European manufacturing firms could increase annual profits by 9% on average if they invested in renewable energy and being more energy and resource efficient, according to a new report by consultancy Lavery/Pennell for carpet tile company Interface
The changes would also create around 168,000 new jobs in energy efficiency and renewables, and reduce Europe's total annual greenhouse-gas emissions by 14.6%.
Described as a new industrial model, the three-stage continuous improvement process in the report focuses on: improving non-labour resource efficiency; investing in sustainable inputs, such as using recycled and bio-based materials; and commercialising competitive advantage by developing new products to displace ones with a high evironmental impact.
Launching the report, Greg Lavery, CEO of Lavery/Pennel, said the model would help companies address supply constraints and resource scarcity issues. "The price of metals is now three times higher than in 2002, while energy costs have increased sixfold," he said.
If the model were introduced across Europe, profits would rise collectively by €100 billion a year, according to Lavery. UK manufacturers alone could increase annual profitability by €9.4 billion by improving energy and transport efficiency, reducing waste, optimising packaging and recycling or remanufacturing products.
Lavery advised manufacturers to start cutting costs by reducing the use of raw materials with the highest price, greatest supply risks and biggest environmental footprint.
"Often the payback is rapid," he said, revealing data showing that, in most cases, firms can recoup the cost of installing equipment to reduce the energy intensity of a product in less than 12 months.
The model builds on the approach that Interface has adopted since the mid-1990s. According to Lavery, innovative firms like Interface have halved resource use by per unit of production over the past 10 years, while most others have achieved levels of only 10%-15%. He highlighted the development by Interface of a carpet tile that uses around 50% of the yarn of a conventional tile.
Another example is Toyota Motor Europe, which since 1993 has reduced by 70% the amount of energy and water it uses a produce a vehicle.
