The most efficient manufacturers worldwide generate profits and provide value for customers while using minimal resources, including energy, scarce minerals and materials, and freshwater. With electricity and commodity costs at record highs, there are many reasons why companies are pursuing long-term business strategies focused on resource efficiencies and sustainability. Global regulations and stakeholders, including investors, employees, and customers, are also demanding that businesses respond to climate change. According to the World Economic Forum (WEF), roughly 40% of global energy consumption and more than 30% of global Greenhouse Gas (GHG) emissions come from the industrial sector processes. Unsurprisingly, manufacturers are looking for cost-effective ways to reduce their carbon footprint.
In this article, you’ll learn how to make manufacturing more sustainable, helping industrial players and technology suppliers understand what it takes to run low-carbon processes. And to better articulate these industrial sustainability best practices, real-world examples will be used throughout this post.
Table of Contents
- Renewable Energy
- Material Sourcing and Eco-Design
- Technology, Manufacturing, and Eco-Efficiency
- Circular Economy and Waste Reduction
- Green Buildings and Vehicles
- Reporting and Governance
Figure 1: Industrial & Manufacturing Climate Change Leaders (Decarbonization Commitment)
Renewable Energy
Purchasing renewable electricity is one of the fastest ways for companies to reduce carbon emissions.
When it comes to sourcing renewable energy for manufacturing, companies have several options:
- Power Purchase Agreements (PPAs), Virtual PPAs (vPPAs)
- Renewable Energy Certificates (RECs) or Guarantees of Origin (GOs)
- Energy or utility provider options (e.g., green power programs, green tariffs)
- On-site or self-generated (solar panels or wind turbines installed and integrated with buildings or factories)
Industry Example
In 2017, only 2% of Schneider Electric’s energy sources were renewable. By 2021, through PPAs, Energy Attribute Certificates (EACs), green tariffs, and on-site projects, the industrial company increased global renewable energy use to 82%. Schneider Electric has pledged to use 100% renewable energy by 2030.
Material Sourcing and Eco-Design
Eighty percent of a product’s environmental footprint is established in the design phase, making investments in this area critical to industrial sustainability initiatives. Material sourcing and eco-design refer to the programs and technology platforms for improving procurement practices, managing upstream suppliers, selecting sustainable materials, encouraging eco-design in products, conducting Life Cycle Assessments (LCA) on products, and reducing carbon emissions from the downstream use phase of products.
Some ways that manufacturers can implement material sourcing and eco-design best practices are:
- Improve procurement practices: Incorporate sustainability into procurement processes, including a weighting for sustainability in Request for Proposal (RFP) scoring.
- Improve supplier engagement upstream: Actively request that upstream suppliers establish their own climate targets and agree to carbon emissions reductions.
- Select sustainable materials: Establish targets for increasing and sourcing recycled materials for product use.
- Encourage eco-design in products: Establish ambitious eco-design criteria for manufactured products, such as reducing materials (lightweighting) or increasing the use of sustainable materials in products, etc.
- Reduce carbon emissions from the customer’s use of products: Leverage manufacturing technologies, platforms, and programs that reduce emissions during the use phase of a product. Examples include power budgeting or energy simulation tools that make electronics more energy efficient.
Industry Example
By carrying out LCAs for all of its most important products, Hitachi quantitively measures the environmental impact of each product. Environmental factors include:
- Consumption of mineral resources
- Water usage
- Fossil fuels
- Air and water pollution
- Biodiversity loss
In FY2021, Hitachi achieved a 28% reduction in carbon emissions per unit of products and services, compared to the base year of FY2010, exceeding its annual reduction target of 21%.
Learn the relationship between digital transformation and manufacturing sustainability by reading #40 on our list of 74 technology trends for 2023.
Technology, Manufacturing, and Eco-Efficiency
This sustainability area addresses how well a manufacturer uses Industry 4.0 or Fourth Industrial Revolution (4IR) technologies to reduce carbon emissions in operational processes. CO2-reducing technologies include (but are not limited to):
- The Industrial Internet of Things (IIoT)
- Artificial Intelligence (AI)
- Analytics and big data
- Automation and robotics
- Augmented Reality (AR) and Virtual Reality (VR)
- Additive manufacturing (Three-Dimensional (3D) printing)
The most sustainable manufacturers have a World Economic Forum (WEF) “advanced lighthouse” or “sustainability lighthouse” factory (or factories) using 4IR technologies for reducing energy use, carbon emissions, water consumption, and waste.
4IR technologies enable manufacturers to measure and monitor their energy and carbon footprint across production and logistics processes, while simulating different product and manufacturing strategies, such as using digital twins. This helps operators understand where production and energy inefficiencies are within their operations while providing decision analysis and recommendations for improved sustainability and cost savings.
Related Content:
5 of the Top Digital Twin Companies
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Industry Example
Bosch is sustainably producing its home appliance and mobility offerings by combining IoT connectivity with AI. Moreover, using its Energy Platform, the company reportedly reduced its emissions by 10% in 2 years at its Homburg, Germany facility. The Energy Platform is designed to optimize industrial equipment and processes in manufacturing operations. The solution is being used at 100+ Bosch locations around the world.
Circular Economy and Waste Reduction
For circularity and waste reduction, reject a “take-make-waste” economy and establish regenerative practices for product design, manufacturing, and use. Examples include:
- Designing products for disaggregation and disassembly
- Using materials that can be easily recycled or reused
- Using nesting software (optimizing yield for multiple components on a piece of raw material)
- Conducting packaging analysis, using recycled packaging materials
- Using LCA tools to identify problem areas
- Contemplating end-of-life of products during the early design phase.
Industry Example
ABB is one of the best implementers of circularity and waste reduction efforts. The manufacturer primarily uses steel, copper, aluminum, oil, and plastics in production, most of which are reclaimable at the end of a product’s life.
ABB has laid out its bold ambitions for 2030, which include the following:
- A minimum of 80% of ABB’s products and solutions will be included in the circularity approach.
- No waste will be sent to landfills whenever local conditions and regulations allow it.
- At least 80% of supply spending in focus countries will be covered by a supplier sustainability framework, including environmental, social, and governance (ESG) performance.
Green Buildings and Vehicles
Green buildings and vehicles are other key areas for reducing a company’s Scope 1 and 2 emissions. This means industrial manufacturers might consider net-zero emission targets for production facilities and support methods for reducing their carbon footprint due to fleet vehicles (e.g., Electric Vehicles (EVs)).
To meet this sustainability requirement, manufacturers should:
- Consider constructing Leadership in Energy and Environmental Design (LEED)- or other sustainability-certified factories and buildings.
- Invest in smart building technologies that measure and monitor energy use, air quality, heating and cooling, water use, etc. during manufacturing processes.
- Transition the company fleet to EVs and use telematics to reduce fleet emissions.
Industry Example
Siemens has about 40 buildings that are LEED certified, including its Munich, Germany-based headquarters. The company currently has roughly 37 sites that are net-zero emissions, and by 2030, the industrial conglomerate aims to have a net-zero carbon footprint for all its production facilities and buildings worldwide. For reducing fleet emissions, Siemens has committed to the EV100 group with a goal of transitioning 100% of its fleet to EVs by 2030.
Reporting and Governance
Some of the most sustainable manufacturers, such as Schneider Electric, Siemens, and Hitachi are global sustainability leaders for their reporting and governance practices. This includes the following best practices:
- Use of green bonds or sustainability-linked capital (to fund purchases of renewable energy, energy efficiency projects, etc.)
- Robustness and transparency of sustainability reporting, including short-term, medium-term, and long-term goals for minimizing environmental impact and reducing carbon emissions.
- Strong supplier engagement (ambitious Scope 3 emissions programs)
- Sustainability culture and compensation tied to ESG criteria, such as carbon reduction targets.
- Corporate-level sustainability organization and Key Performance Indicators (KPIs) for accurately measuring environmental data.
- Participation in high-quality carbon offset programs
Industry Example
Schneider Electric releases quarterly, half-year, and annual sustainability reports that provide extensive insights into the company’s sustainability efforts.
By 2025, Schneider Electric has committed to:
- Carbon neutrality in its own operations (5 years prior to Siemens, ABB, GE, and Hitachi)
- 90% global use of renewable energy for electricity
- 50% of green material in its products
- 100% of its primary and secondary packing is free from single-use plastics while using recycled cardboard
- Requesting that its top 1,000 suppliers reduce their carbon emissions by 50%
- 80% of its product revenue to be covered by its Green Premium standard
Learn More
Industrial manufacturing firms are all at different stages of implementing responsible environmental strategies. To learn more about what some of the top companies are doing to tackle climate change, download ABI Research’s Sustainability Assessment: Large Industrial Solution Providers competitive ranking.
