Discover how ESG is crucial for manufacturers of all sizes to remain within supply chains, reduce costs and build a stronger, more resilient business. Dean Hogg, Energy Manager, Troo explains.
Manufacturing is evolving, with businesses of all sizes facing new expectations around sustainability and responsibility. Environmental, social and governance (ESG) practices are no longer the exclusive domain of large corporations.
Today, even the smallest manufacturers find themselves needing to consider ESG as part of their operations. However, why is this shift happening, and what does it mean for your business? More importantly, how can embracing ESG not only meet demands but also bring new opportunities?
Why ESG matters for all manufacturers
ESG is often associated with big businesses – those with the resources to invest in comprehensive sustainability programmes. However, the reality is ESG is becoming a necessity for manufacturers of all sizes. As large corporations push their ESG commitments down the supply chain, smaller businesses must also meet these standards or risk being left behind.
This isn’t just about compliance; it’s about staying competitive and relevant in a rapidly changing market. Let’s consider a typical scenario. Imagine you’re a mid-sized manufacturer supplying parts to a larger company. This company has made public commitments to reducing its carbon footprint and improving social responsibility.
To achieve these goals, they’re now requiring all suppliers to adhere to strict ESG guidelines. If you can’t meet these expectations, they may look elsewhere for partners who can. Suddenly, ESG is not just a concern for the big players – it’s a critical factor for your business’s survival.
Unlocking efficiency and reducing costs
Adobe Stock Licenced Image – Dee Karen One of the most overlooked benefits of adopting ESG principles is the potential for significant cost savings. Many companies assume that integrating ESG into their operations will require substantial investment, but in reality, it can lead to greater efficiency and lower operating costs.
Energy efficiency, for example, is a key component of ESG. By upgrading machinery or rethinking production processes, manufacturers can reduce their energy consumption and cut their bills. This doesn’t just benefit the environment – it also protects your business from the rising cost of energy. Similarly, waste reduction is an essential part of any ESG strategy. By minimising waste in production and sourcing materials responsibly, you can reduce expenses and improve margins. These measures make your business more resilient and can enhance your ability to manage resources effectively in an increasingly unpredictable market.
Building a stronger reputation
In today’s market, reputation is everything. Customers, investors and business partners are increasingly looking to work with companies that share their values. By adopting strong ESG practices, you’re not just meeting regulatory requirements, you’re building a reputation as a responsible and forward-thinking business.
This can make your company more attractive to potential partners, help you retain existing clients, and even open doors to new markets that prioritise sustainability and ethical practices. Additionally, a study by NYU Stern found that 58% of companies with strong ESG practices show superior operational performance, and 59% experience improved stock price performance. This demonstrates that companies committed to ESG not only build better reputations but also enjoy tangible financial benefits.
Preparing for the future
As global regulations around sustainability and governance tighten, businesses need to be ready for what lies ahead. By adopting ESG practices now, your business is positioning itself to not only comply with current regulations but to stay ahead of future changes. Smaller businesses may assume that these regulations only apply to large corporations, but the reality is different. As mentioned, large companies are increasingly passing down their ESG requirements to their supply chains, and governments worldwide are raising the bar for sustainability and transparency.
The earlier you adopt ESG principles, the better positioned you will be to meet these evolving demands. Starting early also allows you to spread the costs of ESG adoption and avoid the last minute rush to comply with new rules. The companies that take proactive steps today will be the ones best prepared to adapt to the challenges of tomorrow.
This all sounds great, but where do I start?
Understanding the importance of ESG is one thing, but knowing where to start can be challenging, especially for smaller manufacturers. Many businesses are daunted by the idea of integrating sustainability practices, but with the right tools, it can be a straightforward and cost-effective process.
That’s where Troo can help. We’ve partnered with Yellow Alert to offer an AI-powered ESG assessment tool, specifically designed to make integrating ESG practices easier, more efficient and accessible for businesses of all sizes.
Our tool delivers a comprehensive analysis of your current ESG practices in just three to five business days, a process that traditionally takes months. With just three hours of your time, you’ll receive a detailed report that highlights where you stand and what steps you can take to improve. What sets our tool apart is its ability to generate a customised 12-Month Action Plan tailored to your specific business needs.
Whether your focus is on reducing energy consumption, improving supply chain transparency or meeting regulatory requirements, our tool provides a clear, actionable roadmap that you can follow to achieve your ESG goals. Plus, it aligns with globally recognised frameworks like GRI, TFCD and ISO, ensuring your efforts meet international standards.
And the best part? Our AI-powered tool can save you up to 12 months of work and up to 90% in costs compared to traditional ESG consulting. This makes it a cost-effective solution for businesses of all sizes, allowing you to make meaningful progress on your ESG journey without overstretching your resources.
To find out more about Troo’s ESG assessment tool with the email hello@
troocost.com or call 0808 164 2222
For more stories like this, visit the Sustainability section of our website