Leveraging Data to Drive Sustainability Initiatives
I recently had the pleasure of sitting down with Alex West, Senior Principal Analyst at Omdia. Alex brings deep expertise in the manufacturing technology sector, specializing in the Industrial Internet of Things (IIoT), digital transformation, and sustainability. His role involves examining how new technologies are reshaping manufacturing and promoting sustainable business practices.
The Current State of Sustainability in Manufacturing
We began by exploring the big question: Where are manufacturing companies currently on their sustainability journey? Alex highlighted the significant environmental impact of the industry, noting that manufacturing is responsible for approximately 37% of global energy consumption, according to the International Energy Agency (IEA). While companies are setting ambitious goals, Alex emphasized that the industry is still very much in its early stages, with a long road ahead.
According to Alex, many companies are making short-term commitments—about 90% of science-based targets set by organizations focus on 2030, with only 20% aiming for emissions reductions of more than 50%. Businesses need to think beyond immediate gains and establish long-term sustainability plans. Currently, the industry is split: about a third of companies have a comprehensive roadmap, another third are in early stages, and the remainder are still in the planning phase.
Challenges in Meeting Sustainability Goals
Alex noted a persistent gap between intent and action, with many companies struggling to meet their own targets. Particularly around renewable energy and emissions, only about 20% of companies feel ahead of their targets, while around 40% acknowledge they are lagging, especially when it comes to renewable energy transitions.
The Role of External Pressures
Several key drivers are motivating companies to take sustainability seriously. Besides the intrinsic motivation of “doing the right thing,” Alex explained that sustainability efforts often improve efficiency and reduce operational costs. External pressures, such as consumer demand, litigation, and supply chain expectations, are also significant. Alex cited Apple’s commitment to a carbon-neutral supply chain by 2030 as a prime example; suppliers must adopt sustainable practices to continue working with the tech giant.
The Impact of Legislation
Legislation is becoming a significant force, particularly in regions like California, where companies must meet strict reporting standards on emissions and climate impact. Yet, regulatory initiatives like the SEC’s Climate Disclosure Rules in the U.S. and the EU’s Corporate Sustainable Reporting Directive are facing delays, with challenges in both implementation and enforcement.
Key Challenges in Achieving Sustainable Transformation
Alex pointed to several core challenges in the journey to sustainability. Strategic alignment and leadership commitment are essential, as well as managing legacy equipment and securing funding for sustainable upgrades. Additionally, there’s a growing skills gap, with only a third of companies believing they have the necessary expertise in-house. Demand for sustainability skills is outpacing supply, making it difficult for organizations to build the capabilities they need.
The Power of Data and Technology
Data and technology offer solutions, but they’re only as effective as the people who implement them. Real-time data, for example, allows companies to adjust production based on energy costs, enhancing efficiency. However, as Alex noted, technology alone isn’t the challenge—it’s getting people to integrate it effectively.
The Role of Digital Transformation in Reducing Environmental Impact
When it comes to achieving sustainability goals, Alex emphasized that digital transformation is foundational. Good data allows companies to make informed decisions on energy use, predictive maintenance, and production optimization. He pointed out that many manufacturers still rely on paper-based data collection, which can lead to errors. Moving to digital systems improves accuracy and provides the basis for smarter, more sustainable decision-making.
Where to Begin: Advice for Companies Starting Their Sustainability Journey
For companies just starting, Alex advised focusing on incremental planning. Identify the areas of highest environmental impact, set short- and long-term goals, and align sustainability efforts with business performance to ensure they are financially viable. Above all, collaboration across departments and with supply chain partners is crucial, and sustainability goals need strong support from leadership to gain traction.
A Look Ahead: The Sustainable Manufacturing Expo
As a final note, I asked Alex about his thoughts on the upcoming Sustainable Manufacturing Expo in Anaheim this February. He highlighted the event’s unique focus on sustainability within manufacturing and the opportunity it provides to connect with experts, stay current with regulatory shifts, and explore new technologies. With California’s leadership on climate legislation, Anaheim serves as an ideal location for a global audience keen on tackling sustainability.
Agents of Change will continue to feature conversations about the future of sustainable manufacturing. If you or anyone you know want to apply to be a guest on the series get in touch with me to get the conversation started.
You can watch or listen to the full conversation wherever you get your podcasts.
Gemma Walsh Woodcock