Leading industrial companies are now setting ambitious environmental sustainability targets. Schneider Electric and Omdia research found that over half (57%) of the world’s top industrial organisations have set carbon-neutral targets to offset their greenhouse gas (GHG) emissions.
47% have also embraced RE100 pledges to draw all their energy from renewable sources and 36% have established science-backed targets to help limit global warming to 1.5-2°C.
Setting these goals is a crucial first step. What matters, however, is implementing the sustainability initiatives capable of delivering upon them. The research shows that several barriers block the deployment and success for industrial companies’ environmental sustainability projects, from infrastructure to culture. So, let’s explore these roadblocks, and how organisations can safely navigate them to help protect our planet.
Legacy assets and infrastructure
Almost a third (29%) of manufacturing leaders say that their organisation’s legacy assets and infrastructure present a major challenge. This is unsurprising—after all, many buildings, power supplies, and processes predate the latest technology and climate science.
Industrial companies often measure infrastructure replacement rates in decades, and the process is expensive and disruptive. But while installed systems may not be well suited to sustainability initiatives and can be strategically upgraded, ripping and replacing them with new infrastructure will likely cost more, be operationally implausible and leave an even greater carbon footprint in the process.
Here, organisations can ‘digitally retrofit’ their operations to maximise efficiency while minimising impact. One way of doing this is through implementing intelligent energy management systems (EMS) to monitor and manage energy use. The software offers insights into real-time energy performance while tracking variables like weather reports and building and site occupancy to automatically regulate the required levels of consumption, ensuring organisations only ever use the energy they truly need.
Let’s take refrigeration as an example. Refrigeration is a relatively conservative sector. Many facilities still run systems that were installed 50 years ago. Maintenance is usually done reactively by replacing broken parts like valves and compressors without addressing bigger issues. However, Oxford Energy wanted to change the way refrigeration systems are built and maintained in line with its ethos of energy conservation and sustainability.
The company was looking for a flexible, holistic platform that would enable it to bring its vision of control and integration to the market and decided on a full suite of EcoStruxure Machine solutions to provide its customers with more efficient refrigeration systems. At the heart of Oxford Energy’s platform is the Modicon M172 logic controller which offers a wide choice of connectivity options to support integration with a variety of building management systems. Overall, this partnership led to up to 70% savings in energy usage, as well as reducing service, operating, maintenance, and electrical requirements and costs for end users.
Given their efficacy, it is no wonder that over half of industrial organisations are predicted to harness energy management and renewable energy systems within the next three years.
Upfront cost or budget
Upgrading installed systems doesn’t come cheap. In the research, 27% of industrial companies claim that upfront cost or budget is a key roadblock to becoming more sustainable.
It can be difficult to persuade the finance department to divert funds away from business-as-usual activities such as procurement and marketing, and towards sustainable redevelopment. But looking to the future, it’s perhaps the most important investment that an organisation can make. Stakeholders are becoming increasingly eco-conscious: 60% of consumers worldwide now rate sustainability as a key criterion when choosing who to shop with, while investors are likely to scrutinise the long-term ESG efforts of a business as closely as its financial health.
Fortunately, funding is available to support businesses in their energy transitions. The European Commission has pledged to mobilise at least €1 trillion over the next decade, while the US’s Environmental Protection Agency awards over $4 billion in grants each year to help organisations achieve their environmental goals.
Competing priorities and a lack of access to data
Even with extra funding, different departments, with different priorities, will always be competing for an organisation’s resources. Wider challenges, such as a looming recession, mean business leaders may instead look to slash expenditure and scale down operations—particularly if they don’t have data to back up investment. It’s no surprise that competing priorities and a lack of access to the right data are chosen as sustainability barriers by 23% and 21% of managers respectively.
Manufacturing leaders must again look to centralised, cloud-based optimisation and project management technologies to glean data-driven insights that support more informed decision-making around environmental action. These investments can directly benefit the bottom line through reductions in energy consumption, particularly during the current global energy crisis, or improvements in process efficiency. In fact, 49% of manufacturing companies expect improved performance and cost savings when investing in sustainability.
Culture change, or a lack thereof, is ranked by 19% of organisations as a major challenge. Organisations can be hesitant to move away from a ‘winning formula’ and struggle to plan with all departments in mind. Sustainability initiatives require buy-in across a business, and many manufacturers are making it the responsibility of senior leadership. Indeed, 78% of organisations report that C-level roles are directly responsible for driving their sustainability efforts.
To navigate this challenge, many companies are creating a specialist chief sustainability officer (CSO) role to focus on their environmental evolution, with US demand for CSOs growing 228% in a decade. To be successful, this role must consider day-to-day operational decisions and long-term strategy, not just reporting. Then, the success of initiatives will depend on how well the technologies and solutions can be introduced into daily operations and longer-term plans with employee buy-in. Here, it’s often worth hiring a team of expert sustainability consultants to help the organisation break down silos, comply with net-zero regulations, and craft a long-term strategy.
Understanding the value of change
The lack of an identified benefit in becoming more sustainable is stated as a challenge by only 10% of businesses, suggesting that most can articulate the advantages of sustainability projects internally. When considering the advantages of spending on sustainability, companies should also focus on return on value (ROV) rather than just return on investment (ROI).
After all, the manufacturing sector is still at the start of its sustainability journey. Instead of expecting instant impact, industrial businesses must use data to continuously review their existing processes, equipment, organisational culture, and technology to identify and tackle inefficiencies and waste. In short, a long-term commitment to sustainability is essential if we are going to secure the future of our manufacturing, and our planet.
About the author
Dr. Ali Haj Fraj, Senior Vice President, Digital Factory
Ali is the leader of the Line of Business Digital Factory within Schneider Electric’s Business Unit Industrial Automation.
Ali joined Schneider Electric in 2015 as Senior Vice President of the Line of Business Machine Solutions within the Business Unit Industrial Automation. In 2021 he expanded his role by taking the lead of the LoB Digital Plant. As of February 2022, he officially holds the position of Senior Vice President of the LoB Digital Factory, which stems from the merge of Digital Plant and Machine Solutions.
Ali started his career in May 2001 as Project Manager in the Motion Control Unit at Siemens AG. In the following 15 years, he held various leadership positions in R&D, Sales and Marketing, Business Development, Strategy and General Management. He gained both wide-spread experience and deep knowledge in Industrial Automation and Controls, Energy Management and the dedicated customer markets with a proven track record in driving innovation and global business growth.
Ali Haj Fraj holds a diploma in Mechanical Engineering as well as a doctorate in Mechatronics from the TU München.