Long-Term Industrial Improvements Must Come from Ingrained Sustainability Efforts

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Even as ESG issues flood the sustainability landscape, the industrial sector continues to be a significant source of emissions, and without taking further steps to make improvements now, companies face missing stakeholder expectations in the long run.

A report by EY says the industrial sector is lagging in sustainable transitions, and that emissions from industrial processes, transportation, manufacturing, and construction have grown at significant rates over the past three decades. That is despite a growing focus on making sustainable targets, according to EY, because many of the issues companies have addressed can be seen as minimum requirements.

The report outlines ways businesses and industries can make significant changes to their practices and use sustainability to increase value. These include putting sustainability at the center of business models and innovation, boosting sustainability throughout operations and reevaluating supply chains, and using innovative technology, especially in areas such as renewable energy.

Another EY survey shows that 40% of industrial sector CEOs see becoming a sustainability leader reduces capital costs and providing a competitive advantage for businesses. Nearly a quarter of them see environmental sustainability ratings as key to attracting investors.

A survey by AVEX also says nearly half of CEOs will increase their focus on ESG this year and 83% of them believe their ESG efforts impact their brand’s reputation.

Those that are making advancements in such sustainability transitions move beyond basic decarbonization targets and disclosures and make them a key component of their operations. That includes executing detailed plans with technology and infrastructure commitments that will lead to long-term successes.

They also evaluate all aspects of their operations, including manufacturing processes and the overall footprint of their products. Making sure supply chains have the same sustainability requirements as the business and holding them accountable for those efforts are also key, according to EY.

Implementing energy technologies such as carbon capture and sequestration and green hydrogen can also advance initiatives, especially in heavy industries. Using increased data and analysis to improve energy efficiency, including tools like digital twins and blockchains, can also produce a variety of sustainability benefits for an organization.

Other ways businesses can make substantial improvements include incentivizing corporate leadership’s commitment to sustainability efforts, such as linking executive compensation to goals and results. Also, organizations should communicate their performance with external stakeholders and be accountable for their progress, especially since investors increasingly seek companies that differentiate themselves on a range of ESG-related metrics, EY says.

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