By early 2021, over 1,000 companies in 60 countries, representing close to 50 sectors and 20% of global market capitalization, had committed to ambitious Science-Based Targets. Over a quarter of the world’s largest 2000 companies had set Net Zero targets, double that of the prior year. Industrial and manufacturing companies, representing 22% of global emissions, have a particularly important role to play over the coming decade.
Yet, reducing carbon emissions across a manufacturing business—with multiple interconnected processes and dispersed responsibilities—is complex. While siloed, individual projects may have addressed low-hanging fruit like energy efficiency and green electricity, these companies now require more coordinated and structural changes, demanding greater stakeholder alignment. Organizations with large manufacturing footprints will need to build and implement roadmaps for their facilities that not only reduce emissions, but also deliver on their operational and financial targets.
A Net Zero Factory is a manufacturing facility that has net zero energy consumption and net zero carbon emissions. That means the total energy used each year is equal to the amount of renewable energy created on site or offsite through a combination of clean technologies (e.g. PV, industrial heat pumps, energy efficiency and wind) and green sourcing (e.g. electricity, steam and hydrogen).
Shifting to a more coordinated, structural emissions reductions approach requires factories to contend with several interconnected and often competing considerations. When building an emissions reduction pathway, operational leaders need to:
With so much complexity and uncertainty, planning a long-term net zero factory strategy will inevitably come with tradeoffs. Without buy-in from the right stakeholders, the complexity of the undertaking can easily overwhelm even the most dedicated efforts. Poor stakeholder alignment can delay decision-making and lead to inaction. Even with approved strategies, insufficient buy-in and ownership is likely to impact the effectiveness of implementation.
Companies are increasingly pressured by new government regulations, investor demands and NGO initiatives to act faster to achieve their goals. For example:
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Faced with increasing pressure in the coming years to reconcile operational performance, financial performance, and emissions reduction, companies need to ensure that their investment decisions result in the most impactful and cost-effective roadmap to reach their goals. These decisions require aligning diverse internal stakeholders, each with their own perspectives and priorities.
There are four steps to ensuring stakeholders support and are invested in the optimal emissions reduction pathway.
The first step in any transformative process is to reach an agreement on the need for structural change. Organizations should build a common understanding and define a shared purpose to motivate employees and drive innovation. This can be accomplished in a variety of ways:
To build alignment, leaders will need to directly address stakeholder reservations with tangible evidence. Leaders should identify efforts already undertaken, progress made, and best practices involved. In communicating progress, highlight cost savings, efficiency gains and business benefits alongside carbon reduction.
One global food and beverage manufacturer used flagship locations to build a proof-of-concept for low-carbon operations before scaling up across their global footprint. They did this by:
It’s important to identify constraints and non-negotiables early in the process to tailor solutions and technologies to the specific needs of each site. This builds stakeholder alignment into the process from the beginning. Be sure to involve a diverse group of local and corporate decision makers to discuss potential emissions reduction levers (e.g. new technologies) and specify any limitations that need to be addressed. Document participant feedback and ensure that any tradeoffs are discussed and agreed upon. With these boundaries in place, conduct a detailed analysis to develop a least-cost pathway that addresses the site-specific parameters.
Once your roadmap is developed, it’s critical to maintain stakeholder alignment and buy-in to ensure follow-through and progress. Successful companies will go beyond simply communicating emissions reduction targets by formalizing key performance indicators and to embed accountability across the business. Recommended steps include:
As more organizations transition their operations to achieve net zero factory emissions, accelerated timelines will demand swift, coordinated action. Those that effectively build consensus, document tradeoffs and enable engagement and action of all stakeholders will dramatically improve the speed and scale of their transition.
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