In recent years, there has been increasing global awareness regarding the detrimental impact of manufacturing activities on the environment. Sectors such as fashion manufacturing, food production and packaging have come under scrutiny due to their significant environmental footprint.
While sustainable practices have gained traction worldwide, many Australian manufacturers still lag behind in adopting and implementing these practices. Our recent (Environmental, Social, and Governance (ESG) study, Keeping watch: Monitoring your path to a sustainable IT, conducted by Intuit-Research, revealed that businesses in Australia and New Zealand (ANZ) are significantly behind their ASEAN peers regarding their sustainable IT strategies, with only 48% already having one, whereas, in ASEAN countries, it is 72%.
This article explores the reasons behind this lack of capability in sustainable practices among Australian manufacturers and highlights the potential benefits of embracing sustainability for their ESG goals.
Limited Awareness and Education
One of the key reasons for the lack of sustainable practices among Australian manufacturers is the limited awareness and education regarding environmental issues. Many manufacturers are not fully aware of the negative consequences of their current practices or the potential benefits of adopting sustainable alternatives. Without adequate knowledge and understanding, they are unlikely to prioritise sustainability in their operations.
Another significant factor hindering the adoption of sustainable practices is the perception that they come with high costs. Australian and New Zealand manufacturers, especially small and medium-sized enterprises (SMEs), often operate on tight budgets and prioritise cost-saving measures. The initial investment required to transition to sustainable practices, such as upgrading machinery or sourcing eco-friendly materials, can be perceived as financially burdensome, discouraging many manufacturers from making the necessary changes.
Limited Government Support and Incentives
The lack of comprehensive government support and incentives further exacerbates the issue. While some initiatives have been introduced to promote sustainability, they often fall short of providing sufficient assistance to manufacturers in adopting sustainable practices. Manufacturers may find it difficult to justify investing in sustainability without substantial financial incentives or clear regulatory frameworks to guide them.
In our ESG study, the top barrier to adopting sustainability practices, reported by 50% of ANZ businesses, was the lack of clarity from governing bodies.
Complex Supply Chains
Supply chains in industries like fashion manufacturing and food production can be highly complex, involving multiple stakeholders and extensive networks. Implementing sustainable practices across these intricate supply chains presents numerous challenges, such as tracing the origins of raw materials or ensuring ethical labour practices. Australian manufacturers may struggle to navigate these complexities, leading to hesitation to adopt sustainable practices.
Our study says that the cost of deployment was the second biggest barrier to adopting sustainable practices for 48% of ANZ businesses.
Lack of Collaboration and Knowledge Sharing
Limited collaboration and knowledge sharing within the manufacturing sector contribute to the slow progress in sustainable practices. Manufacturers often operate in isolation, without actively engaging with peers or industry associations to exchange best practices and lessons learned. The absence of a supportive network makes it difficult for manufacturers to implement sustainable initiatives effectively.
Embracing Sustainable Practices: Benefits for ANZ Manufacturers
While the challenges are evident, embracing sustainable practices can offer numerous benefits to ANZ manufacturers:
1. Enhanced Reputation and Brand Value: Adopting sustainable practices can improve a manufacturer's reputation and brand image. Consumers are increasingly conscious of environmental issues and are more likely to support companies that prioritise sustainability. By aligning with sustainable values, manufacturers can attract a larger customer base and gain a competitive edge in the market.
2. Cost Savings and Efficiency: Despite the initial investment, sustainable practices can result in long-term cost savings. Energy-efficient technologies, waste reduction measures and optimised resource utilisation can lead to reduced operating costs and improved overall efficiency. Manufacturers can experience lower energy bills, decreased waste disposal expenses, and improved resource management.
3. Compliance with Regulatory Requirements: As environmental regulations continue to evolve and tighten, manufacturers will face increasing pressure to comply with sustainability standards. By proactively adopting sustainable practices, ANZ manufacturers can stay ahead of regulatory changes and avoid potential penalties or legal complications.
4. Access to New Markets and Opportunities: The global demand for sustainable products is on the rise. Manufacturers that prioritise sustainability can tap into new markets and capitalise on emerging opportunities. ANZ manufacturers can position themselves as environmentally conscious suppliers, attracting partnerships with sustainability-focused brands and expanding their customer base.
While most manufacturers here have been slow to adopt sustainable practices, the benefits of embracing sustainability cannot be overlooked. Increased awareness, government support, collaboration and knowledge sharing can help bridge the gap and accelerate the transition to more sustainable manufacturing practices.
By incorporating sustainability into their operations, Australian and New Zealand manufacturers can improve their environmental impact, enhance their reputation and unlock opportunities for long-term growth and success in the evolving global market.