Sustainability Compliance: Overcoming Regulatory Challenges in Industrial Operations

Businesses face pressure to set and meet high sustainability standards from many different fronts, including regulatory demands, consumer and investor expectations, and aspirational goals. More and more companies are implementing environmental, social, and governance (ESG) frameworks, both in response to current and emerging regulations and as a method of maintaining transparency with stakeholders. While this represents a step forward in corporate strategy, it increases the already-heavy compliance burden businesses face.

What Is Sustainability Compliance? Understanding the Regulatory Landscape

Compliance in sustainability refers to the guidelines and standards a business implements to meet mandatory and voluntary benchmarks related to environmental compliance and social responsibility. ESG compliance also includes governance standards that companies implement to remain transparent and accountable.

The 3 Pillars of Corporate Sustainability

For corporations, sustainability includes contributing value to shareholders, employees, consumers, and society. The following pillars support these sustainability goals:

• Environmental: The environmental pillar includes reducing your carbon footprint, waste, water and energy consumption, and other parameters that negatively impact the environment.
• Social: The social pillar refers to activities, policies, and conditions that impact people, including employees and the local and global community.
• Economic: The economic pillar deals with a company’s need to remain profitable. If a business isn’t profitable, it can’t be sustainable.

Elements of Environmental Compliance

Environmental compliance is closely related to the pillars of corporate sustainability, but it focuses on specific accountability and risk mitigation measures implemented by businesses. The biggest difference is the governance component, which refers to the financial risks associated with poor corporate governance practices, such as corruption.

Biggest Compliance Challenges in Industrial Operations

In the U.S., environmental compliance is still largely voluntary. However, in other countries, such as those in the European Union, ESG reporting is mandatory. Many investors in the U.S. rely on environmental reporting to make ethical investing decisions.

In other words, environmental compliance is an increasing concern for businesses. Given the complex nature of regulatory compliance, industrial operations face significant challenges in meeting the obligations associated with ESG and managing sustainability legal compliance protocols.

Regulatory Reporting

Environmental reporting requirements involve disclosing data from a broad spectrum of activities related to responsible business practices. Collecting this data can be difficult due to the scope involved. Data in disparate systems, departments, and functions needs to be collected and brought into a central location where it can be analyzed and reported accurately.

Emissions Tracking

Almost every activity your business engages in can contribute to your carbon footprint. As such, tracking your emissions can be complicated when they include external emissions generated throughout the value chain. Emissions are categorized into three groups based on their source:

• Scope 1: These emissions are generated from sources you control directly, such as the fuel you burn in your fleet of vehicles.
• Scope 2: These emissions are those you generate indirectly through the energy you purchase and consume, such as the electricity used in your production facilities.
• Scope 3: These emissions are generated outside your direct control, but are generated upstream and downstream in the production cycle. The emissions that occur prior to production include activities such as employees commuting to work. Downstream Scope 3 emissions include activities such as consumers disposing of your products. According to the global consulting firm McKinsey & Co., Scope 3 emissions account for approximately 90% of an organization’s total emissions.

Environmental Performance Benchmarks

Given the broad range of activities that contribute to emissions, it can be overwhelming to establish performance benchmarks for sustainability and environmental compliance. Different countries and industries have varying benchmarks, and companies that operate internationally must comply with multiple — often conflicting — standards.

Common benchmarks included in ESG frameworks include:

• Carbon emissions: Sets limits on greenhouse gas emissions
• Energy efficiency: Energy consumption in relation to output
• Water usage: How much water you consume
• Pollution: Air, water, and soil pollution contaminants generated
• Biodiversity impacts: How business operations affect the ecosystem

5 Best Practices for Maintaining Sustainability Compliance

The following best practices will help you achieve and maintain sustainability compliance requirements.

Establish a Comprehensive Environmental Framework

You can start by outlining sustainability goals that align with compliance mandates and organizational values. Your framework should identify roles, responsibilities, policies, and procedures for meeting environmental benchmarks.

Build a Sustainable Supply Chain

Because upstream and downstream emissions comprise such a large percentage of your total emissions, building a sustainable supply chain can significantly reduce your carbon footprint. To do so, you can make environmental reporting a criterion for evaluating suppliers and vendors. Include emissions from all scopes to get a holistic picture of environmental impacts throughout your value chain.

Implement Robust Reporting Systems for Transparency

Effective reporting systems are the foundation of environmental compliance. Compliance software can automate and simplify the process. Also, artificial intelligence programs can integrate data from multiple sources into a comprehensive report that covers all relevant environmental benchmarks.

Improve Data Integrity and Accuracy Across Operations

Data collected from multiple systems can often have inaccuracies and inconsistencies due to varying formats and systems. Implement data collection and cleaning standards to achieve more accurate insights for strategic planning and potential risks. The output your models generate is only valuable if your data input is accurate and high-quality. Particularly in production processes, data cleansing and contextualization are paramount.

Develop Effective Systems for Ongoing Monitoring and Auditing

Taking a proactive approach to meeting sustainability goals can help you achieve them. With ongoing monitoring and auditing, you can identify areas where you may be in danger of exceeding allowable thresholds. AI-based compliance management software can monitor your data for trends and anomalies that could indicate compliance violations.

The Role of Technology in Enhancing Sustainability Compliance

Technological advancements can improve compliance by consolidating manufacturing data into a single pool for analysis and reporting. Seeq offers products that show you how to use advanced analytics to improve sustainability. Seeq Industrial Analytics and AI gives you insights that unlock the potential of your operational data, ranging from better equipment performance to strategic planning. Seeq’s AI Assistant delivers the power of generative AI to your entire team so they can increase their productivity and learn new skills.

Ethical Practices and Stakeholder Engagement in Sustainability Compliance

Ethical practices are baked into sustainability compliance. However, you’ll need to create a company culture that upholds these values to achieve stakeholder and employee buy-in.

Prioritize Transparent and Accurate Reporting

Begin by generating clear, data-backed sustainability disclosures that avoid “greenwashing” — using misleading implications about your environmental impact. Following established frameworks will make it easier to report relevant data. A third-party audit and verification of your environmental reporting will also add transparency to your records.

Empower Cross-functional Collaboration

Centralized platforms allow stakeholders in all departments to work together towards achieving sustainability goals. Process engineers, environmental managers, compliance officers, and operations personnel all need access to shared analytics data in order to implement successful compliance strategies. Incorporating operational data into your environmental management system provides clear data visualization that can simplify compliance for all stakeholders.

The Role of Technology in Enhancing Sustainability Compliance

Technological advancements can improve compliance by consolidating manufacturing data into a single pool for analysis and reporting. Seeq offers products that show you how to use advanced analytics to improve sustainability.

Seeq Industrial Analytics and AI give you insights that unlock the potential of your operational data, ranging from better equipment performance to strategic planning. Seeq’s AI Assistant delivers the power of generative AI to your entire team so they can increase their productivity and learn new skills.

Future Trends in Sustainability Compliance

Artificial intelligence already plays a significant role in sustainability compliance, and this role is likely to expand in the future. Smart manufacturing practices will continue to increase access to sustainable data that can be used to drive improvement. As factories incorporate more automation and robotics, they’ll move toward self-optimizing processes built on this sustainability data.

AI-powered machine-learning algorithms will be able to improve based on data generated from interconnected equipment and systems. This advancement will be part of a trend toward AI-powered strategic decision-making. Systems will eventually be able to make real-time process optimization adjustments, such as dynamically allocating production resources, including materials and labor. AI-driven sensors will measure carbon emissions at a granular level, allowing you to track your compliance and alerting you if you exceed established thresholds.

Seeq: Your Partner on Achieving Sustainability Compliance

Seeq helps deliver valuable insight from operational data to companies in many industries, such as the oil and gas industry. Our advanced AI and analytics platform provides a centralized source for all your data from disparate systems and tools. Our software is specifically built for time series manufacturing data, so you can easily navigate complex regulations and take a strategic approach to business operations. You’ll have access to all of your data in our Workbench platform, where you can clean it and perform calculations in near real-time. Reach out today to book a live demo.