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Manufacturing & Environmental Social Governance

As the global focus on sustainable and responsible business practices intensifies, the need for manufacturers to prioritize the total Environmental, Social, and Governance (ESG) spectrum across their business operations grows. Manufacturing companies that don’t prioritize ESG initiatives are increasingly at risk of fines, impaired reputations, and stunted business growth. While getting started may seem daunting, ESG frameworks and software tools are available to provide manufacturers with easier methods for evaluating and improving their ESG initiatives.

At Keter, we help manufacturing companies address the environmental portion of their ESG goals through our end-to-end managed industrial recycling and waste programs and our fully customizable waste tracking and reporting capabilities.

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Overview of ESG in the Manufacturing Industry

Historically, ESG trends in manufacturing focused on environmental impacts like greenhouse gas (GHG) emissions, biodiversity, and waste management. Today, however, it’s important for manufacturing companies to address the full ESG spectrum. Social aspects mean prioritizing employee health, safety, diversity, and human rights across your business operations and supply chain. As for governance, the focus is on ESG transparency with documented policies, accessible data, and accurate reporting.

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Main Challenges Faced By Large-Scale Manufacturers

Compared to privately held, publicly-traded industrial companies have a funding and support advantage for embracing and addressing the ESG revolution. Nonetheless, according to global research from Capital Group, 49% of investors say access to quality data is a barrier to making lasting changes to tackle ESG goals like lower carbon and net zero emissions. 

Many software solutions are available for companies across metal, battery, solar, and textile manufacturing to collect, track, and analyze ESG data. The IDC predicts that by 2024, 70% of manufacturing companies will adopt software tools to facilitate their sustainability initiatives. 

At Keter, our waste and recycling software solution helps manufacturers track and report on data that makes meeting waste reduction goals easier. Learn more about our manufacturing waste and recycling services here. 

Beyond accurate data collection, manufacturing companies must find ways to integrate new sustainability practices throughout their entire business model to ensure lasting changes.

How Will New ESG Regulations Affect Industrial Real Estate Tenants?

For industrial manufacturers who rent their facility, ESG regulations present new challenges as landlords begin including “Sustainability and Energy Efficiency” clauses in new lease agreements and amending existing ones. Some examples include the following: 
  • Demanding energy efficiency and minimizing environmental impact, with the cost of building changes placed on the tenant
  • Passing costs of ESG certifications to the tenant
  • Requiring building updates with costly sustainable materials and energy-efficient lighting
  • Mandating green spaces for employees and even wellness benefits 
One thing is certain; tenants will face increased reporting and disclosure requirements as landlords begin holding tenants accountable.

Goals for ESG in Manufacturing

Common objectives for industrial and manufacturing sustainability initiatives often include reducing waste and GHG emissions, becoming carbon neutral, and addressing diversity in management gaps.

To ensure ESG compliance, industrial manufacturing companies must develop a comprehensive strategy that includes ESG goals and targets, track data, and report on their performance.

Reaching a state of true sustainability is broad and all-encompassing. Companies must invest in the right resources to develop reasonable goals and methods to achieve them. Early on, companies may establish a sustainability officer integrated within their executive team to ensure ESG goals are created and met consistently throughout their organizations.

How ESG Compliance Benefits Manufacturing Companies

Manufacturing companies prioritizing ESG compliance host a more engaged board, remain competitive, and benefit profitably. 

  • A More Engaged and Involved Board

    The role of a company’s board in mitigating ESG risks and creating sustainable initiative success is paramount. Sustainability programs require significant funding and swift attention to frequently changing laws and regulations. Boards must be both educated and committed to quick, sustainable change rather than constantly scrambling to compensate for being behind. 

  • Sustainability Improves Brand Reputation

    When you choose sustainability as a core component in your business strategy and communicate your efforts transparently, your brand reputation improves. ESG-compliant companies are more attractive to consumers and investors because supporting a sustainable business means supporting a better world. 

  • Long-Term Profit and Employee Retention

    While 66% of consumers are willing to pay more for a product from a sustainable supplier, that’s not the only profit impact you can expect from prioritizing sustainability. Sustainable companies see their operating costs reduced for raw materials. They may receive perks from governing bodies who are pleased with their ESG performance. These perks can help manufacturers find new markets and expand their operations. 

    As for retention, employees increasingly want to work for employers that leave the world a better place. Sustainability initiatives can increase employee motivation and workplace happiness, which leads to increased employee retention and preserves revenue further through reduced employee churn.

Waste and Recycling Services to Manufacturers Provided by Keter

At Keter, we help manufacturing companies run sustainable waste and recycling programs with customized solutions and data-driven strategies. Our technology solution offers centralized data and reporting in one accessible location. We can help you manage waste and recycling across your entire manufacturing plant. Reach out to us and discuss how we can help you solve your waste and recycling challenges.

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