This matrix can help you determine the best option for your organization. And the leaders of tomorrow are already taking steps to secure their hold on that future. Copper Mountain Mining Publishes 2022 ESG Report - PR Newswire A medical researcher accelerated purchases by 45% with a new tech implementation plan. For your stakeholders or potential investors, corporate sustainability, financial performance, and corporate strategy might be of particular interest. Now, you have a theme for an ESG initiative that fits your company. Your frontline workers can now leverage digital operating procedures on the factory floor, not only providing them with access to real-time information, but allowing them to collect data in support of your ESG initiatives. The views expressed in this article are those of the author alone and not the World Economic Forum. Priority initiatives to receive funding are, Improving supply chain sustainability metrics (25% said this is #1 priority), followed by analysis of climate change risk to physical assets (22%) (, Digital projects that will be most important over the next 2 years are: greenhouse gas emissions (26% say #1 priority) and social performance (22%), improving IT systems for environmental performance and metrics (12%), software for sustainability voluntary reporting (9%) (, Executing ESG effectively can help combat rising operating expenses (such as raw-material costs and the true cost of water or carbon), which research has found can affect operating profits by as much as 60% (, A major water utility, achieved cost savings of almost $180 million per year thanks to lean initiatives aimed at improving preventive maintenance, refining spare-part inventory management, and tackling energy consumption and recovery from sludge (, Two-thirds of survey respondents said that a sustainable supply chain is a competitive differentiator (, More than 75% of consumers and employees said theyre more likely to buy from or work for a company that stands up for ESG principles (, There have been more than 2,000 academic studies and around 70% of them find a positive relationship between ESG scores on the one hand and financial returns on the other, whether measured by equity returns or profitability or valuation multiples (, 83% of C-suite leaders and investment professionals say they expect that ESG programs will contribute more shareholder value in five years than today (, ESG programs that add value are now nearly unanimous in perceiving long-term value from environmental programs. Elon Musk has attacked ESG on Twitter, and many Republicans want to cancel it. Dubais Sustainable City is not unique in the choices it had to make. Merck ESG Progress Report 2020/2021 Overview GRI/SASB: General disclosures Economic Environmental Social Indices 4. Stphane Souchet. Heres the good news: You might have done more work than you know and your next steps to creating value and mitigating risk with ESG might be easier than you think. Climate change, sustainability, and ESG . As the pace of innovation quickens, many defense organizations see partnerships as central to navigating space. Dedicated ESG leaders or teams can be valuable as an ESG program matures, but many manufacturers start by assigning ESG leadership to an existing role. Advanced manufacturing is enabling profitability and sustainability goals. Many companies are appointing their audit committee or hiring an outside third party. What business objectives matter to you? Despite the attacks on ESG investing, Hyundai roars into Georgia with another new fossil-killing electric vehicle battery manufacturing plant. For lithium, there are risks in sourcing the material because it is largely provided by only four countriesAustralia, Chile, China and Argentina. A weekly update of the most important issues driving the global agenda. There are at least seven well-known sustainability reporting frameworks and standards available, each one backed by credible organizations and with reputable individuals on their Board. 2020 set a new high in annual PE software deal value. Jan. 24, 2023. The 2022 State of Smart Manufacturing Report is the most robust edition yet and first to cover manufacturers' connection with sustainability/ESG initiatives. Senior management typically works off stakeholder engagement to determine the most sensitive information. 13 Other critics have cast ESG efforts as "greenwashing," "purpose washing," 14 or "woke washing." 15 One Edelman survey, fo. Companies have a responsibility to take action toward positive climate action and build more sustainable manufacturing practices because the future of our planet depends on it. Upon further investigation, more and more business leaders have recognized that having an ESG framework or values in place canin addition to mitigating riskhave meaningful benefits for their stakeholders and society as a whole. Middle market manufacturers that have invested in ESG and developed robust ESG policies and procedures can reap several clear benefits. The sustainability reporting standards matrix provides guidance on which standards are appropriate in each of the four scenarios that arise. How will your organization respond? Spent with Black-owned businesses in 2022. And one of the many benefits of connected worker technology is that it can help you achieve your sustainability goals, According to the U.S. Environmental Protection Agency (EPA), 3 Key ESG Trends: Sustainable Industrial Manufacturing Event, Earth Day: 3 Trends Driving Manufacturing ESG Initiatives, ESG Summit 2022: 3 Takeaways for Building Companies and Building Materials Manufacturers, Ethics concern? Their local sourcing for its supply chain increased to 92% from its previous 90%. 11 minute read 29 October 2021 Tectonic shifts: How ESG is changing business, moving markets, and driving regulation Propelled by the planetary emergency and the drive for transparency, global sustainability reporting standards and ESG disclosure regulations are coming. Find out how the technology, banking and asset management sectors are adapting their strategies to handle todays threats. In 2021, their team of more than 3,500 global employees gave back to over 190 organizations and enabled customers to avoid over 39 million metric tons of greenhouse gas emissions through the use of their products. This includes carbon/greenhouse gas (GHG) accounting and audits, energy assessments, carbon tax, water usage, environmental certifications, energy transitions and environmental impact analysis. This plethora of geopolitical issues has made leaders unavoidably focused on understanding the legitimacy of international governmental practices and actions in the countries from which their products are sourced, the ethics of their suppliers labor practices, and potential stakeholder scrutiny of goods supplied from particular countries or regionse.g., oil from Russia. BlackRock said in a March report that it considers biodiversity loss "a potential risk to the future financial performance of companies in certain sectors" because as an ESG parameter it's a . Their strategies for change include: expanding plant-based menu options, shifting away from single use to reusable packaging, investing in regenerative agriculture, reforestation, forest conservation and water replenishment in their supply chain, investing in better ways to manage their waste, and innovating to develop more sustainable stores, operations, manufacturing and delivery. BlackRock, Vanguard Among Firms Blocking Key ESG Votes: Study We believe that prioritizing ESG principles makes business better by unlocking new value, building resilience, and driving sustainable growth today and tomorrow. Stakeholders such as consumers, investors, and regulators are thinking more and more about the environmental, social, and governance (ESG) maturity of the companies they . CEOs of manufacturers are thinking beyond COVID-19. In alphabetical order they are: Each standard deals with a different scope of topic from narrow (an exclusive focus on greenhouse gas emissions, for example) to broad ones (encompassing all of ESG or the entire range of UN Sustainable Development Goals), and caters to different range of audiences from a narrow set of stakeholders (primarily investors) to broader groups, including customers, employees and society at large. Manufacturers are building global resilience-->, The manufacturers map to asset savings-->, Make your supply chain recession-resilient-->, National Managing Principal, Manufacturing Industry, Partner-in-Charge, Metro New York and New England Business Advisory Services, Our manufacturing featured industry insights. The State of Smart Manufacturing: Respond to Market Adversity with Agility and Technology Adaptation, The State of Smart Manufacturing: Security. Because none of the existing ratings were found to be able to adequately summarize an entitys greenhouse gas emissions reduction performance, it was decided not to seek a sustainability rating. Through the relative transparency that ESG can provide to investors, consumers and markets, some companies have become more sought after because of the alignment of their policies with those of external constituents. The path to quality loyalty programs begins with adopting the right analytics looking deeper into customer purchase patterns to uncover true trends. Resources View all news AZEK Releases Inaugural Environmental, Social, and Governance (ESG) Report, Titled "FULL-CIRCLE" 05/10/2021 Outlines Commitment to Products, People, and Planet; Describes How AZEK Seeks to Revolutionize Outdoor Living to Create a More Sustainable Future National Grids governance is committed to 54% Board diversity, and its code of ethics sets out reporting frameworks, policies, and structures. Executives face an even greater variety of sustainability related ratings than reporting standards. Both of these percentages increased from the previous year. We can harness the power of people, process, data and technology to transform your companys tax operating model into a strategic function of the business. Plus, those next steps could be some quick wins, or they could be aligned with your other business objectives. Climate-related risks and business strategies can help employees do their jobs while a companys carbon footprint is becoming increasingly important to consumers. It may not be possible to fully mitigate problematic labor, ethical and environmental issues immediately. At Ford, we are committed to making progress on the issues that matter in the environmental, social, and governance (ESG) areas. The international sustainability ratings it reviewed didnt fit the local context, while locally developed ratings lacked international comparability. GoTo keeps teams connected by offering simple business communication tools. Tim Rogmans. And the construction of manufacturing facilities is a crucial area where careful and methodical ESG plans will yield tremendous benefits. ESG Investing Goes Quiet After Republican Attacks - Bloomberg 5. The importance of ESG has even greater significance in light of recent events, like the COVID-19 pandemic and the increasingly dire climate conditions. Their baseline retention set in 2020 was 94% which decreased to 91% in 2021. Certain sections of the report may be removed or altered based on data availability and relevance. Your theme will be distinctive to your company, and so will your leadership. While there are no easy solutions, this example represents the first step in embracing ESGawareness. Assessing and bracing against cyber vulnerabilities in industrial sectors. In 2021, for instance, Ford announced their investment in Redwood Materials, a leading battery materials company, to address sustainability in EV batteries through recycling. If you havent already started implementing ESG initiatives or begun thinking about it, youre already behind. The panel covered a wide range of "hot" sustainability topics, from measurement and data challenges to consolidation of reporting frameworks, competitiveness for talent and clients, consistency in messaging, governance, value creation conversations, the "art" of ESG, and core values. One recent client is the developer of a U.S.-based manufacturing facility that uses new and existing technologies to convert woody biomass into . Does ESG really matterand why? - McKinsey & Company Please enable JavaScript on your browser and try again. Georgia To Lead Electric Vehicle Revolution, ESG Or Not - CleanTechnica Start by determining what you want to do, and aligning that with your current capabilities. Future M&A trends in the sector are to be shaped by 3 interconnected factors Manufacturing CEOs search for opportunities amid the disruptive impact of the pandemic. Of greater concern is the process for mining and refining lithium, which requires enormous quantities of water. We adhere to circular economy principles in the innovation and production of more than 515 battery types for cars, boats, motorcycles, forklifts and other vehicles. Industrial Manufacturing - KPMG Global Florida Governor Ron DeSantis, a likely 2024 White House candidate, signed a bill in May barring the use of ESG when . By Pamela Grinter, partner at Fox Rothschild LLP. Along with general awareness and sensitivity around ESG issues, manufacturers need a thorough understanding of their suppliers and subsuppliers supply chains and the potential ESG risk exposure they present in everything from raw material procurement through production, and ultimately through the life of the end product. GTIL is a nonpracticing umbrella entity organized as a private company limited by guarantee incorporated in England and Wales. Download the Report Not-for-profit organizations and higher education institutions, Transportation, logistics, warehousing and distribution, Operation and organizational transformation, Blockchain, digital assets & Web3 solutions, Do not sell/share my personal information. For more detail about our structure please visithttps://kpmg.com/governance. What new work will be created going forward and who will do it? Schwab Foundation for Social Entrepreneurship, Centre for the Fourth Industrial Revolution, Stakeholder Capitalism: over 50 companies adopt ESG reporting metrics, Carbon-neutral manufacturing is possible: here's how, These 10 new 'Lighthouse' factories show the future of manufacturing is here. When policy shifts, our insights and analysis can help you plan and respond. KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (KPMG International), each of which is a separate legal entity. Smart manufacturing is a critical component of driving ESG (Environmental, Social, and Governance) and sustainability success in manufacturing. Find out how, together, these initiatives are helping manufacturers like you stay competitive in 2022 - and beyond. What is a Quality Management System (QMS)? Grant Thorntons latest State of Work in America survey reveals trends companies must heed to attract and retain talent, including supporting mental health and wellbeing, creating flexible hybrid schedules and ensuring a quality company culture. One of the most holistic examples of the prevalence of ESG issues throughout the supply chain is manufacturers dependence on rare earth elements. Banks face new challenges on regulation, ESG, mortgages, digital assets, audit, tax or digital transformation in 2022. Whats a reasonable timeline, with milestones for planning, implementation, review and results? PDF American Axle & Manufacturing | Delivering Power . 6. Environment View 2021 Impact Report More Energy Generation Than Consumption Tesla solar panels have generated more electricity than has been consumed by our vehicles and factories between 2012 and 2021. An ESG report or Sustainability report is a report published by a company or organization about environmental, social and governance (ESG) impacts. This then leads to greater competitiveness in the market, along with increased brand and product reputation and recognition. For more details, review our .chakra .wef-12jlgmc{-webkit-transition:all 0.15s ease-out;transition:all 0.15s ease-out;cursor:pointer;-webkit-text-decoration:none;text-decoration:none;outline:none;color:inherit;font-weight:700;}.chakra .wef-12jlgmc:hover,.chakra .wef-12jlgmc[data-hover]{-webkit-text-decoration:underline;text-decoration:underline;}.chakra .wef-12jlgmc:focus,.chakra .wef-12jlgmc[data-focus]{box-shadow:0 0 0 3px rgba(168,203,251,0.5);}privacy policy. When measuring and communicating corporate sustainability performance through sustainability reports or ratings, executives face a rapidly evolving and complex set of choices. May 22, 2023. The European Commission's plan is intended to rein in the booming market for environmental, social and governance scores, according to the draft document, which may still change. ESG has become buzzy shorthand on Wall Street for an investing strategy that typically weeds out companies whose products or practices are detrimental to the environment or social harmony . What are you asking of those resources? Is it a focused risk management or compliance effort? Scope. Our NFT Playbook is a roadmap to addressing IP rights, business infrastructure and risk for media & entertainment companies and others. You need to reconfirm that you have full executive buy-in, and be ready to answer some tactical questions: Its easy for manufacturers to be intimidated by ESG. GTIL refers to Grant Thornton International Ltd (GTIL). The second matrix the Sustainable City developed charts sustainability ratings. The State of Smart Manufacturing: ESG | Plex Colin McCall, a member of Manufacture Alabama and chief technical officer with All4 Inc., said some investors want to see ESG data before investing in a given manufacturer. The State of ESG in Manufacturing | IndustryWeek This includes consumers being more aware of sustainable goods, business to business (B2B) purchases putting more pressure on supply chains and their ESG practices, and the rise in C-suite and boards paying more attention to these concerns. If its more social, think about Resource Management or HR. Disruption is everywhere. This information is from their sustainability report. BP reduced its methane use by 0.05% and increased its net zero operations to 35% from 16% in 2019. Issuance of green bonds is increasing rapidly and has surpassed a cumulative total of $1 trillion in 2021. Ford Motor Company - Environmental, Social, and Governance www.industryweek.com is using a security service for protection against online attacks. This includes having greater involvement within manufacturing ecosystems to build relationships and increase awareness of what others are seeing and how they are responding. ESG is helping to usher in a new way to evaluate company sustainability efforts. June 14, 2023 With interest in energy supply and security at an all-time high, governments, corporations and individuals are rethinking the role that energy plays as a critical resource, as a driver of growth and as a catalyst for change. Global Head of Industrial Manufacturing Highlights. KPMG in Luxembourg, Partner and National Leader - Automobile and What is the future of work for persons with disabilities? Designing Your Company's Sustainability Report - Harvard Business Review Ashland | ESG Smart manufacturing is a huge driver in ESG and sustainability success. PLZ Corp ESG Report 2021. Theres no one-size-fits-all approach. And one of the many benefits of connected worker technology is that it can help you achieve your sustainability goals, without compromising profitability or productivity. Our audits ensure confidence in our clients financial information. ESG framework | McKinsey COVID-19 has caused PE firms to adjust their valuation practices postponing valuations to avoid reset triggers, exploring new approaches to valuations or diversifying existing ones. These added capabilities provide insight into company actions, measure results, and quantify the impact. The exercise resulted in an annual sustainability report that focused on the most critical environmental challenge that the Sustainable City can impact: the reduction of greenhouse gas emissions, measured according to the Greenhouse Gas Protocol and verified by an external party.