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Sustainability Regulations & Initiatives: Impact on Manufacturers and Their Partners

Posted by IndustrySelect on Wednesday, April 17, 2024

 Sustainability Regulations & Initiatives: Impact on Manufacturers and Their Partners

In the face of a rapidly changing global environment, sustainability has become a central concern for businesses worldwide. New regulations are emerging at a rapid pace, impacting everything from carbon emissions to waste management. While these regulations pose challenges, they also present significant opportunities for manufacturers and the companies that sell to them. Today, we’re taking a closer look at the regulations and incentives manufacturers are facing and how B2B companies can leverage these to strengthen their relationships with manufacturers and position themselves as valuable sustainability partners

The Emergence of Sustainability Regulations & Incentives for Manufacturers

The last decade has seen a surge in environmental regulations aimed at reducing carbon footprints, managing waste, and promoting renewable energy sources. Governments worldwide are implementing policies that require businesses to adhere to strict environmental standards. These regulations often come with significant penalties for non-compliance, making them a critical consideration for any business operation and are increasingly impacting various sectors, including manufacturing. Here are some of the latest regulations that are shaping the U.S. manufacturing industry:

New EPA Standard

The Environmental Protection Agency (EPA) has recently introduced a new air standard, specifically targeting PM2.5. PM2.5 refers to fine particulate matter. In an effort to protect public health, the EPA has revised the annual PM2.5 standard from 12.0 μg/m³ to a stricter 9.0 μg/m³. This revision places the U.S. among the countries with the strictest PM2.5 limits globally, surpassing many developed and developing nations. However, this new standard has been met with opposition from organizations such as the National Association of Manufacturers (NAM), who express concerns that it could hinder manufacturing and job creation due to perceived flawed science and permit gridlock.

The states most impacted by the new Environmental Protection Agency’s air quality standard rules are California, Michigan, and Illinois, as they would need to adhere to reduced acceptable levels of particulate matter.

Despite these concerns, the new regulation stands, requiring significant adjustments within the manufacturing sector to comply with the stricter air quality standards. This development is another example of how sustainability regulations are shaping industries and their B2B interactions.

SEC Climate Disclosure Rules

The Securities and Exchange Commission’s (SEC) new climate disclosure rules, which will be effective in 2026, mandate transparency in material climate risks. However, these rules do not require Scope 3 emissions reporting. This regulation is a significant step towards ensuring that businesses are transparent about their environmental impact, which can influence their relationships with stakeholders, including B2B sales.

ESG Regulations

Environmental, Social, and Governance (ESG) regulations are also gaining prominence. Many of these regulations, including new rules in the EU and the U.S., aim to make data and progress towards sustainability targets more transparent and standardized. This shift is likely to prompt many firms to get serious about ESG data collection and reporting. These new rules are expected to mark a shift in how organizations approach ESG, viewing it not just as a compliance and risk management task, but as an opportunity to overhaul their business models.

Green Initiatives for Businesses

In the face of growing sustainability regulations, numerous incentives have been introduced to encourage manufacturers to adopt greener practices. These incentives, ranging from tax credits to grants, aim to offset the costs associated with implementing sustainable technologies and practices. Here are some key incentives that are currently available for manufacturers looking to go green:

Green Tax Credits and Incentives in the Inflation Reduction Act: This act signed by President Biden in 2022 contains many new tax credits to incentivize taxpayers to go green with energy from renewable resources. It also extends or adds to currently existing credits for additional tax-saving opportunities.

Investment Tax Credit (ITC): Businesses can receive credits on up to 30% of their overall investment expenses if they invest in solar energy.

Business Energy Investment Tax Credit (ITC): This credit is available for businesses looking to invest in renewable energies like wind or solar power. The base credit is 6% to 30%, depending on project status and labor factors.

Electric Vehicle Charging Station Credits: Companies that install electric vehicle charging stations may qualify for a federal tax credit, which ranges from 30% of the eligible costs.

Small Business Energy Efficiency Grant Program: There are many grant programs that support small businesses aiming to improve their energy efficiency or renewable energy systems.

The Federal Buy Clean Initiative is another significant regulation implemented in accordance with the 2021 Federal Sustainability Plan. This initiative focuses on incentivizing clean manufacturing and investment in smart manufacturing technology.

Understanding the Impact on Manufacturing

For B2B manufacturers, these regulations and incentives mean re-evaluating their production processes, supply chains, and product designs to meet new environmental standards. This shift can involve substantial investment in new technologies and processes that reduce environmental impact. Manufacturers are also increasingly required to provide detailed information about the sustainability of their products and processes, adding another layer of complexity to their operations.

For instance, building a new facility in the current regulatory environment presents several challenges. The proposed regulatory changes could lead to more stringent permitting processes, causing potential delays in the establishment of new facilities. Additionally, the stricter environmental rules necessitate businesses to invest more in compliance measures. This includes upgrading equipment and implementing robust emissions monitoring systems to adhere to the new standards.

Moreover, the intensifying battle for talent, exacerbated by new manufacturing incentives, is leading to a labor shortage that industries must navigate. Lastly, navigating the new regulatory environment requires significant resource allocation, posing substantial investment risks for non-compliance. These challenges underscore the importance of incorporating sustainable design, utilizing energy-efficient technologies, and maintaining transparency with stakeholders to mitigate potential delays and costs.

Staying Ahead of the Green Curve: Meeting the Needs of the Green(er) Manufacturer

The new sustainability regulations have a profound impact on the sales strategies of companies selling to manufacturers. Sales teams must now be well-versed in environmental regulations and able to communicate how their products or services can help manufacturers comply with these new standards. This requires a deep understanding of both the regulations themselves and the specific sustainability challenges faced by each manufacturer.

Here are some specific ways you can leverage these regulations and incentives to enhance your B2B sales strategy:

Highlight Relevant Solutions: Does your company offer products or services that can help manufacturers comply with new regulations? Perhaps you provide sustainable materials, energy-efficient equipment, or waste reduction technologies. Now is the time to showcase these solutions and emphasize how they can address your clients' specific needs.

Become a Sustainability Partner: Don't just sell products, sell expertise. Position yourself as a trusted advisor who understands the complexities of environmental regulations. Offer guidance on navigating compliance requirements and achieving sustainability goals.

Content Marketing with a Regulatory Focus: Create valuable content resources like white papers, webinars, or infographics that translate complex regulations into actionable insights. This demonstrates your thought leadership and establishes you as a go-to source of information for B2B manufacturers navigating the green shift.

As we celebrate Earth Day, it is clear that that new green initiatives and regulations are having a major impact on U.S. manufacturers. New sustainability regulations are not just changing how manufacturers operate; they are also reshaping the sales strategies of those who sell to them. Companies that embrace this change, educate their clients, innovate their offerings, and build strong partnerships will be well-positioned to succeed in this new era of sustainable business.

From increased energy costs to labor shortages to looming regulations, U.S. manufacturers are facing abundant challenges in a rapidly-shifting environment. Now is the time to reach out to companies in need of your products and services. IndustrySelect is the industry’s #1 most trusted platform for identifying and contacting decision-makers in the industrial sphere. Set up your free account today, loaded with 500 real company profiles, so you can test all the features of this powerful software.

 

 

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