This is a debate about the rationale for making a major change within a sector whose performance is critical to the Canadian economy.
Unlike most debates, though, whether one side of the debate proves more persuasive than the other isn’t what’s important.
What’s important is that the change — in this case, having manufactures make the switch to clean energy — happens at all. Because when it does, everybody wins.
In some respects this is not unlike other transformative moments that have taken place within business, including manufacturing.
Take cloud computing, for example. Before the ability to host applications and infrastructure online became possible, the only way technology companies could offer their products was by deploying them on premises.
In that sense, at least, the shift to cloud computing — which Salesforce pioneered in CRM space with Sales Cloud — represented true innovation.
As more companies accessed software-as-a-service (SaaS) and even infrastructure-as-a-service (IaaS) products and services, though, innovation wasn’t necessarily the goal. Moving to the cloud in their case was a smart way to access IT resources, deal with fluctuations in demand for technology and to reduce costs.
Manufacturers might look at clean energy in a similar way. For some, it could be a way to harness breakthrough capabilities that reposition them with customers and the market as a whole.
For others, adopting clean energy might simply align with strategies they developed long ago, and are a way for them to achieve specific business outcomes. It could even be a way to operate in accordance with the company’s mission, vision and values.
Let’s delve into some examples of clean energy as innovation catalyst vs. good business practice as a way of exploring this further:
Innovation: Improved forecasting
Pricing in fossil fuels can fluctuate wildly, with considerable impact on the ability of manufacturers to manage their budgets and respond to customer demand.
A Research from consulting firm Deloitte suggests switching to clean energy would mean reducing dependency on fossil fuels and thereby the uncertainty and exposure to sudden changes in the commodities sector.
This means manufacturers could have greater confidence in forecasting their needs over time.
Good Business Practice: Brand Differentiation
A position paper from Climate Action argues that the tradition to clean energy will bring considerable benefit to manufacturers’ bottom lines, and even the way they are seen by the communities they serve.
This includes consumers who buy a manufacturers’ products but also its B2B relationships with suppliers and other stakeholders.
Even investors and might view a clean energy manufacturer as having the kind of brand equity that rewards long-term financial support.
Innovation: Capital To Explore Emerging Technologies
Manufacturers are often well aware of advances that are being made in retail, health care and financial services, but may feel they don’t have the budget available to investigate opportunities such as digital transformation.
Some of those companies might want to read a report from the International Renewable Energy Agency (IRENA). It predicts that nenewables could grow to around 27% of total final energy consumption for global manufacturing by 2030. That could reduce the capital they need to pilot technologies that could vastly improve the way they operate, the report suggests.
Good Business Practice: The Ability To Expand Operations
One of the key success metrics for many manufacturers is reaching a point where their existing factories are so busy they need to build more. This is by no means an easy undertaking, however. Companies need to be sure they don’t move forward with projects they can’t yet afford.
A recent article in Industry Week magazine, however, looked at how clean energy could lower the costs of constructing a new plant and thereby further an organization’s growth. There aren’t much better business cases than that.
Innovation: Developing A More Knowledge-Based Workforce
Contrary to some fears, green manufacturing doesn’t have to mean bad news on the employment front.
Clean energy will bring plenty of additional jobs. In fact, a report from the Bookings Institute said it will uplift the communities that have been traditionally centred around fossil fuel production and open up demand for new kinds of talent.
Instead of hiring mostly workers for an assembly line, for instance, this could mean manufacturers begin recruiting innovators who will develop fresh ideas to make use of wind, solar power and biomass.
Good Business Practice: Enhancing Employee Experiences
Think of this as the flip side of the previous point. Manufacturers are like all employers in that they need to be mindful of what keeps their team engaged to bring their best selves to work every day. The risk of employee turnover is higher than ever before.
Investing in clean energy sends a powerful message about what a manufacturer feels is its responsibility to the planet from a sustainability perspective. And whereas fossil fuels will eventually be depleted, renewable sources of energy promise a longer-term future that employees can count on.
Conclusion
As predicted, neither side really “won” this debate. The point was to show a transition to clean energy can accomplish two things at once.
First, they can increase their ability to pursue innovation thanks to the cost savings and transformation in talent green energy brings.
Second, clean energy aligns with good business practices — to reduce capital expenditures, to make better use of resources and to nurture relationships with customers and the rest of an organization’s ecosystem.
The time for debating a move to clean manufacturing is coming to a close — it’s time to start doing it instead.
