The growth of green manufacturing and achieving profitability through sustainability
In late January, many of the world’s leading economists, businesspeople, politicians, journalists, and academics gathered in Davos, Switzerland, for the annual World Economic Forum (WEF), where they discussed and debated pressing global issues. One area of concern was the global manufacturing sector, which requires nearly 54 percent of the world’s energy and is responsible for one fifth of greenhouse gas emissions.
With the WEF focusing two initiatives on sustainable manufacturing (Shaping the Future of Advanced Manufacturing and Production and Shaping the Future of Environment and Natural Resource Security) as well as the Green New Deal resolution put forward by Congress in February, momentum is gathering among world leaders for a push toward green manufacturing. When the inevitable regulation comes, manufacturers who have already been making the switch towards more sustainable practices will be the ones best prepared to thrive.
The Goals of Green Manufacturing
Manufacturing is one of the largest sectors in the US economy, and as such, employing sustainable production methods across the sector could provide huge environmental benefits. There are four key areas of green manufacturing that will garner more attention as the move towards sustainable production increases:
- Conserving natural resources: Using new forms of land management to be more mindful of soil, water, and wildlife conservation as well as careful use of raw materials.
- Renewable energy: Making efforts to switch to solar, hydro, wind, geothermal, and biomass energy.
- Reduction of pollution and greenhouse gases: Limiting waste and recycling or composting waste material. Eliminating the release of greenhouse gases and pollutants or capturing them.
- Increased energy efficiency: Embracing the latest practices and technology that saves on energy usage.
In many cases, adhering to these guidelines is not only beneficial to the environment, it has also proven to improve operational costs in the long run.
The Impetus
The prospect of regulatory pressure is just one factor driving companies to embrace green manufacturing. Aside from the political pressure in the form of laws that could impose fines for pollution, companies have been feeling societal pressure to adopt greener practices.
Green manufacturing can play a big part in a company’s branding and reputation management. Companies such as Patagonia have turned their eco-conscious efforts into marketing campaigns that even get free advertising in the form of articles covering innovative green manufacturing efforts, for example, making “recycled clothes” out of discarded plastic water bottles.
As more and more people become concerned about the environment, they choose to support companies that they know share their concern. Word of mouth and social media can play a big part in a company’s commitment to green manufacturing. Alternatively, companies who develop a reputation for being unfriendly to the environment can be on the receiving end of social media campaigns that lead to boycotts and loss of revenue.
Opportunities and Challenges in Going Green
The biggest challenge companies face when making the switch to green manufacturing is finding ways to do so in a cost-effective manner. Sure, green manufacturing practices save money down the road, but before the initial investment is recovered, companies could be operating in the red.
In a globalized economy, many manufacturers have to compete with production facilities overseas that don’t have to adhere to stringent environmental and workplace laws. However, many companies find that when they begin thinking in an eco-friendly way, the reduction of waste creates a leaner operation that makes conserving resources and energy easier, driving down costs.
Additionally, while many forms of renewable energy have simply not reached the point where their technology is such that it can reliably power big manufacturing plants, technology is rapidly advancing. As the trend toward green manufacturing grows, opportunities and jobs will be created. As a result, renewable energy companies such as Vivint Solar and Sun Power will be spurred to further innovation as they have the chance to secure multiple contracts retrofitting factories.
Leading by Example
Making the necessary changes to become a green manufacturing site or a company that uses green manufacturing as part of its supply chain can seem overwhelming at first. Fortunately, there are several trailblazers that have already made some noticeable differences and can be used as an example by other companies who wish to follow suit.
- IKEA – The furniture maker uses a lot of natural resources for its furniture, but it is committed to getting wood from sustainable forests and, in anticipation of the Paris Climate Agreement, in 2016 committed to becoming an energy producer and exporter by 2020 thanks to wind turbines and solar panels on stores and distribution centers.
- Johnson & Johnson – As part of Climate Week NYC in 2015, Johnson & Johnson joined other Fortune 500 companies in committing to 100 percent renewable energy. Today, the company gets more than half its energy from renewable resources and is the second biggest consumer of solar power in the US.
- Unilever – The recipient of the United Nations’ Champion of the Earth Award in 2015, Unilever created a Sustainable Living Plan in 2010 to limit water usage, greenhouse gas emissions, and waste, while also promoting inclusion and sustainable sourcing. Over the past nine years, the company has tripled its amount of sustainable agricultural suppliers and kept three quarters of its waste out of landfills.
- Allergan – The pharmaceutical company perhaps best known as the makers of Botox is a five-time EPA EnergySTAR Award winner thanks to energy conservation efforts. The company uses benchmarks and reporting to limit its water usage and has reduced its waste and emissions across the supply chain.
- Schott – Glass manufacturer Schott is committed to environmental responsibility by limiting its use of natural resources and potentially harmful heavy metals such as antimony and arsenic. The company develops its own technology for specialty glass that is safer for the environment and more sustainable.
