The global manufacturing industry, and the companies within it have long been criticized for their impact on the environment. The production of waste and the contribution towards water and air pollution make it one of the sectors most responsible for carbon emissions and general environmental impact. However, in recent years the sector has taken great steps forward in cleaning up its act and reforming its reputation.
Manufacturing companies of all sizes are "going green" by reducing waste and implementing cleaner production methods. In fact, sustainability is fast becoming crucial to many areas of manufacturing supply chains. Whilst this trend is partly due to ethical reasons, there are also undeniable economic and efficiency-based benefits that are enticing manufacturers away from traditional, ‘dirty’ practices, towards a new way of thinking.
From smart factories to green delivery trucks, business leaders at the forefront of redesigning, restructuring and re-engineering manufacturing operations and processes to be more sustainable are finding measurable results and in some cases, generating new business opportunities.
From tax incentives for investment in new, to stability in times of political changes through regulation compliance, those able implement sustainable practices that exceed sustainability laws avoid compliance violations and greater value generation from the manufacturing process. In addition, companies that optimise operations and reduce demand for energy can cut the cost per product, which can be translated into savings for customers whilst facilitating competition.
However, whilst these commercial benefits are critical in persuading boards and management teams to embrace sustainable practices, it is critical that we do not lose sight of the end goal in applying greener thinking to manufacturing – that of reducing our overall impact on the environment. Whilst the commercial benefits are important, the long-term wellbeing of the planet and providing a positive impact on global society is critical. So, who is leading the charge when it comes to implementation of greener and more sustainable manufacturing practices?
BMW is making strides in sustainable practices. The company sees sustainability as a key component of its corporate strategy. Therefore, by 2020, BMW aims to have reduced the CO2 emissions of its European new vehicle fleet by at least 50 percent compared to 1995, and BMW Group also committed to the EU target of 95 grams of CO2 per vehicle from 2020 onwards. On its production lines BMW aims to reduce resource consumption per vehicle by 45 percent by 2020 compared to 2006 whilst its long-term vision is to conduct completely CO2-free vehicle production.
Chairman of the Board of Management of BMW AG, Norbert Reithofe said, “We take a holistic approach by implementing sustainability along the entire value chain. We see this as an investment in the future. It is our way of ensuring that sustainability is established as part of the very structure of the company, becoming an integral part of our day-to-day lives.”
Scania has placed sustainability in the centre of all of its operations, outlining key indicators to reduce its footprint and develop innovative, low-carbon logistics and mobility solutions that enhance customer profitability and bring value to society. Its mission statement outlines its approach saying; “We want to be the leading provider of sustainable transport. This means integrating sustainability fully into the business and working with others to tackle impacts, transform our industry and create lasting value.”
Isothane manufactures products used for insulating buildings, providing buoyancy for boats, protecting bridges and reinforcing roads. It approach to sustainability saw the company eliminate flammable materials from its product lines in order to reduce substantially the solvent emissions and help ensure compliance with legislation. The company’s research and development (R&D) team spent two months researching less hazardous alternatives to find substitutes, and a few product lines were discontinued.
This approach enabled Isothane to reduce its solvent use from 150 tonnes (165 US tons) of flammable solvent to just 22 tonnes (24 US tons) a year. The only cost was for internal R&D team but it saved the company $400 000, the same cost as upgrading its factory’s electrical equipment and warehouses to comply with the required flameproof standards. As an additional benefit, the changes meant that employees’ exposure to hazardous materials was been reduced and the company generates less hazardous waste.
Henkel, a German household products manufacturer employing 48,000 people, runs a strategy to reduce the environmental impact of their products. By identifying that a significant proportion of the their related environmental impact comes from the use of energy required for their products to work – such as heating water to run a laundry or dishwasher, they created products that work at lower temperatures, meaning consumers can achieve energy savings of 20% on average.
In addition, optimised production processes improved their product’s spray valves to reduce losses of a deodorant spray by 20%. Further, by introducing high renewable and biodegradable materials using plastic made from 90% plants reduced waste associated with its products. These innovations save customers money and reduce the environmental impact and consequently grew market share.
Determining what makes a company sustainable is challenging. Firstly, there no universally accepted definition of corporate sustainability, and secondly public companies are often complex, spanning multiple geographies and industrial sectors making their practices hard to navigate. As a result of these challenges, many governments have stepped in to provide guidelines and frameworks for companies to follow in order to boost sustainable practices.
For example, China’s move to protect the environment and avoid pollution-related social unrest resulted in a radical shift in policy. Since vowing to ‘make the skies blue again’, the National People’s Party cut the use of coal, which currently provides around 70 % of the country’s electricity, dropping consumption every year for the past three years, falling 4.7% in 2016 alone.
The Philippines, the world’s largest supplier of nickel, initiated a crackdown on mining companies accused of violating environmental laws and since then, multiple benefits have been realised, as well as garnering increased support from the population.
South Africa was the first country to introduce mandatory integrated reporting for all listed companies. This means that each public company must clearly outline all Corporate, Social Responsibilities in their annual reports to give a truly holistic view of its activities. As a result, the issue of sustainable practices that benefit all stakeholders is becoming for more accepted by boards and management teams as the competitive advantage is clear.
A growing number of manufacturers are finding that reducing reliance on resources, waste, and pollution, coupled with recycling and reusing waste products delivers an improved bottom line, enhanced employee motivation, morale, and positive public relations.
As one of the key contributors to global waste and emissions, the manufacturing sector has a key part to play in addressing climate change, emissions and sustainability targets. However, whilst the business case for turning to sustainability is becoming stronger with each year, it is important not to lose sight of the key element of implementing greener practices – reducing our impact on the environment. Climate change will affect every community worldwide unless we act swiftly and comprehensively. Therefore, the key motivation should be a greener, cleaner world, leaving the financial benefits as a secondary advantage to better behaviour.
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