6 March 2023
As more companies make commitments to achieve net zero, greenshoring will reduce global environmental impact and increase UK economic competitiveness.
The UK can become the greenshoring location of choice for manufacturing supply chains, and that can grow the sector’s contribution to the UK economy; but doing so relies on creating common standards for carbon emissions reporting, the High Value Manufacturing (HVM) Catapult has warned.
Industrial production accounts for around 16% of the UK’s direct carbon emissions. When looking at consumption emissions – carbon embodied in all the goods and services – that figure is 43%. The growing urgency of shifting to a low-carbon economy means more and more companies are seeking to develop greener supply chains.
For decades, the standard business practice has been to manufacture goods in less-developed countries as cheaply as possible. This offshoring of production has helped greatly in making goods more affordable and accessible to the mass market, but it also carries a far greater environmental impact due higher-carbon intensity factory processes and long-distance transport.
Greenshoring shifts the focus from low cost and places it onto sustainable manufacturing. As more companies make commitments to achieve net zero, greenshoring will become a key part of the manufacturing sector’s sustainable transformation and help to address security of supply.
Professor Sam Turner, the High Value Manufacturing Catapult’s Net Zero Champion, said:
Greenshoring isn’t reshoring, it isn’t bringing back that which was once made in the UK. This is about being globally competitive based on having a demonstrably low-carbon, sustainable manufacturing footprint, alongside other competitiveness measures such as high levels of productivity, innovation and growth.
“The opportunity centres on growing the manufacturing sector’s contribution to the UK economy from 10% currently to the 20% of other well-established industrialised nations or greater.
Regions that can evidence a low-carbon manufacturing supply base will have a key competitive advantage in global supply chains.
The timescale depends on how quickly the world tips towards carbon being priced in. A key underpinning of the greenshoring agenda is that low-carbon manufacturing can be evidenced and is valued. When sustainably moves from being voluntary to sitting alongside quality, delivery and cost in terms of influencing decision-making and continuous improvement.
“We expect that to happen within the next five to 20 years but what’s vital is not simply waiting for that to happen. The work must start now so that when markets do begin to look for that low-carbon manufacturing supply base, the UK is the place to go.
Frog Bikes, a children’s bike manufacturer in Pontypool in South Wales, is a prime example of a company that has embraced greenshoring. Founded in 2013, the company designs and builds quality, light weight and affordable kids bikes, employing 54 people.
In 2021, the business reduced its total emissions by just over 10% year-on-year despite a 14% increase in the number of bikes built.
“Part of that came from design improvements to reduce the amount of steel and aluminium used in each bike, but its primary decarbonisation focus is on sourcing lower-carbon aluminium and alternatives to plastic. In doing so, Frog Bikes has also started to secure the downstream manufacturing content, the fabrication, which was currently done overseas.
“That’s another key part of the greenshoring vision. Most carbon emissions are embodied in the raw materials. Greater control over an increasingly low-carbon, local material supply base enables companies like Frog Bikes to bring additional parts of the manufacturing value chain closer to home.
“The UK has an opportunity to take advantage of greenshoring and low-carbon manufacturing. Successfully exploiting this advantage, however, relies on addressing the lack of common carbon auditing and monitoring standards.
Carbon accounting is becoming increasingly important for all companies that wish to understand and track the carbon emissions associated with their products or services. Without appropriate auditing and monitoring system in place for Scope 3 supply chain emissions, there is no way of knowing where the manufacturing sector is in terms of progress toward organisational and national net zero targets.
The High Value Manufacturing Catapult, established and supported by Innovate UK, has called for a universal methodology for measuring and reporting emissions to be developed – with government agreement on which metrics must be used – in a series of Embodied Emissions and Net Zero reports.