Decarbonisation: How manufacturers can tackle cost, skills and carbon challenges and drive competitive advantage

Decarbonisation may not be top of the to-do list for manufacturers amid cost concerns and labour shortages. But the sooner businesses recognise that going green can help them tackle these challenges (and more), the better.

Evidence shows that the firms executing on bold net zero promises are leading the charge — those who are tuned in to changing market demands and making purpose-driven investments to progress their vision for the future. Decarbonisation isn’t just a good look, it’s good business.

The decarbonisation opportunity

According to PwC and Make UK’s Executive Survey, the pressure to prioritise ESG is coming primarily from customers (43%), who are looking for ESG credentials from businesses. Adding to the mix are supplier pressure, new market opportunities and the need to attract investment. Together, this is all creating a heightened sense of urgency for industrial decarbonisation. And market leaders are taking note. 43% of manufacturers have increased their focus on ESG in the past 12 months, and a further 51% have invested in a board-led ESG strategy.

So what does this really mean for manufacturers? It’s about getting to grips with the complex inner workings of your supply chain to understand where the inefficiencies lie, and where simple changes can maximise your positive impact. It’s about benchmarking your sustainability strategy against changing expectations, and reporting on your efforts effectively to attract both customers and investors.

The key to making decarbonisation a success is extending action beyond your clear-cut energy saving measures. Instead, take a big picture approach to transforming your entire value chain and take small steps to make the change.

The power of digitisation and green tech

Progress is easier with the data to help you pinpoint areas for improvement, and digitisation is your route to insight. One third of manufacturers said that digital adoption helped them improve energy efficiency, with a further 33% attributing the reduction of emissions to process improvements.

Good quality data helps manufacturers make purpose-driven decisions. It helps to not only decarbonise their value chain, but also effectively report those efforts to the market. And that’s made possible through the use of advanced technology.

Digitisation enables data to be captured and used in decision making across the value chain, with a focus on reducing both inefficiency and carbon. Three quarters of UK CEOs are already investing in technologies like cloud, AI, 5G and machine learning to help them collect real-time data about the energy being used in their businesses. This in turn enables them to achieve their overall carbon reduction goals.

Nearly half (43%) of manufacturers are prioritising investment in green technology like solar panels, carbon capture and storage methods and electric vehicles to help accelerate their carbon-out efforts. While there is often an initial investment, green tech can pay dividends, helping you save on carbon emissions while also reducing operating costs in the long run.

Retraining and retaining talent

With green technology on the rise and new roles popping up as a result, it’s no surprise that more than half (52%) of industrial companies are investing in upskilling their existing workforce. A further 56% of CEOs are investing in technology-specific training for their staff.

Despite the biggest barrier to green jobs being the skills shortage, green jobs are growing at around four times the rate of the overall UK employment market. 2.2% of all new jobs are classed as green. So it’s about being ready to give your employees the skills they need to reinvent your business with sustainability in mind.

Retraining programmes can provide employees with the necessary skills to work with advanced technologies, helping to not only address the ongoing skills shortage, but also furthering your progress to net zero. And decarbonisation may also be seen as more attractive to job seekers. 86% of employees prefer to work for companies that care about the same issues that they do. At a time where attracting new talent is an industry-wide challenge, sustainability credentials could be the make or break between employees choosing to work at your company, or not.

Making it happen

Firms can either embrace a wait and see approach, or they can start taking proactive steps now to get ahead. But those who wait to see how policy and legislation evolves over the coming years will lose out to those with a first-mover advantage.

Although being at the start of your journey might leave you feeling ill-equipped to begin decarbonisation, customer and investor demand means there’s no time to lose.

Start small and scale up. Think about migrating your operations to the Cloud, or ensuring your existing cloud platforms are as efficient as possible. While there is still ambiguity around ESG reporting, an optimised cloud environment will help you deploy a data management system that can track your sustainability metrics, such as the environmental impact of your products and processes.
Lean on your peers, the whole board needs to be brought in right from the start. Getting insight from CIOs, CTOs, CFOs and CSOs is one of the most important steps CEOs can take to get a handle on the best way forward. Not only that, but engage in open source sharing with leaders across your industry, bringing a wide range of expertise and experience to tackle decarbonisation on an industrial scale.

The leaders in the industry are the ones who are taking the next step towards decarbonisation now, before clear regulations are imposed. It’s time for manufacturers to be big, brave and bold — putting in the time to focus on this now, to realise benefits in the long term.