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There is no way around decarbonization for manufacturers. At the same time, bringing sustainability to the core of the business model is one of the biggest opportunities ahead. How should a manufacturer innovate to reap the benefits?

While manufacturing can be a carbon-intensive industry, 92 percent of respondents understand that becoming environmentally and socially sustainable is crucial to being future-ready, according to a Cognizant/Economist Impact study. What happens to manufacturers that dwell? Regulations are ramping up across the board, and being non-compliant will become expensive as fines and legal penalties will hit hard.

Manufacturers that don’t become sustainable will also miss out on a major market opportunity; the green technology and sustainability market size worldwide is estimated to grow to over 400 billion US $ by 2030.

Conscious quitting is here

What’s more, consumers, employees, investors and partners are increasingly concerned about the impact of the products they buy and the footprint of companies they work for, invest in, or partner with. The depth of your sustainable innovation efforts will affect your brand reputation as well as your competitiveness. 

Have you heard about “conscious quitting”, the new workplace buzzword? Nearly half of employees say they would consider resigning from their job if the values of the company did not align with their values, according to The 2023 Net Positive Employee Barometer, a survey of over 4,000 workers across the US and UK. It says something important about the necessity of becoming a sustainable business to attract and retain talent.

More and better information is key

While a majority of manufacturers, fortunately, have realized the value and urgency of sustainability, fewer are backing it up with any real action. According to the same Cognizant/Economist Impact study, just over half of respondents say they are setting sustainability targets, and few are managing to get the right information to the right people to make better decisions.

What’s hampering them? Well, becoming truly sustainable is not an easy road ahead. For manufacturers, it has three major elements: buying, building and serving better, where the ultimate goal is to transform the business model from linear and degenerative to circular and regenerative. You need a life cycle perspective, where you measure and improve social and environmental impacts along the complete lifecycle of products. Consider everything from raw material to waste; focusing on your own production isn’t enough.

Here, technology is a game-changer. With automated and primary data flows, deep footprint calculations and actionable insights, tailored to different business users within the company, you can understand the impact, prioritize and make incremental changes that jointly lead to big changes. Fortunately, the same infrastructure that many manufacturers have invested in to promote efficiency and resilience can be applied to sustainability. IoT sensors, cloud infrastructure and big data analytics are already there (learn more about how Industry 4.0 can help with sustainability).

Avoid carbon tunnel vision

While there’s no doubt that climate change is among the most pressing challenges for environmental sustainability, there is a lack of a holistic approach. I have previously touched upon the risk of falling into a carbon tunnel vision. Companies sometimes ignore the links between the wide spectrum of important environmental and social impacts – like biodiversity loss, land conversion or gender equality.

What to do then? We urge businesses to consider the array of interlinked environmental and social impacts to gain the full breadth of opportunities and value that lie ahead. Linking different impacts requires more variables to track, but collecting new data can be a tedious task. A clear data strategy helps manage this increased complexity. We advise companies to augment their sustainability strategy with a data strategy that tracks several relevant impacts and provides dashboards customized to different business user groups. A useful framework here comes from Doughnut Economics.

All in all, with a broad approach, backed up by a data strategy and powerful technologies, manufacturers can manage the complexity of sustainability to both take responsibility and create new business value. To learn more, please visit Cognizant’s sustainability services section and our manufacturing section.

Jan Konietzko

Manager of Sustainability Advisory, Cognizant

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