Accelerate decarbonization in the chemical, pharmaceutical, and semiconductor industries
Sustainability strategy is top-of-mind for business decision-makers and innovators across manufacturing. What was once considered an individual company’s mission to do good is now a business imperative, from customer expectations, national and local benchmarks, and regulations. The manufacturing industry is under a lot of pressure to advance sustainability commitments, with enormous challenges given modern lengthy, complex, and geographically diverse production operations and supply chains. Let’s take a look at one of the key sustainability strategies: decarbonization, and what it means for the manufacturing industry.
To gain top insights on a global scale, Microsoft engaged Economist Impact, the research arm of The Economist Group, to conduct a study, “Scoring Decarbonization Progress.” For Manufacturing, the study focused on the chemical, pharmaceutical, and the semiconductor verticals. This research evaluates the decarbonization trajectories of the verticals and breaks down key decarbonization strategies for firms, including for those beginning their journeys and unsure where to start. Firms that engage in a proactive approach to decarbonization will be able to better align their low-carbon transition plans with their strategic objectives and organizational values and avoid a costly cycle of decarbonization catch-up. In addition, they’ll be able to align early with long-term shifts in policy, tap into regulatory incentives, enjoy positive consumer perception, attract the best and brightest talent, and seize new market opportunities.
As we progress through a critical decade of implementing national and global goals to reach net-zero and mitigate climate change, it is necessary to address the following questions:
- How is progress toward decarbonization being achieved, and measured?
- What can be done to accelerate it?
As part of this study The Economist focused on two manufacturing sectors with both an imperative to transform towards sustainable operations and with a crucial impact on the world economy.
Scoring Decarbonization Progress
Learn how different industries are taking steps to decarbonize their operations
Advancing sustainability in the chemical and pharmaceutical industries
The chemicals industry is under the spotlight to lead the material transformation the economy needs to achieve its sustainability goals by 2030. The industry needs to maintain this focus while dealing with volatile energy prices, higher costs, and fracturing trading patterns. Chemical companies are looking to technology providers to help them advance their sustainability agenda, and to stabilize their current platforms and capabilities with a focus on near term revenue to fund their portfolio expansion aligned to new materials.
As the Economist Impact research and pharmaceuticals sub-sectors, emissions are tied largely to the value chain, particularly purchased goods and services. While the figure below demonstrates that there’s a lot of progress to be made, it also means that there’s an enormous upside to implementing solutions that can track complexity across various data sources, and surface insights for action.
Increasing the uptake of renewable energy and supporting research and development (R&D) of low-carbon feedstocks are key decarbonization levers for chemical manufacturers, collectively among the world’s largest emitters.
The pharmaceutical sub-sector is currently behind in reducing the emissions from operations, but pilot programs are in progress which indicates that progress is achievable as pilot programs spread more widely. To scale up, pharmaceutical companies also need to scale across their product portfolio which adds to the complexity to manage when scaling. For example, as of right now, green chemistry is being piloted for a small selection of products.
Pharmaceutical manufacturers are critical players in the healthcare sector, responsible for a small but growing pool of emissions. To address these proactively, manufacturers are piloting green chemistry solutions to decarbonize drug production. They now need to invest in scaling and mainstreaming these solutions to enable operational emissions reductions.
Learnings from recent sustainability advances made by industry leaders in chemical and pharmaceutical can be used as inspiration by those seeking to achieve sustainability or decarbonization goals. One such example is FLSmidth. FLSmidth wants to be the sustainability leader in the mining and cement industries, and the company is on track to do that with its MissionZero plan for zero emissions and zero waste by 2030. By adopting sophisticated digital sustainability tools, FLSmidth can accelerate its own sustainability journey, deliver innovative solutions to its customers, enable brand new business models, and position the company to dramatically reduce the 10 to 12 percent of global emissions that come from mining and cement.
A second example in this vein is Ingredion. The company’s ambitious All Life 2030 sustainability plan targets emissions, plastics, energy sources, biodiversity, human rights, and more. To help achieve these goals, Ingredion sought a unified solution to replace the varied and highly manual data collection protocols in use at its dozens of global facilities. The company chose to work with Microsoft Cloud for Sustainability, and initial testing on its United States operations shows that Microsoft Cloud for Sustainability can support Ingredion in making business decisions that help it meet its 2030 targets.
Decarbonizing supply chain in the semiconductor vertical
The semiconductor vertical is focused on design and mass production of circuit-boards, semiconductors, fiber cables, and other electronics components. The semiconductor industry has been highly susceptible to supply chain disruptions facing both shortages and oversupplies of critical materials at the same time; they are looking at nearshoring and friendshoring strategies coupled with supply chain resilience to mitigate these risks.
As found in the Economist Impact research, electronics manufacturers, as a sub-sector, are behind the average in developing and implementing decarbonization plans and metrics. This has partly been due to limited emissions reporting from suppliers and lack of regulatory requirements. However this is changing as customer and regulatory expectations increase. Technology solutions that provide visibility throughout the value chain can go a long way to revealing opportunities for electronics firms to meet and exceed the current pace of decarbonization. Microsoft provides technology solutions for this purpose, and for organizations to position themselves as leaders in this space.
One example of leadership is Imec, a Microsoft partner. Their Sustainable Semiconductor Technologies and Systems (SSTS) research program succeeded in bringing together stakeholders of the semiconductor value chain, from large system companies to suppliers. While some companies are already investing in decarbonizing their supply chain and products, committing to be carbon neutral by 2030 or 2040, they typically lack accurate insight into the emissions footprint of chip manufacturing of future technologies as there is limited life cycle analysis data available. To solve this problem, Imec set up the program of which Microsoft is a partner.
A new era of visibility and access to complex industrial data
The research summarized here focuses on one aspect of sustainability: decarbonization. For sustainability all-up, one of the most powerful areas of value we are seeing for manufacturers is in combining Microsoft Sustainability Manager with industrial data. Industrial data is complex, spanning anything from the performance of individual equipment to energy outputs for entire regional systems. This data problem exacerbated by siloed sources and diverse systems. The example of Cognite Data Fusion provides meaningful insights for those planning and implementing sustainability initiatives. The solution makes data consumable by providing a holistic, nuanced view of all existing data, enabling customers to take meaningful action to drive sustainability. The combination of Cognite Data Fusion and Sustainability Manager, enabled by Microsoft Azure, created powerful results.
Get started on your sustainability journey
As the Economist Impact research shows, many manufacturers are just getting started on their sustainability journeys, and those who have are better positioned to experience benefits that can contribute to their bottom-line growth. Microsoft provides solutions for sustainability and is rapidly integrating meticulously engineered offerings that will meet your needs.
With Sustainability Manager, organizations can monitor and manage their environmental impact with unified data that helps enable actionable insights. They can record, report, and reduce their environmental impact more accurately and easily, to better design and improve sustainability solutions that target environmental, social, and governance (ESG) goals.
There are two emerging technologies that differentiate Microsoft from our competitors and that will shape the future of the industry, namely: AI, which will further increase automation and new levels of worker productivity, and the industrial metaverse, which will provide a connection between physical (machines), digital (data) resources, and people to reduce costs, increase productivity, drive sustainability, and create resiliency.
Microsoft Cloud for Manufacturing is purpose-built to make the most of both these emerging technologies.
Learn more about Microsoft sustainability solutions
- Microsoft Cloud for Sustainability
- Microsoft Sustainability Manager
- Streamline supplier engagement with the new ESG value chain solution
- Introducing new ESG data and reporting capabilities in Microsoft Cloud for Sustainability
- Maximize the value of your data with new Microsoft Sustainability Manager Intelligent insights
1 Economist Impact “Decarbonization Progress Benchmark” research report for Manufacturing Sector, Scoring Decarbonization Progress, also available from economist.com.
