The Role of Knowledge Development in Manufacturing Sustainability

Abstract

The propensity of industrial firms to build sustainability strategies based on knowledge development is an incentive for strategies driven by environmental, social, and economic criteria. However, although firms are increasingly committed to sustainability, poor engagement may lead to strategic drifts. Energy efficiency is one of the most important targets in industrial firms for reducing emissions primarily generated directly by the firm—emissions that are created by generating electricity or heat needed by firms. We focus on energy efficiency, which—along with technological advancement—is the most critical factor in industrial decarbonization and is a pathway for improving economic competitiveness and sustainability. Advances in technological innovation and stakeholders’ requirements provide a range of reasons for achieving environmental benefits. In our view, the outcomes of environmental strategies are influenced by the commitment of firms to sustainable business and their propensity for R&D. Our results show that 44.1% of firms claim to have an investment plan for energy efficiency. This percentage rises to 65% for firms investing more than 4% of their turnover in R&D. A similar trend can be noticed for investments in environmental, social, and governance (ESG) topics, in which 83.3% of the firms claim to have an investment plan of 4% of their turnover. We argue that ESG strategies require competencies and capability building among employees to be successful; otherwise, the risk of strategic drifts increases.

The Effect of Investment in Green Technology and Renewable Technology Adoption on Energy Efficiency and Carbon Emissions Reduction in Indonesian Manufacturing Companies

“…The literature emphasizes the intricate link between energy efficiency measures and the broader goal of achieving substantial carbon emissions reduction [3]. By improving energy efficiency, companies can not only reduce their environmental impact but also enhance their economic competitiveness and sustainability [26]. This aligns with global efforts to promote sustainable manufacturing practices.…”