Manufacturing, as a cornerstone of economies worldwide, is typically associated with significant carbon emissions. In fact, global production is now responsible for one-fifth of carbon emissions, and the average company’s supply chain emissions are over 11 times higher than its own operational emissions.
However, manufacturing is also a vital driver of innovation and change. Take data analytics as an example – the technology that has revolutionised how organisations gather, process and leverage information. By harnessing the vast streams of data generated by manufacturing processes, companies can unveil insights that were once hidden, leading to heightened operational efficiency, reduced waste, and ultimately, lower carbon emissions.
Yet, data alone cannot create a sustainable future for manufacturing. This is where carbon accounting steps in – the process of measuring, managing and reporting an organisation's footprint. Carbon accounting not only quantifies emissions, but also guides businesses in adopting strategies to reduce their environmental impact. In the manufacturing sector, where complexities are abundant and emissions are often intertwined with intricate supply chains, accurate carbon accounting is a critical compass for navigating toward greener operations.
Carbon reporting is becoming a must
The urgency to address manufacturing emissions is ramping up. As part of the quest for a more sustainable future, regulations are increasingly coming into force that require organisations to disclose their carbon footprints, with some enforcing the reporting of Scope 3 emissions. For those unfamiliar, these are indirect emissions associated with an organisation’s value chain, such as from transportation, distribution and processing of products, to name a few.
Take the Corporate Sustainability Reporting Directive (CSRD) as an example. This regulation will require all large enterprises that carry out business in the EU, including those based outside of the EU, to disclose their carbon footprint starting in 2024, covering Scope 3 emissions too.
This will run alongside the UK’s Streamlined Energy and Carbon Reporting (SECR) policy, which already requires certain organisations to share energy use and carbon emissions information in their annual reports, and the Task Force on Climate-related Disclosures (TCFD), which is a mandatory framework for some UK companies to help wider stakeholders understand how companies are managing climate-related financial risks.
These reporting regulations mean that decarbonising manufacturing operations isn't a mere aspiration; it's an actionable imperative.
The decarbonisation data revolution
The convergence of manufacturing and data analytics allows organisations to reimagine their processes, from predictive maintenance in factories to traceability of raw materials. But it also plays a pivotal role in the decarbonisation of manufacturing operations.
Here’s why:
1. Precise identification of emissions hotspots
Data analytics allows manufacturers to identify specific processes, operations or equipment that are responsible for carbon emissions. This granular understanding enables targeted interventions to be directed where they will have the most impact, optimising resource allocation and emissions reduction efforts.
2. Real-time monitoring
Internet of Things (IoT) devices and sensors enables manufacturers to monitor energy consumption, emissions and waste generation in real-time. This instant feedback allows the detection of anomalies and deviations from optimal performance, enabling immediate corrective action to prevent unnecessary emissions.
3. Resource optimisation
Both the identification of emissions hotspots and real-time monitoring mean manufacturers can identify opportunities to optimise resource utilisation. Not only does this benefit the planet, but improving efficiencies and optimising processes also lead to cost savings, making the business case for decarbonisation even more compelling.
4. Predictive insights
Data analytics can predict future energy consumption patterns, equipment failures and production inefficiencies. This foresight enables manufacturers to take proactive measures, preventing energy wastage and unplanned downtime that can result in increased emissions.
5. Supply chain visibility
Decarbonisation efforts often extend beyond a single organisation to its suppliers (Scope 3, which we mentioned earlier). Extensive data analytics can provide transparency across the entire value chain, allowing manufacturers to make informed decisions about sourcing and partnerships.
6. Tracking progress and reporting
Data analytics facilitates accurate measurement and tracking of emissions reductions over time. As we discussed earlier, stricter climate regulations are coming into force, so manufacturers need accurate emissions data to comply with reporting requirements and meet these obligations effectively.
Data-driven carbon reductions
Data analytics is paving the way for a more sustainable manufacturing landscape. Meanwhile, carbon accounting serves as the foundation of strategic decision-making, ensuring that emissions reductions are not just aspirational, but quantifiable and attainable goals. It empowers organisations to utilise data-driven insights and choose the most effective carbon reduction strategies based on evidence rather than assumptions.
Here’s how:
Informed decision-making
Carbon accounting provides manufacturers with a holistic view of their environmental impact. This information enables them to make informed decisions about resource allocation, process optimisation, and product development.
Risk mitigation
Understanding carbon emissions helps manufacturers anticipate regulatory changes, market trends, and potential supply chain disruptions, mitigating risks associated with changing environmental regulations.
Competitive advantage
Forward-thinking companies that embrace carbon accounting gain a competitive edge by aligning their offerings with the growing demand for sustainable products and practices. Manual carbon accounting for manufacturing businesses can be tricky though, particularly due to the complexity of supply chains. Top tip for manufacturers is to utilise technology and software wherever possible to help save time and resources.
Automating carbon accounting makes tasks like data collection, emissions tracking and analysis a whole lot more streamlined. Not to mention that the transformational insights offered by these tools often leads to cost savings too, as the greatest sources of emissions are typically also sources of financial inefficiency.
To learn more about carbon accounting, check out our free online courses. Or reach out to our team, who can answer any questions you may have to give you a demo of our software.