Last month, world leaders and sustainability experts gathered in Azerbaijan for the 29th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29). Leaders came together to discuss environmental, social, and governance (ESG) solutions and policies aimed at addressing the most pressing environmental issues affecting governments and businesses worldwide. And manufacturing was in the spotlight throughout the convention.
As one of the world’s leading polluters, manufacturers have a huge responsibility right now to reduce emissions – and they must do so quickly. There is increasing pressure, as witnessed at COP29, for companies to follow the party’s guidance and actively embrace green frameworks as they strive to achieve net zero, future proof their businesses, and pave the way for the next generation of leaders.
According to McKinsey and Co. research, there is a huge upside to adopting green frameworks. CEOs who embrace ESG models not only maintain competitiveness but also attract more investment. Approximately 85 per cent of investors surveyed said that a business’s ESG health is a key factor in their investment decisions. Even the World Economic Forum has suggested that firms with healthy ESG frameworks can better weather market uncertainties and deliver a more resilient financial performance.
Without a solid and robust ESG framework in place, though, manufacturing leaders will flounder to meet the modern demands of business. While embracing ESG frameworks was once optional, they aren’t now. CEOs are witnessing the devastating effects of sub-par ESG reporting, which often stem from a lack of clear direction – direction that ESG frameworks can provide. With over half of investors looking to increase their ESG investments this year, the time to act is now, or CEOs risk that their enterprises will not only miss ESG targets but will lose shareholder confidence, even customers and revenue. Yet, many CEOs don’t know which framework to utilise or where even to start.
Understanding green frameworks and their role in the manufacturing industry
Ultimately, green frameworks offer data-backed intelligence and insights to support CEOs as they design their ESG strategy towards net zero. They offer leaders a foundation of guidelines to begin making changes that support ESG goals. Green frameworks act as a guiding light during the storm of new regulations, client expectations, and current challenges within the manufacturing sector that make sustainability practices challenging to implement.
For example, the Índice de Preparação da Indústria para a Sustentabilidade do Consumidor (COSIRI) is a framework and assessment tool that allows manufacturers to compile and compare results across their factories to help you spot high and low-performing dimensions. COSIRI and other types of ESG blueprints show CEOs where to adopt eco-friendly practices, offering them a fresh start and the confidence that they have a correct ESG foundation that can help reduce their eco footprint.
What is your ESG story?
In an era where ESG competence is a must have, green frameworks can be used as a sustainability compass for CEOs navigating ESG complexities. Bogged down with stringent regulations, such as the U.S.’s California Climate Reporting Bill, the EU’s Corporate Sustainability Reporting Directive, and Australia’s National Greenhouse and Energy Reporting Scheme, leaders must strive for compliance while also looking after the general health and day-to-day of their business.
Achieving sustainability maturity is critical for manufacturers, and ESG frameworks can act as interactive score cards tracking their progress. This vital information enables future planning and strengthens a business’s ESG position and the story it presents to investors and the world. According to McKinsey and Co., despite 95 per cent of S&P 500 companies publishing a sustainability report, only a small number of businesses actually integrate ESG into their equity stories, affecting their brand and attractiveness to investors. CEOs armed with ESG data and analytics have a clear path toward sustainability maturity; the sky is the limit, and new advantages are unlocked. Here are the top five:
The top 5 reasons why you must adopt ESG frameworks in 2025
1. Improve your bottom line
The Harvard Business Review lists several ways ESG practices can cut costs, including renewable energy, which, in the long term, can save money and result in significant tax benefits. An ESG-focused company with a strong ESG story can also attract investors -a win-win for investors and CEOs alike.
2. Protect your brand reputation
Investors and consumers—especially Gen Z and millennials—increasingly base their purchasing decisions on authenticity and “green credentials.” This presents an opportunity for CEOs to leverage ESG frameworks to protect their company’s reputation while meeting growing customer expectations. However, it is important to avoid greenwashing at all costs! Otherwise, you risk backlash and damage to your brand.
3. Drive deeper innovation
We’ve written extensively about how embracing ESG practices, which align with digital transformation goals, offers several benefits to businesses, such as the ability to implement effectively advanced technology solutions. ESG frameworks can supercharge innovation by highlighting areas of improvement, allowing businesses to deploy cutting-edge solutions that meet their needs.
4. Supercharge operational efficiency
Smart manufacturing can significantly enhance operational efficiency, enabling businesses to streamline their processes and boost productivity. The lift in productivity is directly related to employee satisfaction in terms of their company prioritising ESG practices, as reported by McKinsey and Co. Furthermore, improved transparency within supply chains can lead to better overall performance.
5. Access new markets
Manufacturers that implement a robust green framework can tap into new markets and attract new clients, generating new revenue streams. According to PricewaterhouseCoopers (PwC), asset directors globally are anticipated to raise their ESG-related assets US $33.9 trillion by 2026, from US $18.4 trillion in 2021, highlighting the power of ESG in business and growing demands for a greener market.
Harnessing ESG frameworks for a greener tomorrow
To summarise, companies often struggle to measure the impact of ESG initiatives, particularly when it comes to Scope 1, 2, and 3 emissions. It’s certainly challenging, but ESG progress can be accomplished with the right green frameworks in place that will unlock deeper insights that manufacturers need spotlighting ESG strengths and weaknesses to advance their net zero efforts.
With a comprehensive overview of ESG progress across an organisation through an ESG framework, CEOs can feel confident that they are making the right sustainable choices for today, tomorrow, and the next five years. INCIT’s COSIRI framework is one such example featuring a universal design that caters to manufacturers of all sizes and is a global leader in ESG assessment. We recognise that the manufacturing landscape is evolving rapidly, and adopting sustainable practices is no longer optional; it is essential. Contate-nos today to learn more about this powerful tool and our mission.
