The Imperative of a Sustainable Industry

We are at a critical point in the face of the challenges that climate change imposes on us. The new normality in big cities is bringing back the pollution levels that existed before the pandemic and time is running out to reverse global warming. Industry, specifically manufacturing, is one of the protagonists of this scenario, due to the nature of its processes and the composition of its production chains.

This sector, according to the United Nations Environment Program (UNEP), is responsible for generating more than 20 percent of carbon dioxide (CO2) emissions globally and demands more than a quarter of primary resource extraction. In the social environment, more than 17 percent of diseases are attributed to air pollution. That is why a transformation is necessary, so that production remains sustainable.

The US Environmental Protection Agency defines sustainable manufacturing as "the creation of manufactured products through economically-sound processes that minimize negative environmental impacts while conserving energy and natural resources." Here, I would like to add another part of the definition quoted in the Study for the Reconversion of the Industry for the Green Economy (SRIGE), prepared for th Mexico’s National Chamber of the Transformation Industry: "It promotes the transition to and generation of green jobs and contributes to competitiveness and transition to a green economy.”

As the consulting firm Deloitte observes, the manufacturing sector is not related to the best environmental practices; however, in the face of an environmental emergency, manufacturers around the world are already generating economic benefits from sustainable production. An example is in the automotive industry, where we are working with Mercedes-Benz to advance digitalization in engineering and sustainable production methods. Our cooperation will help the company meet the challenge of building flexible and CO2-neutral factories while enabling the improvement of conditions for its workers.

Deloitte's report, “Sustainable Manufacturing, From Vision to Action,” highlights five impact areas where sustainable practices can drive improvements in the manufacturing value chain: Engineering (modifying procedures and infrastructure can reduce costs and waste generation), Sourcing (sustainable materials can be selected for manufacturing), Production (improving operational efficiency with smart technology and using clean energy help create the factory of the future), Transportation (if the supply chain is reconfigured and decarbonized, distribution routes can be optimized and reduce polluting emissions) and Aftermarket (changing the way products are sold, used and disposed of will contribute to migrating toward a circular economy model).

In Mexico, according to data from the Ministry of Energy, the main source of emissions at the national level is power generation and the industrial sector is among its largest consumers, which demonstrates the urgency of a transformation; in addition, only 31 percent of companies (from all types of sectors) have a budget allocated for sustainability and only 25 percent issue a report on this matter, according to KPMG’s “Sustainable Development in Mexico 2020” study.

Fortunately, Mexico is already taking action, as it was the first country in Latin America and the second country internationally to introduce a climate change law. The nation has established specific commitments and goals to reduce greenhouse gas emissions and other pollutants, with more than a dozen related initiatives. But this is only the beginning.

At Siemens, we work to promote the transformation of industries toward sustainable growth. It is our responsibility; it is in our DNA. I believe we can, as my colleague Franz-Josef Menzl says, “use resources efficiently while reducing impact throughout our entire value chain, from product design to manufacturing and packaging, to the systematic recovery of valuable materials from the manufacturing process.” I am convinced that the repair, reuse, remanufacturing and ultimately recycling of products will play an important role in the future.

From our perspective, the solution is to digitalize manufacturing to make it more efficient, productive, and cleaner. At the same time, we must make it flexible so that it responds to the personalized needs of the market. We define five fields of innovation on the way to a more sustainable green factory and the questions that must be answered to define the sustainable actions that we must undertake:

1. Design. What aspects of this phase could have the greatest impact on the recyclability of my product?

2. Sourcing. How can we improve the resilience of our supply chain while enabling sustainability?

3. Production. How can we accurately forecast auxiliary material usage?

4. Energy efficiency. How can we avoid energy consumption peaks at factories?

5. Circular economy. How can we quickly evaluate the remaining life of products and machines?

In concrete terms, according to the SRIGE, the specific benefits of sustainable manufacturing encompass the optimization of administrative and operational performance, while contributing to protecting the environment. “By promoting and supporting the sustainability initiatives of the plants, there is a direct and positive impact on the financial results, on the productivity and efficiency of processes, on the use of natural resources, on the improvement of business reputation, on the footprint of products, in aspects of regulation and technological innovation and the sustainability culture of the organization, as well as in the insertion in new market niches and the satisfaction of employees and clients.”

We must assume our responsibility for the environment and take the reins of the transformation of our industries to make them sustainable. Let us take concrete actions because, as our Chief People and Sustainability Officer Judith Wiese says, "it is not an option, it is a business imperative." Sustainable growth goes hand in hand with the value we create for people and our planet