How the industrial sector is turning net zero goals into practice

The industrial sector, including manufacturing and its interconnected value chains, contributes nearly 30% to global greenhouse gas emissions, making it a crucial player in the pursuit of net zero carbon emissions by 2050.

As a crucial player in the global economy with a vast associated network of stakeholders, decarbonizing the industrial sector won’t be simple. The transition to net zero emissions is not just an environmental imperative, but also a key to ensure the long-term competitiveness and sustainable development of the industry.

For companies, it means a fundamental rethinking and restructuring of production and operational models to address different scopes of emission, which face financial, technical and organizational challenges.

When it comes to decarbonizing the industrial sector’s value chain, Scope 3 emissions present a complicated challenge. Scope 3 encompasses all indirect emissions not included in Scope 2, which occur throughout the value chain of the company reporting them, including those from upstream and downstream sources.

Reducing Scope 3 emissions is challenging due to the complexity of global supply chains, difficulties in establishing partnerships and the need to scale the technological shift required for decarbonization. Companies face knowledge gaps and reluctance to change, along with resource constraints. Additionally, inconsistent standards, inadequate infrastructure and limited visibility across supply chains complicate effective measurement and management of emissions.

Overcoming barriers to Scope 3 decarbonization is crucial for companies striving to achieve net zero emissions at the right pace and scale.

To assist companies at various stages of this transition, from building the foundation, to starting from within and discovering the pathway through value chains and the industrial ecosystem, the World Economic Forum’s Centre for Advanced Manufacturing and Supply Chains established the Industry Net Zero Accelerator initiative, in partnership with Cambridge Industrial Innovation Policy (Institute for Manufacturing, University of Cambridge), Capgemini, Rockwell Automation and Siemens.

The initiative has developed a comprehensive 10-step framework to guide companies toward achieving net zero emissions. This framework serves as a roadmap for integrating sustainable practices throughout all aspects of business operations, from initial emissions assessment to stakeholder engagement and continuous improvement. By collaborating with a growing community of industry executives, the initiative aims to demystify and accelerate the net zero journey through the dissemination of how-to knowledge and the sharing of best practices.

Furthermore, the initiative explores in depth how to tackle Scope 3 emissions and has developed a comprehensive framework on the opportunities to achieve net zero targets in manufacturing and value chains. Structured around four action levels — initiating internal changes, empowering the supply chain, leveraging industrial ecosystems and fostering a cultural shift towards sustainability — the No-Excuse Framework is pivotal for industries aiming to reduce their environmental footprint.

China’s manufacturing industries are a major component of the country's economy, contributing approximately 28% of its value added. Given the scale of China's economy, this has a substantial impact on the global market. As the world strives for a net zero future, the transformation of leading Chinese manufacturing companies provides valuable insights into sustainable evolution of manufacturing operations and supply chains. Their journey underscores the importance of innovation and collaboration.

Foxconn, an electronics manufacturer, tackled Scope 3 emissions by compacting supply chain efficiency and recycling. Recognizing that a significant portion of their emissions came from aluminium and stainless-steel alloy consumption, Foxconn implemented a reverse logistics process to recycle aluminium debris for reuse in the melting process. Through a digital platform, they ensured traceability, monitored recycling rates and tracked product carbon footprints, fostering transparency and accountability. This approach reduced raw aluminum usage, lowered material costs and decreased carbon footprints, benefiting both Foxconn and its suppliers. By leveraging innovation, digital integration and strong partnerships, Foxconn demonstrates how manufacturers can achieve net zero goals while driving economic growth.

Contemporary Amperex Technology (CATL), a pioneer in energy technologies, launched the "CREDIT" program to promote sustainability across its supply chain. Evaluating suppliers on 135 sustainability indicators, aligned with EU standards, CATL influences purchasing decisions and motivates suppliers to transform. Since 2022, CATL has assessed 35 core suppliers and conducted 51 sustainability training sessions. In 2023, it expanded assessments and introduced post-assessment tracking to support supplier sustainability transformations. By setting stringent standards and providing continuous support, CATL not only enhances its sustainability but also drives industry-wide change. This approach highlights the effectiveness of clear frameworks, rigorous evaluation, and cooperative efforts in achieving ambitious net zero goals.

The journey towards net zero is a collective effort that transcends regional boundaries, demanding practical strategies and collaborative initiatives on a global scale. Leading manufacturers like Foxconn and CATL, with their operations rooted deeply in China, are at the forefront of this path, demonstrating that net zero goals are achievable with the right strategies and a spirit of cooperation that spans continents.

The World Economic Forum’s Industry Net Zero Accelerator initiative provides a robust framework and actionable insights that are designed to facilitate a unified approach across regions, ensuring that stakeholders at all levels are empowered to contribute to and benefit from the global shift towards sustainability.

We thank the Industry Net Zero Accelerator initiative’s team and partnering organizations – Cambridge Industrial Innovation Policy, Capgemini, Rockwell Automation, Siemens – for their contribution to the initiative.