New Industrial Model Identified

| Monday, March 3rd, 2014 | 2 Comments »

A new, more profitable and sustainable model for industry has emerged estimated to be worth, for Europe, €100bn in additional profits, 168,000 new jobs and a 14.6% reduction in greenhouse gas emissions. It involves three stages which respond to today’s business challenges.

  1. REDUCE – improving non-labour resource efficiency*
  2. REPLACE – reinvesting some of the efficiency savings in sustainable inputs (materials and renewable energy)
  3. RE-OFFER – developing innovative new products and capturing market share growth

NIM6

 

The report on the model is available here: new industrial model report.

The logic for the new model is compelling: increased profits, more jobs and reduced environmental impact. Leading companies including Unilever, Body Shop, Patagonia, Ecover and Interface have recognised the power of the new model and are capturing value through its implementation.

Interface, the world’s largest producer of carpet tiles, is a case study of the benefits available. In its European manufacturing operations, Interface has reduced energy and yarn usage per unit of production by 40% and 12% respectively since 1996, switched to 100% renewable energy for its Scherpenzeel site, and replaced 43% of its raw materials with bio-based or recycled alternatives. This has reduced Interface’s costs by €7.6 million p.a., as well as reduced life cycle greenhouse gas emissions by 35,500 tCO2e p.a. and enabled the company to remain the world’s leading manufacturer of carpet tile in a highly competitive industry.

The potential of the new industrial model for the whole of the European manufacturing sector is estimated to be:

  • €100 billion p.a. profit before tax improvement from materials efficiency, energy efficiency and renewable energy – at a capex cost of €66 billion. This represents an average 9% increase in profit for the European manufacturing sector. Market share improvements and new product revenues add to this, but have not been included.
  • 168,000 new skilled and mostly local jobs in energy efficiency and renewable energy.
  • 1,200 MtCO2e p.a. reduction in greenhouse gas emissions (equivalent to 14.6% of Europe’s total annual greenhouse gas emissions) from energy efficiency and use of renewable energy.

11% of the additional profits and 20% of the additional jobs and greenhouse gas reductions identified above for Europe could be achieved if the top 20 European manufacturers alone applied the new industrial model to their global operations.

This new industrial model decouples economic success from natural resource consumption. It goes beyond conventional thinking, which considers sustainability as a compliance activity and cost, to drive revenues and profits by integrating sustainability within a company’s core strategy.

Rob Boogaard, acting chief executive of Interface Europe, challenges all European manufacturers to adopt the new model. “The ‘new industrial model’ demonstrates that there is a better way and we have the evidence to prove it.”

Click through to read the new industrial model report and the supporting calculations.

 

*Non-labour resource efficiency was the subject of the Next Manufacturing Revolution, an initiative led by Lavery/Pennell, the University of Cambridge’s Institute for Manufacturing and 2degrees to accelerate the adoption of non-labour resource efficiency to capture its profit, employment and environmental potential.

2 Comments

  1. Interesting and important report. In the light of Apple CEO Tim Cook standing up to climate change denying investors, there may be an audience that is willing to take these ideas forward and implement this new model.

    • admin says:

      Steve, let’s hope so. Fortunately a range of companies including Interface, Unilever, Patagonia, and Body Shop are case studies in the model and the benefits that it brings.

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