Making <1.5°C work: Sumeet Ladsaongikar, Partner in Kearney’s Strategic Operations Practice, explains how to drive sustainability through manufacturing.
Not long ago, government leaders gathered at the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow to make policy commitments that will shape the future of our planet. The world now stands at a historic crossroads: our governments must act decisively to cut GHG emissions to net zero by mid-century, and control average temperature rise, or to face calamitous consequences such as the irreversible melting of the Antarctic ice sheet and a rise in average sea levels of more than 0.07 inches per year from 2060 and beyond.
COP26 focused on four core objectives: first, to secure net zero and keep 1.5°C within reach; second, to urgently adapt to protect communities and natural habitats; third, to mobilise finance; and fourth, to work together to deliver. Over the coming weeks and months, much of the attention will be on the government action needed to achieve these goals, but what really matters is how those commitments are executed at the gemba (at the place of action).
Manufacturing-based industry accounts for around 30% of direct and indirect global GHG emissions, as shown in Figure 1. Given the size of this contribution, both manufacturing companies and individual plants must play a leading role in tackling emissions if we are to respond positively to this pivotal moment in our history.
Making a change
Multiple studies by the IPCC and other bodies offer compelling evidence that implementing known industry-specific and cross-industry levers can significantly reduce emissions. And the evidence also suggests that energy intensity in industry could be cut by around 25% from today’s levels through wide-scale upgrade, replacement, and deployment of best available techniques (BAT) – especially in countries where these are not currently used, and in non-energy-intensive industries.
In our experience, these initiatives often help deliver a marked improvement in cost performance too – particularly as technologies evolve and start generating a positive financial impact. We have built on our deep expertise in operations and supply chain – gained over hundreds of manufacturing site improvement projects – and have created a framework to assess the maturity of manufacturing plants when it comes to key sustainability practices on environmental and social standards.
The framework features four levels of maturity (Stages 1—4), spanning 19 sub-dimensions of environmental and social standards, aligned to the Global Reporting Initiative (GRI). However, the emphasis of this approach is on practice maturity, unlike the GRI, which often focus on reporting maturity. This ability to assess maturity is critical to identifying initiatives that can significantly reduce emissions (as shown in Figure 2).
Overall sustainability strategy maturity assesses the extent to which sustainability is embedded in the business strategy and in product and process technology for the plant. In addition, it looks at the portfolio of initiatives, KPIs, adoption of novel technologies etc. to achieve sustainability objectives. Each individual topic area is assessed under environmental standards both on practice maturity and reporting maturity, with a primary focus on the practices adopted. For example, on materials, the assessment includes the maturity of sustainability practices in a plant along the following subdimensions:
a) Renewable/sustainable nature of materials used (including packaging) in production
b) Extent to which the sustainability of materials influences product design
c) Understanding of material mass-balance in the plant with continuous improvement programmes to tackle waste and improve yields
d) Rejection rates, reduction in rejection, and the extent to which rejected materials are reused/repurposed
e) Extent of cooperation with community stakeholders (e.g., local municipalities) to improve recycling
For each topic area, plants are assessed on Level 1 to 4 based on their practices, and highlight opportunities for improved sustainability and cost performance, leveraging a database of process and technical levers. For example, in several process industry plants (speciality chemicals, metal refining, cement manufacturing etc.), electric motors represent a major source of energy consumption in pumping, compressors, HVAC, and other applications.
A proactive strategy of moving to higher-efficiency-class electric motors, along with the adoption of variable speed drives to control speeds versus throttling using valves, can cut energy and equivalent GHG emissions by 5%-20%. Business cases made for reducing emissions need to account for the holistic impact – both in terms of financial and sustainability benefits – of any investment decision.
Similarly, using advanced analytics models to understand the precise range of material input and production process parameters, to drive optimal yield in chemical reactions or metal refining processes, can significantly reduce solid waste. This, in turn, can lower the need for recycling, cut energy consumption per unit of output due to higher yields, and create smaller waste streams.
Sustainability gemba
In our experience, conducting a three-to-four-week sustainability gemba at individual plants represents a compelling way to:
- Assess current maturity level
- Identify and quantify the impact of improvement levers
- Build a roadmap of improvement initiatives
- Identify external technical partners
Experience has taught us that the most effective approach is to undertake these gemba exercises at key plants that represent all major plant archetypes in a given manufacturing network, and then scale up these practices to other sites.
Manufacturers cannot deliver this change on their own. Support of external technical partners becomes critical to quickly execute individual initiatives. Technical partners in sustainability across energy audit, software, and hardware solutions (for diagnostic, monitoring, and management of ESG elements), and highly experienced sustainability experts, are needed to support the assessment and solution deployment projects.
The human race has reached a pivotal point in its history. COP26 marks the moment for world leaders to act to preserve our planet for future generations. However, commitments to tackling GHG emissions must extend beyond governments: to deliver tangible, lasting change, those commitments must be championed – and convincingly executed – on the production floor of manufacturers across the globe.
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