The Green Transformation and business – top-down or bottom-up?
21 February 2022
I was talking to a director of a large multinational manufacturing company with operations in Poland about how firms are embracing the challenges of green transformation. He said that he could see a gulf between the approach of corporates and that seen in many Polish SMEs. “They will be dragged into it [green transformation]; I don’t see them doing it for themselves,” he said. The corporate world has got the memo, handed down from HQ. It reads: “Because of our clients, customers, employees, shareholders and investors, we need to take climate change seriously.”
BPCC's green blog:
COP26 – after the party, the fallout
Car fleets, driving to work and ESG
Communicating the Green Imperative within your firm
How green is your office?
The Green Canteen
Remake, remodel - remanufacture?
Nudging the consumer towards a greener way of life
The language – and behaviour – of large companies, words like ‘sustainability’, ‘ESG’, ‘carbon footprint’ and ‘net zero’ is quite different to that which I used to hear at business conferences 30 years ago, where the only task facing the CEO was to deliver growth and profit every quarter. Yet for many smaller Polish business owners, that’s where they still are. Cutting costs and driving revenues remain the overriding priorities. But this will change; and change is likely to come from above.
We have already seen this in automotive manufacturing, where the challenge of adapting to Industry 4.0 has been set out by the OEMs and passed on down the supply chains to the Tier 1, Tier 2 and Tier 3 suppliers. A couple of years ago, I was talking to the sales manager of a German robotics firm responsible for Eastern Poland, who told me she was amazed at how many orders were coming in from small, family-owned businesses in the Lubelskie voivodship for networked industrial automation equipment – they knew that without investment in state-of-the-art robotics, they would be in danger of losing their place in the supply chain.
I would expect that a similar process will happen in green transformation. The need of corporate CEOs to publish annual reports detailing how the company is progressing on its journey towards net zero will ensure that environmental under-performers who fail ESG audits will not have their contracts extended. For those SMEs who have been previously supplying the company without any issues over many years, this will mean upheaval and costs.
The construction sector, which we will focus on in the next issue of Contact Magazine Online (out next month), is decades behind manufacturing technologically, as well as being the source of 40% of greenhouse gas emissions. The application of technology – in particular the use of building information modelling (BIM) is shown to have huge benefits in how quickly and efficiently a building can be erected – and more importantly – how much cheaper it is to run over its decades-long lifetime. But whilst CAD/CAM and robotics were introduced into manufacturing industry back in the 1980s, much of the construction sector works much as it had been a century ago.
As we’ll see in an article for Contact Magazine Online from Arup, the notion of recycling in construction is only just beginning to take off. Almost all demolished buildings today go to landfill, when historically, as much building material as possible would be reused when old buildings were taken down.
My own experience with small builders in Poland is that – just like their counterparts in the UK – there is a low level of IT knowledge; sharing plans with a client over the internet is still the future, let alone 3D plans that include non-graphic information about insulation and energy use over a 30-year time span. Architects and engineering consultants are using BIM to a significant degree, but among actual builders, it remains a rarity. Sub-contractors who work with major construction firms will have to up their game when it comes to technology, but at the B2C level, it will have to be the well-informed customer who gets the small builder to embrace green transformation.
Governmental regulation will drive the process too, with ever-more stringent controls across every sector of business, not just manufacturing and construction. But as we see in Brussels, directives are drawn up with thresholds of employee numbers in mind, so that small firms without the resources for compliance are not lumbered with insuperable burdens. Given that the vast proportion of all firms on our planet are SMEs, it therefore behoves the corporate end of business to help SMEs see green transformation as something beneficial to the planet – and to their own sustained economic well-being.
The Green Blog by Michael Dembinski
Day 1: BPCC’s green blog on COP 26 in Glasgow
Day 2: Methane emission pledge hailed as success on second day of COP26
Day 3: Coal and climate finance are the focus of the third day of COP26
Day 4: Youth activism flavours fourth day of COP26
Day 7: Barack Obama’s speech highlighted start of second week of COP26
Day 8: Gender equality – focus of eighth day of COP26 – overshadowed by new heat calculation
Day 10&11: China-US ‘breakthrough’ as final statement is hammered out
Summary: COP26 disappoints with the loss of strong commitment