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SUSTAINABLE MANUFACTURING


FINANCING A MORE SUSTAINABLE FUTURE


Neli Ivanova, Head of Sales, Asset Finance at Siemens Financial Services, explores some of the sustainability improvements manufacturers can put in place using smart financing solutions


sustainability in the face of climate change. In Europe, for example, EU law sets an intermediate target of reducing greenhouse gases (GHG) by at least 55% by 2030 compared to 1990 levels. At the same time, global events are


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presenting new challenges to achieving these commitments. Despite these challenges, it is unlikely that manufacturers will be diverted from their sustainability goals. This is because sustainable manufacturing not only results in moral and climate change benefits but also provides commercial advantages. So, what are the sustainability


improvements that manufacturers can put in place, to deliver cost savings, greater productivity, competitive brand advantage and security of supply, as well as making a contribution to carbon elimination, waste reduction and other sustainable goals? Sustainability by design: Much can be


achieved by designing whole manufacturing processes to be less energy-hungry, less wasteful, and lower impact. Additionally, being able to design, or reconfigure, manufacturing processes in the virtual world – through a ‘digital twin’ – allows these design developments to be achieved and tested more quickly and at lower cost. At its core the various aspects of Industry 4.0, or digitalisation, are inherently enablers of sustainability improvements, assisted through remote collaboration and virtualisation, with up to 80% of products’ environmental impacts determined at the design phase – including use of responsibly sourced raw materials. Moreover, the notion of ‘design’ can be extended to supply chain restructuring, given that in some cases 90% of emissions originate


44 NOVEMBER 2023 | PROCESS & CONTROL


ajor economies across the globe have made substantial commitments to improving environmental


in complex and distributed supply chains, according to the Carbon Disclosure Project. Energy efficiency: Studies have shown that


gains from energy-efficiency initiatives in the manufacturing industry are typically around 20%. This can result from better design of new facilities or retrofitting of established plants. Opportunities for increased energy efficiency exist throughout the whole process – for example: CHP (Combined Heat and Power) technologies recover energy from the production environment and re-use it for other


requirements. The installation of variable speed drives can


introduce energy efficiencies of as much as 50% to key industrial


processes, while building automation technologies can reduce power consumption – over 50% of industrial building energy consumption is devoted to space heating/cooling. Financing sustainability: To become more


sustainable, manufacturing firms have to invest in new or alternative technologies – more energy efficient equipment, combined heat & power (CHP), additive manufacturing, materials recycling, water-efficiency, eco- packaging, to name a few. There is therefore an urgent need to invest, and invest significantly. At the same time, following a pandemic and in a period of political/economic uncertainty, companies are cautious about tying up capital in equipment. Hence the dilemma – manufacturers cannot afford to delay their sustainable manufacturing investments, but need smart ways of overcoming their investment caution. To this end, pioneering manufacturers have


recognised the importance of leveraging the right mix of financing to navigate times of uncertainty, volatility and crisis, and this latest stage of world affairs is no exception. Leading CFOs in industry are already deploying third party capital through a wider use of smart finance structures. As a result, they can invest in sustainability initiatives (often through digitalisation) in ways that are financially sustainable, through aligning flexible financing arrangements with the expected rate of benefit gained through those investments. Each manufacturer’s cash flow needs are


different – yet most generalist, standard financing arrangements only offer off-the- shelf terms and structures. Specialist financiers, on the other hand, are able to use their knowledge of the manufacturing industry to understand the likely benefits that sustainable manufacturing technology will bring. Arrangements can be structured to flex over time as manufacturing production (and revenues) and efficiencies ramp up. Equally, payments can be aligned to expected sustainability related outcomes or even varied on a seasonal basis. It is these specialised finance packages which really help accelerate the move to sustainable platforms. In summary, sustainable manufacturing is a


compelling commercial goal, offering financial and business benefits, as much as ethical and reputational advantages. By bridging the gap between desire to invest and hesitancy to commit capital in uncertain markets, specialist finance is a key enabler for manufacturers to invest in a more sustainable future. The sources used in this feature can be


found at www.processandcontrolmag.co.uk/ smart-ways-to-enable-sustainable- manufacturing/


Siemens Financial Services www.siemens.com


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