How customer-led decarbonisation can kickstart growth for industrial and services businesses

Despite today’s challenging and cost-constrained market, growing customer pressure to decarbonise means industrial and services businesses can no longer afford to delay action.

Almost half (43%) of manufacturers feel that the demand for ESG initiatives, low-carbon products and eco-friendly services is coming directly from customers. Our recent Law Firm survey also highlighted that “moral duty” was the most important driver behind ESG activities followed by client pressure.

There’s increasing pressure around being seen to be green, with many Request for Proposals (RFPs) specifically asking businesses for data and facts to demonstrate their claims. Customers want to see the changes being made and the impact they’re having.

There’s no time to lose — using these demands as benchmarks for your decarbonisation strategy will help you achieve responsible growth.

Opportunities, no matter where you are in your journey

Around 60% of global manufacturing, industrial and automotive CEOs see customer demand as being a significant factor on their profitability. While 40% believe their business will no longer be viable a decade from now. So there’s no better time to make the most of opportunities to maximise revenue.

Industrial and services businesses are thinking about how to enable customer-led transformation and fast-tracking of decarbonisation efforts. Decarbonising the value chain can help you secure that lasting market advantage by building greater market resilience, attracting new capital at a lower cost, and setting your business apart from competitors.

The risk for an organisation early in its journey is that they get left behind trying to work out how best to capture, categorise and report on their carbon position. And those who limit action to the supply chain will struggle to keep pace as pioneers transform their entire value chain — rethinking how they design, build, ship and dispose of products.

“We're seeing business running simulations to discover opportunities to optimise their approach and direct future investment. But the real story is on those seeing this as a chance to set the pace by leaning into the decarbonisation opportunity, able to tell a compelling story to the market about the difference and impact they’re having.”

_{Cara Haffey, UK Manufacturing and Automotive lead, PwC United Kingdom}

Front-runners are securing preferential rates for ‘green’ capital, helping to optimise and reduce their overall cost of capital. Not only that, but at a time when firms across the industry are battling to attract and retain talent, as 86% of employees prefer to work for companies that care about the same issues that they do, it’s also a persuasive factor in ensuring potential employees choose your business.

Human-led change, powered by technology

With rapidly changing markets requiring agility and a challenging economic environment meaning every investment needs to deliver, the focus has to come to the role of digitalisation.

Not only will it provide the data and insights for better decision-making by tuning into customer needs more accurately, but that accuracy and transparency can also pay off with your decarbonisation agenda.

Allowing you to improve reporting on the current carbon impact of your business and its products, as well as helping steer more direct opportunities to drive carbon savings. What was once a compliance headache is suddenly your launchpad for a leap towards sustainability.

With the obvious energy savings to be gained from parting with physical servers, shifting more of your operations to the Cloud not only provides more business continuity, but also a greener computing environment. Cloud vendors provide you with insights into how much carbon you’re producing per hour of computing usage, arming you with the information needed to make the right changes. A report by 451 Research found cloud infrastructure can help businesses reduce energy use by nearly 80% when they run cloud applications instead of operating their data centres. Looking ahead, organisations could even potentially reduce carbon emissions of an average workload by up to 96% when AWS reaches its goal of purchasing 100% of its energy from renewable sources.

“Digitising your enterprise systems – such as financial, back office and resource planning systems unlocks both supply chain and activity-based metrics – so you can build a picture of which suppliers are contributing to your carbon footprint, prioritising and optimising decision-making.”

_{Matt Cook, Partner, Customer-Led Transformation, RISE Sector Lead at PwC UK}

We’re already seeing big name manufacturers closely linked to mass consumer markets lead the way with their digitisation programmes. Because of the maturity of their data reporting and focus, they are able to put huge pressure on suppliers in their supply chain. It means smaller manufacturers and suppliers are feeling the heat. They have no choice but to digitise and fast-track their own decarbonisation plans to comply, or risk being replaced.

Overcoming the cost barriers

More than half (54%) of manufacturers in Make UK’s Executive Survey are already adjusting business practices to reduce energy consumption, with a further 43% planning to invest in energy efficiency measures over the course of 2023. Similar numbers (53%) are passing on their energy costs to customers through their product pricings, or even planning to produce their own energy on site (40%).

“Because decarbonisation requires some initial investment, many businesses may be thinking, ‘Can we afford this?’ But with long-term value and resilience in mind, can you afford not to?”

_{Cara Haffey, UK Manufacturing and Automotive lead, PwC United Kingdom}

We recognise that firms are at different stages in their journey for example only 25% of Law Firms have imbedded a well developed policy, 46% have a largely formulated policy that has not yet been fully implemented, 27% with a policy and its implementation still in its infancy and 2% having no policy in place at all.

Making it happen

While ESG is a complicated topic, it’s crucial to first gain an understanding of your opportunity within the market, what the journey looks like and what the benefits are. This will help not only to cement the value of decarbonisation, but also present the business case to your board and stakeholders.
Kickstart your customer-led decarbonisation journey with the research and insights needed to benchmark your strategy against customer expectations. Explore activity-based carbon costing across your value chain, helping you build momentum in formulating the first or next steps in your formal decarbonisation strategy.
Discover opportunities to make small changes into a big difference, whether that’s redesigning your manufacturing process, diversifying your product portfolio or developing low-carbon services.
Evaluate the impact of the customer and supplier shift towards sustainability on your value chain, product portfolio and service offerings — this is vital to building a sustained growth strategy. Bringing your board into the journey from the very beginning will also give you full visibility over what your clients are expecting.

How PwC can help

There are a number of ways in which we can support clients on this journey:

Design and implement technology to target new and existing customers in an ethical manner
Position and communicate their ESG credentials as a value proposition for prospective and current customers
Steering customers towards more sustainable and ethically responsible products / services
A managed service, underpinned by one of our Cloud technology partners, taking control of collection and reporting of carbon emissions
Design sustainable propositions and bring them to market
Boost morale and retain best talent through values & purpose.

Now is the time to harness the decarbonisation opportunity, and transform your business to be truly customer led.