Driving sustainability for manufacturing companies

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Summary

Almost every conversation about business, economics or government today involves some ESG consideration – Environment, social and governance. The environmental issue (and the need to develop a more sustainable economy) first appeared in the debate at the end of the last century, but remained a relatively minor issue until recently. Today, governments around the world are painting their agendas green, with regulation and tax policy following suit. Customers demand low-carbon products, and capital markets are also signaling an ESG preference. The COVID-19 pandemic has highlighted our vulnerability to global natural disasters and the possibility of constructive action to address them.

Durability for manufacturingThe trend towards a sustainable economy is clear and businesses will need to adapt to remain competitive and compliant. However, it happens quickly and many organizations need support during the process. As the ARC Advisory Group learned in a recent discussion, Tata Consultancy Services (TCS) has worked with manufacturing companies to help them improve their sustainability, helping them to report, communicate, monitor and reduce emissions. , and to comply with their regulators.

Sustainability has become a key goal

What is sustainability and why has it become a central issue in recent years? Sustainability means a long-term vision for businesses, where they can operate indefinitely without using resources faster than they can be replenished, while not releasing pollutants into the atmosphere, soil or water more. quickly than nature neutralizes or eliminates them. The idea can be applied with profit to less tangible parts of the organization, like avoiding employee burnout, but here we will stay with the environmental perspective.

Sustainability is becoming increasingly important now, with increased public acceptance of the effects of excessive pollution, rapid increases in greenhouse gases (GHGs) in the atmosphere, more severe natural disasters and a scientific consensus that has developed over the decades. Reducing emissions and using more efficient energy sources are not only good for people and the environment, they are good for business.

The tide has changed

Government attention and activity has intensified with research funding, regulation and industrial policy – all supporting the transition to a cleaner economy. With its call for looser monetary and fiscal policies (and newly blurred lines between the two), the pandemic has accelerated that shift. Most major countries are implementing “build back better” plans – channeling the torrent of stimulus money intended to jumpstart economic recovery into green initiatives.

Government considerations aside, organizations find that sustainability often contributes to good business performance. Reducing emissions means reducing waste, and today’s consumers, B2B customers and investors are also rewarding green businesses.

Go green

Moving towards a sustainable business involves accounting for existing sources of waste and pollution and communicating this information to employees, investors and regulators. GHG emissions (usually the main objective) often break down into:

  • Scope 1 emissions: Those resulting directly from operations controlled by the organization.
  • Scope 2 emissions: GHGs emitted by the production of electricity, heating or cooling purchased.
  • Scope 3 emissions: All indirect emissions in the value chain, both upstream and downstream of the organization.

Durability for manufacturing

Litters 1 and 3 can be particularly difficult to report. Evaluating them accurately is a serious challenge that can span the disciplines of engineering, chemistry, supply chain, and accounting, to name a few. Many companies who are thinking about this for the first time find that they need advice.

Second, organizations continue to reduce their footprint, ideally in a way that benefits the entire business. Approaches range from directly reducing emissions to working with suppliers to reduce their footprint, purchasing carbon credits, creating your own offsets through negative carbon activities and assisting customers in their own efforts regarding the use of your products. The design space here is full of opportunities.

TCS: enabling manufacturing companies to be “sustainable by design”

Recently, TCS leaders briefed ARC on its capabilities and recent experiences in helping organizations improve and communicate their sustainability performance. TCS believes the future of manufacturing is neural. Through its thought leadership framework called Neural Manufacturing, it enables manufacturing companies to orchestrate cognitive, connected and collaborative ecosystems. These neural capacities take center stage when organizations need to work with multiple stakeholders to achieve common sustainability goals.

Case studies

TCS fills knowledge and technical gaps for businesses, creating solutions that cover environmental reporting, operational innovation, business model transformation, supply chain management, and more. Here are some examples shared in the briefing:

Durability for manufacturing

Measurement and reports

Companies need to understand and account for all their pollution and waste before they can hope to change them, as well as effectively communicating their footprint and mitigation efforts to the outside world. A major building materials manufacturer needed help synthesizing disparate environmental health, safety, and sustainability (EHS & S) data from across the company because the existing piecemeal process was expensive and incomplete.

TCS worked with stakeholders across the organization to develop a streamlined and comprehensive data collection process leveraging standardization and automation. As a result, the company was able to report on GRI G4, DJSI, FTSE, CDP Water, CDP Investor, CDP Supply Chain and IW Financial with confidence and at a lower cost. The company’s subsequent reduction in emissions and energy intensity has earned it recognition as a DJSI leader.

While accounting for emissions from scopes 1 and 2 can be difficult, scope 3 is even more so. A large US-based agricultural company decided it would partner with TCS to assess all Scope 3 emissions for upstream and downstream operations with the intention of using the knowledge to make meaningful decisions for the company. TCS has set up its Viridi platform (which is part of TCS’s ESG services) to calculate all of the company’s supplier and customer emissions. This increased visibility on the sources of emissions has enabled the company to more effectively assess its performance in terms of sustainable development and to progress towards its objectives of reducing its footprint.

Greening operations

After taking precise account of the environmental impact, companies can work to reduce it. TCS also provides operational support. TCS worked with a major industrial boiler OEM in their efforts to revamp their equipment tuning process. By implementing a full digital twin of the equipment and applying artificial intelligence analysis, TCS was able to automate the setting of more than 250 parameters for the customer. This has resulted in dramatic reductions in power consumption, emissions, setup costs and labor, which is essential in an industry where experienced engineers retire faster than new ones can. be trained.

TCS also worked with a large utility in Singapore that needed a platform for Renewable Energy Certificates (CERs), where customers could buy and sell RE-100 recognized CERs as well as have their own issued. certificates to represent carbon reduction activities in their organizations. TCS has built a REC platform that aggregates RECs from various sources in the customer’s ecosystem, thereby creating liquidity for the market. The solution uses an internal blockchain system to increase transparency of market activity and ownership of REC assets, building confidence in the market.

Data holds the key

TCS strongly believes that access to data throughout the extended value chain, from procurement to production and then to the product used, is essential to manage the goal of establishing ‘lifecycle sustainability’. “. This, they argue, is possible with the informational tissue activated by its neural manufacturing framework.

Conclusion

While this was a questionable and belated transition just three years ago, when this analyst began writing on the subject, the world seems to have crossed the proverbial Rubicon in its commitment to sustainability, and the trend does not seem likely to be reversed. The pandemic has focused minds on global issues and ‘build back better’ initiatives, and these are a catalyst for radical change. Today, customers, regulators, investors and employees demand sustainability, and companies are realizing they need to engage to stay ahead. As the CRA learned during our conversation, TCS is leveraging its vast expertise and prowess in software tools to help businesses navigate and thrive in this new world.

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Keywords: Sustainability, ESG, Carbon neutrality, Tata Consultancy Services, Neural Manufacturing, ARC Advisory Group.


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