Why green and local are good for industrial companies
March 5, 2021
The pandemic set the stage for an unprecedented experiment on the interconnectedness of business and the environment. As businesses temporarily ground to a halt all over the world, carbon emissions briefly decreased. But most importantly, the pandemic shook to the core the status quo and any predetermined way of conducting business. While having significant consequences for both business and people, it also opened a window towards innovative thinking for the future.
I recently had a conversation with Bruno Nicolas, who is Brand Director at Actemium, part of VINCI Energies. We discussed the possibilities that the current disruption has revealed for engineering and construction. A snippet of our conversation follows:
<<< Start >>>
Sustainability, from trend to necessity
<<< End >>>
Bruno: The COVID-19 pandemic has changed priorities around the world, and it has renewed a sense of business purpose for corporations. In this context, in the urgent short term of the pandemic, the fight against global warming seems to have taken a back seat, along with the ambitions of the European Union. But the global aspect of the pandemic crisis also reminded all of us of the long-term urgency and impact of the global warming crisis.
Grégory: I couldn’t agree more. In fact, I believe that the pandemic was a wake-up call that alerted businesses to the real reasons behind all the norms and regulations that have been issued and will continue to be issued in respect to sustainable business practices around the world. Before the pandemic, businesses worried about remaining compliant with regulations. From a risk management point of view, it made sense. The pandemic rendered real and palpable what the actual, global impact of a natural disaster can be. In the future, staying compliant will no longer be a manageable risk, but an imperative.
Bruno: The European Union has set the goal of a 55% reduction in its greenhouse gas (GHG) emissions by 2030 and carbon neutrality by 2050. These are ambitious goals that are very hard to reach within the established time frame. Yet, in 2020, as a third of humanity was forced to live in confinement for several weeks, it became clear that the issue of transportation has a strong environmental impact, and that all corporations can contribute to bring down green-house gas (GHG) emissions.
<<< Start >>>
Thinking outside the box
<<< End >>>
Grégory: And this is where becoming part of the solution to global reduction of GHG emissions and embracing other sustainable practices can lead to a differentiating position in the market.
Bruno: Absolutely, especially since the industry is one of the sectors of activity that contributes the most to GHG emissions, due to all its integrated externalities, including transportation. Yet, during the pandemic, the health crisis has revealed the importance of new, or previously underestimated, approaches such as the relocation of production, teleworking (working remotely) and the circular economy. Now, more than ever, it is in the industry's interest to accelerate its transformation from within.
To become part of the solution, the industry needs to turn its attention to three levers: 1) reducing emissions; 2) designing "greener" products; and 3) adjusting production methods.
In terms of greenhouse gas emissions, the industry can optimize its energy efficiency and use renewable energy, as well as utilize both recycling and reusing. Several approaches work, such as storing and reusing CO2 emissions, decarbonization, optimizing production cycles to be more eco-efficient (i.e., eco-design, more efficient processes, materials with a low carbon footprint, alternative production solutions, etc.), or reusing components when rebuilding a new production line (i.e., tools and technological bricks). The reuse of components offers a much better carbon footprint. Finally, the COVID-19 crisis demonstrated the effectiveness of teleworking (or remote working), proving that another way to improve the carbon footprint can be to reduce staff travel time.
Designing greener products.
There are opportunities to use more environmentally friendly products in all sectors — from the production of construction materials with much better energy performance, to the design of electric vehicles. For example, in the design of electric vehicles, some parts can be reusable, or lighter materials can be used to reduce energy consumption. Also, miniaturized electronics can be used to optimize the use of a machine or product.
Changing production methods.
Finally, when it comes to the evolution of production methods, there are two main areas of focus for the industry. The first is to develop more flexible, more autonomous and more local production units that are physically located as close as possible to meet demands. The impact is immediate in terms of the carbon footprint of transportation, both in terms of personnel and products. Automation and artificial intelligence make this relocation possible. The second change relates to strengthening the connection between the industry to its ecosystem by realizing positive externalities beyond production alone, e.g., using industrial land for agriculture; utilizing the CO2 generated by the industry to produce algae and spirulina for cosmetics and pharmaceuticals; or capturing the heat generated by the asphalt areas of industrial sites (as exemplified by the Power Road process developed by Eurovia).
<<< Start >>>
Differentiating in the global market through sustainability
<<< End >>>
Grégory: Yes, all of these are strategic ways of making industrial business greener, and engineering and construction in particular. I would also add:
Local sovereignty equals increased sustainability.
The pressure that the pandemic put on global supply chains has made it so that both governments and society have established expectations that businesses will look to a circular economy and local supply chains. Whereas a few years ago, delocalization was the trend meant to relieve labor costs, now sourcing local is at the top of the corporate agenda. To manage this tension, most companies will reinvent their supply chain and accelerate their transition to smart factories. New facilities will have more efficient processes that will have a lesser impact on the environment.
Accenture and Dassault’s recent piece on digital twins explains how this can be achieved. By using virtual twin technologies from the construction phase of new facilities, companies can model and aggregate data to model energy consumption, plan and execute inspections, and perform maintenance and repair activities. The benefits can result in significant reduction in energy and water consumption, as well as waste optimization.
Talent implicitly influences the industry through their choice of work.
As all industrial branches, engineering and construction included, are engaged in the competition of attracting the best technical talent — engineers, data scientists and analysts, programmers etc. And the industry has a been known for being resistant to change and to disruption.
By having positive impact on the environment, through green infrastructures and buildings, engineering and construction companies are also looking to attract the new generation workforce. The call to action for them: make the world a better place for future generations. This renewed sense of purpose for the industry can make the difference in the war for talents.
Balancing cost-to-serve with sustainable practices is a must-have in the future.
A repositioning in value is necessary to maintain compliance with local rules and regulations, while also keeping in check a cost-to-serve and ensuring a competitive price. This will be achieved in the future through factory automation. It depends on retraining current talent, or on attracting and hiring new talent that has the necessary data-driven skills to enable this transformation. The winners will not only comply, but also create a competitive advantage; this should not only be a cost, but a premium.
Bruno: I fully agree. The pandemic put the industry in an accelerated mindset shift and imposed urgent piloting of solutions that, in a different environment, would have maybe taken years to be tried out. Also, the business response was at the heart of the problem for the industry and the climate impact was a benefit. This shows that making industry part of the sustainable solution to both relocation and climate change is therefore a matter of thinking about it first. But once the business looks at the issue from a different point of view, it soon becomes clear that good business and a healthy environment can go hand in hand. It may even be easier than we could have imagined.
<<< Start >>>
It is greener on the other side
<<< End >>>
Grégory: I hear more and more such conversations and they underline the fact that the time has come for companies to establish meaningful partnerships on their commitment to sustainability. More and more global executive committees are making an official commitment to conducting business that is mindful of the natural environment.
Accenture, for example, has recently announced zero emission goals. VINCI has pledged to cut CO₂ emissions by 40% by 2030. Actemium is very much part of the effort at VINCI to envision and develop effective environmental solutions. When several companies, such as Actemium and Accenture, join forces in an effort to diminish their impact on the environment, the co-beneficial effects multiply, helping the industry as a whole to go green and stay green.
<<< Start >>>
Actemium is part of VINCI Energies, a service company dedicated to improving performance and competitive advantage for industrial companies, comprised of a worldwide network of 400 business unites, located in 41 countries.
<<< End >>>
Accenture explains how industrial companies can renew growth post-COVID-19 by focusing on two factors: customers and talent. Read more.
Accenture's Tadahiro Murakami discusses the success of some industrial companies offering new business services in Japan, China and India. Read more.
Accenture's research on intelligent operations shows when it comes to being ready for the future, industrial companies are behind other industries. Read more.