How to meet increasing sustainability regulations 

Makersite and Forrester have collaborated on a thought leadership paper with a grand – but simple – goal: to redefine how businesses approach sustainability. 

Makersite commissioned Forrester to evaluate the state and impact of sustainability in product lifecycle management in the manufacturing industry. In order to do so, they surveyed 493 organizations, liaising directly with product design and sourcing decision-makers in manufacturing to build the fullest possible picture of the opportunities – and challenges – that lie ahead. 

We’ll delve further into the report in future blog posts, starting off with a series on 5 key takeaways for manufacturing businesses based on the research. 

The first takeaway: organizations must be able to keep pace with and meet the increasing number of sustainability regulations. Let’s take a look at why. 

It is clear from our research that sustainability – now more than ever – is business critical. For many organizations, its importance lies on par with revenue growth. A huge increase in sustainability regulations, heightened customer expectations around supply chain transparency, compounded with complexities in the supply chain of materials and components, are compelling manufacturers to transform their product lifecycle management and supply chain processes. 

Within the manufacturing industry, product design and sourcing leaders are addressing the intersection of sustainability, resilience, and business performance, prioritizing initiatives such as enhancing sustainability reporting for compliance and to support sales, as well as optimizing materials sourcing reliability and efficiency. 

Why do organizations need to do this? 

Most importantly, however, companies who seek to increase regulatory sustainability reporting of their products and operations will reap two particular benefits. 

Firstly, no matter the size of your organization, you need to abide by the regulatory requirements of the region, or regions, in which you’re seeking to operate. With an enhanced focus on and alignment with regional regulatory obligations, businesses give themselves a license to sell in the market they’re targeting. With some 80% of emissions coming in the design phase of a product, it’s crucial that each stage of the process is rigorously mapped and evaluated. 

Secondly, a firmer grasp on sustainability reporting goes a long way to establishing – and maintaining – business continuity. In an environment where marginal gains and a keen sense of foresight can offer major advantages over peers and competitors, a lackadaisical approach to sustainability reporting can quickly result in major supply disruptions (for example, having to find supply chain alternatives at the last minute, or at much greater cost), ultimately leading to lost production and severe impacts on revenue. In a competitive environment, such missteps can be hard to recover from. 

What are organizations doing currently? 

The Forrester research underlines these findings. 66% of respondents showcased an awareness and understanding of the potentially severe impact on product and operations that not toeing the regulatory line would bring about. Furthermore, a full 10% of respondents ranked ‘strengthening regulatory compliance’ as their greatest business priority during the next 12 months, while 35% in total ranked it as being within their top 3 priorities. Out of the 10 options given to those surveyed, ‘strengthening regulatory compliance’ came top of the list. 

Despite that figure winning out, however, the relatively low number indicates there is some way to go before there is a proper acceptance of the importance of increasing regulatory sustainability reporting. With only 35% of organizations having the initiative to solve the challenge, the research suggests an element of indecision and uncertainty, exacerbated by competing priorities coming from different angles. A successful organization in 2024 and beyond will be defined by its ability to cut through the noise, manage competing expectations, and execute a vision firmly focused on removing the biggest barriers to market entry and success as a priority. 

How can Makersite help? 

Whilst there are many benefits to regulation – from better risk management to increased transparency to greater innovation to enhanced efficiency – the increase in reporting requirements comes with some obvious downsides. They put a greater strain on teams and distract from the important work at hand. In many cases, organizations simply do not have enough people to actually put together the reports. This results in a scenario where the time spent on reporting adds little-to-nothing to business value. 

At Makersite, some of our biggest clients experienced that exact dilemma.  

We partnered with Microsoft to transform their LCA methodology from directional modeling to a supply chain-specific environmental impact accounting process. In doing so, Microsoft were able to automate and scale the modeling of complex electronic products with an unprecedented level of primary data coverage. 

Of the multiple benefits, perhaps the most valuable was the reduction of the modeling time, allowing Microsoft to focus their efforts on collecting and processing suppliers’ primary data and performing data quality assurance and data analysis. As Kelly Stumbaugh, Microsoft’s Director of Devices, Ecodesign, Ecolabels, and Carbon Emissions, noted: “[With Makersite] we are efficiently scaling up our LCAs so our engineers can focus on designing the best and most sustainable products instead of only focusing on disclosures.” 

Similarly, with Cummins Inc., the company had a clear goal that they needed help in executing. They wanted to grow and create a circular lifecycle plan for every part of their reports so that they could, as Mousumi Mukhopadhyay, their Manager of Circular Economy, stated: “Use less, use better and use again.” 

They were looking to take the next step in their sustainability journey. For them, this included keeping pace with the growth in annual ESG reporting obligations (including scaling their reporting capabilities to handle 27 ESG reports annually), standardizing their data and enhancing supply chain transparency through digitization.  

With Makersite, Cummins were able to digitize their supply chains to show multitiered data aggregation layers, including data assurance, traceability and transparency as well as the collection and inspection of specific domains. With our solution, they were able to show how a product was generated, trace its journey through the supply chain and translate that information into the required sustainability reports, setting them on their way towards achieving their ambitious 2050 goals: reducing Scope 3 absolute lifetime GHG emissions from newly sold products by 25% and reusing or responsibly recycling 100% of packaging plastics or any other goal. 

Ultimately, thanks to Makersite, both companies were able to use product and supply chain data to automate reporting across all product groups, saving time, greatly increasing efficiency and giving their teams a priceless opportunity to execute their key tasks undistracted and to the best of their abilities.