Significant challenges lie ahead for Canadian small- and medium-size enterprise (SME) manufacturers before they can fully commit to sustainable development, according to the 2024 Green Manufacturing and Clean Technology Adoption Report prepared by Canada's Excellence in Manufacturing Consortium.

The report was prepared in collaboration with Next Generation Manufacturing Canada.

The in-depth survey of 700 manufacturing firms, conducted over a six-week period, produced insights into the strategic thinking of senior manufacturing leaders with respect to the transition to net-zero.

The report suggests it is both "urgent" and "imperative" that Canada's manufacturing sector deepen its understanding of climate change and consequently ramp up efforts to introduce green manufacturing practices and clean technologies as part of an overall commitment to decarbonization.

Paving the way for a sustainable, low-carbon production ecosystem is a holistic, three-pronged strategic approach that calls for the deployment of green manufacturing processes, building a skilled workforce capable of implementing this new pathway, and the rollout of cutting-edge clean technologies.

"To achieve 'Net Zero by 2050' Canadian manufacturers face several challenges, especially SMEs," Excellence in Manufacturing Consortium (EMC) president Jean-Pierre Giroux said in a release. "Transitioning to a low-carbon production ecosystem . . . Unfortunately, the feedback indicates high costs and lack of internal skills and technical capabilities necessary are significant barriers."

Barriers to SMEs entering the clean tech world

Based on feedback from its SME respondents, the report offers actionable recommendations to propel the sector toward a low-carbon economy. This involves the need to address several key barriers that prevent Canadian manufacturers from fully embracing green tech solutions and accelerating toward increased sustainability. 

According to the report's findings, "costs and production uncertainty" are two main issues manufacturers said were slowing the transition to low-carbon practices. "Too costly" topped the findings as the leading factor exerting a "moderate and large" negative impact.

Additional feedback from SMEs was also pointed to the two other main barriers to cleantech adoption: 70.2 per cent of respondents regarded that such "investment (was) not necessary to continue operations" while 64.6 per cent listed "lack of financing and support" as a factor.

Through industry consultations, EMC notes that "lack of support or services from government" most often refers to a less favourable tax or tax credit environment for acquiring new technology and equipment.

Main reasons for not adopting cleantech

The report identified 13 key issues facing cleantech adoption by SMEs, divided into four categories:

Approach:

• not sure where to start;
• unclear measurement and reporting requirements; and
• lack of adequate information about advanced technologies.

Cost:

• too costly;
• lack of financing and support; and
• not convinced of economic benefit.

Production:

• uncertainty, risk, and disruption;
• investment not necessary to continue operations; and
• difficulties integrating advanced technologies into existing systems.

Stakeholders and personnel:

• lack of services from the government;
• lack of services and support from external vendors;
• weak customer demand; and
• lack of internal skills/capabilities to support investment.

The report also found that nearly half (47 per cent) of manufacturers were not implementing green technology "due to a lack of skilled talent."

In addition, participating manufacturers rated their overall capabilities and preparedness for transition to net zero as "fairly low."

GreenMFG Network to spur transition to low-carbon economy

Founded in the mid-1980's and incorporated in 1997, the EMC serves over 60 consortium regions across more than 450 communities.

The not-for-profit organization offers a broad range of hands-on programs and services that are geared toward helping manufacturers lower costs, improve their competitiveness, share best practices, and become more efficient with respect to day-to-day manufacturing operations.

Guided by the critical insights issuing from the report, the EMC is harnessing its long-standing experience in energy management and sustainability by launching its in-house GreenMFG Network, a major initiative aimed at bolstering manufacturing awareness of green solutions and accelerating the sector's transition to a low carbon economy.

Providing a path forward for SMEs

"By enabling small- and medium-sized manufacturers access to expertise, tools and resources needed to transition to a green and low-carbon production ecosystem, we anticipate measurable increases in productivity and competitiveness," the report states.

"EMC is estimating that SMEs participating (in the GreenMFG Network) will identify significant opportunities to reduce related operational costs, GHG (greenhouse gas) emissions reductions, energy efficiencies and management, translating to millions of dollars in annual savings for the entire sector."

In order to increase awareness of available green and cleantech solutions, the EMC has committed to providing businesses with a comprehensive package of briefings, workshops, roundtable consultations and certification training throughout 2024. 

"These initiatives aim to empower manufacturers with the knowledge and resources needed to navigate the transition towards sustainability effectively."