The rise of ESG!
Published: 13 March, 2024
The UK manufacturing landscape is experiencing a big shift towards Environmental, Social, and Governance (ESG) initiatives. A recent report by Make UK and Lloyds Bank unveiled a 48% increase in manufacturing firms setting ESG targets since 2021, with 62% now actively engaged in this pursuit. This trend underscores an evolution in corporate consciousness, where businesses are no longer solely driven by profit margins but are aligning their strategies with societal and environmental imperatives.
The report highlights the motivations behind this shift, citing mounting pressures from various stakeholders including the workforce, government, investors, and customers. With 77% of firms receiving ESG mandates from clients, it’s evident that consumer expectations are a driving force behind this transformation. However, a stark disconnect emerges as only 27% of companies receive support from clients in meeting these requirements, highlighting a pressing need for collaborative partnerships to facilitate this transition effectively.
Moreover, the report sheds light on the cascading effect of ESG integration within supply chains, with 74% of manufacturers incorporating ESG criteria into their procurement strategies. While this signifies progress, the revelation that 45% of firms lack visibility into their suppliers’ ESG performance underscores the complexity of this endeavour. It’s imperative for manufacturers to foster transparency and accountability across their supply networks to uphold shared sustainability goals.
As regulatory mandates loom, compelling companies to disclose ESG transition plans, the urgency for comprehensive strategies intensifies. Faye Skelton, Head of Policy at Make UK, aptly notes that ESG is no longer a peripheral concern but a strategic imperative. Those pioneering this shift stand to gain a competitive edge, whereas laggards risk exclusion from lucrative supply chains.
However, amid this progress, challenges still persist, particularly for smaller firms grappling with financial and technological barriers. Huw Howells, Head of Manufacturing & Industrials at Lloyds Bank, emphasises the need for collaborative efforts to surmount these obstacles and foster sustainable growth collectively.
Furthermore, the report underscores the evolving landscape of ESG priorities, with a growing emphasis on human capital, carbon emissions, and biodiversity. This evolution reflects a nuanced understanding of sustainability, encompassing not only social welfare but also environmental stewardship.
Although the burgeoning adoption of ESG principles heralds a new era of responsible manufacturing in the UK, the journey ahead is fraught with complexities and uncertainties. It is incumbent upon manufacturers to navigate these challenges with foresight and diligence, forging a path towards a more sustainable and equitable future for all stakeholders.
Aaron Blutstein, Editor, Plant & Works Engineering magazine
