FRP - Against the odds - The future of UK manufacturing

Against the odds: The future of UK manufacturing

Against the odds: The future of UK manufacturing

Everyone’s problem Time is ticking Clearly, achieving Net Zero is not an issue that is exclusive to manufacturers, and they face competition from all sectors to access the specialist skills they need to guide them along their journey.

At the moment, it seems that many firms see ESG initiatives as being a ‘nice to have’ but feel that they can’t justify substantial expenditure at a time of such uncertainty, or position it as a competitive point of difference. But there will soon come a time when it becomes mandatory – driven by original equipment manufacturers (OEM) and public sector customers who demand it from their suppliers. Ultimately, ESG represents not just a moral imperative for manufacturers but also an important commercial opportunity too. Funders understand that, and we’ve seen that banking partners are happy to fund ESG- linked investments at potentially lower rates.

Sustainable solutions The UK manufacturing sector has already made significant progress in reducing its environmental impact, but there remains much to be done to reach Net Zero.

Measuring environmental impact is a complex area, but fundamental to benchmarking a firm’s progress, so it’s positive to see that ‘improving methods to measure environmental impact’ is the number one ESG investment priority for firms, alongside improving the recyclability of their products. And it’s also heartening to see that manufacturers feel a deep-seated commitment to the communities where they operate.

39%

8%

Top five areas for ESG investment in the year ahead

According to the Office for National Statistics, greenhouse gas emissions have fallen by 39%, though progress has slowed more recently and manufacturing remains the third highest contributor to overall UK emissions, behind energy and consumer expenditure. Given that manufacturers face a hard deadline of 2050 for achieving Net Zero and that achieving this will be a massive undertaking, it is disappointing that fewer than a fifth of the manufacturers we surveyed cited ESG as a top investment priority. Still, given the challenges they face, it is understandable.

30% 30% 28%

Just 8% of firms said greater scrutiny over demand for better ESG performance had been a risk to their business during the past 12 months, though this does increase to 14% in the year ahead. Accordingly, we can confidently imagine that ESG will continue to move up the agenda as competing pressures continue to recede.

Improving methods to measure environmental impact

Improving recyclability of manufactured products

Supporting environmentally positive initiatives in our/ supplier’s local communities

26% 24%

Improving oversight of environmental impact in our supply chain

Reducing environmental impact of existing plant/ machinery or real estate

16

17

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