Accountants MHA McIntyre Hudson, Lloyds Bank, and motorsport gearbox manufacturer Xtrac sponsored this roundtable held at the Royal Berkshire Conference Centre at the Madejski Stadium, Reading.
Sustainability and green manufacturing
There tends to be a misplaced perception that manufacturing is dirty, noisy and smelly, rather than green, agreed participants at the roundtable. They set about countering this view with examples of sustainability and discussed the challenges they face in reducing the environmental impact of their businesses.
The panelists observed that being a green manufacturer is a balance between doing the right thing and being profitable. However, the culture among many manufacturers is to be green by always trying to find new ways of doing more with less resource, compared with other aspects of the economy that encourage a throwaway society. Manufacturers also need to meet the demands of their customers for environmentally-friendlier products. And they need to make sure their employees are on board with their sustainability objectives. Environmental legislation is helping make being sustainable easier, but is more action needed?
Panelists were enthusiastic about their efforts to protect the environment and about the role SMEs play in tackling environmental issues. They were also concerned that there should be no let-up in the UK’s commitment to sustainability.
Is sustainability central to your business?
For the Oxford Charcoal Company, sustainability is a core business principle. “It’s central to what we do,” said Karl Ahmed. “The company was founded in 2013 and we believe we are now the UK largest manufacturer of charcoal. We have a nearly zero-carbon footprint.”
Having a farming background naturally makes you more aware of the impact your business has on the environment, believes Andy Melachrino at Chichester-based Natures Way Foods, which produces fresh produce, either bagged or in bowls. He said: “It’s our responsibility to be sustainable. We also need to meet our customers’ expectations in driving our sustainability agenda and we are constantly looking at ways to improve both our operations and our impact on the planet. We want to move to a position where we are leading the sustainability agenda with our suppliers and customer base.
Being sustainable is at the forefront for Intersurgical, as many of its medical devices are manufactured from plastic. “We are focused on the whole lifecycle of our products and establishing a sustainable approach across the business as part of our ISO 14001 certified Environmental Management System, ensuring sustainability wherever possible as well as guaranteeing patient safety,” said Rachel Frost at the Wokingham-based company.
Metal and plastic perforating company Robert Bion & Co recycles around 99% of the waste it produces adding holes to metal products. “I think UK manufacturing is more efficient than overseas manufacturers,’ said Nick Bion. “What we need to stop is moving manufacturing abroad to less efficient producers, which isn’t good for the planet,”
Good for business
Kate Arnott from roundtable sponsor MHA McIntyre Hudson asked: “What are the main drivers for sustainability, for example, decreasing costs or increasing income?”
That’s an important question for LG Motion. That company designs and manufacturers “things that go up and down and round and round”. Its clients range from Aardman Animations to the European Space Agency. “We are looking at increasing the amount of automation in our manufacturing processes to make us more efficient and also to achieve greater sustainability,” said Gary Livingstone.
Bion noted that manufacturing involves constant innovation based on “doing more with less”. He said: “This is an underlying belief of most manufacturers. In comparison, an industry like IT gets a free pass on sustainability by forcing you to change your hardware every few years and not being responsible for recycling its products.”
The question of incentivising recycling companies was raised by Ed Toms from roundtable sponsor Lloyds Bank. “Is it important that someone earns an income from recycling your waste?” he asked.
“Yes,” said Bion, “because if you are being paid for your waste you know it has a value and is being recycled.”
Oxford Charcoal generates revenue from what is usually a waste bi-product. “One of the biggest changes we have introduced is to capitalise on the benefits of biochar a type of waste charcoal. It can be mixed into compost as a super-fuel for plant growth or added to animal feedstock to help digestion. It can also be added as a water filter in fields to remove harmful chemicals from water run-off before entering rivers,” said Ahmed.
Natures Way Foods also has a key focus to reduce waste and is making progress against the IGD WRAP Food Waste Roadmap KPI’s since joining in January of this year “Although plastic is useful in keeping food fresh, you also have to think about how you dispose of it. We send plastic for recycling and waste food for composting and energy recovery, which is more responsible and costs us less than sending the whole lot to be burned for energy recovery,” said Melachrino.
Panelists agreed that the UK’s recycling infrastructure should be improved. “There needs to be more facilities for recycling plastic,” said both Melachrino and Livingstone. “A lot of the UK’s general waste goes to the Nordic countries, where it is burned and turned into energy. Transporting our waste to be burned doesn’t seem right,” said Livingstone.
There can be restrictions on what packaging can be used and whether this can be recycled in certain areas, making it a difficult issue for manufacturers like Intersurgical. Frost said: “We have to meet certain standards on packaging for some of our medical devices, ensuring product and patient safety. Therefore, recycling the packaging isn’t always possible. However, we are continuously and actively aiming to reduce packaging wherever possible and looking for more sustainable alternatives.”
Natures Way Foods’ decision to extend the UK growing season will depend to a large extent on balancing production volume and return on investment. We continue to look at ways to make growing more efficient and sustainable throughout the year, including scientific methods and have a team dedicated to exploring field and farming innovations. Melachrino.
Offering consumers choice
While manufacturers may be keen on finding more sustainable products and production methods, their customers aren’t always as enthusiastic. Although Intersurgical offices eco-ranges that don’t contain PVC, some of its customers still stick with older products, despite them costing more and being less sustainable.
“There’s a risk of losing out to competitors if you stop certain product lines,” noted Philip Glover, while his colleague Frost wondered: “Perhaps there needs to be more communication between the procurement departments and the end users?”
Benefits of environmental audits
Are environmental audits helpful in steering manufacturers towards more sustainable production? Energy audits at Robert Bion have been very useful. “We take our energy audit to a device level, as well as separating usage between the warehouse and factory to find savings. For example, we discovered that one machine in particular was using more electricity than we had realised,” said Bion. “Energy audits have helped us cut about one third from our energy bill. However, the energy providers aren’t pushing energy audits on us – you have to take the initiative yourself.”
Focusing on energy usage can depend on how big a proportion of your operating costs it takes up, agreed the panelists. Melachrino said: “We recently switched to a 100% renewable energy supplier and are working closely with them to reduce our carbon footprint and identify areas to make further improvements.
Energy saving is also about taking small steps, observed Toms. “The MD at one of our clients watched out of his office window as the lawns were being mowed and decided to switch to planting a wildflower meadow instead, with a bench for staff to sit on. As a result, costs to the business went down and staff morale went up with staff encouraged to raise initiatives that are sustainable and save money.”
A similar thought process applies to encouraging people to turn off lights. “It might not save you much money, but it changes people’s mentality and makes them think about their personal impact on the environment, both at work and at home,” said Bion.
Oxford Charcoal closely monitors its energy usage. The company uses the energy generated in charcoal production to heat its buildings and has also installed a ground-source pump to provide grey water for the company’s welfare unit. Our manufacturing process doesn’t utilise any fossil fuel only wood, during the process of charcoal manufacture we recycle the waste gas as the fuel. “We have a very small energy overhead and are almost self-sufficient for energy,” said Ahmed.
Legislation drives change
The panel moved on to talk about how legislation is both helping and hampering sustainability efforts. More needs to be done to encourage tree planting in the UK but there is a lack of funding available, thought Ahmed. “An audit by the organisation Grown in Britain, which looks at the UK’s forestry and woodland, found that if we stopped importing wood we would be okay for some years, but not in the longer term. If governments legislated on expanding woodland then the UK’s carbon footprint would go down as we’d import less timber,” he said.
Livingstone wondered what the impact the UK leaving the EU would have on timber production. Ahmed commented: “Currently, it’s cheaper to ship 1,000 tonnes of wood to the UK than to use a home-grown source, which is bonkers in terms of protecting the environment. Brexit might encourage more tree growing in this country.”
The question of whether carbon offsetting was having the desired effect drew some negative responses. “Carbon offsetting is a bit of a myth. You are just sending money to other countries in order to have a better conscience, when that money should be invested in the UK to make us more sustainable,” said Ahmed.
Enthusing your employees
Being a sustainable business helps you attract employees, especially millennials, thought the panel. “If you are vocal about protecting the environment you attract people who support your ideas and culture,” said Toms.
However, Bion thought that attracting people with the right technical skills was currently more important than finding people who support your sustainability objectives. Toms noted that some recruits will accept lower salaries to work for a business whose culture they believe in.
Tapping into people’s feeling about sustainability has reached the way energy suppliers attract customers, explained Melachrino. “Energy suppliers look at the psychology involved in people’s decisions about their energy usage. I know that nPower looks at how its customers behave and creates energy and carbon plans based on those behaviours. We have just signed up to one of their energy deals.”
Financial incentives to be greener
Arnott wondered whether enough was being done to reward businesses for being greener. She thought one of the most effective incentives is the UK government’s Climate Change Levy, which is based on energy usage. Natures Way Foods participates in the scheme. “If you can demonstrate carbon savings then the levy tax that you pay goes down,” said Melachrino.
Lloyds Bank operates its own clean growth fund for all corporate clients. “We offer a discount in our lending rate to companies that are going greener, for example improving water efficiency or low carbon transport. The fund aims to be the most inclusive in the market helping to reduce businesses environmental impacts and help them benefit from a low carbon economy,” said Toms.
Is our disposable culture a problem?
Toms asked whether consumer attitudes need to change significantly before sustainability initiatives can be sustained. An example was discussed about food packaging. After all, wrapping a banana in plastic means it lasts longer and is therefore less likely to be thrown away, so is the packaging necessarily a bad thing?
Melachrino said: “We are actively exploring new ways to deliver our products to customer and consumer but our data and insight tells us that consumers aren’t ready to delve into large containers of leafy produce to be placed in their own storage container. A lot of consumers are driven more by the sell-by date when deciding whether or not to throw away food,”. Bion noted: “You could say the UK is too efficient at how it packages products.”
Sharing sustainability secrets
Another aspect of improving sustainability in manufacturing is the point at which businesses are prepared to share information and best practice with each other. Arnott said: “Larger manufacturers aren’t always so keen on sharing their sustainability secrets in case rivals catch up with them, which is worrying in terms of making progress on sustainability.”
Melachrino said Natures Way Foods works with its competitors on sustainability issues, but Intersurgical’s Glover said his company was currently more focused on ‘right first-time’ production to keep down costs and lower scrappage rates, rather than in sharing details on how it achieves this.
Energy saving ideas
Changing energy usage can cut power bills and improve production efficiency. At Intersurgical, reducing power usage has cut the energy bill in its warehouse by around 70%. “We introduced smart lighting that can be controlled from a tablet computer. The original problem we wanted to solve was how to increase productivity and finding a greener way of doing it is a positive extra benefit,” said Glover.
Livingstone noted that SMEs often have a longer payback period on investments made to improve sustainability compared with larger businesses. “We put in thermostats in different parts of our warehouse for greater control and invested in a new lighting system a few years ago. We did it because it was the right thing to do, but the payback will take time. For smaller, privately-owned companies, it’s a question of how much investment you can commit to sustainability initiatives,” he said.
UK manufacturing is leading and learning
Delegates left the roundtable more enthusiastic than before about improving sustainability. “I’ve heard some useful ideas to take back and to do more for my business,” said Bion. While Toms said: “Hearing from other business brings the issues to life.”
Arnott emphasised that UK manufacturing is among the most innovative in the world, including how it is tackling sustainability. Livingstone commented: “Manufacturers are always using technological innovation to improve processes – it’s what we have always done. We don’t wait to be told – if you see a better way of doing something then you do it.” While Melachrino agreed: “We have to innovate to survive.”
Sustainability in manufacturing will be more important than ever as global trends change. “Countries like China, for example, are refusing to take the UK’s waste materials,” said Livingstone.
Different approaches between countries to green manufacturing creates challenges for businesses that operate internationally, thought Melachrino: “Western companies opening factories in other countries must jump through hoops to be green in their production processes, while next door a local company’s factory is belching out pollution unchallenged. We are committed to going above and beyond in our sustainability practices but clearly there needs to be global collaboration.”
Looking to the future, Ahmed noted that the Internet of Things was likely to be an important driver in helping manufacturers be greener. “The IoT is a huge and growing industry with solutions that can make homes, factories and warehouses more energy efficient,” he said.
Karl Ahmed: CEO, Oxford Charcoal Company
Kate Arnott: partner, MHA MacIntyre Hudson
Nick Bion: managing director, Robert Bion & Co
Rachel Frost: environmental manager, Intersurgical
Philip Glover: manufacturing manager, Intersurgical
Gary Livingstone: managing director, LG Motion
Andy Melachrino: head of health and safety and risk, Natures Way Foods
Ed Toms: relationship director, Lloyds Bank
James Harwood: The Business Magazine, chaired the discussion