For manufacturing companies, ConMoto has identified four fields of action for sustainable wealth creation. The design of sustainable products begins with product development. In the development process itself, the use of Digital Testing / Digital Twins is also a useful lever from an environmental point of view to proceed in a resource-saving manner. Important considerations are the use of renewable raw materials and their economical use, increasing the recycling rate and the use of resource-saving manufacturing processes. Sustainability issues must be addressed throughout a product’s lifecycle – from sustainable procurement to the repair or disposal of a product that is no longer usable. Other dimensions of a product’s sustainability are its marketability and its flexible usability or convertibility. Following this approach environmental sustainability becomes an integral dimension of total product costs.

The second field of action deals with the production process. Both the location of the production facilities and the production real estate and its infrastructure, especially the energy supply, influence the sustainability of the production process. When planning, acquiring, and using machinery and equipment, sustainability considerations also become part of the profitability calculation. Measurability and thus transparency of energy consumption and identification of potential savings are essential elements of this structured approach. Accordingly, in the production processes themselves, material consumption, the use of energy, water, and other resources and, last but not least, CO2 emissions are central parameters of controlling.

Detailed key figures and limits

The EU’s taxonomy of sustainability criteria defines in great detail and unambiguously for each branch of industry who belongs to “the good guys” and acts sustainably and who belongs to “the bad guys” and harms the environment. Here is a concrete example that the Council for Sustainable Development has picked out from the numerous regulations in the EU regulation. This body has been advising the German government on sustainability issues since 2001. Companies producing gray cement clinker are allowed to emit a maximum of 0.722 metric tons of CO2 or equivalent gases per ton produced, according to the taxonomy’s regulations. This value is based on the output of the most efficient ten percent of plants in Europe. This example clearly shows how detailed the EU regulatory framework is. The EU Taxonomy Compass already gives an impression of this and will become much more detailed in the coming years.

ESG criteria have an impact on investment decisions

The popular acronym for anything having to do with corporate responsibility and sustainability is ESG. It takes up the terms we already know from the EU taxonomy: The E stands for “environment”, i.e. everything to do with the environment and environmental compatibility such as energy efficiency, emissions and compliance with environmental standards. S = “social” summarizes all the aspects related to occupational health and safety conditions – along the entire value chain and supply chain, i.e. also at suppliers in Germany and abroad. In addition, all social issues that affect the company also fall within this area: Corporate Social Responsibility (CSR) and issues of gender equality and diversity in the company. Finally G, the topic of governance directly affects corporate governance, management decisions and overall controlling. This is about transparency, compliance and sustainable risk management. There has also been a reporting obligation for European capital market companies since 2017.

ESG is no longer a niche topic. ESG is playing an increasingly important role, particularly in access to investors and the capital market. The vast majority of institutional investors already take ESG criteria into account when making investment decisions, and private investors are also increasingly asking for sustainable investments, which is why banks and fund companies are offering sustainable funds. For such investment portfolios, ESG criteria serve as negative screening. Companies that do not meet the criteria are simply excluded. In addition, there are already rating agencies that produce sustainability ratings.

Significant impact on day-to-day operations

The topic of sustainability and its concrete manifestations, of which the EU taxonomy and the ESG criteria are just two examples, will have a significant impact on the day-to-day operations of companies. The necessary changes mean an immense, but unavoidable, effort. The first step is to analyze where each company stands. This will become mandatory for significantly more companies in 2024 than today. This is because the Corporate Sustainabilty Reporting Directive (CSRD) will then no longer apply to around 600 companies in Germany, as was previously the case, but to around 15,000. Most of them will find that they do not meet the requirements of the EU taxonomy in many areas. Creating transparency here is the first step toward a sustainable company.

The analysis is followed by the definition of measures to become green in the sense of the taxonomy as quickly as possible, taking into account operational possibilities. These measures must not only be feasible, they must also be implemented. Just as the key figures and thresholds of the EU regulation are defined on a fact-based basis, the economic activities of companies and their environmental and social impact must also be objectively demonstrated in terms of the taxonomy. This applies to investments, value creation processes and products. ConMoto has prepared comprehensively for these challenges. We are known as implementation consultants, for us the clean analysis of the actual state is a matter of course. We develop our strength in defining, implementing and monitoring measures to improve the sustainability balance towards a green company in terms of the taxonomy and ESG criteria.