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Carlos Roberto Liboni

President of Techind Consultancy and APL Coordinator Metal Mechanic of the Sertãozinho

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The challenge of sustainable industry development

The latest news from Brazilian daily life show an improvement in the country's international confidence. We had 3 of the major rating agencies improve Brazil's rating, we witnessed a movement towards fiscal responsibility, which may not please everyone, but has the merit of overcoming a decades-long inertia. In addition, we had a serious demonstration of the Monetary Policy that showed resistance to political pressures, among others.

In this way, despite the great and notorious partisan political polarization, the country approaches a more internationally accepted standard, which, more and more intensely, requires efforts towards sustainability, in a huge concentrated movement directed towards the development of nations .

In this sense, Brazil tries to demonstrate its alignment, assuming commitments with policies and practices for economic, environmental and governance sustainability. There is a whole range of commitments, some of which are well known, such as the Paris Agreement and the United Nations Sustainable Development Goals.

Compliance with these commitments, outlined by the Sustainable Development Goals, tends to increase with Brazil's candidacy for membership in the Organization for Economic Cooperation and Development. Passing since February 2022 through the analytical sieve of the criteria to join the framework, Brazil will certainly assume another good dose of international governance regulation for the country. The goals of the Sustainable Development Goals are a global agenda adopted during the United Nations Summit on Sustainable Development in September 2015, consisting of 17 goals and 169 targets to be achieved by 2030.

Committed to this agenda, we have committed ourselves to sustainability, consolidating new strategies, with policies and productive consumption standards, thus impacting the entire Brazilian society. As an example of this, the “Green Package” was recently sent to Congress by the government, a set of rules aimed at eradicating poverty, regulating the carbon market and classifying activities according to their environmental and climate impact.

Analyzing the panel of 17 items that make up the Sustainable Development Goals, one of them highlights the industry's responsibilities in the general scenario. This is the Sustainable Development Goal 9, which advocates “the development of industry, innovation and value creation”. Divided into 8 goals and 12 indicators, Sustainable Development Goal 9 is part of the puzzle that seeks to put the planet on track for sustainable development.

Despite the sector's challenging themes for the coming years, such as the surprising participation of corn in the production of biofuel, despite its agricultural productivity; the challenge of reducing the immense standard deviation of sugarcane productivity per hectare, which ranges from 70 to more than 120 tons per hectare; the responsibility of the production mix that currently privileges sugar to the detriment of ethanol; the great innovations in the technological area that will bring disruptive and transformative innovations , the theme of sustainability will be inescapable.

Discussing sustainability in the sector's production chain is essential. Thus, it is important to see the thousands of small and medium industries, equipment and implement suppliers, vital for the sector's performance, especially in retrofits that will enable us to face these productivity challenges.

The participation of medium-scale industries in the total added value of the industry is one of the goals (9.2.3) of the Sustainable Development Goal 9. That goal is to increase the access of small and medium-sized industrial enterprises, particularly in developing countries, to financial services, including affordable credit and their integration into value chains and markets.

It is necessary to understand how this chain is positioned in relation to all the goals expected for 2030. The question is: how much progress have we made towards meeting the goals of Sustainable Development Goal 9 ? Talking about sustainability and discussing Sustainable Development Goal 9 in Brazil requires looking at reality with the sensitivity it deserves, as we are less than 7 years away from meeting the goals. 

Here is the reflection that there is no way to achieve the desired sustainable development by leaving parts of this puzzle behind. The industry is part of this panel of objectives. Sustainability is the current roadmap for the development of industries and their countries. There is no longer any way to postpone the future.

Those who still don't understand this trend are late. In the 1980s and 1990s, some companies saw the discussion of competitiveness as a fluff. But at the height of economic openness and the internationalization of companies, it became clear who understood this rule. A good number of business groups have already demonstrated advances in anticipating this future. I highlight here, just as a reference, Klabin and São Martinho.

According to the United Nations Industrial Development Organization, the Sustainable Development Goal 9 index “comprises the following dimensions: industry added value, employment, technological sophistication of production and environmental performance of the industrial sector”.

“And here the infrastructure is a basic issue of support. It must be understood in a broad way, ranging from the construction and maintenance of ports, airports, railways, terminals for the flow of production, to innovation parks, including service for telecommunications networks. Technological development and industrial diversification play a central role in this objective, as it enables production efficiency gains”.

In its 2022 report by the United Nations Industrial Development Organization, with data from 2020, Brazil occupies the 62nd position in the ranking of nations, (down 16 positions since 2000) and has difficulties with the added value of the industry relative to the its Gross Domestic Product (90th position in the ranking of nations).

In this added value, the participation of new technologies is timid (45th place), the carbon emission to produce within the walls of the industry is still high and the percentage of industrial employment occupies 55th position in the classification. It is worth a closer look at the Sustainable Development Goal 9 indicators to see the clear dichotomy between manufacturing value added as a proportion of Gross Domestic Product (target 9.2.1) and manufacturing employment as a proportion of employment total (goal 9.2.2).

The reader may interpret this article as pessimistic. But that's not the point. The observed indices do not categorize the country's industry, but its effort to reach the agreed objectives. Therefore, the article does not see the criticism for the empty half of the glass, but understands that there is a huge space for us to grow, in all these dimensions, with correct public policies and mainly with the involvement of industrial leaders. We have the necessary tools and we can use them.

For example, a recent survey by the National Confederation of Industry found that industrial machines and equipment are on average 14 years old and 38% of them have already exceeded the ideal life cycle. And the biofuel sector stands out with the highest average age of machinery and equipment, over 20 years. However, on the other hand, the good news is that the Brazilian government in a recent decision authorizes accelerated depreciation accounting, at an important moment when advances in Artificial Intelligence, Robotics and Internet of Things are being discussed, towards the fourth generation of the industry.

We also have as tools the Brazilian advantages of the clean energy matrix, the production of bioenergy, our genuine sugar-energy production technology, our arable land still available and an organized base industry, with productive arrangements and agglomerates ready to achieve a fundamental part of the Goals . Yes, we still have a long but hopeful way to go, and that is why this provocation for the reader to delve into this data and understand the best practices for their activity, making a 360º analysis of the universe of interested parties, valuing suppliers in the development of a set of solutions and investing, as quickly as possible, in new equipment and technologies.