be held to account for their scope 3 emissions, and by extension the companies with which they choose to partner.

The footprint of a business’s supply chain, including upstream purchase of goods and downstream use by customers, will need to be considered as part of total scope 3 visibility, making effective partnerships and data integration essential.

Sell the vision
Any sustainability initiative depends on buy-in from all stakeholders. This can be tricky, with 19 percent of manufacturers noting culture change as a major challenge. Positioning the return on value of sustainability projects to the company is important not only for brand management, but also for increasing employee morale. 

The large-scale coordination and strategic integration across business functions go beyond connecting siloed data and systems. If businesses communicate their vision, internally and externally, providing a clear roadmap of goals and activities, this will solicit the buy-in from the workforce and partners needed to succeed. 

Fortunately, there is weight behind such initiatives: with 78 percent of industrial companies stating that a C-level role is directly responsible for driving their sustainability efforts.

The long road to sustainability 
When it comes to sustainability, the manufacturing industry has a long way to go and has some difficult decisions to make. Effective action will require a review of existing processes, equipment, organisational culture, and technology to identify and tackle inefficiencies and waste. 

By following these five recommendations, industries and manufacturing can set and hit sustainability targets, evolve and benefit both the planet and their bottom line.

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