Manufacturing companies must now document and disclose their greenhouse gas emissions, energy usage and hazardous materials handling as regulators implement new sustainability requirements. The Securities and Exchange Commission (SEC) Climate Disclosure Rules represent one of the most significant changes to reporting requirements, requiring public companies to report greenhouse gas emissions in SEC filings. While these rules currently apply only to public companies, private manufacturers will likely face pressure to provide similar disclosures to meet customer needs, according to Marcel Minutola, president and co-founder of Peritia LLC and professor of strategic management at Robert Morris University.

Data Management Challenges

These new emissions reporting requirements expose a common problem: while manufacturers collect vast amounts of environmental data, many cannot analyze it effectively enough to meet SEC standards. "Many companies are data rich but insight poor," Minutola says. Their environmental data sits in massive, disorganized databases that make accurate compliance reporting difficult.

The problem extends beyond data management. Robert Ferrone, former chair of Energy Star and developer of the Design for the Environment program at the EPA, says many companies haven’t fully embraced sustainability initiatives. "Sustainability has become a frequently discussed topic in the modern business world, yet many organizations still regard it as little more than a buzzword," he says. "Many organizations believe that sustainability is just another catchy advertisement. This perception stems from a combination of skepticism about its practical value, short-term business pressures, and superficial implementation strategies that fail to achieve meaningful change."

Global Impact

While U.S. manufacturers adapt to new SEC rules, they must also comply with stricter international standards. European Union regulations particularly affect American companies selling products overseas.

The European Union’s REACH and RoHS directives have forced U.S. manufacturers to reformulate products and revise supply chains to eliminate hazardous chemicals, according to Ferrone.

Beyond materials restrictions, the European Union has implemented broader environmental requirements. The Carbon Border Adjustment Mechanism sets prices for imported goods based on carbon content, while the Circular Economy Action Plan requires manufacturers to consider product end-of-life in their designs.

Technology Solutions

Manufacturers increasingly turn to new technology to meet these expanding requirements. Modern systems help track emissions, monitor resource usage and document compliance.

Technology applications range from basic monitoring to advanced predictive systems, Minutola explains. "Emerging technologies like AI, IoT, and other applications are improving manufacturers’ abilities to meet sustainability regulations through a variety of means," he says. Companies now use enhanced sensors for emissions monitoring and machine learning to forecast equipment life cycles, while developing blockchain systems to track materials.

Cost Management

While technology offers solutions, companies must balance implementation costs with compliance needs. Many manufacturers find success starting with basic efficiency improvements.

Jamie Orlandi, USA-Canada representative for isoTracker Solutions Ltd, recommends beginning with simple measures that provide quick returns. "It’s cliché, but go for low-hanging fruit and easy things first. In the shorter term, simple things like what your parent may have always nagged about: turn off the lights! Turn off equipment when not in use and use natural lighting, if possible," he says.

Beyond basic efficiency, companies need strategic approaches to manage sustainability costs. "Get creative. First, partner with others to work collaboratively to meet the sustainability initiative," Minutola says. "You do not have to do it alone." These partnerships might include competitors. Companies can find support through various channels, he adds, including local, state and federal funding opportunities and value chain partners.

Audit Preparation

Regular audits help companies track their progress toward sustainability goals. To prepare for them successfully, teams must understand both stakeholder expectations and industry standards.

Orlandi emphasizes the importance of systematic preparation. "The most important steps to prepare for sustainability audits are going to include or overlap with the same steps you’d do for any audit: identify your stakeholders and expectations – environmental, social and economic," he says. Companies should develop checklists and conduct regular internal audits, using industry best practices as benchmarks.

"Develop checklists and use them to conduct internal sustainability audits on a routine basis," Orlandi says. "Investigate what the best practices for sustainability in your industry are and use that as a baseline upon which to compare your organization."

However, maintaining compliance isn’t easy. Manufacturers often struggle to stay current with changing regulations while managing resource constraints, experts say. "Among the biggest challenges I see, include staying abreast of new regulations and complying with both new and existing regulations, [are] just navigating multitude of standards," Orlandi notes. Many organizations also face funding and time limitations.

Future Requirements

Industry experts expect sustainability regulations to become more stringent. Market pressure, rather than government action, may drive these changes.

"I think that sustainability regulations will get stricter regardless of the administration because the market is demanding it," Minutola says. He points to growing energy demands from data centers and international climate goals as factors that will affect manufacturing requirements.

What’s more, customer expectations can drive sustainability initiatives beyond regulatory requirements. Public sentiment can make or break a business, and the public’s awareness of climate change is only growing. This means that organizations’ overall sustainability levels have "come under greater scrutiny and [become] a competitive issue,’ Ferrone says.

Environmental, Social and Governance reporting requirements will likely expand beyond current standards, experts say. Companies that only meet minimum requirements may find themselves at a competitive disadvantage.

"Regulations are going to get stricter as increased demand for electricity from the large data centers puts increased stress on our grid," Minutola says. "While not driven by the manufacturers, they will be forced to respond [to it]."

Implementation Strategies

To meet stricter environmental regulations while staying profitable, manufacturers must move beyond basic compliance to create comprehensive sustainability programs. Companies should treat audits as opportunities for improvement rather than regulatory hurdles.

Orlandi recommends setting clear timelines for improvements. "Remember that audits are opportunities for improvement. Strive to look further than naming risks, root causes and CAPAs – set target completion dates to keep you and your team on track," he says.

Supply chain management plays an increasing role in sustainability compliance. European regulations now require companies to assess their entire supply chain’s environmental impact. This requirement, Ferrone notes, creates pressure throughout manufacturing networks to adopt sustainable practices.

The transition affects core business operations. "Transitioning to sustainable practices often involves restructuring supply chains, production processes, and logistics ­– for example, sourcing renewable materials or adopting energy-efficient manufacturing can disrupt established workflows," Ferrone says.

Additionally, different sectors face distinct challenges when navigating sustainability regulations. The European Union’s comprehensive approach, which includes stringent requirements like REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals) and RoHS (Restriction of Hazardous Substances), impacts companies based on their specific products and processes. Industries like chemicals and electronics are particularly affected due to strict materials requirements, which demand careful management and innovation to meet these high standards.

Different industries face specific challenges under sustainability regulations. For example, The European Union’s Registration, Evaluation, Authorization, and Restriction of Chemicals and Restriction of Hazardous Substances requirements impacts companies based on their specific products and processes. For example, manufacturers who produce chemicals and electronics are particularly affected due to strict materials requirements.

Cultural Changes

Complying with SEC emissions reporting and European Union chemical restrictions requires manufacturers to change their basic operations. Companies must shift from viewing sustainability as a marketing tool to treating it as a core business function.

"The perception of sustainability as a buzz idea stems from a combination of shallow implementation, short-term pressures and a lack of accountability," Ferrone says. He emphasizes that success requires leadership commitment. When executives view sustainability as merely a regulatory burden rather than an opportunity for innovation, implementation often falls short.

Getting executives to invest in sustainability programs starts with showing them the business case. "What should take place is a high-level education to top level management," Ferrone says. "What needs to be transmitted to upper management [is the] importance of sustainability’s growth worldwide."