Sustainability in Manufacturing, Courtesy of Digital Tools

Not long ago, industrial manufacturing executives and industry observers seemed to put more weight on circularity and sustainability than they do these days.

More likely, it’s a function of a shift from the marketing front to the accounting and operational realms – for two reasons.

• The technologies to support circularity and sustainability in industrial manufacturing have matured to the point that they can also contribute to boosting efficiency and profitability. Simply put, sustainability is good for business.
• Regulators have been busy, particularly in the European Union. The EU packaging rules and battery regulations, the EU taxonomy, the EU Corporate Sustainable and Reporting Directive (CSRD) and other reporting requirements are prime examples (though far from the only ones).

Given the clear consequences of global warming and other factors, it’s hard to imagine governments elsewhere doing nothing. Sustainability reporting is moving in the direction of financial reporting. There will be no avoiding it.

So, it makes sense that sustainability reporting requirements are the focus of many industrial manufacturers. But to consider circularity and sustainability only through the lenses of compliance and corporate image is to miss opportunities. Sustainability-related data that regulators will make you collect, compile and report on anyway can help you boost sales through sustainable products and services, reduce costs by using secondary materials and components, attract new talent and improve collaboration with suppliers.

Green Ledgers Treat Carbon Like Cash

Collecting sustainability data is the big challenge at the moment, and a lot of that’s being done manually. This must – and will – change, not only with respect to an industrial manufacturer’s internal data, but also with that generated by suppliers. And it is changing, in part because the tools to make use of that data can deliver a lot of value.

What are some of those tools?

• Emerging sustainability data exchanges enable the sharing of Scope 3 emissions data throughout the supply chain and can spot products or processes with carbon-reduction potential and avoid duplicate emissions counting.
• AI-powered carbon-accounting software then calculates carbon footprint from the product to the corporate level.
• Extended producer responsibility systems provide lifecycle views into costs and the environmental impact of design choices while calculating and reporting on EPR fees, plastic taxes and corporate commitments.
• “Green ledgers” link emissions and financial data, allowing industrial manufacturers to see the linkages between emissions and finances, model out sustainable business scenarios and make decisions that meet both financial and environmental targets.

Common among all of the above is that they’re embedded into traditional business processes and information systems. Sustainability becomes a part of doing business.

Circularity and sustainability can be good for the planet and good for business. The requisite digital tools are now in place to help industrial manufacturers turn regulatory reporting requirements into competitive advantage.