To understand where companies stand on this journey—and the challenges they face—IFS convened a roundtable with over 13 France‑based C‑level executives (many from large multinationals). We spoke with CFOs, COOs, Heads of Decarbonization, Digital Transformation Directors, and Board Members.

A New Era: ESG and the “Next Normal”

As one participant observed, “Since COVID, everything has changed. It means more restrictions for us, new perspectives, and—alongside supply‑chain challenges—new opportunities.”

Indeed, the pandemic accelerated preexisting ESG reporting and performance trends. In Europe, the reporting environment has tightened: the Corporate Sustainability Reporting Directive (CSRD) will expand and revise the Non‑Financial Reporting Directive (NFRD). Starting in 2025, companies must publish digitally readable, searchable sustainability reports under the new European Sustainability Reporting Standards (ESRS).

Our conversations revealed that most companies already have ongoing initiatives—and growing interest in supply‑chain visibility and traceability, including deeper understanding of Scope 3 emissions. One key question emerged: will CSRD’s new rules hamper competitiveness in the short term—and drive sustainable value creation in the medium to long term?

The Data Challenge

Much of our discussion centered on Scope emissions data: gathering, processing, and interpreting it correctly. As one Head of Decarbonization explained,

“Collecting all relevant data from diverse sources and populating legally required reports—often needing hundreds of KPIs—is extremely complex.”

Calculating Scope 1 and 2 is relatively straightforward, as these emissions are owned and controlled internally and use a manageable set of methodologies. Scope 3, however—covering 15 categories, each with its own methods and external data—poses a huge challenge for manufacturers, since many of their emission‑generating activities fall into Scope 3.

While early in their decarbonization journeys, companies often accept less‑precise methodologies as a “good start,” provided their numbers remain internally consistent for reporting. As one executive put it,

“We don’t need perfect Scope 3 numbers yet—just consistency. We can improve accuracy over time.”

The Need for New Business Models

“Can we integrate new business models that embed sustainability?” This question underscored the fact that manufacturers must eventually redesign end‑to‑end processes—from product design through to disposal—with sustainability at the core.

For example, one participant in electronics remanufacturing described success offering “second‑life” devices to customers seeking lower carbon footprints. Other sectors—like cement, where limestone calcination itself emits vast CO₂—will require breakthrough technologies (e.g., carbon capture and underground storage) to make real progress.

Such carbon‑capture innovations not only remove CO₂ permanently but can also transform it into marketable industrial products. Companies increasingly see these transformational models as sources of competitive advantage and talent attraction.

What Role for Technology?

Solving decarbonization is inherently complex and long‑term, but technology will be vital. One heavy‑equipment manufacturer shared how its digital‑innovation team built digital‑twin tools to perform maintenance remotely—eliminating travel needs.

Technology alone isn’t a magic bullet, but it boosts productivity, efficiency, and cost savings; cuts waste; optimizes resource use; and—critically—enables real‑time monitoring and analysis of progress.

Furthermore, the technology ecosystem can supply not only software but also expertise, skills, and insights—crucial when manufacturers lack internal digital and green competencies. As one executive noted,

“Finding the right talent—especially for data and life‑cycle analysis—is incredibly difficult today.”

Looking ahead, companies must invest in building new “green” skill sets around resource efficiency, sustainable design, and decarbonization.

Conclusion: The Key Is to Keep Going—Wherever You Are

Many companies have already started their journeys and agree decarbonization will only grow in importance. We observed that French firms are particularly aligned with local policies—and that their leadership often inspires other regions and business units.

As one multinational executive said,

“France is where most of our sustainability initiatives take place—and it’s our second‑largest, most profitable market.”

That demonstrates how a responsible, eco‑focused approach can be highly profitable by driving efficiency and opening doors to innovation and collaboration.

There is no single “one‑size‑fits‑all” path—each journey is unique. But the critical lesson is to persevere, learn through failure, keep investing, and—above all—collaborate across the value chain. Only a truly ecosystem‑based approach can deliver the transparency, accuracy, and accessibility of emissions data so vital to decarbonization.

Source: https://blog.ifs.com/2024/02/the-road-to-decarbonization-in-manufacturing-challenges-and-opportunities-ahead/