Over the last decade, reducing the corporate environmental footprint has become an increasingly important challenge for many manufacturers facing scrutiny from diverse stakeholders, including governments, consumers, and industrial customers. However, the manufacturing industry is actually not a newcomer to the idea of "going green." For many manufacturers, the environmental agenda merely starts with legal mandates. Over the years, governments have issued increasingly stringent regulations that call upon high-emitting industries, such as chemicals, to implement Environmental, Health & Safety (EHS) point projects, which run at the operations or factory levels.

And more recently, the European Commission has issued new environmental regulations, impacting many industries and requiring more pervasive implementations. Among them we find RoHS (Reduction of Hazardous Substances), which bans the use of six chemicals in almost all electronics products; WEEE (Waste Electrical and Electronic Equipment), which requires high-tech manufacturers to take care of recycling and disposal of used products; EURO 5 (and the forthcoming EURO 6), which reduces the emission limits for passenger cars; and REACH (Registration, Evaluation, and Authorization of Chemicals), which requires registration for chemical substances imported or used when higher than 1 ton.

More and more companies are heralding their achievements in corporate social responsibility or developing marketing campaigns about their green processes, products, and services. In some cases, the focus is more on promotion than actual achievements--often referred to as "greenwashing"--but regardless of how serious manufacturers green strategies are, their efforts have typically made only limited contributions to business performance and have not captured board-level attention.  Lately, however, a number of factors, such as skyrocketing energy, fuel, and raw material costs, have raised awareness of a possible return on green investments.

To measure the maturity level of the manufacturing industry against environmental challenges, IDC Manufacturing Insights launched a series of surveys in 2008 exploring green issues and covering Europe, Asia, and America. The results suggest that going green is moving beyond hype and becoming one of the most scrutinized strategies for enhancing business differentiation and cost cutting. The vast majority of European companies responding to our survey consider the goal of reducing their environmental impact extremely important, and the numbers are expected to increase over the next couple of years. Companies in the European Nordic regions and the United Kingdom are particularly attentive to their environmental impacts, while Eastern European companies plan to quickly cover the gap that exists with respect to Western Europe.

The survey results also indicate that the manufacturing industry is starting to understand the ROI connected with going green. Thus, companies are progressively incorporating green initiatives into their mainstream strategy. Although the most important driver for environmental sustainability initiatives remains governmental compliance mandates, business objectives such as "cost reduction" are rapidly growing as key drivers for going green. Additionally, companies are moving away from mere greenwashing, as there is low interest in the goal of "reducing carbon emissions," per se, as a driver for going green. This is not to say that effective communication is unimportant; on the contrary, improving the image or reputation is a way to augment the results of real green initiatives.

Among manufacturers most scrutinized initiatives are the prioritizing of supply chain greening efforts that provide ROI in terms of cost reduction in transportation and raw material sourcing, and the design of green products, as there is clear evidence that the introduction of greener products enables a faster ramp-up than traditional products and as consumer awareness of climate change issues is starting to drive product-selection criteria.

We have high expectations for the manufacturing industry s contribution to environmental impact issues. Nonetheless, as any basic business rules would suggest, no initiative would be launched just because it brings environmental benefits; it must simultaneously improve business performance.  To continue this conversation, please feel free to contact Pierfrancesco Manenti, European practice director, at pmanenti@manufacturing-insights.com
Manufacturing Insights