A new sustainability frontier: industrial equipment

23 November 2020
Principal Peter Kalish discusses the evolving situation around sustainable industry and what companies can do to keep up with the transition.


Peter Kalish

Peter Kalish

Director, Business Development
T: +1 518 948 0567

In the 1980s, manufacturers experienced a renaissance in quality, driven by global competition. Overnight, an entire industry emerged supporting quality-related consulting, software, devices and training. Initially, companies that went all-in saw improvements in yields but inconsistent impact on the bottom line. A lack of results didn’t dissuade practitioners, and, over time, the quality management industry figured out how to apply their methods to problems that impacted both customers and the bottom line.

It seems a similar evolution is now occurring within sustainability. There is no lack of practitioners and an abundance of new services. But sustainability is only starting to make the pivot from corporate fad to impactful strategy. What’s driving this shift is a recognition that, like the quality renaissance years before, there are places where sustainability impact is highest. And those are the places worth focusing early attention.

The evidence that impact is being felt can be seen in the stock market. Several studies have shown that investors who place their funds in strong ESG (environmental, social, governance) companies see returns that outperform the rest of the market. With more money shifting to ESG-driven companies, corporate boards have woken up to a new sustainability mandate.

While much of the focus of sustainability within industrial companies has been on product design, material selection, energy/water systems and buildings, the design and construction of industrial equipment is lagging. The sourcing of industrial equipment still leans toward meeting operational performance objectives (cost, quality, throughput), even if it means inefficient energy use, high consumption of water or generation of waste. It doesn’t have to be this way. Capital investments can be both high performing – from a financial/operational perspective – and sustainable. The trick is applying the same kind of thinking that goes into offering high quality – deliver impact and sustainability; it’s not an either/or proposition.

Equipment designers make dozens of choices each day on what materials to use for construction, how many parts go into an assembly, how energy flows through the system and whether designs are robust/resilient. Not all choices should be approached with sustainability as the primary driver. But, it’s all about making better decisions. Is it possible to meet performance requirements while limiting material waste destined for hazardous landfills? Can insulation be designed to reduce overall assembly cost while reducing energy consumption? The answer to these questions may not always be in the affirmative. The problem, however, is that most designers never even ask these questions.

As industrial equipment suppliers begin to think differently about their options, expect to see an emergence of sustainable industrial solutions. There are three criteria that a capital asset must meet to be considered a sustainable industrial solution:

  1. It must be designed for long-term competitiveness. The asset must deliver a tangible financial or other return to the corporation. It could be reduced operating cost, higher throughput or increase in brand strength (leading to higher sales or more loyal customers).
  2. The solution must make more effective use of resources – including material, energy, water and people – than a traditional design.
  3. There must be no compromise in product performance. This has been a challenge for many of the new sustainability initiatives. A product that has less life than a customer wants can be more sustainable, but should not be considered a solution. This applies equally to a compostable paper straw that disintegrates in the middle of your lunch or a heat treat furnace with efficient burners that reduce throughput by 20%.

The challenge in developing sustainable industrial solutions is the array of expertise required. Consider the Venn diagram below. “Sustainability,” represented by ESG in the green circle, is but one of three factors in a sustainable solution. The second is the blue circle representing impact on strategy and/or finance. The third factor, in light green, is the ability to design and build a product that meets customer-driven performance requirements. To create an industrial solution that is sustainable, all three factors must be addressed.

For now, buyers must contract their own solutions. But sustainable engineering methods will gradually become more commonplace. And, like the quality renaissance that preceded it, sustainability will become less of a destination and more of a way to improve the entire journey. 


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