DX Is An Opportunity to Deliver Sustainable Manufacturing

The manufacturing industry is increasingly on-board with the sustainability agenda driven by the climate emergency. Change is visible in the number of manufacturers now operating within the UN’s Sustainable Development Goals (SDGs) framework, with Environmental, Social and Governance (ESG) policies in place to set tone and direction. This shift is already widespread across larger businesses — by mid-2021, 95% of S&P 500 companies had detailed ESG information publicly available — and is now percolating through to all levels.

Manufacturers have got the message. On one side, there is changing consumer behavior — favoring products with a credible sustainable agenda. Employees, investors and customers want to feel good about the ethics and practices of businesses they work in, invest in, and buy from. Businesses genuinely seek to be good corporate citizens. On the other side is an increasing level of government regulation to limit carbon emissions and reduce environmental destruction. Net-zero policies, which will profoundly affect manufacturers in the next investment cycle, are now in place in 130 countries.

And then there is the extraordinary rise in energy and raw materials input costs resulting from Russia’s invasion of Ukraine. Bloomberg recently reported how the cost of manufacturing household goods in Asia is being driven higher by surging energy and commodities prices. Energy has doubled from about 10-12% of total costs for European petrochemical crackers to about a quarter since the end of last year, according to ICIS, a commodity data business,

Reducing energy and raw materials usage is a key objective for many aspects of sustainability, with the result that driving forwards on this agenda has strong commercial benefits as well as an ESG component.