How midsize manufacturers can benefit from outsourcing sustainability

Building a large internal team for sustainability may not be necessary; outsourcing can enhance compliance and unlock growth opportunities.

In brief

• Building an in-house sustainability team from scratch can be costly; leveraging external specialists offers flexibility and access to critical knowledge.
• Effective sustainability reporting requires dependable data to inform decision-making and achieve regulatory compliance.
• Focused sustainability efforts in areas like greenhouse gas reduction, product innovation and safety can drive ROI-positive approaches for progress.

As sustainability regulations evolve rapidly, midsize manufacturers find themselves at a crossroads, facing uncertainty about how to adapt to the shifting landscape with limited resources.

Gone are the days when greenhouse gas (GHG) emissions reporting and climate risk assessments were a matter of choice; today, these are necessities that demand attention and resources. With new requirements looming, many companies are grappling with how to meet these challenges without overwhelming their already lean teams. The reality is that navigating the complexities of sustainability reporting can feel like a daunting task, especially when resources are tight and expertise is scarce.

Fortunately, outsourcing can provide a lifeline.

By engaging external specialists, manufacturers can not only lighten their reporting burden but also unlock valuable insights into increasing their resiliency and capitalizing on new opportunities — including new processes, technologies and markets.

Identify your sustainability needs

With the ongoing shift from voluntary to mandatory reporting and assurance on sustainability metrics, manufacturers are feeling the pressure to deliver accurate and comprehensive sustainability data — information that’s often managed manually in spreadsheets today, if it’s tracked at all. As a result, organizations must adapt to these new expectations.

It’s essential for organizations to not only gather data but also verify it meets the new and rapidly evolving standards set by regulatory bodies. This often means implementing new and more sophisticated data systems and processes, such as carbon accounting software and last-mile reporting tools, which can be a tall order for those with limited resources. Common GHG accounting issues include verifying the completeness, wherein operational emissions must encompass all sites, the appropriate use of extrapolation for gaps in data and the proper treatment of renewable energy sources. The complexity of sustainability metrics and the demand for transparency make it crucial that manufacturers have dependable data for their reporting.

Adding to the challenge is the reality of resource constraints. Unlike larger corporations that can afford to invest heavily in dedicated sustainability teams, midsize manufacturers typically operate with a lean staff. And with so much of the effort being a one-time cost to stand up these new systems and prepare for assurance, manufacturers are nervous to add to their headcount. That can make it tough to develop and execute effective sustainability reporting and address key sustainability initiatives such as product design, GHG emissions, safety and talent. While bigger firms might have the luxury of hiring specialized personnel, midsize companies often find it harder to justify the costs of adding to their headcount or the unwieldy nature of a new department when its focus is primarily on core business operations.

Given those challenges, it’s important for these manufacturers to take a step back and evaluate their current capabilities. Identifying gaps in their sustainability needs can provide valuable insights. By understanding their specific sustainability needs, organizations can develop a strategic approach that not only meets regulatory requirements but also strengthens their positioning for the months and years ahead.

Common sustainability needs for manufacturers include:

• Beginning or improving the quality of GHG emissions reporting
• Developing and driving the approach to reduce emissions
• Embedding sustainability into product development processes
• Monitoring sustainability regulations and reporting guidelines
• Including sustainability in strategic assessments of new markets and product offerings 
• Assessing asset-level risks across different climate-related scenarios
• Improving employee health and safety performance
• Engaging and retaining employees, including union labor
• Implementing IT systems to facilitate internal and external reporting
• Preparing for assurance of key metrics

Build enduring sustainability relationships

Access to specialized knowledge is a key benefit of establishing strategic partnerships through a “virtual sustainability office.” The landscape of sustainability reporting is complex, and having experts well versed in the latest regulations and leading practices can significantly enhance compliance and performance.

By collaborating with trusted partners who understand the organization’s vision, companies can align their sustainability efforts with their core beliefs and objectives. This partnership enables manufacturers to tackle sustainability challenges pragmatically, freeing internal teams to concentrate on strategic initiatives that drive a meaningful impact.

Building an in-house sustainability team for the first time can be a hefty investment, requiring salaries, training, technology and ongoing management. By working with external specialists who act as an extension of the sustainability function, companies can access the expertise they need without the burden of permanent hires. This approach allows organizations to scale resources according to their needs, making it easier to adapt to changing regulations without incurring unnecessary expenses. The team functions like a Swiss Army Knife, providing a range of tools and expertise precisely when needed, which can be hard to find in a single person or small team.

For example, at one manufacturer, the team supported the client the first year in establishing a strong set of GHG emissions data to support reporting and decision-making. The next year, the client asked the EY team to pivot to developing and executing an action plan for its top emitting sites to reduce operational emissions. At the end of the two years, the client’s emissions reporting was robust and largely automated, and site personnel were making progress on GHG reduction goals. The client then reduced its reliance on the consulting team.

Outsourcing creates a dynamic channel that adapts to the organization’s sustainability needs without detracting from other critical functions. Trusted partners bring the knowledge and experience to efficiently manage reporting, streamlining data collection and analysis to improve the data quality and reporting accuracy. This integrated approach minimizes errors and supports reliable, actionable data.

By embracing strategic partnerships, midsize manufacturers can maintain their sustainability vision and make significant strides in addressing challenges. With the right partner, organizations can transform sustainability reporting into a strategic advantage, enabling them to focus on impactful initiatives that drive growth and resilience.

Miranda Nayyar, Zachary Oliphant and Henrik Turk also contributed to this article.