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CORPORATE SUSTAINABILITY
HOW’S YOUR RETURN ON VALUE (ROV)?
Ali Haj Fraj, Senior Vice President, Digital Factory at Schneider Electric, says a shift in mindset can drive industrial
sustainability goals U
ntil recently, the singular aim of virtually every company worldwide was to make a profit. Each investment, new hire, and strategy aimed to shore up the financial health of the organisation, whether through customer value creation or investor attraction. But now, industries, and the world, are a little different.
Corporate sustainability, once viewed as a luxury venture or a cynical PR initiative, is fast becoming a crucial metric of success as the industrial world embraces Industry 4.0 and even starts to move towards Industry 5.0. Increasing numbers of consumers shun businesses they see as detrimental to the environment, while investors require reassurance that a business can evolve and exist within a net-zero society.
Sustainability is now a necessity for creating long-term value. Operating sustainably means industrial companies must simultaneously meet environmental, economic and social measures. Yet new research from Schneider Electric and Omdia found that 48% of manufacturing companies worldwide are still yet to deploy sustainability initiatives. Manufacturers need to shift their mindsets away from pure profit, and towards ‘profits for purpose’ if they want to thrive. But how? Whether internal or external, investment always requires justification before it can be agreed upon, released, and put to use. According to Schneider Electric and Omdia’s research, the top investment motivator for sustainability is ‘corporate responsibility (CR)’, with 41% of manufacturing companies citing it as a catalyst for funding. An effective CR programme is key to brand perception, attracting customers, talent, investors, and more. These benefits must be highlighted when attempting to change attitudes to investment.
Equally important are the concrete
financial gains that come with sustainable investment. 26% of industrial companies cite ‘improved performance’ as an expected result from investment, while 23% specify cost savings. Improvements to efficiency, such as a reduction in waste and material and
38 MAY 2023 | PROCESS & CONTROL
their benefits, such as lower energy bills, are apparent, the more challenging projects, such as upgrades to infrastructure, will become far easier to justify. Managers will feel ready to prioritise investment with long- term goals and commitments in mind. Energy management systems, automated processes, cloud migration, and more are the weightier solutions that will help ensure sustainability long into the future. As discussed, a business’s sustainability evolution is more than just a means of earning a return on investment (ROI). By presenting the return on value (ROV) to company stakeholders, they will come to understand the wider halo of positive impacts that sustainability initiatives can deliver.
energy consumption, can recoup costs and justify further investment into areas like improved quality control and supply chain resilience, and so on – a rare virtuous circle. Aquapolo can attest to this. Brazil’s largest wastewater treatment plant uses EcoStruxure to increase operational efficiencies: for every litre of recycled water they produce, a litre of drinking water is saved. Not only this, but by adopting a complete EcoStruxure solution, including digital and field services as well as AVEVA industrial software, Aquapolo achieved a 15% reduction in total production costs and improved overall efficiency.
Meanwhile, the increased scrutiny that industrial companies, especially multinationals, are under regarding their environmental and broader ESG activities will also drive change. Manufacturers must consider not just the direct environmental footprint of their manufacturing operations but also those of the companies they choose to partner with. In the future, they may well be required to report on these scope 3 emissions, so a proactive approach will avoid potential regulatory issues and damages to their public perception.
Mindsets must also move from the assumption that sustainability is unachievable to an understanding that small, tangible steps can add up to make a huge difference. This process begins by identifying the ‘quick wins’ – switching to renewable energy sources, turning off equipment when not in use, reusing materials where possible, and more.
Once these changes are enacted and
To do this, company advocates must explain that while industrial sustainability projects are still relatively new in many cases, the benefits that can be realised will continue to evolve and extend beyond direct returns, leading to intangibles such as more effective brand management, adherence to future legislations, lower insurance costs, and more. Industrial firms need clear alignment of goals and activities across departments and buy-in from employees and partners. For many, this starts in the C-suite: 78% of industrial companies report that a C-level role is directly responsible for their sustainability efforts. From there, wider buy-in is needed to succeed in the deployment of projects and to encourage employee feedback for plans and improvements. To engage employees in a wider green culture, they must be involved in the company’s sustainable evolution from the beginning. This involves inviting observations and suggestions from staff, educational sessions on the company’s goals, and regular communications on the results of the initiatives. Close involvement ensures wider departments and staff feel ‘ownership’ of the project. This leads to greater participation in, understanding of, and loyalty to any implemented changes.
Ultimately, every business worldwide will have to restructure its operations in accordance with sustainable principles. The sooner a company moves its mindset towards sustainability, the more likely it’ll become a profitable, model, future-proofed leader within its industry.
Schneider Electric
www.se.com
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