More and more, we see manufacturers worldwide stating impressive, lofty goals for sustainability at their organizations. Phrases like “zero emissions,” and “net carbon zero by X” are frequently communicated, both internally and externally. But there is a real difference between simple rhetoric and a true sustainability strategy.
According to Allison Kuhn, research analyst at LNS Research, “You see these great goals like ‘net carbon zero by 2024 or 2025’, but you also see greenwashing, where companies are pushing out these statements and not really living up to their end of the bargain by showing actual progress toward a sustainable future. In the worst cases, this can even be somewhat fraudulent and mislead stakeholders.”
While many industrial organizations are focused on creating sustainable products in the least wasteful and harmful ways, their actions sometimes fall short because of what Kuhn describes as “actions disconnected from strategy.” She explains that organizations may have the best of intentions, but if their sustainability strategy is simply “bolted on” versus “built-in,” manufacturers will run into repeated obstacles and won’t realize the program success they set out to achieve.
Risks and opportunities
Though some risk comes along with creating a holistic sustainability program, there is also much opportunity. According to Kuhn, the business case is certainly there, including support for the ever-important bottom line.
“We know that more than 70% of sustainability leaders are finding corporate financial gains and getting long-term growth from their efforts, delivering to the bottom line and improving operations,” Kuhn said. In addition, she points out that these environmentally friendly programs are extremely important generationally. “We are finding it’s especially important to Gen Z…many will insist manufacturers focus on sustainability in order to work for or buy products from these companies.”
Sustainability program development
Any new operating models tied to sustainability must address the complexity, uncertainty, and the potential for disruption of sustainability and ESG (environmental, social, and governance) initiatives. Kuhn states it’s important to mitigate these elements to set up a successful and scalable sustainability program. Moreover, she says to achieve centers of excellence versus “pockets of compliance,” a few things need to happen.
First, the program needs to start with executive leadership. “Top leaders in the organization need to impress on their teams that sustainability is not just the ‘right thing to do,’ but ‘this is how we WILL do things.’” Yet, while successful sustainability programs need such C-suite backing, the initiatives themselves must incorporate all levels of an organization, particularly the sometimes-overlooked frontline workforce.
“Converging transformation initiatives by engaging from the ground up with frontline workers is critical. Embedding sustainability by looking at processes across the entire supply chain—end-to-end—is very important to creating a holistic, organizational-wide program that is genuinely built-in,” said Kuhn.
Perhaps most important to a successful sustainability program is going beyond simply “reporting” or what Kuhn deems as incessant “scorekeeping” and having the correct metrics in place. “The old way of looking at return on investment is not going to work for sustainability. Given we are talking about using resources better, less energy, and minimal waste, we need to ensure our sustainability program metrics are also evolving to define and measure what success looks like within an organization. The metrics need to incentivize workers as we build this changed mindset.”
Overall, industry is headed in the right direction with the conversations, goal setting, and actionable strides toward sustainability. But there is still a long way to go. As manufacturers march toward this new mindset with the focus on preserving the world for future generations, understanding that embedding sustainability within their programs will also position companies to meet those big, lofty goals for competitive advantage.