The vulnerability of our ecosystems has never been more acute. The Intergovernmental Panel on Climate Change (IPCC) has demonstrated the need for “immediate and deep emissions reductions across all sectors” if global warming is to be limited to 1.5° C. Accordingly, the organisation has called for economies to achieve net zero CO2 emissions by 2050, yet also cited that there are options to at least halve emissions by 2030.
Industry is accountable for approximately a quarter of global emissions and is, therefore, a critical player in achieving a sustainable future. However, as the IPCC acknowledges, “achieving net zero will be challenging”. It will require new production processes, reconfigured manufacturing lifecycles, and collaboration with stakeholders at every stage of the supply chain.
Achieving change at this scale is not possible at pace, nor is it possible by treating sustainability as just another business initiative. The road to net zero has to be considered a strategic driver and fundamental to any organisation’s future. However, the good news is that, with the right approach and roadmap, making substantive progress can start today, as Adem Kulauzovic, Director of Automation, Domino Printing Sciences, outlines.
Action now
As the IPCC Working Group III Co-Chair, Jim Skea, recently commented: “Climate change is the result of more than a century of unsustainable energy and land use, lifestyles and patterns of consumption and production.” Yet, scientists also cited increasing evidence of climate action and its early effectiveness. IPCC Chair Hoesung Lee stated: “If these [policies, regulations and market instruments] are scaled up and applied more widely and equitably, they can support deep emissions reductions and stimulate innovation.”
Within these statements are three key points:
- Unsustainable practices will take time to reverse and cannot be changed overnight;
- Even seemingly small sustainability actions can have a positive impact – and lay a foundation for continuous improvement;
- Taking early action can drive innovation and competitive advantage.
So why are these relevant for industry – and manufacturing organisations in particular?
Experience in facilitating any significant change, whether due to new legislation or out of a need to achieve better operational efficiency, has shown three key components to success: physical capabilities (e.g. technology), funding, and people/culture. A common mistake many organisations make is to wait and try to drive change too quickly, which frequently leads to poor planning and execution, a lack of ROI to support senior-level buy-in and further funding, and cultural resistance.
By taking action on sustainability now, however, these commonplace hurdles can be readily addressed in bite-size chunks while gaining a competitive advantage. Indeed, research indicates that consumers (Gen Z in particular) are willing to pay more and demonstrate increased loyalty to brands that are seen as more sustainable – a win-win scenario for all stakeholders.
So, what might a successful roadmap to net zero comprise?
The IPCC evidence makes clear that many factors impact an organisation’s execution of a net zero target and that these will impact organisations at different times and in various measures, as supported by research from McKinsey.
However, there are some universal considerations that manufacturers need to make on their journey to net zero, including product concept and design, production line efficiency, workforce requirements, and data needs. Let’s explore each of these in turn.
Product
As highlighted, consumer preferences are changing as awareness increases of the need for more sustainable and greener products, and they are voting with their wallets. Manufacturers may want to consider the opportunity to incorporate new, sustainable, ethical, and alternative (e.g., plant-based) raw materials in product design and production. They may also want to look at improving a product’s energy efficiency to reduce cost and waste during production and/or highlight how their product forms part of the circular economy by making it easier to repair, reuse, or recycle.
Any changes to product design need to be considered with respect to the potential knock-on effects they might have on production lines – from product handling and packaging design, to the way in which key new information is conveyed through coding and marking. Companies therefore need to assess that the changes being introduced are not going to add to production inefficiency.
Production
Manufacturing production lines can be fraught with hidden causes of waste and inefficiency that can contribute significantly to a company’s overall production footprint.
Assess for manual label creation processes; unplanned downtime per site per year; service delays and shift loss, as well as errors missed through manual code inspection and lack of data aggregation – all of which constitute forms of production line waste. Indeed, the latter is also the #1 cause of product recalls. On average, an individual product recall costs up to $10m in wasted stock, logistics costs, punitive fines/penalties, plus the associated brand damage.
By identifying such causes of waste and addressing these through automation and intelligent cloud-based monitoring solutions, not only can significant cost savings be achieved – savings which can generate further buy-in and be reinvested into additional areas of continuous improvement – the positive sustainability impact will benefit brand reputation amongst all stakeholders.
People
As the McKinsey report highlights, the transition to net zero is estimated to result in a loss of 185 million direct and indirect jobs by 2050, yet a gain of 200 million. Improving processes doesn’t mean replacing workers, but it will require understanding of the new skills needed to drive sustainability improvements and innovation. Where might staff be redeployed to offer value-added impact? How can organisations ensure continuous staff development and engender a culture of openness to drive improvements? How can manufacturers attract new talent into the business?
Part of a manufacturer’s sustainability strategy and roadmap should offer consideration for these questions to attract and retain ‘green’ workers, which will propel the virtuous circle of net zero.
Data
The net zero commitment comes hand-in-glove with a significant burden on organisations with regard to reporting and analysis. The Greenhouse Gas Protocol stipulates that emissions fall into three categories – scope one, two, and three.
Scope one emissions originate from a company’s owned assets like the fossil fuels used on a production line or burned by their fleet of trucks. Scope two includes indirect emissions from purchased energy generated offsite. Lastly, scope three comprises other indirect emissions from a company’s upstream and downstream value chain. It’s by far the largest source of emissions for most organisations – more than 70% of their entire footprint on average.
Until now, most EU companies have only reported on scope one and two – just a third measure their scope three emissions. But, with the Corporate Sustainability Reporting Directive, this is about to change. Under the proposed value chain sustainability reporting, companies will also be required to report on scope three, and their net zero reduction targets and progress.
This means manufacturers will have to be able to exchange data with partners to track and document the carbon footprint of raw materials brought in, the final product for sale – and everything in between. For manufacturers, collecting and sharing this data should start with providing on-pack product data embedded with scannable 2D codes, such as QR codes equipped with a GS1 Digital Link. These advanced data carriers allow more data to flow through the supply chain, providing options for brands and supply chain partners to track products and share data upstream and downstream.
Partnerships and collaboration
The IPCC has emphasised that achieving net zero cannot be achieved by any one organisation – or indeed any one region or government – in isolation. This is a matter of global significance.
For manufacturers, the path to net zero will require partnerships up and down the supply chain, with providers that can assist with making the positive changes that allow processes to flow in a beneficial way. Within product design alone, this might include working with a provider who can help consider the impact of potential changes on production line processes or verify and streamline new production processes and systems to incorporate sustainable developments.
On the path to net zero, it is important to consider all the elements that together make up a whole that is much greater than the sum of its individual parts. This can only be achieved with partnerships with like-minded organisations willing to work together to agree on outcomes, reduce waste, and promote efficiency in a strategic, sustainable way – which is why the path to net zero must start today.