Sustainability In Manufacturing | Indian Context

Introduction

The manufacturing sector is a significant contributor to India’s gross domestic product (GDP). And it is crucial for overall economic growth, since it amplifies employment opportunities across secondary and tertiary sectors as well. However, the sector is also one of the largest contributors to the country’s carbon emissions, which stood at 2.88 gigatons in 2021. Moreover, the sector is a major consumer of energy and natural resources (such as water), while generating waste which is detrimental to the environment. Sectors such as metals (ferrous and non-ferrous), chemicals, non-metallic minerals (including cement), and heavy industry (such as machinery, transport equipment etc.) account for the lion’s share of these emissions, energy consumption, and waste generation. 

It is therefore imperative for these sectors to leverage their efforts in de-carbonization and look beyond mere alternatives for fossil fuel-based electricity. There is a dire need to focus on end-to-end sustainable manufacturing that looks at a holistic view of design and engineering methods, sourcing channels, operational processes, end of the line supply chains, and so on.

Sustainable manufacturing initiatives of Indian conglomerates/multinational corporations (MNCs) in India

Sustainable Product Design & Innovation:    

Organizations have now started focusing on ‘Design for Sustainability’ which could help them in embedding principles for sustainable development right from the design stage of a product.

For example: Bharat Forge, a leading machinery and auto component manufacturer, now lays down greater emphasis of a systemic approach towards lightweighting of automotive components through optimizing design, characterizing material properties, implementing a wider variety of manufacturing processes, and using computer-aided engineering (CAE) techniques. This has resulted in lighter, fuel-efficient, and greener vehicles thereby helping to reduce the carbon footprints. Their crankshaft design innovation resulted in the creation of a lightweight crankshaft with substantial weight reduction and improved engine reliability.

Sustainable sourcing:

One aspect of sustainable sourcing is switching to renewable sources of energy in the form of solar, natural gas etc. For example, Tata Steel planned several initiatives to reduce Scope 1 and 2 greenhouse gases (GHG) emissions by utilizing solar energy as a primary source for electricity needs of their manufacturing plants. Also, the company is executing a trial for an initiative to replace coal consumption with hydrogen gas in the steel manufacturing process. It aims to help the company in improving on various key performance indicators (KPIs) such as CO2 emission intensity (tCO2/tcs), Dust emission intensity (kg/tcs), and support in achieving the overall vision of being net zero by 2030.

Another aspect of sustainable sourcing is to ensure residues from manufacturing plants can be recycled or reused for other purposes.

For example: Hindalco is setting up long-term contracts with cement/road developers for bauxite residue as it can be used in road building.

Tata Steel introduced a marketplace called ‘FerroHaat’ to procure steel scrap of good quality from small suppliers or vendors who do not have recycling facilities in their area/region to recycle scrap and reuse it for steel manufacturing.

Process Innovation for Sustainable Solutions:

Optimization of resources/assets utilized in the manufacturing process not only helps reduce emissions and wastages but also enables profitability. This includes enabling process innovations while handling raw materials, machinery, natural resources such as water, fuel etc. Several initiatives are being implemented across the manufacturing industry.

For example: Hindalco has installed windscreens of approximately 1,000m in the periphery of its coal yard to contain the coal dust emissions and to prevent them from spreading. The company has also installed a water tank to store cooling tower blowdown water (having high turbidity) and it reuses this water in the sprinkler system. To further reduce the emissions generated while unloading the coal the company has installed a central sprinkler system with 78 nozzles.

Responsible Waste Disposal and Waste Management:

To support future supply chain model and circular economy, it has now become critical to reduce waste or treat residue before releasing it and recycle as much as possible by making it reusable within the supply chain.

For example: Kirloskar Oil Engines Ltd has installed a manufacturing plant unit that can convert 100kg of plastic waste into fuel, which has characteristics similar to those of diesel.

Eaton India is recycling industrial water waste for reuse within its manufacturing plants and have reduced wastewater discharge to less than 2% for these plants. Additionally, it is supporting drought-prone villages in Maharashtra with:
–          The creation of 150 water harvesting structures (using treated wastewater)
–          Soil conservation
The conversion of barren land into recultivation land.

Indian Companies harness technology to achieve Sustainability goals

Integrating technology and data at the outset is crucial to accelerate the path to Sustainability. Industry 4.0 technologies including Artificial Intelligence/Machine Learning (AI/ML), Industrial Internet of Things (IIoT), Cloud, and Blockchain could not only help in increasing process efficiencies but also enable technology-driven sustainable solutions for industries.

For example: IIoT platforms could create a connected manufacturing environment which enables the measurement of key Sustainability KPIs in real time and help manufacturers reduce or eliminate carbon footprint. 

Cloud could help organizations accelerate the building of digital twins of the manufacturing process, which could simulate the operating procedure such that waste is minimized; and it could also enable reuse of the product, thereby eliminating the wastage industrial manufacturers have to deal with in the transition towards circular economy.

Blockchain could be used in waste management systems to track waste from its generation till the end, while capturing all the Sustainability metrics.

Manufacturers in India have started realizing the importance of technology and they are beginning to view it as an enabler of Sustainability. For example: Vedanta has taken up digitalization across the value chain; and in a particular instance, the company started incorporating technology to mitigate risks and minimize environmental impact while constructing tailings dams.

Similarly, Hindalco has an effective tool ‒ internal carbon pricing (ICP) ‒ for managing carbon risks and opportunities, and to enable more carbon-efficient projects to get approved through the investment decision process. The ICP mechanism is used to monitor the cost of carbon. This initiative aims to help Hindalco to prepare for upcoming regulations, emission trading schemes (ETS), carbon tax, and making investment decisions related to low-carbon growth initiatives.

Benefits realized as part of the Sustainability journey

1. Increase in brand value: Being proactive towards Sustainability helps organizations be ready for the related regulations. In addition to reducing compliance-related risks, it also helps minimize climate and supply chain risks. Moreover, Sustainability initiatives help improve the company’s brand image, thereby enhancing stakeholders’ perceptions of the organization, customer loyalty, and investor relations.
   
   For example: In 2021, Hindalco won the title of ‘the world’s most sustainable aluminum company’ conferred by the Dow Jones Sustainability Indices (DJSI) for the second consecutive year; and it is the only aluminum company which is part of the DJSI World Index.
   
2.  Development of Sustainable ecosystem: Due to the increased focus on Sustainability, organizations are now finding ways and means to utilize the waste generated from factories by partnering with recyclers. They are trying to utilize this waste as raw material for other industries, thereby building entire ecosystems which will help to achieve circular economy.
   
3. Increase in the bottom line: Reduced business costs, more innovative strategies, an improved reputation, newer business models, and new customers who value Sustainability could eventually lead to more earnings; and this could have a direct impact on the bottom line of the organization.

The way forward

While some conglomerates have made great progress, India’s manufacturing sector still needs to make a steady shift towards sustainable manufacturing, driven by the need to address urgent environmental issues and stakeholders’ and customers’ demands. Some of the key considerations that could assist the industries embarking on this journey are:

1. Sustainability needs to be seen as a value driver: Organizations need to focus on enabling value creation  through Sustainability. Industries could create new business models driven by Sustainability which could create new revenue streams and grab the attention of larger stakeholders.
   
2. Control lifecycles efficiently: Organizations are still focusing on initiatives for Sustainability after the product has been manufactured. However, companies need to implement lifecycle assessment techniques to understand and optimize the carbon footprint across the value chain ‒ right from purchasing, input materials, design, transportation, manufacturing, and consumption to the end of the lifecycle.
   
   To be focused on significantly reducing GHG emissions across the entire manufacturing and supply value chain, organizations need to:
   
   – Take a circular economy approach
   – Chart a path towards zero waste (to recycle and repurpose materials throughout the product lifecycle)
   – Continue to responsibly use natural resources (such as water) through reduced consumption and resource-protective practices.
   
3. Embed technology and data early on in the roadmap: The success of the Sustainability journey is dependent on technology and data being leveraged at the outset. Before making substantial commitments of time, energy, and resources, the management needs to take a dynamic and strategic view of harnessing advanced technology and data to accelerate the  Sustainability journey.