How data is driving a more sustainable industrial transformation

As market attention to sustainability grows, regulatory pressures and consumer expectations around environmental, social, and governance (ESG) issues are driving change, in the context of greater transformation initiatives in the manufacturing and mobility sector.

These initiatives focus on harnessing data insights from smart technologies such as automation, Internet of Things (IoT), and AI, to improve how products are made and distributed. By unifying this and other data-including siloed data sets-into a single ESG data estate, manufacturing organizations can gain holistic views and granular insights to help them not only meet ESG reporting requirements, but also drive the sustainability of sourcing, making, transporting, and disposing of products-and implement business practices that advance a circular economy.

To support your organization as you explore options and identify cost-effective steps in this era of industrial transformation, we've gathered learnings and recommendations into the Leader's Guide to Sustainable Business Transformation. We've also created an ESG data readiness assessment to help you get started quickly.

A more responsible, competitive path forward

Manufacturing and mobility organizations that develop smart, automated, and data-driven processes as part of industrial transformation -and incorporate sustainability into those processes-are well positioned to gain a competitive advantage. ESG insights can help manufacturers achieve a range of goals across the value chain, such as:

• Improved risk management and the protection of critical production processes.
• Engagement with vendors and suppliers to address Scope 3 emissions, reduce exposure to impacts from climate risks, and governance loopholes.
• Reduced costs and improved traceability with streamlined technology resources.
• More responsible capital deployment.

With advanced solutions, organizations have already begun making these improvements. For example, Sandvik, a leader in mining industry manufacturing, implemented Microsoft AI and cloud technologies to enhance predictive maintenance and lower emissions, allowing them to cut down on waste and optimize resource use.

ESG data: The input that fuels comprehensive sustainability

To achieve the full potential of ESG data-from the shop floor to the board room-manufacturing and mobility organizations can benefit from evaluating sustainability comprehensively, in terms of environmental concerns as well as social and governance impacts. This approach uses ESG data insights to improve risk management and protect the value of critical product processes, and to make decisions that improve energy use, labor practices, supply chain transparency, regulatory compliance, and more.

For example, Outokumpu, a worldwide leader in stainless steel production, tapped into the power of data by developing an industrial digital platform based on Microsoft Azure. The insights this platform provided led to significantly reduced waste (due to fewer defects) and energy usage-contributing to lower CO2 emissions.

Key ways to maximize the benefits of ESG data in manufacturing and mobility include:

• Build a data-driven infrastructure:ensure that systems are in place to collect and integrate accurate ESG data seamlessly across all departments.
• Leverage predictive insights:use AI and analytics to forecast and optimize operations, including by using natural language querying to enable all teams to access insights-enabling efficient resource use and proactive risk management.
• Foster a culture of sustainability:from executives to front-line workers, train employees in how ESG data can improve decision-making and drive sustainability outcomes.

Implementing these ideas can provide the foundation for using ESG data to drive long-term success, and to make significant improvements relatively quickly. For instance, Nordic-based OSTP Group, which specializes in manufacturing stainless steel products and custom equipment, is using Microsoft technologies to track and report CO2 emissions. The data insights they gained led to a 70% reduction in direct CO2 emissions from 2021 to 2023.

Schneider Electric, a global leader in energy management and industrial automation, has also reduced carbon emissions and optimized energy use-leveraging Azure OpenAI and other Microsoft AI technologies to boost not only sustainability, but also their engineers' productivity.

How Microsoft is powering sustainable transformations

Microsoft has emerged as a leading partner for manufacturing and mobility organizations on their journey toward sustainability. We've designed our solutions to help businesses in three primary ways:

1. Improve ESG data transparency: We're continuously innovating to enable our customers to glean consolidated data intelligence from across their operations and value chain.
2. Deliver actionable insights: Microsoft has a deep slate of expertise helping manufacturers maximize operational efficiencies using sensor-enabled data management and automated scenarios powered by the Microsoft Cloud.
3. Create new opportunities: We are a global leader in enabling digital transformation through our data and AI solutions, to help businesses grow while becoming more sustainable.

We're delivering for these solution areas by bringing together a growing set of ESG data and AI capabilities from Microsoft and our global ecosystem of partners, in Microsoft Cloud for Sustainability.

A core solution in this suite is Microsoft Sustainability Manager, which allows businesses to more easily record, report, and reduce their environmental impact through data connections and powerful AI-powered analytics-and can be integrated with virtually any business system. With this solution, manufacturing and mobility teams advance on carbon, water, and waste management, as well as circularity.

Businesses can also implement the purpose-built ESG capabilities of Sustainability data solutions in Microsoft Fabric, to integrate, normalize, and analyze ESG data-and other enterprise data-on a single digital platform. Together, these capabilities help improve ESG data accuracy and transparency, simplify reporting processes, and accelerate progress toward goals.

Swedish forestry giant Södra is showing what's possible with these capabilities. Södra utilizes Microsoft Sustainability Manager to improve supply chain transparency and track sustainability data across its entire operation, allowing them to reduce reliance on carbon-intensive materials, displacing 8.8 million tons of CO2 emissions annually. Södra estimates the positive impact of this accomplishment as equivalent to one-fifth of Sweden's annual reported carbon emissions.

A sustainable future begins with smarter solutions

As manufacturing and mobility continues to transform, both smart technologies and ESG data will help companies drive sustainability, meet compliance and reporting requirements, and uncover new opportunities for growth. Microsoft is here to help organizations make the transition with solutions to help reduce their environmental impact, improve operational efficiency, and position themselves for long-term success in a rapidly changing world. To gain a view of your ESG data across key areas, as well as customized guidance on how to drive sustainability progress and add business value, complete our readiness assessment.

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