News / Blog / 05.26.2022

The ESG Era: Smart Manufacturing Trends in 2022

The ESG Era: Smart Manufacturing Trends in 2022 - Image

Environmental, social, and governance (ESG)—these aspects of modern corporate responsibility have taken the manufacturing world by storm and are transforming the way we operate and invest in business. 

In this ESG Era, the push for sustainability, community, and governance isn’t purely about ethics anymore, but the key to strengthening the global supply chain and attracting investors. It’s becoming increasingly important for companies to jump on board, and essential for manufacturers. 

Here are some of the top changes companies are making in 2022 to streamline operations and drive up their ESG rating.

Seizing Opportunity in Sustainability

Manufacturing has come a long way in driving more sustainable practices. In making industrial processes better for the environment, most companies are also enjoying the financial efficiencies that come with it. And across the supply chain, we’re starting to see sustainability not only as a responsibility, but a huge opportunity. 

Because sustainable operations are better for the environment and the bottom line, companies are more motivated than ever to join the global effort to reach net zero by 2050, and we’re beginning to see big attempts to reduce waste and emissions. What this looks like exactly varies by industry, but it starts with tapping into the circular economy: 

  • Fuel switching to balance the cost and environmental impact of operations.
  • Combined heat and power (CHP), or cogeneration. The Office of Energy Efficiency and Renewable Energy cites that CHP produces 25% less waste and emissions than other operations. 
  • Tapping into renewable energy, such as solar and wind.
  • Switching to energy-efficient equipment when old equipment is decommissioned. 
  • Recycling scrap material. 
  • Fluid recovery and recycling.
  • And other factory sustainability methods.

Finding Purpose and Improving Cultural Impact

Fostering a safe and healthy work environment has a domino effect within your company and surrounding community, and it begins with corporate culture. Good leadership sets the foundation for positive team morale, employee retention, and overall productivity. On a larger scale, companies can lead with purpose to reform policy and systems that are repressive and have impact on a community well beyond their own.

A growing number of investors and consumers take a company’s social impact into account with every buying decision. Gender pay equity, diversity and inclusion, and basic human rights are topics that have become valuable differentiators across the supply chain.

Here are some of the biggest ways manufacturers are working to better their communities:

  • Strategic recruitment efforts and DEI reporting.
  • Board diversity and transparent decision-making.
  • Advocacy for industry-wide changes at climate and economic summits, like the World Economic Forum.

Developing a Strong ESG Strategy

We understand that getting started with an ESG strategy can be overwhelming, and it’s hard knowing where to start. A good first step is to analyze your own operations from the top, down and identify the largest areas for improvement. Factory energy management systems (FEMS) and other industrial data reporting methods are also great tools for conducting a more comprehensive review of the energy use in your facility. These foundational tactics will help you identify every opportunity for improvement and put your best foot forward. 

Corporate practice is evolving fast as manufacturing shifts focus to ESG reporting. Subscribe to our newsletter today to stay up to date on emerging trends in smart manufacturing.