Environmentally Sustainable Manufacturing Boosts the Bottom Line
Environmental sustainability and business success are often seen as being at odds with each other—businesses must choose between being profitable and being green.
But growing numbers of businesses are proving that business success goes hand in hand with upholding ecological principles. Sustainability, as company practice and supported by a robust regulatory framework, can pay off in multiple ways.
What are the key components of sustainable manufacturing? What do these practices look like? How can it be profitable?
What Is Sustainable Manufacturing?
The US Environmental Protection Agency says sustainable manufacturing uses “economically sound processes that minimize negative environmental impacts while conserving energy and natural resources.” This type of manufacturing also “enhances employee, community, and product safety.”
When companies use ecological principles to produce commodities, the design of the commodities themselves, the manufacturing process, and the overall organization of the business are all affected.
These companies also observe the UN's Sustainable Development Goals, which address climate change, loss of biodiversity, social inequality, and more (see above).
As Kresse Wesling, CBE, co-founder of the successful Elvis & Kresse clothing brand, says, “Sustainability is best defined by what it isn’t.”
“The definition of unsustainable is either ‘unable to be maintained in the long term’ or ‘indefensible,’” she says in an interview for The Earth & I. “Something that is sustainable needs to be able to continue to be produced in perpetuity (so think socially, environmentally, and financially viable given climate change, biodiversity loss and rising inequality) and defensible.”
Concern For ‘Sustainability’ Growing
Sustainable manufacturing is no longer a minority concern. Research by KPMG of the top 100 companies out of 5,200 sampled companies in 52 countries found that 80% now report on sustainability and a growing number—around 40%—acknowledge the financial risks of climate change in their reporting.
This finding shows sustainability reporting is more than “greenwashing” or the practice of purporting to be environmentally conscious for marketing purposes. In 2015, the Task Force on Climate-Related Financial Disclosures (TCFD) was created to assist companies to disclose information related to climate change for investors and others.
Free market proponents argue that environmental regulations hinder economic growth and profitability. In the UK, for instance, the government has promised to water down environmental protections and ramp up fossil fuel exploitation to kickstart growth. However, a letter by 100 large companies—including Amazon and Siemens—urged the government not to abandon net zero goals.
A survey of 700 CEOs and business leaders across seven major world economies found that 80% believe net zero regulation is needed for their companies and the economy. Seventy percent already had plans, and 80% had earmarked funding to implement net-zero practices.
Sustainability has positive impacts on business practice, employees, and product manufacture.
But it’s not just a question of risk mitigation. Sustainability has positive impacts on business practice, employees, and product manufacture. A conference paper by Jawahir and Dillon (2007) identified six elements of sustainable manufacturing: manufacturing cost, energy consumption, waste management, operational safety, personnel health, and environmental impact. All these diverse elements of a business operation contribute to sustainability.
While the initial outlay to transition to environmentally friendly production might be daunting and require considerable investment, most of these measures also save production costs: Improved employee health and operational safety cut sick pay or absenteeism, and wise energy consumption and waste management practices lower running costs.
Being a sustainable brand increasingly has benefits. A McKinsey & Co., survey found that 66% of US respondents (and 77% of millennials) say they consider sustainability when making a luxury purchase. The Economist Intelligence Unit said there has been a 71% rise in online searches for sustainable goods in the last five years. Unilever’s eco-brands grew 46% more than its other products and comprised 70% of its turnover growth in 2017. However, cost is an issue; the McKinsey survey revealed that only a minority of consumers would pay higher prices for sustainability.
Environmental Regulation: Helping or Hindering?
In some political narratives, environmental regulation is seen as holding businesses back. But for many companies, environmental regulation helps create a stable business environment; everyone knows where they stand, and there is a level playing field.
For Wesling, “Regulations are a necessity, but I have never understood why anyone sees them as anything other than the parameters in which you can be truly creative and regenerative.” She cites the theory of “doughnut economics”—which advocates human improvement within an overall boundary of planetary limitations—as a source of inspiration.
Citing the 1972 report to the Club of Rome, “The Limits to Growth,” which argued that humans have to work within limits set by nature and natural resources, Burkhard Remmers, head of International Communications for Wilkhahn, says, “[T]here is probably no way around legal regulations to achieve real change."
So, what does corporate sustainability look like? Two notable companies have embraced the idea of sustainable business and design.
Elvis & Kresse
Founded in 2005, Elvis & Kresse rescued the London Fire Brigade's damaged and retired fire hoses from landfill. Over ten years, they have upcycled 300 tons of decommissioned hose, turning them into luxury accessories such as bags, wallets, belts, and notebooks. They donate 50% of their profits to charity. In 2017, they partnered with the Burberry Foundation to tackle the mountain of leather waste. Over five years, they aim to recraft a minimum of 120 tons of leather offcuts to make high-end goods sold through the Elvis & Kresse brand and business model.
The brand critically highlights the difference between being a truly sustainable brand and a company primarily delivering profit through greenwashing. For Kresse, it means solving a “crisis level [environmental] problem” for which companies can use the Sustainable Development Goals as a guide. Says Kresse:
“It was never enough for us to rescue one fire hose. We had to solve the fire hose problem. It isn’t enough to make a very nice bag. ... You have to do all kinds of things. You have to be really genuine. You have to make a big promise, and then you have to deliver.”
Wilkhahn
German manufacturer Wilkhahn, founded 115 years ago, makes a range of ergonomic office and conference furniture. In the 1990s, it started integrating the principles of sustainable design and environmental responsibility into its products and production process.
Wilkhahn believes design is best understood within an ecological and social context. “In short,” says Remmers, “sustainable design and environmentally friendly production are a constitutive part of Wilkhahn’s corporate culture and sense of purpose.”
For example, the ON office chair has two separately moving swing plates (so-called Trimension® technology), encouraging forwards, backwards, and sideways movement, which allows the pelvis to rotate. This functionality is critical to ensure the spine's stability and health. The chair won the German Federal Ecodesign Award 2012 due to its innovation; health impact; capacity for retrofitting and repair; and its 97% recyclability.
“Planned obsolescence as an industrial growth strategy must no longer have a future. … Quality of use, durability and repairability will … become the decisive criteria of the circular economy,” Remmers tells The Earth & I.
The company also sees its working culture as integral to its success. They consider themselves a “human-centered workplace,” enacting the values of health, collaboration, identity, and a sense of purpose. One example of these values is that teams of employees consider tasks holistically before making decisions, which impacts positively performance and profitability.
The Future of Sustainable Production
Even if governments lag behind, the corporate world is waking up to the importance of working with the Earth, not against it, for the sake of humankind and the environment. Sustainability need not mean deprivation or negative growth. However, companies must do more than greenwashing. Successful companies that practice sustainability, like Elvis & Kresse and Wilkhahn, show that these practices are good for business.
*Deborah Talbot is a journalist with three decades of research experience in sustainability as a concept, focusing on cities, the environment, eco tech and education.
Sources:
Deborah Talbot interviewed Kresse Wesling, CBE, co-founder of Elvis & Kresse; and Burkhard Remmers, head of International Communications for Wilkhahn.