To effectively collect, aggregate, and report ESG metrics, manufacturers should focus on measuring what matters most, appoint a designated ESG leader to manage change, and recognize and reward progress. Manufacturing leaders need to be mindful of ESG violations in domestic and global supply chains. According to the U.S. Environmental Protection Agency (EPA), 23% of greenhouse gas emissions come from burning fossil fuels for industrial purposes. Not-for-profit organizations and higher education institutions, Transportation, logistics, warehousing and distribution, Operation and organizational transformation, Blockchain, digital assets & Web3 solutions, Do not sell/share my personal information. Global Head of Industrial Manufacturing How will your organization respond? What qualitative and quantitative data do you need in order to measure metrics? Managers who use this matrix need to decide whether to focus reporting only on environmental aspects or to include a broader set of non-financial topics in the report. Non-financial reporting, assurance of those reports, responsible tax, board composition, remuneration and executive compensation, shareholder rights, ethics, bribery and corruption, and corporate investigations, ethics and compliance, supply chain management, product quality, cybersecurity and data protection. Following wealth of information on Tata Group - Hosur Electronics Manufacturing Unit - Tamil Nadu is covered in the scope of this report: Stakeholders such as consumers, investors, and regulators are thinking more and more about the environmental, social, and governance (ESG) maturity of the companies they . Amazons key goals include transforming operations, contributing to a more equitable society, and activating collective impact. Some companies report only their greenhouse gas emissions, while others publish glossy reports about their CSR (corporate social responsibility) initiatives or use their ESG (environment, social, and governance) ratings as a badge of honor. The second matrix the Sustainable City developed charts sustainability ratings. ESG and supply chain trends in manufacturing: Summer 2022 - RSM US Manufacturing - ESG strategy | BDO Canada General Motors ESG strategy begins with human capital. Some of Nikes ESG topics and initiatives include prioritizing mental health & creating opportunities for women and girls. The first alliance to accelerate digital inclusion, Why refugees need a better chance at professional development, 5 reasons why the G20 needs a sustainable blue economy. The abundance of choice can be dangerous for executives. 2020 Argo ESG Report They have reduced carbon emissions by 62% and water waste by 24%. PLZ Corp is the North American leader in specialty aerosol and liquid product manufacturing. And one of the many benefits of connected worker technology is that it can help you achieve your sustainability goals, According to the U.S. Environmental Protection Agency (EPA), 3 Key ESG Trends: Sustainable Industrial Manufacturing Event, Earth Day: 3 Trends Driving Manufacturing ESG Initiatives, ESG Summit 2022: 3 Takeaways for Building Companies and Building Materials Manufacturers, Ethics concern? ENVIRONMENTAL, SOCIAL, AND GOVERNANCE REPORT. If taking care of your community and environment, your employees, and your business werent reason enough, adopting more sustainable policies is also good for business. This isnt the tech you know. 2023Copyright owned by one or more of the KPMG International entities. Shockwave Medical Publishes 2022 ESG Report - Yahoo Finance #1 What is ESG? - Deloitte US The goal of ESG is to capture all the non-financial risks and opportunities inherent to a company's day to day activities. Select a leader from one of those areas. We understand you. What should local manufacturers look out for on the ESG front As companies navigate towards net zero, choosing the right approach is critical and senior executives need to be sufficiently informed to be able to actively participate in the discussion and decision making. An ESG disclosure is all about transparency and accountability. Their board of directors averages 31% people of color or ethnically diverse and 54% women. It was difficult to choose from a wide range of reporting standards, each with a different view of what sustainability reporting should cover. KPMG in Canada, Sector Leader, Manufacturing, Life Sciences & Services Getting to Net Zero is broken down into two subcategories that specify BPs climate action, enhancing peoples lives with cleaner energy and sustainable livelihoods and enhancing biodiversity to help the planet. May 22, 2023. In this edition, we break down how manufacturers are using smart manufacturing to achieve their environmental stewardship, social purpose, and responsible corporate governance goals. The opportunities are endless for those willing to adapt. PDF American Axle & Manufacturing | Delivering Power An ESG report or Sustainability report is a report published by a company or organization about environmental, social and governance (ESG) impacts. Of greater concern is the process for mining and refining lithium, which requires enormous quantities of water. Measuring, reporting and managing a companys sustainability performance is only going to have a greater impact on corporate performance, reputation and risk. Please enable JavaScript on your browser and try again. Future M&A trends in the sector are to be shaped by 3 interconnected factors Manufacturing CEOs search for opportunities amid the disruptive impact of the pandemic. Manufacturers in the automotive industry are already acknowledging that recycling can and will be part of their supply chain of the future for certain rare earth elements and are taking responsibility in their planned sourcing and recycling of used EV batteries. You can unsubscribe at any time using the link in our emails. Hersh concluded, We tell clients, There are creative ways that we can make ESG a part of a normal business process. ESG is a set of frameworks used to assess the impact of a company's sustainable and ethical practices on its financial performance and operations. Collectively, our people are contributing to carefully growing our space industry. Get ahead of shifting customer demands and start predicting your future. Governance: Non-financial reporting, assurance of those reports, responsible tax, board composition, remuneration and executive compensation, shareholder rights, ethics, bribery and corruption, and corporate investigations, ethics and compliance, supply chain management, product quality, cybersecurity and data protection. 13 Other critics have cast ESG efforts as "greenwashing," "purpose washing," 14 or "woke washing." 15 One Edelman survey, fo. Scope. Senior management typically works off stakeholder engagement to determine the most sensitive information. CDP allows companies to report their impact on climate, water and forests, with reporting on climate typically based on the Greenhouse Gas Protocol. The Russia-NATO conflict, major cyberattacks and the decoupling of technology between the United States and China are the top three risks highlighted in the most recent BlackRock Geopolitical Risk Indicator, which lists the top 10 such risks by likelihood from high to low. At the same time, you might save energy and improve your cost profile. And thats a priority for every business. The potential is great what to know before taking action. Discover what makes RSM the first choice advisor to middle market leaders, globally. Get the latest KPMG thought leadership directly to your individual personalized dashboard. Grant Thornton LLP is a member firm of GTIL. Ready to start solving problems before they become problems? KPMGs Global Industrial Manufacturing practice helps organizations secure lasting.. View Print friendly version of this article Opens in a new window. The series explores how manufacturing leaders can succeed in turbulent conditions. They have trained 23.6 million of its supplier employees on their rights and surveyed 352,589 people on their workplace experiences to continue support and growth. The importance of ESG and sustainability initiatives have reached a tipping point, particularly for manufacturing companies. The service requires full cookie support in order to view this website. Does sustainability/ESG policy have a place in manufacturing? The sustainability reporting and rating matrices can be useful tools to think through a companys choices and help ensure regulatory compliance, responsiveness to stakeholder needs and ultimately lead to superior sustainability and corporate performance. And that means great opportunity for manufacturers. KPMG in Luxembourg, Partner and National Leader - Automobile and This 2022 research from Plex Systems and Rockwell Automation surveyed more than 300 manufacturing leaders across the globe. Copper Mountain Mining Publishes 2022 ESG Report - PR Newswire The exercise resulted in an annual sustainability report that focused on the most critical environmental challenge that the Sustainable City can impact: the reduction of greenhouse gas emissions, measured according to the Greenhouse Gas Protocol and verified by an external party. While there are no easy solutions, this example represents the first step in embracing ESGawareness. Manufacturers that have not yet addressed how ESG issues fit throughout their enterprise should embark on a plan to do so, especially as these issues relate to sourcing and supply chains. Whether you want to transform your enterprise, grow your business, manage your risks, improve your performance or enhance your customer relationships, KPMG can help. Global analysis of the cost of doing business. Such infractions can involve issues ranging from geopolitical conflicts and unethical labor practices to sourcing strategies that violate human rights. For good. ESG Blowback: Exxon, Chevron Investors Reject Climate Measures ESG impact and effective ESG operating models | McKinsey Still, companies should begin on a path guided by ESG policies for the long term. They aim to develop a workforce to deliver sustainable growth. , where the manufacturing industry emits 880 million tons of carbon dioxide annually. As social awareness of these and other issues increases, middle market manufacturers will need to understand the impact on how customers and other companies perceive their brand. By categorizing all available reporting and rating options in terms of the scope of topics they cover and their target audience, executives at the Sustainable City were able define a sustainability reporting approach that fits the needs of the company and its stakeholders. Best Buy is helping local communities by donating $145 million to St. Judes Hospital. ESG stands for "environmental, social, and governance" and reference to ESG for a food manufacturing business means using environmental, social and governance factors to evaluate the company or its business. The European Commission's plan is intended to rein in the booming market for environmental, social and governance scores, according to the draft document, which may still change. Their local sourcing for its supply chain increased to 92% from its previous 90%. One recent client is the developer of a U.S.-based manufacturing facility that uses new and existing technologies to convert woody biomass into . Sustainability ratings (discussed below) provide a summary indicator of an entitys performance. www.industryweek.com is using a security service for protection against online attacks. PDF Intersecting Sustainability - Manufacturers Alliance Email us at ethics@parsable.com. Heres how it works. What is a Quality Management System (QMS)? TABLE OF CONTENTS. This then leads to greater competitiveness in the market, along with increased brand and product reputation and recognition. KPMG International provides no client services. Global Head of Industrial Manufacturing Stphane Souchet. 10 Sample ESG Reports - Millie From your company's internal culture and social impact to its environmental and governmental initiatives, releasing an extensive ESG report annually is becoming standard with some of the world's leading companies. This includes consumers being more aware of sustainable goods, business to business (B2B) purchases putting more pressure on supply chains and their ESG practices, and the rise in C-suite and boards paying more attention to these concerns. 2021. It may not be possible to fully mitigate problematic labor, ethical and environmental issues immediately. On the top half of the matrix there are several ratings that communicate to a wide range of stakeholders. The first matrix developed by Dubais Sustainable City sorted through these differences by placing topic on one axis and audience on the other. It is a critical part of our Ford+ plan for growth and value creation as we transform our business for a new era of electric and connected vehicles, setting the pathway for our continued success, for generations to . However, it is unclear if ESG is driving the support, or if the report reflects existing . 2023 Grant Thornton LLP - Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Prioritizing ESG issues in the supply chain is not only about doing what is right or mitigating all identifiable risks. In charitable giving. A diverse supplier is defined as using a more profitable company that is 51% owned by women, a member of the LGBT+ company, veteran-owned, or differently abled. The importance of ESG cant be considered without the right tools and technology in place to help you achieve your ESG goals. Both of these percentages increased from the previous year. 0.56%. Environmental: The production of goods with regards to climate impact, energy and resource and material use. This includes consumers being more aware of sustainable goods, business to business (B2B) purchases putting more. As a result, companies are at risk of falling behind or choosing inappropriate reports and ratings that dont drive sustainability performance and open the door to accusations of greenwashing. It continued last years 100% pay equity percentage across all employee levels annually. Measuring Sustainability Performance & ESG KPI's | Accenture An ecosystem of connected machines a game changer? Establish a theme that resonates with your values, aligns with your strengths, and dovetails with what youre already doing. With the right planning and strategy, companies can harness these ESG frameworks to achieve improvements in quality, production efficiency, profitability and talent attraction. One of the most holistic examples of the prevalence of ESG issues throughout the supply chain is manufacturers' dependence on rare earth elements. Assessing and bracing against cyber vulnerabilities in industrial sectors. Manufacturers also need to navigate a key reality when it comes to ESG strategies; it may not be possible to fully mitigate problematic labor, ethical and environmental issues immediately. Don't let tax be the only deciding factor in your relocation. Whether you are dealing with new technologies, new competitors, new business models or new customer expectations, the reality is that your business is changing. Environmental, social and governance (ESG) are standards for a companys operations that help guide an organization to do better and be more accountable about their environmental impact, social responsibility and organizational governance. Material ESG Issues for Food Manufacturers Despite the attacks on ESG investing, Hyundai roars into Georgia with another new fossil-killing electric vehicle battery manufacturing plant. In 2021, their team of more than 3,500 global employees gave back to over 190 organizations and enabled customers to avoid over 39 million metric tons of greenhouse gas emissions through the use of their products. Still, companies can and should begin on a path guided by ESG policies for the long term. Given efforts to increase traceability, it will become increasingly important to understand not only a materials source country, but also the company that mined it and that companys labor practices. Finding the Right Fit: Company & Nonprofit Partnerships. Its easy for companies to be focused on making immediate business decisions. Disruption is everywhere. Whoever is chosen should have access to high-level conversations. He said some of the . ESG ratings and score provider MSCI, for example, found that nearly 60 percent of "say on climate" votes 12 in 2021 were only one-time events; fewer than one in four of these votes were scheduled to have annual follow-ups. It enables the company to be more transparent about the risks and opportunities it faces. Intersecting Sustainability: ESG and Smart Manufacturing Trends Similarly, ratings for the built environment (such as LEED and BREEAM) communicate sustainability characteristics of buildings and communities to a broad audience. In its efforts to continue diversifying its board, its senior management comprises 43% women and 29% people of color. KPMG in France, Global Sector Executive, Industrial Manufacturing Grant Thornton Manufacturing Industry National Managing Partner Robert Hersh observed, If the issues are a combination of operations, compliance, or risk, that often sits in the audit committee or even the governance model of a corporation.. Although both are based on a solid understanding of climate change and its causes, they are essentially separate questions and use different reporting standards. The production of goods with regards to climate impact, energy and resource and material use.