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Concurrent Engineering Blog

Why is ESG taking hold in manufacturing?

Posted by Concurrent Engineering on 27-Apr-2023 09:15:00

Sustainability is one of the hottest topics in the manufacturing industry, but the factors that drive it vary greatly. Let’s find out more.




A Voice of the Enterprise (VotE) study found that, in 2022, 35% of manufacturing companies either have in place or are planning to implement a formal ESG programme. That’s a rise from 23% in 2021. When VotE probed deeper into the reasons behind this rise in emphasis on sustainability, there was one widespread driver and two other prevalent factors. 


Understanding the drivers behind these moves towards sustainability can help guide the industry in the right direction. In this article, we’ll look at the three most cited drivers behind companies’ ESG initiatives and explain how they might work for you. Let’s get started.


1 - Regulatory compliance


In the VotE survey, 61% of manufacturing firms said that complying with environmental regulations and other laws was a factor behind implementing an ESG program. In other industries, that figure is only 44%. 


This is understandable. If you’re a manufacturing company and you’re found not to be compliant with regulations, the consequences can be severe. You can be fined, sanctioned or even shut down entirely. If you manage to stay in business, the damage to your reputation in your customers’ eyes could be the final straw.


To comply with the growing number of worldwide regulations, manufacturing firms must focus on their entire supply chain, not just the environmental impact of their operations. This includes looking at how they source their materials and what happens when their products come to the end of their lives. 


Technology can help with this. Syncing their ESG programmes with digital transformation initiatives provides structure to their compliance. It can also help them anticipate future compliance issues.


2 - Operational efficiency


29% of manufacturing firms cited becoming more efficient as a factor behind their ESG programme. Of course, if you can become more sustainable and efficient at the same time, it’s a win-win. Many companies operate on exceptionally thin profit margins, so any way you can boost productivity, reduce downtime or get more from less is welcome.


One way manufacturers can improve efficiency is by getting more from their equipment. Many are implementing Internet of Things (IoT) technology to monitor their machinery and make them more sustainable in ways including:

  • Availability - Improving equipment scheduling and optimising capacity
  • Output - Reducing small downtime instances which negatively affect output and power usage
  • Defects - Improving quality, which in turn reduces wastage and scrap


3 - Customer demands


26% of manufacturing companies told VotE that their ESG initiatives are part of a drive to meet changing customer demands. This makes sense. Consumers are increasingly concerned about environmental issues and will vote with their wallets for more sustainability-focused companies. 


To achieve this, companies are looking at ways to innovate their entire product lifecycle, whether that’s in product design, production, end-of-life or anything else. It’s a way to differentiate yourself from your competitors in the marketplace to gain an edge and win more customers. 


Change for the better with Windchill+


Product Lifecycle Management (PLM) solutions are vital to finding success with sustainability-focused changes. While completely rewriting your manufacturing process can be overwhelming, PLM gives you the tools you need to do it.


Find out more