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Siddharth Batra (JSIA)
Oct 16, 20214 min read

Achieving Responsible Capitalism: Industry 4.0 for Net Zero Emissions

Updated: Apr 9, 2022



Responsible Capitalism

Capitalism, as an ideology, is considered to be the most resilient one. It is due to the fact that capitalism reinvents itself when it faces existential challenges. One of the biggest challenges for capitalism in recent times has been the Covid-19 crisis. It is widely believed that the countries with capitalism as an economic system have been affected the most due to the pandemic. As a result, capitalism as a system of production and distribution of goods and services has faced criticism from all corners of the world. In this background, G7 summit of the most advanced capitalist countries took place in Cornwall, England. The member countries adopted Cornwall Consensus (The Cornwall Consensus, 2021), according to which, capitalism must reinvent itself into a new form of capitalism (responsible capitalism). This new face of capitalism will be more responsive to socio-economic challenges faced by countries in 21st century and will look forward to addressing these challenges while sustaining decent economic growth. One of major challenges of 21st century is that of climate change and achieving net zero emissions in a timely manner.


Climate Change and Industry

According to the recently released IPCC 6th assessment report, with the current measures that States are taking towards tackling climate change, a 2.7 degree rise in global temperature is expected by 2100. IPCC highlights this as ‘code red for humanity,’ and calls for urgent rise in actions to tackle climate change.


According to US Environmental Protection Agency, Industry is one of the major contributors to climate change and accounts for 23% of the total greenhouse gas emissions (GHGs) (Sources of Greenhouse Gas Emissions, n.d.). These emissions are mainly caused by the manufacturing practices adopted by the industry, including burning of fossil fuels and chemical reactions, to transform raw materials into finished goods (Sources of Greenhouse Gases , n.d.). Due to the urgency to tackle climate change, Industry will have to take steps to evolve eco-friendly mechanisms, especially for manufacturing sector. In this context, the arrival of Industrial Revolution 4.0 is considered as a blessing in disguise.


Industry 4.0 for Climate Change

Industry 4.0 is the 4th phase of Industrial Revolution and deals with application of new age technologies like Artificial Intelligence, Machine Learning, interconnectivity and big data in manufacturing processes and supply chain management to achieve higher efficiency and effectiveness (What is Industry 4.0, n.d.). For this reason, Industry 4.0 is also called as smart manufacturing or Industrial Internet of Things (IIOT).


Industry 4.0 can turn enterprises into smart manufacturing units and can assist them to achieve net zero emissions through multiple ways. First, smart manufacturing units utilise analysis of real time data for decision making. The availability of data would provide real-time information on various issues which can occur during the production process. These issues could be losses in material consumption, energy consumption; instances of human failure; issues with speed of manufacturing and issues related to quality of goods produced. Addressing these issues could lead to reduction in emission of GHGs during manufacturing processes.


Second, application of IIOT would lead to more efficient supply chain management which will result in decrease in transportation activities and resultant decrease in emissions of GHGs. Third, real-time data analysis of different phases of production processes would provide insights into consumption of raw materials and their modification into the final good. These insights could lead to utilisation of raw materials in the most effective manner. Thus, decreasing the levels of consumption of raw material and therefore, their extraction.


Fourth, recycling activities of the manufacturing units can be made efficient with the usage of new age technologies provided by Industry 4.0. Thus, instead of filling the landfills and water bodies with leftovers of manufacturing processes, these leftovers can be utilised to further produce desired goods. Fifth, more efficient and effective manufacturing would lead to more profits. A part of the added profits can be utilised in Corporate Social Responsibility (CSR) activities focussing on reducing GHG emissions within the society. Sixth, to implement data driven approach to decision making, virtual models are created by manufacturing units.


Most efficient of these models can be shared with other manufacturing units producing similar goods. Thus, smart manufacturing can be scaled and as a result, increasing number of manufacturing units can decrease their GHG emissions. Lastly, manufacturing units producing recycled goods, after adopting Industry 4.0, can scale up their production which would lead to increased recycling activities. This would help creating a circular economy.


The push towards adoption of Industry 4.0 should be made by the governments. Governments must bring policies and schemes which create awareness among enterprises regarding the benefits of Industry 4.0. Such policies should incentivise enterprises to become a part of the 4th Industrial Revolution. However, it is to be noted that such government policies, especially in developing countries like India, must primarily target Micro, Small and Medium Industries (MSMEs), as Industry 4.0 can assure their competitiveness and thus survival.


Conclusion

From the arguments made above, it can be understood that smart manufacturing introduced by Industry 4.0 can lead to reduction in GHG emissions. Enterprises across the world, with assistance from respective governments, must adopt smart manufacturing not only to remain competitive in a market-based economy but also to tackle climate change by reducing their GHG emissions. This would be in line with the aim of creating a more responsible and responsive capitalism, as agreed at the recent G7 meet.


References


Sources of Greenhouse Gas Emissions. (n.d.). Retrieved from US Environment Protection Agency: https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions


Sources of Greenhouse Gases . (n.d.). Retrieved from US Environment Protection Agency: https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions



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