Four ways ESG leadership offers a competitive edge in the manufacturing sector
Sustainability in manufacturing is about more than compliance, it’s a strategic journey of innovation, resilience, and measurable impact, according to Zuzana Struharova and Anna Ma. The Nexio Projects professionals explain four key trends in the manufacturing sector, which go far beyond the traditional expectations of box-ticking.
Sustainability in manufacturing has evolved from a compliance checkbox to a strategic imperative, which drives innovation, resilience, and competitive advantage,” explains Zuzana Struharova. “The sector faces escalating environmental pressures alongside social and regulatory demands.”
Previously European policy lead with the pan-European political party Volt, Struharova joined Nexio Projects in 2021. As a principal consultant with the firm, she specialises in ESG assessments, sustainability strategy development and implementation; and works to coordinate the firm’s internal sustainability team.
“Manufacturing companies must prepare for a comprehensive transformation,” adds her colleague, Anna Ma. “Understanding the nuanced ESG trends within manufacturing – and responding effectively – is essential for companies aiming to lead in this changing landscape and ensure business resiliency in the future.”
Ma is a former principal consultant with global sustainability consultancy ERM, and joined Nexio Projects earlier in 2025. As a climate director with the firm, she is a skilled expert in the environmental and sustainability sector, leading end-to-end climate strategy and implementation for clients across sectors – with a role spanning technical leadership, strategic advisory, and business transformation.
Nexio Projects is an international consultancy firm, helping organisations reach their sustainability ambitions. In 2025 was recognised as a top consulting firm by Consultancy.nl, earning platinum ratings in both the sustainability and ESG categories, for its holistic view on the sustainability function.
“Our expertise spans strategic reporting, implementation and ESG framework integration, supported by an in-house team of certified B Leaders and strategic EcoVadis partner status since 2018,” Ma continues. “This has helped us to distil six unique examples, which shapes the way sustainability solutions can drive measurable impact beyond merely meeting regulatory and market demands.”
Carbon footprints beyond the factory gate
Manufacturing is traditionally resource and energy intensive, contributing significantly to global greenhouse gas (GHG) emissions. But many companies are neglecting indirect emissions because they may not be immediately apparent to them.
Scope 3 emissions – relating primarily to upstream suppliers and raw material extraction – are on average are 26 times higher than a manufacturer’s Scope 1 and 2 ‘direct’ emissions.
Regulators, investors, and customers are increasingly demanding both transparency and action on these fronts. Change is needed not just on owned operations but across supply chains. But manufacturing firms looking to decarbonise upstream activities are missing a trick by only thinking in these terms.
Ma explains, “Companies investing in mature Scope 3 measurement capabilities often unlock strategic value: they can mitigate risks and enhance supply chain resilience.”
In manufacturing, the majority of Scope 3 emissions – typically 70% to 90% in the firm’s anonymised data from clients – “come from purchased goods and services”. This reflects the resource-intensive nature of the sector, where extracting, processing, and transporting raw materials and components drives most upstream emissions; while also presenting a clear opportunity to find savings through ESG policies.
Pointing to what upstream decarbonisation might look like, Ma says it can include “collaborating closely with suppliers on emissions data reporting”; “considering co-financing such as mutual investments and co-development initiatives”; and developing supplier engagement programmes that incentivise emission reductions. These are each steps which come with obvious financial and performance boosts for a firm willing to implement them.
Giving an example of this in action, the professionals recalled an ESG gap analysis and policy framework improvement project Nexio Projects recently delivered for a client. Fostering cross-functional alignment that “propelled the client a significant improvement EcoVadis score and medal, the work reflected “an industry-wide imperative for streamlined, consistent ESG governance and supplier transparency”, Struharova says.
Redefining resources and waste
Circular economics involves a change to the model in which resources are mined, made into products, and then become waste. A circular economy scales back material use, redesigns materials, products, and services to be less resource intensive, and recaptures “waste” as a resource to manufacture new materials and products.
“Circularity has emerged as a critical strategy for sustainable manufacturing,” notes Ma. “Focusing on extending product lifecycles and reducing waste. Key trends include adoption of resource-efficient manufacturing processes incorporating renewable, recycled and responsibly sourced materials, and the implementation of design for durability, reusability, disassembly, repairability (e.g. modular), and recyclability to reduce product obsolescence.”
European initiatives, such as the Circular Economy Action Plan, the overarching Eco‑design for Sustainable Products Regulation (ESPR) and extended producer responsibility (EPR) schemes, require manufacturers to innovate product design and waste management, thereby impacting competitiveness and compliance.
Struharova states, “The ESPR specifically aims to improve product circularity, energy performance, durability, recyclability and reparability across nearly all physical product categories, setting harmonised EU-wide sustainability standards. This makes it an essential framework for manufacturers seeking to future-proof their products and meet tightening regulatory demands.
But again, there are benefits to this beyond simple compliance. Citing a 2024 survey from Nexio Projects, Struharova adds that companies embedding circular practices reported “average reductions of 20% in raw material costs; and an 18% increase in customer loyalty tied to sustainable product attributes.”
Exemplifying this, Nexio Projects recently partnered with a global client to develop a thorough greenhouse gas inventory focusing on Scopes 1 and 2. By helping redefine an overview of the firm’s resources and waste, the project has helped put the client back “in control and actually creating the impact” it set out to achieve.
Struharova adds, “This initiative laid the groundwork for expansive supply chain emissions management, while our collaborative approach advanced their EcoVadis rating and systematically embedded sustainability leadership into all departments.”
Amplifying ethical and labour standards
“ESG in manufacturing cannot solely focus on environmental challenges,” warns Struharova. “Manufacturers must also reinforce employee safety and wellbeing, prioritising rigorous health and safety protocols.”
Alongside the clear and obvious benefits to employees, and the important of adhering to health and safety laws, for example, this form of ESG can minimise operational risks. It can also boost a company’s reputation, helping to both appeal to customers, and potential partners, while aligning with broader social responsibility goals.
“This includes respect for human rights across the entire value chain, including the supply chain, with fair labour practices and conflict-free sourcing,” Ma adds. “For example, diversity, equity, and inclusion can help to enhance workforce innovation and stakeholder trust.”
Pointing to more recent data, the pair add that highlights that manufacturers with robust social governance report “23% higher employee retention and significantly fewer labour disputes”.
Making the most of innovation and digitalisation
An ESG drive can also help to bring focus and purpose to shifts to digital technologies. In particular, as digital technologies serve as “critical enablers in ESG performance enhancement”, both experts highlight how sustainability excellence can help ground transformations in the material needs of a business – rather than just fear of missing out.
This can help companies regain oversight of their emissions and sourcing, both to a compliance end, but also from a perspective of finding efficiency gains too. Meanwhile, digital tools like advanced simulation tools can “facilitate lifecycle assessments and material substitution decisions, accelerating decarbonisation initiatives” – according to Struharova.
She goes on, “Moreover, 65% of manufacturers investing in digital sustainability solutions report enhanced ESG reporting accuracy and accelerated goal achievement.”
Nexio Projects recently saw this first hand, when collaborating with an international food supplier – helping to develop a comprehensive Product Carbon Footprint (PCF) framework for a liquid egg product. During the project, the firm worked to map emissions across the entire supply chain, including feed, energy, and hen productivity, enabling accurate attribution of emissions throughout production stages – and enabling the client to successfully perform a complex PCF calculation, giving the firm “the confidence to report on and accelerate its sustainability progress”.
Ma concludes, “Our partnership equipped our client with advanced modelling tools and streamlined methodologies, enhancing transparency and stakeholder engagement, while building a scalable approach for ongoing and future carbon assessments.”
