The manufacturing industry fuels consumption and production around the globe, is dependent on complex global supply chains, and demands one third of the world’s energy usage. As such, it has a unique ability and responsibility to support progress towards net zero and slow climate change.
Acknowledging this and facing the challenge head-on, the industry set ambitious targets committing to drastic action. What followed this surge in ambition was a two-year period of upheaval and uncertainty.
Brought about by the COVID-19 pandemic, Brexit and subsequent economic fallout, manufacturers were forced to divert their efforts to crisis planning and safety measures, while dealing with staffing challenges, increased costs and supply chain delays.
The result is an industry that committed to timelines and targets on radical sustainability action, yet for the most part has had its ability to act restricted. In fact, recent research from Microsoft UK found that, despite strong ambitions, almost 3 in 4 UK manufacturers (74%) are struggling to back up their climate commitments with tangible reductions in their carbon footprint.
Seeking to understand how the industry can drive progress, our latest research, in partnership with academics led by Dr Chris Brauer, Goldsmith’s, University of London, provides a carbon reduction blueprint for manufacturers. This blueprint identifies a series of short- and long-term steps that organisations can take to both improve their own sustainability performance and play their part in building a greener economy. These have been grouped into the following seven categories, showing the manufacturing industry where it can see quick results and drive lasting progress towards a greener future.
1) Connected sustainability
An effective sustainability strategy cannot be limited to one project, team or workstream. It needs to be woven through an organisation, supported by goals and targets, valued alongside financial objectives.
In accordance with this, such a strategy needs to include frequent milestones and risk assessments, while receiving support from executive sponsorship and organisational understanding of the key benefits. Only with this degree of conviction, rigour and support can a sustainability strategy succeed.
For many industries, the requirements of reaching the government’s 2050 net zero target will involve switching to a renewable energy provider and reshaping their relationships with suppliers. Given the volume of energy consumed and deep relationships with energy providers, for heavy industries such as manufacturing these decisions and changes are seismic.
Organisations need to start with the fundamentals, understanding their dependence and use of carbon resources, planning how to bring this down, and setting organisation-wide targets to reach net zero. Critical to this is emissions measurement, without the understanding this provides, organisations cannot set grounded targets, nor can they understand their progress.
When looking at carbon consumption from cloud technology, Microsoft and other providers offer tools to help customers understand the carbon cost of their computing and how this can be reduced. More advanced solutions on the horizon, such as Cloud for Sustainability, will help the industry record, report, and reduce its emissions throughout its operations.
3) Funding and skills
In the manufacturing sector, reskilling a workforce that is used to working with carbon and energy intensive solutions is a critical process, but it will also take time and investment. Which is why it came as no surprise that manufacturing leaders listed a lack of in-house skills as one of their top three sustainability challenges.
A shorter-term fix and specialised skillset is also required if the industry is to overcome the other barriers preventing it from reaching net zero and delivering on decarbonisation. This can come from integrating sustainability skills training to onboarding programmes, equipping new recruits with the means to analyse emissions data, set targets and forecast costs, financial and otherwise, of new projects.
When it comes to accessing funding to progress with sustainability ambitions, manufacturing organisations can seek out and champion greater inter-sector support, capitalising on the networks available through the likes of the Sustainable Manufacturing Symposium to do so.
Here, leading UK manufacturers come together to share learning, skills and best practice in overcoming the substantial challenges posed by net zero ambitions, helping the entire industry reach their climate goals.
4) Accounting for natural capital
If the manufacturing industry is to deliver on the sustainability commitments it has made, it needs to give the same weighting to climate impacts as it does financial performance. This requirement was made clear in the government’s Dasgupta review, a foundational assessment of the economic impact of changing biodiversity and how contemporary climate strategies can account for this.
This means aligning organisational goals to the elimination of carbon emissions and preservation of biodiversity, reporting on results with the same degree of rigour and accuracy we deliver annual statements with. Organisations that implement this effectively will find that they can more naturally make progress towards sustainability goals, without being blocked by conflicting objectives and short-term pressures.
5) Sustainability infrastructure
As with other elements of this blueprint, the development of sustainable infrastructure is critical in manufacturing’s journey to net zero, perhaps more so than other industries. To make direct progress here, the industry can invest in sustainable infrastructure on-site and work towards the creation of a Net Zero Factory, facilitating operational efficiency and using smart technologies to better understand their operations and outputs.
Critical to this will be partnerships with the energy industry. Great strides have been made here in preparation of supporting the push to net zero. SSE Renewables, for example, already provides 4GW of renewable energy, aiming to treble this by 2030. This has seen the provider form partnerships with the likes of Microsoft to rapidly scale of its renewable portfolio and ensure that as it expands, it minimises impacts on local communities and wildlife.
By forming partnerships with the likes of SSE, manufacturers will see a host of benefits expanding beyond a more sustainable planet. Renewable, local solutions also deliver much greater energy security than dependence on the global oil and gas economy and supply chain, reducing the industry’s vulnerability to price volatility and market fluctuations, more critical now than ever.
6) Supply chain resilience
With global supply chains becoming increasingly complex and interconnected, monitoring and understanding a network of suppliers has never been more challenging or necessary. As well as being critical to developing resilience, a rich, live understanding of supply chains is central to ensuring manufacturers can measure and reduce their emissions. Despite this, only 36% of manufacturers are currently monitoring the sustainability of their supply chains.
For organisations looking to make progress here, the load can be lightened with the application of technology that is designed exactly for this purpose, collating and surfacing supply chain data into an accessible format. Equipped with this insight, manufacturers can reduce emissions and agree reduction targets with suppliers. While this insight can also identify further opportunities, both commercial and environmental.
7) Technological innovation
While our research has identified several significant barriers and areas of progress, the industry is by no means alone in its journey to net zero. The High Value Manufacturing Catapult provides just one example of how the industry is coming together with academics and government to help the manufacturing sector decarbonise. Deploying 4,000 engineering staff and an asset base worth over one billion pounds, the organisation is able to develop, test and scale technologies across the industry rapidly, with a significant and growing portion of this work being focused on sustainability.
More broadly, the industry can also find support from within the private sector. Taking Microsoft and the technology industry as an example, there are a host of industry-specific solutions being developed to support manufacturers turn their climate ambitions into action.
In fact, our research identified that UK manufacturing leaders are already eyeing out-the-box measurement tools that monitor the sustainability of supply chains, as well as machine learning and digital twin technologies that can facilitate rich modelling and offer a unique understanding of how organisations can reduce emissions and improve efficiency.
With some already having identified the potential here, by partnering with the technology industry more manufacturing leaders can take advantage of the sustainability gains these technologies offer.
While the road to our net zero ambitions may seem long, it’s critical the industry acknowledges the progress it has made in committing to strong ambitions, and uses this drive to catalyse action to deliver a brighter, greener future for all.
About the author
Richard King, Head of Manufacturing, Automotive and Aerospace at Microsoft UK
Richard is responsible for leading Microsoft’s approach into the UK Manufacturing industry.
Richard joined Microsoft 16 years ago, where he has held various leadership roles across the business, the most recent of which is to establish and drive Microsoft’s strategy into the UK Industrial sector. He works closely with businesses and partners across automotive, aerospace and manufacturing focusing on how digital transformation can enable them to achieve more.
He also works closely with associated industry bodies and consortia, supporting industry collaboration, growth and skills development. Richard holds a Bachelor of Arts Degree in Accounting.