This article was originally published by Victorian Chamber member Sunified.

Manufacturing is a critical sector of the economy, responsible for a large portion of the world’s output of goods and services. However, many manufacturers still do not realise just how much they are contributing to climate change.

Manufacturing in Australia is responsible for approximately 10 per cent of total carbon dioxide emissions, one of the most significant greenhouse gases. This is a relatively high percentage when compared to other developed countries. For example, in the United Kingdom, manufacturing is responsible for around 8 per cent of emissions while in the United States the figure is closer to 11 per cent. There are several reasons for this.

First, Australia is a relatively large country with a relatively small population. This means that there are relatively few people to share the burden of emissions from manufacturing.

Second, Australia has many highly polluting industries, such as mining and manufacturing of aluminum and steel. These industries are a major source of emissions from manufacturing.

Third, Australia has a relatively high level of emissions from manufacturing due to its high level of economic activity. The country has a high level of industrial activity, which results in emissions.

Finally, Australia has a high level of manufacturing emissions because it exports many of its products. This means that emissions from manufacturing are spread around the world, rather than being confined to Australia.

The high level of emissions from manufacturing in Australia is a cause for concern. The country needs to take action to reduce emissions from this sector if it is to meet its international obligations on climate change.

This article looks at five reasons why using renewable energy in manufacturing is better for manufacturers.

#1: Renewable energy helps manufacturers reduce their own emissions

Manufacturers are already aware that reducing their emissions is important. The majority of emissions created by the manufacturing sector are from energy use. Manufacturers that run heavy machinery during daylight hours can sometimes reduce their emissions caused by electricity generation by 80 per cent.

The simplest and most effective impact a business can have on reducing its emissions is using renewable energy instead of fossil fuels.

Renewable energy is becoming increasingly cost-competitive with traditional fossil fuels, if not cheaper, making it an attractive option for manufacturers looking to reduce their environmental impact.

In addition to reducing emissions, using renewable energy can also help manufacturers improve their energy security. By diversifying their energy sources, manufacturers can hedge against the volatility of fossil fuel prices and reduce their exposure to supply disruptions.

Adopting renewable energy is also good for the economy, creating jobs and driving investment in clean technologies. In addition, a shift to renewable energy would help to decouple economic growth from environmental damage, setting the stage for a more sustainable future.

#2: Renewable energy helps reduce supply chain emissions

Most companies’ total carbon emissions are created by their supply chains, either upstream or downstream.

A lot of manufacturers rely on third parties to provide them with goods and services. Unfortunately, these third parties may be located far away, meaning that they produce emissions along the way.

When it comes to climate change, every little bit helps. And that’s why more and more manufacturers are turning to renewable energy to power their operations. By asking their supply chains to also use renewable energy, manufacturers can reduce the emissions footprint of their end products, making a big impact on the fight against climate change.

Leading manufacturers are well advanced in choosing suppliers that support sustainable energy and therefore avoid the release of harmful emissions into the environment.

The World Wildlife Fund suggests that manufacturers introduce sustainable procurement policies starting with researching their suppliers’ ethics and environmental practices, and telling suppliers that ethical or environmental aspects matter to your business. The goal is to send a clear message that in 2022 things need to change.

On the other side of the supply chain, upstream supply chain pressure is increasing as well, whereby contract renewals or tenders involve explaining a supplier’s sustainability strategy. For example, BHP, the world’s largest mining company, now requires suppliers of goods and services to reach net zero by 2050.

This means that in order to remain a supplier to BHP, companies will be required to demonstrate a credible plan to achieve net zero by 2050 with a realistic target for 2030. BHP’s purchasing staff will audit larger suppliers.

#3: Being an environmentally friendly employer is attractive to employees

Employees are becoming increasingly concerned about the environmental impacts of their work.

A survey conducted by the Carbon Trust found that nearly half of workers said they would consider leaving their current job if they knew it was harming the planet.

The average Australian worker thinks their employer could do much better on sustainability, according to a new report based on a survey of 686 business leaders and 1,030 employees by Microsoft ANZ and a research team led by Dr Chris Brauer, Director of Innovation at Goldsmiths, University of London.

The Accelerating the journey to net zero report shows that employees overwhelmingly support their organisations’ sustainability strategies, with 60 per cent saying that such strategies make an employer more attractive. However, almost half (43 per cent) disagree with how these plans for reaching net zero emissions are being carried out.

Microsoft’s research shows that the majority of employees across sectors are trying to reduce their personal carbon footprints, with 53 per cent using recycled goods at home and 44 per cent trying to be more energy efficient. Yet most report that these behaviors aren’t incentivised at work.

As such, employers showing concern for the environment are viewed as being more trustworthy and attractive to potential employees. As well as attracting better talent, such employers will likely retain key staff for longer.

#4: Having a formal ESG policy sets companies apart from competitors

The attention to the environment and sustainability is not new. What has changed is the frequency with which companies are being asked about their environmental, social and governance policies – and the expectations for how they will answer.

An effective ESG policy demonstrates a company’s values and can create trust and confidence among its stakeholders. It can also positively impact the bottom line by improving operational efficiencies, reducing costs and mitigating risks.

In today’s business environment, an ESG policy is not a luxury – it’s a necessity. By taking the time to develop and implement a comprehensive ESG policy, companies can set themselves apart from their competitors and position themselves for long-term success.

Companies adopting an active and transparent ESG policy are seen as more ethical and socially responsible. Switching to clean energy sources, such as wind and solar, addresses not only climate change but also air pollution and health, which is of concern to the entire community.

According to research carried out by the Carbon Trust, companies that have made an effort to improve their reputation through adopting an ESG policy are seen to be more trusted and respected by consumers.

Furthermore, those same customers are more willing to buy from companies that take steps to protect the environment.

#5: Renewable energy avoids price increases and helps with long-term cost savings

Renewable energy is among the cheapest forms of energy generation and can help businesses reduce their long-term costs. By having a supply from a grid-scale renewable source, manufacturers can avoid future electricity price rises and keep their input costs more predictable. This is because the costs associated with renewable energy tend to remain stable.

In addition, renewable energy is trending to be cheaper than traditional forms of energy.

Renewable energy is becoming more and more affordable as technology improves, while the cost of traditional fossil fuels continues to rise.

Although solar and wind power costs are expected to remain higher in 2022 and 2023 than pre-pandemic levels due to generally elevated commodity and freight prices, their competitiveness actually improves due to much sharper increases in gas and coal prices, says the International Energy Agency (IEA).

In Australia, the cost of renewable energy is already cheaper than the cost of energy generated from fossil fuels. The price of solar and wind power has fallen by around 60 per cent in recent years, making it a much more attractive option for businesses and homeowners alike. Given that renewables are a clean and sustainable source of energy, it makes financial sense to switch to them now rather than wait for even higher prices down the road.

This helps with competitiveness in the market, as well as reducing environmental impact. Renewables are also becoming more reliable, so businesses can be confident that they will have a stable source of energy for years to come.

Conclusion

There are many advantages to using renewable energy in manufacturing. Not only does it help to combat global warming, but it also helps to reduce the harmful effects of pollution on the environment.

It also saves companies money, improves their image among their customers, and helps them attract the best young talent.