Crisis often brings people together and this has been exemplified by our nation’s united front against the coronavirus pandemic. UK manufacturers have demonstrated their resilience and adaptability, not least in rising to the challenge of answering the nation’s call for help in making vital medical equipment to save lives.
It should not be forgotten that manufacturers across the country had already entered the New Year bracing themselves for an uncertain future. The UK’s long-term trading relationship with the EU and the rest of the world remained unresolved, and despite continued calls for concerted progress, digital transformation across the industry appeared distant.
Arguably the biggest challenge for our economy is the Government’s ambitious target of reaching net-zero emissions by 2050. Ultimately, it will be the actions of industry in general, and manufacturing in particular, that will define our success in delivering on this. It is a significant task for an industry dealing with the challenges and the aftermath of the coronavirus crisis on top of that existing backdrop of uncertainty.
Our new report, conducted in partnership with Make UK, comes as we begin to look beyond the immediate effects of the pandemic and manufacturers begin to map their recovery plans. It serves as both a timely reminder of the momentum growing across the industry and a blueprint for how we can accelerate towards our green goals. It’s not that recovery plans must deliver both sustainable progress and prosperity, it is the case that sustainable investment can help drive efficiency and prosperity.
The path has been paved for a greener future
The encouraging findings from our research, undertaken shortly before the coronavirus crisis fully emerged, show that industry’s awareness of net-zero is high and manufacturers who are investing in energy efficiency are already seeing the commercial benefits.
The fact 40% of manufacturers report increased margins, and 30% increased competitiveness, as a result of sustainability initiatives vindicates the case for green investment to spur the sector’s post-coronavirus recovery and proves that energy must be a strategic imperative.
There is undoubtedly still progress to be made – and this requires overcoming barriers to further investment as reported by manufacturers, particularly cashflow and profit margin impacts, as well as payback periods on investments.
A strategic imperative
These barriers are being more keenly felt than ever before and if our economy is to recover in a way that supports the UK’s net-zero target, both government and the energy industry must find a way to remove these barriers and address concerns about the impact on competitiveness.
These past few months have demonstrated that collaboration across government, industry and society can transform how our economy operates. We must now extend this same spirit of cooperation to collectively seize the opportunity to implement a green recovery and demonstrate that the transition to a low-carbon economy is not only possible but also economically prudent.
As a critical first step, the Government must set the agenda by demonstrating that our long-term trajectory to net-zero emissions remains paramount, with increased incentives for businesses willing to put the net-zero target at the heart of their business strategy. With such policies, alongside growing consumer demand for sustainability, industry leaders must embrace the fact that ‘spend to save’ investment will be required and factor this into their capital, or operational, expenditure plans.
Our industries, together, have a pivotal role
One cost-effective measure, from which so many manufacturers continue to benefit, is securing better deals by renegotiating energy contracts. This is positive to see but it’s still the case that focusing on unit rates is only half the issue. The bigger emphasis needs to be on managing overall consumption.
Our report underlines a greater role for ourselves in the energy industry, helping to tackle the knowledge gap among manufacturers on the benefits of improved energy efficiency. There is no such thing as an average business, and there is no one-size-fits-all solution and energy suppliers must ensure businesses of all sizes, with varying levels of existing sustainability measures, fully appreciate the range of scalable options available.
At E.ON, we offer 100% renewables-backed electricity to eligible microbusiness customers across Britain, which for some might be a vital first step towards a more sustainable and personalised energy system. From there solutions scale rapidly; from high-efficiency LED lighting, HVAC upgrades and building management systems through to solar panels and battery storage, electric vehicles, and heat pumps[1].
By working closer with energy providers, manufacturers can improve sustainability through smart and more bespoke solutions, minimising operational expenditure and increasing energy resilience. As an illustration, on-site generation can offer not only greater flexibility and security of supply, but an additional revenue stream through supporting the grid at times of high demand.
Now is the time to accelerate sustainability
While the survival and revival following this pandemic rightly remains the priority for most in the short term, the UK’s net-zero target remains by far the biggest challenge for our future. Our report with Make UK not only signals an increased appetite among manufacturers to take up the mantle of driving our nation towards a greener future, it highlights the central role of energy efficiency in, and commercial benefits of, doing so.
We must now build our own roadmaps out of this crisis, hold our gaze firmly on the net-zero target and deliver a green recovery. With support from the UK Government and the energy industry, manufacturers will need to realise their part as end customers and supply chain partners look to improve and decarbonise in the “new normal” that awaits us. Now is the time to advance the effort to reach net-zero by 2050.
[1] Electricity sourced from E.ON’s renewable generation assets, supply agreements with independent UK wind generators and the purchase of renewable electricity certificates. The electricity supplied to homes and businesses comes from the National Grid.
