Optimising sustainability in manufacturing

An environmental friendly strategy is crucial for manufacturers to ensure long-term viability

Today, the manufacturing sector is presented with a host of incentives to transition to more environmentally sound processes. Environmental, social and governance (ESG) concerns sit prominently alongside other broader benefits of emerging technology adoption.

Growing regulatory, societal and stakeholder demands are encouraging companies to incorporate sustainability into their business strategies.

Manufacturers are urged to develop responsible business models that not only maximise benefits for the organisations, but also contribute positively to society while meeting stakeholder expectations.

Additionally, adopting Industry 4.0 technologies helps pave the way for more future-ready industries.

“Industry 4.0 and ESG go hand in hand,” Yousra Elsayed, director of sustainable finance at Mashreq, said during a recent Mashreq MEED Manufacturing Summit. “Sustainability is not just about meeting your ESG mandates, but also looking into the sustainability of your operations.”

Increasingly, environmentally sound processes are coming together with more efficient and resilient policies that yield benefits for stakeholders and sustainability.

Championing sustainability

To achieve their sustainability aims, manufacturers must commit to concrete actions and incorporate initiatives that align with the company’s overall corporate strategy, vision and mission.

Organisations can initiate this process by assessing their present condition, formulating a strategy, defining precise goals and priorities, and re-evaluating resource allocation within the company.

Prior to setting targets, evaluating the baseline offers a realistic starting point and the opportunity to develop a time-phased road map against which performance can be measured by achieving milestones.

Examining their carbon footprint, waste generation, water usage and social impact becomes essential in the process.

“Companies must evaluate the baseline to enhance performance and achieve key performance indicators (KPIs),” said Mike Cheetham, head of sustainability at Hotpack Packaging Industries. “ESG improvement is not possible without establishing KPIs from the outset.

“Implementing Industry 4.0 standards and establishing long-term ESG roadmaps across various factories is crucial. Companies must ensure strict adherence to the roadmap and assess progress annually, as continuous improvement requires ongoing measurement.”

Data and artificial intelligence (AI)-driven predictive maintenance also play a pivotal role in streamlining manufacturing processes and establishing a foundation for meeting sustainable objectives.

Leveraging data in operations can lead to enhanced efficiencies, which include driving productivity, lowering machine downtime and improving overall functionalities.

“Without sustainability, we cannot show progress or improvements,” said Fraz Younas, head of manufacturing at Masafi Group.

“Accurate data collection and monitoring drives a reduction in electricity and water consumption.”

Masafi has experienced significant savings in consumption due to the ongoing transition to digitalisation, leading to a 36% decrease in power consumption over the past two years.

While companies can find themselves torn between their production goals and the necessity to embrace emerging technologies, solutions are increasingly emerging that can be implemented more seamlessly and with less disruption.

“In the past five years, several technologies have been introduced that allow manufacturers to quantify the benefits and make enhancements without disrupting their ongoing workflow,” said Abdel Qader Abusafieh, senior vice-president of technology and advanced materials at Strata Manufacturing.

Enhanced outcomes

A reliable method of assessing sustainability goals is to compare them with industry norms or competitors. Internationally recognised frameworks such as the United Nations Sustainable Development Goals (SDGs) can provide a widely understood context.

While green design principles can help manufacturers reduce their environmental footprint, those seeking to create better value are embracing more creative strategies.

Recent advances have seen companies engineer processes with substantially improved outcomes, from sustainable product design and more efficient raw materials processing to less energy-intensive manufacturing machinery and eco-friendly packaging.

Hotpack, a prominent player in packaging solutions, published its inaugural sustainability report in 2023, with the goal of attaining net-zero emissions by 2050.

By embracing Industry 4.0, Hotpack says it stands to enhance productivity by up to 20% while transitioning into a paperless operation. It is also aiming to make 96% of its product range recyclable or eco-friendly.

Strata Manufacturing, Mubadala Investment Company’s aerospace unit, is reshaping its manufacturing processes by adopting Industry 4.0 technologies across its operations to reduce emissions.

“We are trying to leverage Industry 4.0 to make our processes efficient,” said Abusafieh. “At Mubadala, we have added ESG as one of the stage gates for investment decisions.”

Strata produces nearly 200 engines annually, creating an estimated 700,000-1,000,000 tonnes of CO2 emissions. The company is actively exploring technologies to help bring this figure down, including through the greater use of carbon composite material.

Adopting sustainability standards across supply chains is imperative to help reduce environmental impact. According to EY, over 90% of an organisation’s greenhouse gas emissions and 50% -70% of its operating costs are attributable to supply chains.

Transparency in supply chain operations enables companies to monitor materials and supplies, better understand supplier working conditions, and gather data to evaluate the effectiveness of their programmes. Technological solutions can further help implement operational and resource efficiencies.

Operational excellence and a dedication to continuous human capital improvement are also key.

Investing in upskilling, redeployment and hiring already upskilled individuals will position organisations to be future-ready, while concurrently empowering its workforce.

“A people-centric approach is critical in the age of transformation,” said Younas. “It is equally crucial to prioritise stakeholders and consumers, while keeping your organisation’s long-term vision in mind.”

Financial and regulatory compliance

Today, financial institutions are increasingly integrating ESG factors into their risk assessment and investment decisions.

This involves evaluating environmental and social risks associated with loans and investments, while considering the long-term sustainability of businesses and projects.

“Organisations must integrate ESG consideration when making investment decisions and support research on sustainable technologies,” said Abusafieh.

Industry 4.0 and its related technologies present an effective way to mitigate these risks. They allow companies to enhance transparency, efficiency and sustainability in their operations, leading to better risk management and overall resilience against environmental and social challenges.

“As a financier, our role is to enable, facilitate and mobilise the capital needed for things to move in the right direction,” said Elsayed. “We are committed to sustainable finance and see that adopting a sustainable mindset is becoming increasingly common.”

ESG-related instruments have the potential to fund and facilitate substantial improvements in the utilisation of natural resources, steering businesses and corporations towards sustainability-linked financial services.

Whether through trade finance, green bonds or sustainability-linked loans, financial institutions must offer a diverse range of opportunities that could assist developers, businesses and governments in addressing their short- and long-term needs.

“Sustainable finance tools such as sustainability-linked loans that provide financing incentives when targets are met are critical,” said Elsayed. “Measurement of impacts is important for qualifying.”

While access to capital is essential for companies to meet customers’ dynamic needs, providing high-quality, transparent and reliable non-financial reporting is equally important for making sustainability-guided decisions.

Elsayed emphasises the growing role of regulations in encouraging sustainable practices and the need for standardised reporting. This will allow the public to have access to accurate information about a company’s sustainability programmes and products.

“If it cannot be measured, it cannot be claimed. Establishing a baseline with the help of relevant data can be a good starting point,” she said. 

03 April, 2024 | .By Mrudvi Bakshi