How manufacturing is discovering new virtuous circles as it moves toward a more circular economy

Simple economics have been pushing manufacturers to find less energy-intensive ways to make things, and companies that make the machinery to power a greener economy are benefiting too. “You go where the dollars go,” sums up Elfrun von Koeller, an analyst with Boston Consulting Group. “Trillions of dollars of value creation will move into renewable spaces.”

Take the oldest enterprise on Fast Company’s list of the most innovative companies in manufacturing, Timken. The Ohio-based ball-bearings firm, founded in 1899, has leveraged learnings in metallurgy to develop a custom steel alloy—which it hardens in a “heat treating” process that relies on electricity instead of fossil-fueled furnaces, and which can itself be made from 100% recycled steel—optimized for use in increasingly giant offshore wind turbines.

Nucor, at a different stage in the steel supply chain, has only been working to decarbonize different facets of its operation but has developed its own steel alloy for wind-turbine use—and those wind farms can then power the electric-arc furnaces in Nucor’s mills.

And one of the younger firms on this list, Redwood Materials, has positioned itself in the middle of the battery market to collect spent EV batteries and extract raw materials for use in future EVs. That gives carmakers a break from having to outsource mining to overseas sources that have a history of falling short of U.S. environmental and labor standards, but it also stands to lower the cost of new EVs.

The intersecting trends of increasingly affordable sustainability and a growing recognition of the longer-term payback of a smaller carbon footprint have sped up this progress further.

“About 30% of emissions reductions, especially scope 1 and 2 in most industries, you can do at net-zero cost,” says von Koeller, referring to the terms of art for the pollution coming from a company’s own facilities (scope 1) and from the energy sources powering those places (scope 2).

She adds that she’s seeing companies now willing to budget for a longer payback period for cost-reduction projects that also yield “substantial carbon-reduction impact”—five years, up from the usual two.

The past two years have seen the U.S. government put a red, white, and blue thumb on the scale with such sweeping industrial-policy measures as the CHIPS and Science Act and the Inflation Reduction Act. The former rewards tech manufacturers for setting up shop in the States; the latter offers a range of incentives for companies to switch to greener and cleaner energy inputs. Those and other measures stand to fuel sustainability investments in manufacturing and other sectors.

Redwood, for example, is putting a $2 billion Department of Energy loan to work to expand a facility in Nevada and build a new factory in South Carolina.

“Create the demand,” says von Koeller, “the companies will figure out how to serve it.”

Explore the full 2024 list of Fast Company’s Most Innovative Companies, 606 organizations that are reshaping industries and culture. We’ve selected the firms making the biggest impact across 58 categories, including advertising, artificial intelligence, design, sustainability, and more.

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