The world is facing a climate change challenge. Growing public pressure and increasing regulations mean that the move towards a lower carbon footprint will be one of the major factors in manufacturing in the decades to come.
Sustainable manufacturing is making its way to the top of the manufacturing boardroom agenda. We are already seeing global OEMs issuing public statements that they have recognised this challenge and they are expecting their supply chains to develop sustainability programmes to meet that agenda.
Two major OEMs in automotive and aerospace are clear that sustainability and reducing their carbon footprint is a key strategic imperative.
Jaguar Land Rover is striving to reduce 30% of its emissions across its manufacturing operations by 2020. It plans to do this by designing and engineering emission-free vehicles and reviewing how it sources materials and eliminates waste. With over 10,000 suppliers, it is building a sustainable, resilient and ethical supply chain particularly through its tier 1 suppliers. This, in turn, will put significant pressure on those further down the supply chain.
Similarly, Rolls Royce set a number of targets in order to minimise the impact of its products on the environment. These include reducing energy use in their operations and facilities by 30% and achieving zero greenhouse gas emissions in its operations and facilities by 2030. Rolls Royce is developing hybrid systems and has a ‘Global Supplier Code of Conduct’ to ensure its suppliers maintain the highest ethical standards, behaviours and compliance. It sees technology playing a fundamental part in this transition.
The direction of travel is all too clear – sustainability will rapidly become a ‘must have’ for all manufacturers. Companies that do not change are likely to be left behind as the world moves towards a greener future.
Unfortunately our Make UK/BDO Manufacturing Outlook survey has shown manufacturer’s investment intentions have contracted throughout 2019. Despite investment intentions returning to positive territory this quarter, they are still very low.
The move to a more sustainable business often involves high costs and the changes can sometimes be challenging to manage. With the ongoing uncertainty, manufacturers’ ability to make a step change towards a more sustainable future is hugely inhibited. Directly linked to sustainability is fourth industrial revolution and digital transformation. Sustainability wins can be generated through a greater digitalised environment, however we are seeing investment in digital transformation decreasing due to the uncertain and unstable landscape.
With increased reporting requirements from the Government such as the ‘Streamlined Energy and Carbon Reporting’ (SECR) regulations, which require organisations to report on a range of environmental factors including greenhouse gas, it is important for manufacturers to start monitoring the environmental impact of their business and identify ways in which they can improve environmental performance and cut costs and waste.
There is no doubt that sustainability and digital transformation will be major issues for UK manufacturing in the years ahead. There is also no doubt that the sector needs the government to develop a clear and supportive industrial strategy to help support the significant change and high levels of investment that will be required.
Image credit – Fine Detail, taken by Andy Newman at Griffon Hoverworks in Southampton. Shortlisted in the Amateur Manufacturing Process category of the Make UK Photography Competition 2018.
Tom Lawton is National Head of Manufacturing at BDO.