As companies with significant Scope 1 and 2 GHG emissions exposure get more sophisticated in their management of environmental resources, they are now exposed to the quadruple optimization function of cost, production, environmental impact and safety.
The most sophisticated of these companies are beginning to recognize that managing at the "facility wall" simply isn’t enough to drive efficiencies and understand how operational changes will impact carbon liability and other financial drivers. These companies have also realized that they need more frequent and increasingly granular data than an annual or quarterly survey of environmental and safety data allows. Further, more granular information allows you to move away from a vague understanding of energy and water costs as G&A, to the ability to allocate them as direct costs of creating inventory.
Like buildings, electric grids and trucks, operational assets such as manufacturing and processing equipment can also be made smart – not only from a cost perspective but also relative to the ability to manage other critical elements such as carbon, waste or water.
In the case of smart buildings, grids, and transport - the world is rushing to add granular software and data management to an otherwise "dumb" system so that those systems can be remotely monitored, managed or optimized for inputs like energy. The same is beginning to happen in the oil and gas, utilities, metals, manufacturing and goods and food processing industries with operational equipment.
The good news with operational equipment as another form of "smart asset" is that manufacturing and processing equipment has been automated for years by Supervisory Control and Data Acquisition (SCADA) systems, Distributed Control Systems (DCS), Maintenance, Repair and Operations (MRO) software, Computerized Maintenance Management Systems (CMMS), Process Historians and other real-time control and operation systems.
Similar to Building Management Systems or IT management systems, the data exists; it simply hadn’t been used in the past to optimize for newly recognized costs. For enterprise operational assets at any large company that manages complex processes to manufacture or process large amounts of product, the data is there. It is a matter of easily extracting that data, translating the data accurately, and then using that data not only to drive cost reductions, maintenance and productivity, as happens today; but now also to also for environmental and safety impact.
Leveraging operational asset data to support your corporate energy and sustainability goals can have both immediate benefits (in preventing an accident, for instance) or long term strategic benefit (such as identifying and addressing trends in energy use across like processes). Using asset-level environmental data can help a company get beyond manual "tweaking" of equipment at a given plant, to being able to compare energy or water use of similar assets across a company to select the most efficient processing asset for a given material at a given time, or identify a variation that caused wasted energy or water. When energy, water and waste equal money – ignoring this data as a factor in production management is to ignore unknown costs.
I spoke recently to the sustainability executive at a global metals and mining company. He shared that utility data, measured "at the wall" of a plant, is simply no longer sufficient for him to use in helping to drive operational and technological efficiencies. Juxtapose this comment with that of another global metals executive who told me "There is the opportunity for us to become 600 times more efficient globally than we are today." That leaves an awful lot of opportunity on the table.
The question is how that kind of massive shift will come about. As always, it will come about partly as new manufacturing technology comes to market. But new technology won’t get us there on its own; and there is so much more we can do with our existing systems. We simply need to start connecting dots across the silos of manufacturing, IT, and environment and safety.
Connecting those dots is, in fact, our biggest challenge. Operations, IT, environmental health and safety and sustainability experts speak different language and have traditionally had a very different focus. Today, the opportunity exists for all of them to serve mutual goals. Creating value from sharing information and driving goals across traditional functions will bring a new paradigm of effectiveness.
Timing is also at issue. Step back to 30,000 feet; think for a moment about how most companies are reporting on their carbon inventory (and water, waste and other pollutants) today.
Many companies take an annual, or at best, a quarterly survey of environmental and safety data, enter it manually into an spreadsheet or system, report it out, and have no ability to take action on that information given its lagging nature. Going forward, that won’t scratch the surface of the capability required to reduce costly and damaging injuries, budget-killing energy, water and materials waste, and address significant environmental goals while continuing to grow.
As an example, a leading Asian utility has, in order to meet their bold and sophisticated environmental and financial goals, begun to pull their asset data into their environmental and safety management system. This allows them to correlate that real time data with their GHG, energy, water, waste and safety plans – and drive changes in their operations in real time.
Not only will this save them money, it will prevent injury and environmental waste. Strategically, they will be in control of their ability to meet their sustainability commitments to government, customers, employees and other stakeholders. Without that control, it will be awfully hard for companies to go beyond low hanging fruit and meet ever more challenging constraints.
Rebecca Sternberg is Vice President of Sustainability at ESS.
