How can ESG support your long-term business and sustainability goals?
The COP26 agreement set out the global agenda on climate change for the next 10 years. Firm plans were agreed to cut CO2 emissions, reduce coal use (which is responsible for 40% of annual CO2 emissions) and help developing countries switch to clean energy.1
These positive steps highlight the urgency for manufacturers to step up their game and make progress with their net-zero targets. After all, it is estimated that manufacturing operations used somewhere in the region of 20% of UK energy consumption in 2020.2 Despite uncertainty on the impact that climate change action could have on production, more manufacturers are now realising that they can achieve business goals without sacrificing the needs of the planet.
Let’s turn our attention to Environmental, Social and Corporate Governance (ESG), which Cimlogic have seen as an area of growing importance amongst clients in the manufacturing sector.
So, what is ESG?
Although ESG is not exclusively focused on environmental factors, the increasing emphasis on net zero and wider social considerations is putting ESG centre stage. According to Wikipedia, ‘Environmental, Social and Corporate Governance (ESG) is an evaluation of a firm’s collective conscientiousness for social and environmental factors. It is typically a score that is compiled from data collected surrounding specific metrics related to intangible assets within the enterprise. It could be considered a form of corporate social credit score. They are used for a myriad of specific purposes with the ultimate objective of measuring elements related to sustainability and societal impact of a company or business’.3
The benefits of implementing an ESG strategy
Global manufacturers are seeing the importance of ESG as part of their overall business strategy, to demonstrate sustainability in their supply chain and report on things like climate risk management.
ESG can deliver many business benefits and opportunities, including:
- Competitive edge – A High ESG score suggests that business or brand reputation will be enhanced over and above a competitor, which enhances an organisation’s overall enterprise value.
- Less financial risk – Organisations that are environmentally responsible and have plans to meet net-zero targets are less likely to suffer from the financial implications of climate-related risks.
- Improved investor relations – Organisations that have an ESG agenda will be attractive to stakeholders, particularly investors who will want to ensure that the business can operate successfully and adapt to climate disruptions.
- Attract and retain employees – In a declining workforce, the ability to attract and keep the right people is imperative. The environmentally conscious employees of today may choose to work for organisations that invest in sustainable production and social initiatives.
- Greater consumer loyalty – Consumer expectations of organisations’ commitment to the environment continues to grow. Research suggests that consumers are more likely to purchase and pay a higher price for a product that is sustainably made.
According to Make UK research, ‘In a bid to lead in areas around ESG, two-fifths (42%) of manufacturers have set ESG targets or KPIs. A further one in five companies are considering introducing ESG targets or KPIs’.4 As discussed above, the rise of environmental, social, and governance factors is growing across all industries, but it will certainly advance sustainability efforts in manufacturing.
How can digital technology support your long-term sustainability goals?
Leading manufacturers looking to drive operational efficiencies, long-term growth and competitiveness are investing more in digital tools such as IIoT, robotics, automation, artificial intelligence, machine learning and edge-to-cloud. In particular, the investment in predictive manufacturing technologies is expected to grow significantly over the next 3 years. Manufacturers will benefit from the added power of data from these technologies, to provide greater insight for improvements such as increased operational efficiencies, reduced costs, CO2 waste, and resources.
As the cost of energy and materials continues to rise, manufacturers are focussing on ways to reduce their energy consumption and achieve sustainable production. Implementing factory automation and sustainable processes is key to optimising production times to minimise energy and utilities consumption, optimise quality and yield and improve performance and utilisation.
Cimlogic has helped a global pet food client reduce site utility consumption costs and support sustainability goals by collecting and organising utility data (within the context of products, rates, timing and other parameters), to drive lower energy consumption, uncover inefficiencies and enable real-time corrective actions.
Cimlogic’s Energy Management solution empowered the frontline workforce by providing real-time notifications for a lower cost to manufacture and a reduction in waste, resulting in a significant saving of £100K electricity costs per annum.
Cimlogic understands how to improve manufacturing processes, securely collect industrial data and apply digital technology solutions. Combining technical expertise with our unique RAISE™ methodology, Cimlogic can support your sustainability journey, helping you make an informed decision as to what is the right solution for your organisation.
If you’d like to learn more about how Cimlogic can help you achieve Sustainable Manufacturing, please contact us today at [email protected] or Tel: +44(0)1274 599955.
1https://www.bbc.co.uk/news/science-environment-56901261
3https://en.wikipedia.org/wiki/Environmental,_social_and_corporate_governance
4https://www.makeuk.org/insights/reports/manufacturing-outlook-2021-q3