Global Industry Director, Process Manufacturing, IFS
Attitudes toward sustainability are changing rapidly and industry needs to keep pace. Sustainability is no longer a nice to have; it’s a critical issue for manufacturing industries that are serious about growth.
In a 2014 report into attitudes toward sustainability published by PwC, just 5% of CEOs predicted that sustainability and climate change would be the next big issue to impact business.
Barely five years later and things are very different. “A survey published in the Telegraph showed that 69% now feel the issue is critical,” explains Colin Elkins, Global Industry Director for Process Manufacturing at global software solutions company IFS.
The shift in attitude mirrors the changing demands of today’s consumers. While exact percentages differ, research conducted by Accenture, McKinsey and Nielsen all report that more than 70% of consumers would be prepared to pay more for products that have sustainable credentials.
Elkins cites the chocolate market as just one example of the case in point. “The chocolate market saw overall growth of 3% last year, but products with environmental claims grew by 22%,” he says.
Facing the challenges
The desire for change is certainly there from a consumer perspective, but it’s not without its challenges – particularly for industries that have complicated supply chains and those that outsource elements of production.
It’s not just a case of monitoring what your suppliers are up to either. “We know that just 20% of greenhouse gases are produced by the manufacturers themselves – the other 80% come from moving parts and goods around,” reports Elkins.
But that’s no excuse to pass the buck. Plenty of companies are thinking creatively about how they work with their supply chains to ensure sustainability and mitigate their environmental impact.
Offsetting carbon used to be the knee jerk reaction of industry, but ‘insetting’ has been a concept that a growing number of companies are embracing. And technological advances are helping them to do it.
Artificial Intelligence and what Elkins refers to as ‘connected assets’ are all helping industry to plan and monitor their activities more efficiently. By applying such tools to their current models, companies can improve planning, work out where inefficiencies lie, and track and trace products and components more effectively.
For example, Coca Cola have used intelligence to relocate factories closer to their raw materials; tomato growers in Suffolk are using waste to heat their greenhouses; and supermarkets are using GPS tracking to move produce more efficiently.
However, Elkins believes that industry needs to go even further when it comes to investing in sustainability. What has been dubbed the Fourth Industrial Revolution is bringing technologies such as artificial intelligence, Blockchain and the Internet of Things to the forefront.
IFS are currently developing software tools that harness machine learning to help companies forecast more effectively. They are also looking at ways that other technologies like IOT and Blockchain can be implemented to monitor and improve supply chains.
It’s clear to see how reducing water and energy consumption, minimising waste, decreasing dangerous emissions, and reducing inefficiency can reduce cost and improve productivity. But beyond these economic benefits, taking a more sustainable approach helps companies to position themselves as responsible corporate citizens – something that appeals to savvy stakeholders and investors alike.
“There are dramatic changes and accelerating progress when it comes to sustainability. Companies that recognise this are the ones that will still be in business in five years’ time,” says Elkins. “Those that don’t won’t. It’s as simple as that.”
Clear, transparent and accountable
The final piece of the jigsaw puzzle is how industry communicates all they are doing to consumers.
“We need more standardisation and it needs to be more comprehensible,” admits Elkins.
“The fact that packaging labelled as ‘compostable plastic’ can’t actually be put in the compost is just one example of how confusing it can be.”
Elkins doesn’t believe that legislation is the answer, however. The clear economic benefits should be enough to drive more businesses to make the shift to sustainable activities. The next question is how they share the good they are doing with consumers in a way we can all understand.