Understanding ESG and How Manufacturers Can Leverage Data and IT to Get Ahead!

Dec 14, 2022 11:05:00 AM . Julia Walsh

ESG has become a ubiquitous aspect of global business for a good reason: consumers and employees are more aware of the impacts companies can have and are holding them accountable. Governments around the world are creating more stringent norms to protect people and the environment and are looking for transparency from corporations and conglomerates. Companies are realizing that acting on ESG initiatives should not only be seen as a compliance measure. Rather, staying ahead of the competition might actually help them create better value, attract superior talent, and gain a larger market share.

Manufacturers at the center of the value chain have a vital role to play in improving ESG results not just for themselves but for their entire partner and supplier ecosystems. And, like with everything in manufacturing, improving ESG results depends heavily on how relevant data is gathered, analyzed, and converted into action. Also extremely important are the IT platforms deployed within the value chain and the way they are leveraged to create better results. Manufacturing is currently at a technological inflection point, and employing the right tech can assure manufacturers of both operational transformation and a better future, ESG-wise and overall.

Understanding ESG:

Environmental, social, and governance (ESG) priorities are gaining momentum globally. Forbes points out that a recent study by communications firm Edelman found that 58% of consumers now buy from companies that share their beliefs, and 60% of employees choose a workplace based on mutual values. Elsewhere, Bloomberg reported a record $120 billion invested sustainably in 2021, while federal and state regulators increasingly require organizations to comply with stringent ESG-related targets–from carbon emissions to gender-equal pay.

Today, investing in ESG is seen not as something companies have to do but as something they must do, as it is good for business. The combination of moral duty and long-term value creation is driving manufacturers to pursue ESG deliverables. Most are trying to figure out how to set up clear strategies for their entire value chains to deliver better ESG results. First, let’s look at each component of ESG and what improving it entails for manufacturers.

E- Environmental improvement goes beyond reducing a company’s carbon footprint and climate impact. It means being more energy efficient, reducing waste, and avoiding natural capital depletion and doing all of these consistently across their supply chain. This means that their shop floors, offices, and the entire ecosystem need to look at their current infrastructure and practices through the lens of environmental impact and put measures in place to make improvements.   

S- Protection of human rights, improved employee safety, and enhanced labor relations form the society aspect of ESG. This includes having a more diverse employee base, addressing inequality and discrimination, and creating a model work environment  across facilities and the broader supply chain. Companies are realizing that their policies and measures can have a large impact on society and are taking steps to create more equitable and inclusive environments in their value chains.

G- First and foremost, governance demands transparency and ethical behavior at the board level and then across the C-suite. Having the right escalation protocols, risk tolerances, and uniform compensation policies are just some of the key aspects of governance.

ESG improvements require that materiality assessments be done for all three aspects. This requires data, but not just bulky, unformatted, and non-contextual data. For real change and action to take place, the right data needs to be collected for the metrics that matter. Then a strategy for the next 3 to5 years needs to be drawn out and broken into short-term deliverables and action items for manufacturing plants and partner locations. Communication of clearly drawn-out goals, discussion with internal and external stakeholders, and the identification of high-concern issues to act upon should constitute the ESG endeavor. Forbes finishes their post by highlighting that ESG is now a core part of doing business and creates both responsibility and opportunity for the manufacturing industry as a whole. 

Webalo Insights:       

In order to create effective ESG strategy and action plans, it is imperative that manufacturers are able to collect relevant data from their own shop floors and the processes that directly impact them. The largest gap in data collection and visibility exists at the frontline-worker level, and this is the case in both large and small manufacturers and their supply-chain partners as well. ESG progress works in a very similar manner to Industry 4.0 adoption and digital transformation and uses the same technologies that enable process improvement and efficiency gains. IT platforms and AI play a major role in both.

The Webalo platform connects the frontline workforce to larger enterprise applications,  which enables ESG-relevant data to be gathered, contextualized, and presented to the right decision and policy makers within the organization and the supply chain. Webalo empowers the workforce through simplicity, mobility, visibility, clear vision, and inclusivity, and unlocks the value of connected-worker data through continuous improvements, optimization using AI/ML, and synchronization with the digital worlds.

With Webalo, manufacturers can create an ecosystem of partnerships focused on sustainable data collection. Workers using the platform can easily configure applications and start collecting relevant data while the platform automatically logs process data, start and end times, and user info.  The platform provides enterprise-wide integration, which presents many ESG opportunities: health-monitoring systems for the well-being of workers can be used, live messaging and communication can lead to effective collaboration on ESG deliverables, optimized machine-learning algorithms can predict ESG patterns and suggest future actions, wearable devices can lead to safer and more effective operations, voice-recognition systems can reduce manual inputs and save digital waste, and a convergence of multiple technologies can lead to the establishment of an industrial metaverse.

At Webalo, we believe platforms that provide workforce digitization and optimization are the key to establishing a strong foundation for a manufacturer’s ESG strategy. The three main deliverables of Webalo’s value proposition for manufacturers are reducing digital waste, respecting employee and stakeholder privacy, and increasing inclusivity. Going paperless with Webalo is a mere start to a company’s ESG initiatives, but a critical milestone nonetheless, as it ushers in the new age of workforce intelligence and digital transformation.

As the Webalo platform gains momentum, it can truly catapult manufacturers and their supply partners into an optimized ESG scenario where emissions and climate impact are under control, clear policies exist, and a diverse workforce acts collectively to deliver products made ethically under the right governance infrastructure. What begins with the automation of workflows can transform in a year into the optimization of end-to-end processes, first at a manufacturer’s own plant and then at their partner locations. This transformation is followed by AI-driven innovations and predictive metaverse scenarios that occur two to three years post implementation.