The UK’s ambitious plans to significantly reduce industry carbon emissions could end up hamstrung by a myriad of ‘almost useless’ data, according to the High Value Manufacturing Catapult (HVMC). The Manufacturer’s James Devonshire delves deeper.
In March 2021, the UK government laid out the country’s ambitious Industrial Decarbonisation Strategy (IDS); a roadmap for the decarbonisation of UK industry and manufacturing, and the first of its kind in a major economy.
Under the IDS, the government is targeting a carbon emissions reduction of at least two-thirds by 2035 and at least 90% by 2050.
The government says the wider Net Zero Strategy will secure 440,000 well-paid jobs and unlock £90bn in investment by 2030. Furthermore, by boosting clean energy as part of the nation’s journey to net zero, reliance on imported fossil fuels will be reduced, insulating British consumers from global price spikes and strengthening the UK’s energy security.
It all sounds very impressive, resolutely determined and, let’s face it, not a moment too soon. However, merely sounding proper isn’t going to cut it. The proof is going to be in the end results, which is why industry needs to be stepping up now, not later.
Sustainability-first agendas afford many benefits
According to the latest figures from the Office for National Statistics, consumer expenditure aside, the manufacturing sector accounted for 16.8% of total UK greenhouse gas (GHG) emissions in 2020. Transport and storage, a sector very closely linked with manufacturing, accounted for 11.3% of total GHG emissions.
Positively, though, UK industry has managed to reduce its carbon emissions significantly over the last 30 years, removing around 55.5% since 1990.
Nevertheless, there is still a long way to go if the manufacturing sector’s net zero journey is going to be successful. The good news, however, is while we’ve still got a challenging road to travel, the benefits of sustainability initiatives are numerous, making the transition all the more worthwhile.
First, there is the moral gratification associated with knowing you are manufacturing your products as sustainably as possible. It’s the right thing to do and will benefit our future generations.
Then there are the financial incentives to adopt net zero initiatives. From access to finance for green investments, to reduced energy bills as a direct result of taking advantage of renewable sources, operating more sustainably can have a direct impact on an organisation’s bottom line. And this is before we even consider any potential regulatory requirements and associated penalties for not demonstrating a sustainability-first focus.
Rounding out my top three benefits of following sustainable manufacturing practices is the reputational boost companies can afford as a result. Today, amid a severe skills and talent shortage, coming across as an attractive place to work has, arguably, never been more important.
At a time when tremendous focus is on sustainability, manufacturers can appear particularly favourable in talent’s eyes by highlighting their net zero ambitions and achievements.
Furthermore, pushing sustainability-focused initiatives also reflects favourably in the eyes of consumers. Indeed, recent research by Deloitte, on how consumers are embracing sustainability, revealed the five sustainable practices consumers value most are:
- Producing sustainable packaging and products
- Reducing waste in the manufacturing process • Committing to ethical working practices
- Reducing carbon footprint
- Respect for human rights
Even as B2B companies, manufacturers need to seriously consider these factors. After all, there is a knock-on effect along the value chain, whereby end consumers may make different choices based on organisations’ sustainability credentials. The bottom line is that by displaying they are following a net zero agenda, companies will give themselves another differentiating factor for customers and consumers to consider.
Industry needs set standards if it’s to really drive decarbonisation
The manufacturing sector has made some significant net zero strides, and the benefits of following a sustainable agenda are numerous and well known. Yet, the High Value Manufacturing Catapult (HVMC), UK manufacturing’s strategic research group, has recently issued a stark warning.
In its HVMC Embodied Emissions and Net Zero. A Review of Standards, Recommendations for Consistent Green House Gas Emissions Accounting in the UK report, released in early October, HVMC warns that industry’s net zero plans are at risk because of a volume of data which it describes as ‘almost useless’.
HVMC warns that industry’s net zero plans are at risk because of a volume of data which it describes as ‘almost useless’
Given manufacturing’s significant contribution to GHG emissions, it stands to reason that there should be a set of common carbon emissions reporting standards across the sector. However, as the HVMC research highlights, organisations are faced with a number of different carbon accounting standards, which use varying terminology and can be broadly separated into corporate/ organisational standards or product standards. The problem manufacturers have is deciding which standard to use.
In addition, the HVMC research outlines how currently there are no definitive guidelines when it comes to reporting on Scope 3 emissions – the emissions that are not directly produced by the company itself. Accurately reporting on Scope 3 emissions is crucial as 60% and 90% of industry’s emissions occur in the early materials extraction and materials processing stages of the manufacturing value chain.
Except for the GHG Protocol Scope 3 Standard, Scope 3 emissions are typically either totally optional, or the organisation can decide which ones it includes in its calculations. As a result, Scope 3 reporting among manufacturers varies wildly and without a consistent approach across the board, it will be near impossible to measure gains and, indeed, losses.
Finally, current reporting standards are inconsistent, using varying formats and terminology. If the manufacturing sector’s carbon emissions are to be reviewed and verified accurately, the HVMC states that a ‘robust reporting and monitoring system should be implemented – overseen by an economy-wide carbon regulator.’
As the HVMC report warns: ‘Without a proper auditing and monitoring system in place, there is no way of knowing where the UK manufacturing industry is in terms of working towards and meeting net zero targets.’
Commenting on the report, HVMC Chief Executive Katherine Bennett said: “Tracking carbon emissions is now an integral part of a company’s annual audit. Yet, a myriad of different carbon accounting standards and methodologies are used, meaning that the data is rendered almost useless when combined across the manufacturing sector.
“Given the energy intensive nature of manufacturing, this lack of common data makes tracking overall emissions reductions almost impossible and vital information can be obscured or lost. This risks completely undermining the UK’s drive to net zero. We would be delighted to work with relevant government departments, such as BEIS, to address this shortfall and jointly develop these universal standards.”
Start with small steps
Something we hear frequently from manufacturers, particularly SMEs, is that they do not know where to begin when it comes to reducing emissions. There is a definitive perception that adopting a sustainability-first agenda will inevitably involve making significant investments. The reality, however, is that organisations can often take small steps and realise quick gains, without spending large sums of money.
It could be installing solar panels to reduce reliance on grid power or switching energy providers as part of Scope 2 reduction initiatives – the important part is to do something. That could even be getting to grips with the plethora of net zero related terms that are out there.
Once organisations take their first steps towards decarbonisation and see the results that can be achieved, it often leads to a snowball effect, with more changes following in quick succession.
Key takeaways:
- Under the Industrial Decarbonisation Strategy, the government is targeting a carbon emissions reduction of at least two-thirds by 2035 and at least 90% by 2050
- The government states the wider Net Zero Strategy will secure 440,000 well-paid jobs and unlock £90bn in investment by 2030
- UK industry has removed the equivalent of around 100 metric tonnes of carbon dioxide in air emissions since 1990
- Adopting a sustainability-first agenda can reap numerous benefits for manufacturers
- Setting standards, common terms and consistent reporting are crucial if industry is to make measurable net zero gains
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