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Sustainability Accounting and Reporting in the Industry 4.0

Kamlesh Tiwari, Mohammad Shadab Khan

PII: S0959-6526(20)30830-1
DOI: https://doi.org/10.1016/j.jclepro.2020.120783
Reference: JCLP 120783

To appear in: Journal of Cleaner Production

Received Date: 02 January 2020

Accepted Date: 26 February 2020

Please cite this article as: Kamlesh Tiwari, Mohammad Shadab Khan, Sustainability Accounting
and Reporting in the Industry 4.0, Journal of Cleaner Production (2020), https://doi.org/10.1016/j.
jclepro.2020.120783

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Sustainability Accounting and Reporting in the Industry 4.0

Kamlesh Tiwaria*, Mohammad Shadab Khanb
aResearch Scholar, Integral University, Lucknow , India
bAssociate Professor, Integral University, Lucknow, India
*email: [email protected]

ABSTRACT:

Industry 4.0 is the fourth industrial revolution. It is formed on the building blocks of Industrial
Internet of Things, real-time data collection and predictive analytics using big data analytics,
artificial intelligence, and cloud manufacturing. The complexity and value of Industry 4.0 is
established by the existing research studies. Some of the research studies have proposed the
design elements and contribution of Industry 4.0 to achieving sustainability objectives. This
research delves deeper into this area to evolve a new research challenge on contribution of
Industry 4.0 to sustainability accounting and reporting. Through a methodology of two focus
group discussions and interviews, this research derived an empirical formulation presenting a
mapping between Industry 4.0 attributes and selected material topics and their disclosures in
Global Reporting Initiative framework. The empirical formulation divided the Industry 4.0
framework in India into three levels of maturity each mapped with the appropriate triple
bottomline topics under the Global Reporting Initiative. This empirical formulation requires
further research to establish its validity as it appears to be not-to-optimistic representation by the
members of the two focus groups. The Interview respondents suggested cautious approach as AI-
based predictive analytics and automation may need a long maturity path. Soft aspects of
reluctance to complexity and new technology adoption may need continuous evolution of
technical and other training programmes with the maturity of Industry 4.0 for sustainability
accounting and reporting in an organisation.

Keywords: Sustainability, Accounting, Reporting, Industry 4.0, Internet of Things, Big Data,
Artificial Intelligence, Global Reporting Initiative
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Graphical Abstract:

Table of Contents

1. Introduction ..............................................................................................................................................3

2. Industry 4.0 framework and the roles of Industrial Internet and Things, Big Data Analytics, and

Artificial Intelligence in it ............................................................................................................................6

3. Industry 4.0 for Sustainability ................................................................................................................12

4. Methodology...........................................................................................................................................19

5. Industry 4.0 for Sustainability Accounting and Reporting (SAR) – A Primary Analysis.......................23

6. Critical Discussion and Empirical Formulation......................................................................................35

7. Conclusion..............................................................................................................................................42

References ..................................................................................................................................................43
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1. Introduction

Sustainability accounting and reporting (SAR) is a framework for defining sustainability

variables based on the triple bottom line model (TBLM), defining and implementing

measurement techniques, and reporting the actual status of the variables in the public reports by a

company (Bebbington & Larrinaga, 2014; DEFRA, 2013). The SAR framework is developed by

Global Reporting Initiatives (GRI, 2016) comprising of universal standards of disclosures and

management approaches of the TBLM variables. Reliable and valid measurement approaches of

TBLM variables have been a challenge for industries (Burritt & Christ, 2016). Industry 4.0

provides a new approach to this challenge as advancements in information and communication

technology and IP-enabled industrial cyber-physical systems (Industrial Internet of Things)can

form a value chain under this framework facilitating real-time data sharing on the variables under

monitoring and controlling (Burritt & Christ, 2016; Kiel et al., 2017; Stock & Seliger, 2016).

This level of system facilitating real-time awareness was not possible using the legacy

technologies. This research is a study of SAR modelling under Industry 4.0 and is an attempt to

develop a reliable and valid model showing the most significant Industry 4.0 variables

influencing the GRI principles facilitating SAR.

The business case for sustainability was proposed by Porter and van der Linde (1995), and the

Industry 4.0 was first conceptualised by few industrial organisations in Germany (Burritt &

Christ, 2016). SAR has been long criticised for the green wash effect based on poorly

conceptualised and prepared baselines for measurements, unreliable measurements following

manual or semi-automatic processes affected by delays and errors, and manipulation of results

and analysis to hide the weaknesses in the corporate environmental performance of an

organisation. The GRI framework has provided a new perspective to sustainability measurements
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and is the most popular framework for sustainability reporting worldwide (KPMG, 2015, 2017;

Tiwari, 2018). However, there is a lack of empirical evidence on effectiveness in measurements

methods and scientific methods followed in reporting of environmental performances. Dahl

(2012) had highlighted the problem of insufficient indicators of sustainability targets and their

measurement for meeting company-level sustainability goals and contribution to national and

global sustainability goals. The indicators need to be scientific (for example, the indicators

measured over a time series should clearly reflect a trend of improvements). Kwatra, Kumar, &

Sharma (2020) highlighted the need for bottoms-up approach emphasising that national or global

indicators are not sufficient to assess the sustainability goals of an individual company. For

example, technical efficiency in low carbon production needs to be mapped with the spatial zone

directly influenced by a manufacturing plant (Li et al., 2020). A spatio-temporal mapping of a

zone for capturing indicators of green performance of industries in the zone can reflect the

differences in their green performances.

KPMG (2015) published a three step formula for reliable and valid carbon reporting:

identification of the materiality and measurements data clearly, reporting on steps taken and

demonstration of reduction of carbon emissions and footprints, and demonstration of how the

steps taken have helped in achieving climate protection goals of the company. Such a framework

requires comprehensive technology and process capabilities dedicated to SAR. How can Industry

4.0 help? The Industrial Internet of Things (IIoT) and big data analytics (BDA) are at the core of

Industry 4.0 (Kiel et al., 2017). Currently, manufacturing organisations are adopting the IIoT and

big data systems for solving their gaps in industrial process data collection and analysis.

However, the core and features of IIoT technology and architecture are not appropriately

positioned for SAR of triple bottom line variables in literature.

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The research questions investigated in this research are the following:

(a) What technology and architectural features of Industry 4.0 can enable reliable and valid

measurements of SAR variables in the triple bottom line model?

(b) How can industries implement these features in practice to ensure reliable and valid

measurements of SAR as per the GRI framework?

The highlights of this research are the following:

(a) A detailed review of the key SAR variables under Global Reporting Initiatives and other

relevant literature;

(b) A detailed review of Industry 4.0 technology and architectural features;

(c) Mapping of Industry 4.0 capabilities with SAR variables in a multivariate model

(d) Collecting primary data from two Focus Groups working on Industry 4.0 solutions in

Delhi NCR region (details of Focus Groups are in Section 5: Methodology);

(e) Conducting interviews with five manufacturing operations heads in the city of Lucknow

(details in Section 5: Methodology);

(f) Evolving an empirical model showing relationships between the Industry 4.0 capabilities

and the relevant triple bottomline topic areas of the Global Reporting Initiative;

(g) Critical analyses of the empirical model, their relevance, and significance for theory and

practice;

In the next two sections, a review of literature is presented for building the two foundation pillars

of knowledge essential for this research:

(a) About Industry 4.0 framework and the roles of Industrial Internet of Things (IIoT), Big

Data Analytics (BDA), and Artificial Intelligence (AI) in it;

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(b) The role of the Industry 4.0 in achieving sustainability.

2. Industry 4.0 framework and the roles of Industrial Internet and Things, Big

Data Analytics, and Artificial Intelligence in it

Industry 4.0 is conceptualised as the fourth industrial revolution benefitting from digital

innovations in industrial processes and engineering applications, latest communication

technologies, service-orientation (servitisation) of knowledge-based integrated and automated

manufacturing systems, and evolving ways of digitally offering products and services through

new forms of markets and exchanges (Roblek, Mesko, & Krapez, 2016; Yao et al., 2017). This

concept is also called smart manufacturing (Chen et al., 2018), which is delivered by integrating

manufacturing systems through cloud computing riding on integrated cloud-based manufacturing

applications. These applications are specialised production flows offered by cloud manufacturing

integrators allowing manufacturing companies to plug-in their processes with the cloud

workflows and begin taking and processing production orders (Wang & Xu, 2013; Wu et al.,

2013).

Adopting cloud-based services-oriented manufacturing is a new innovation driven by the modern

industrial market dynamics, changing customers’ demand patterns, and the need for real-time

visibility into demands and supplies for building dynamic quick response and agile capabilities

(Cegielski et al., 2012; Oliveira, Thomas, & Espadanal, 2014). Capability building in this

direction requires significantly large scales of data collection, storage, and analysis. This

requirement created the roles of IIoT and BDA systems deployed on cloud computing within the

Industry 4.0 framework (Gabriel & Pessl, 2016; Kiel et al., 2017; Tao et al., 2014). The

framework of cloud-based manufacturing integration under Industry 4.0 allows large

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manufacturers to open their job working assignments to smaller manufacturers through cloud-

based service-oriented manufacturing integration (Cegielski et al., 2012; Oliveira, Thomas, &

Espadanal, 2014). This framework can also allow multiple small manufacturers to collaborate

through a manufacturing applications integrator to manufacture products flexibly as per the

market demands and quickly deliver them to the intended marketplaces.

As the Industry 4.0 framework rides on real-time flow of demand and supplies data,

manufacturers collaborating through the cloud-based manufacturing integrators can deliver

product and services just-in-time following the demands pull strategy (Cegielski et al., 2012;

Oliveira, Thomas, & Espadanal, 2014; Wu et al., 2013). The manufacturing applications can

facilitate performance-oriented design and allocation of costing per design component, process

planning and production sequencing, plugging in physical production resources providers,

identification and allocation of resources, testing and quality assurance, and delivery of products

to the end customers by matching with the demands (Wu et al., 2013). Figure 1 presents the

framework:
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Figure 1: Cloud-based integrated manufacturing in Industry 4.0 (Redrawn figure based on Wu et

al., 2013: 566).

The Industry 4.0 requires two separate sections to be integrated within the manufacturing system:

the traditional materials requirements and enterprise resources planning software (MRERPS) and

the production planning and control of smart manufacturing system (PPCSMS) powered by

cyber-physical (IIoT) system deployed at the machine controls and data collection, optimisation

and control systems supported by big data (Trstenjak & Cosic, 2017). The process variables’

sensors and robotics controlling the manufacturing machines are made of different varieties of

IIoTs deployed as separate clusters (Wang, Liu, & Meng, 2016). Numerous robotics task

allocation algorithms have evolved under the Industry 4.0 framework following a hybrid of

centralised and distributed resource allocation and sensing/control mechanisms. The cloud-based

data centres host the programming and control logic integrated with PPCSMS software system.
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The data flow mechanism from the IIoT sensors follow a flow of scheduling, buffering, filtering,

and logging/querying. The PPCSMS calculates multiple combinations of resources and their

scheduling and selects the most cost-optimised one for the MRERPS system to handle.

The IIoT sensors and actuators are deployed in three layers: sensors, middleware, and actuators

(Abdmeziem, Tandjaoui, & Romdhani, 2016). Sensors are deployed in massive-scale farms with

the central role of data collection, harvesting, and communication to big data servers (ITU-T,

2012; ITU-T, 2017). Sensors provide vital information from the running processes needed for

decision-making on actuation of robotic controls. Many IIoTs possess both sensing and actuation

capabilities. Sensors are small autonomous devices with multilayered architecture as per the IoT

reference model for collecting data and storing in the solid state memory within their microchips

(ITU-T, 2012). Sensors are interconnected via wireless sensor networks (WSNs) for multiple

industrial purposes (like, keeping multiple backups of the real time data) (ITU-T, 2017). They

provide their stored data to the central big data servers whenever request are made by the

centralised PPCSMS (ITU-T, 2017, ITU-T, 2018). However, actuation is not autonomous. It is

tightly controlled through highly secured signalling protocols and communication channels. A

middleware is an integral component of the PPCSMS that interfaces a large cluster of sensors

with the big data servers (Abdmeziem, Tandjaoui, & Romdhani, 2016). It serves as an

intermediate buffering station before data is finally committed into the big data tables. It also has

security controls to identify compromised sensors and take corrective actions.

Actuation is a complex robotics process for fulfilling the physical roles of the cyber-physical

IIoTs (Abdmeziem, Tandjaoui, & Romdhani, 2016). Actuation commands are programmable and

are linked with a carefully crafted subroutine of resource allocation and activation within a

manufacturing process chain. The key design considerations for deploying the IIoTs for the
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PPCSMS are: protocol support, battery life and energy efficiency, allocation of IIoT to

manufacturing resources (actual field robots), identification and authorisation of the IIoTs, IPv6

addressing, quality of service, data storage, security and privacy, and communication systems

(Aazam et al., 2016). The BDA is deployed inside the core of the PPCSMS. It is integrated with

the MRERPS at the database level (Khan et al., 2016; Lee, Kao, & Yang, 2014). Figure 2

presents a schematic of BDA in the Industry 4.0 PPCSMS framework:

Figure 2: Big data Analytics system in the Industry 4.0 framework (Khan et al., 2016: 2)

BDA system with artificial intelligence (AI) can command cyber-physical IIoT systems

controlling multiple fleets of machines and facilitates remote operator to machine interactions at

mass scales. It helps in smart analytics, like machine health awareness, and optimal decision

support for automated and self-controlled maintenance of machines. The big data servers

maintains multiple information items collected from the IIoTs, like data for monitoring machine
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conditions, parameters controlled by the robotics, machine performance measurements data,

model and make information, machines’ components’ configurations, and data on tasks executed

and utilisation of resources. Artificial intelligence (AI), as an Industry 4.0 layer over BDA, is

related to autonomous decision-making by machine learning algorithms designed to control

robots and machines (Dopico et al., 2016).

Standardised machine communication languages and BDA systems have made AI more robust

and accurate (Dopico et al., 2016). Using the power of BDA, AI can now simulate the whole life

cycle of manufacturing of a product providing a three dimensional view on how a digital factory

can work. AI adds the capability of intelligence-assisted manufacturing and process execution

using the evolving features of robotics and machine tools controllable through entire algorithmic

cycles of mathematical expressions invoking numerous activations based on data streams (Li et

al., 2017). This capability reduces the role of operators in controlling robots through individual

commands issued through their manual decision-making (Romero et al., 2016). Modern

communication systems and cloud computing play a significant role in digital transformation of

AI-controlled robotics.

With AI support, robots have become more collaborative, cognitively and ergonomically aware,

conscious and knowledge-driven within their augmented reality environment, adaptive to

environmental changes, and adaptive to multiple complex control strategies (Avishay et al.,

2019; Romero et al., 2016; Yao et al., 2017). The human operators need not guide and control

the robots at every step of their operations. They can now play the role of an analytical operator

powered by BDA and multiple decision options provided by AI actively collaborating with

robots using them as smart cyber-physical assistants. This capability of Industry 4.0 may be

viewed as the next giant step of innovation beyond computer-aided designs (CAD), computer-
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aided engineering (CAE), and computer-aided manufacturing (CAM). Traditional industrial

communication protocols had limited the networking capabilities between control systems and

robots. Industry 4.0 on IPv6 has broken this barrier making the control systems smarter.

3. Industry 4.0 for Sustainability

Sustainability is a highly complex subject dealing with numerous variables under the scope of

the TBLM objectives (Golini, Longoni, & Cagliano, 2014). Managing sustainability goals,

especially related to environmental protection, is a competitive priority as there is a strong

emphasis on integrating environmental protection technologies into manufacturing systems and

technologies (Jabbour et al., 2012). Manufacturing organisations have recognised the value of

TBLM objectives for their business in the longer-term, and are investing in technologies and

standards for achieving those (Jabbour et al., 2012; Golini, Longoni, & Cagliano, 2014).

However, the effectiveness of TBLM in a manufacturing network can be achieved only when

each site in the network is prepared as per the established standards at the network level (Golini,

Longoni, & Cagliano, 2014). Standalone sites can lack capabilities in meeting TBLM. Further,

manufacturing organisations may implement environmental practices as a preventive measure

with focus on eco-efficiency, which may limit its potential competitive priority in spite of

positive influence on quality, cost, delivery, and flexibility (four fundamental manufacturing

priorities) (Jabbour et al., 2012). A systemic approach towards integrating green supply chain

and environmental management practices with the quality management practices shall enable

enhancement of green performance of manufacturing organisations (de Sousa Jabbour et al.,

2014). A good opportunity in this context is to implement ISO 14001 standard and its controls.
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These crucial findings by Golini, Longoni, & Cagliano (2014), Jabbour et al. (2012), and

Jabbour et al. (2014) link the Industry 4.0 to TBLM as networked manufacturing and

achievement of fundamental manufacturing priorities (systemic improvements, quality, cost,

delivery, and flexibility) are key components of its fundamental design. The traditional

manufacturing models lacked delivery effectiveness and flexibility for dynamic systemic

improvements (Golini, Longoni, & Cagliano, 2014). The traditional Peripheral, Onion, and

Complex Control System (CCS) models of manufacturing plants treated a manufacturing facility

as a standalone system (Golini, Longoni, & Cagliano, 2014; Herrmann et al., 2014). A

standalone manufacturing plant takes energy inputs (electricity, gas, oil) to drive production

machines and their technical building services that transform raw materials into finished goods

(Herrmann et al., 2014). Such complex systems generate lots of heat, wastes, exhausts,

emissions, and provide highly difficult working environments for the workers. For decades, such

manufacturing plants have flourished across the world in thousands. They are unsustainable by

design. It is very difficult to develop capabilities in them in their traditional model designs for

achieving TBLM objectives unless the model itself is changed.

The future model of manufacturing plants is the Manufacturing Ecosystem Model (MEM) in

which, plants are integrated in a network that can facilitate flows-based processes for governing

production, energy, resources, and people skills based on a symbiosis driven by cyber-physical

systems and modern information and communication technologies (Alcacer & Cruz-Machado,

2019; Golini, Longoni, & Cagliano, 2014; Herrmann et al., 2014). In this model, plants do not

work at their maximum efficiencies (fully stressed utilisation of capacities) (Herrmann et al.,

2014). Instead they work at optimal efficiencies. The focus is on maximising collaborative

outcomes of multiple plants to meet the demands instead of pushing an individual manufacturing
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plant to produce the maximum that it can achieve to push mass products in the markets. This

model can be achieved effectively following the Industry 4.0 design (Alcacer & Cruz-Machado,

2019). TBLM objectives are natural outcomes in this model as the per-plant consumption of

energy and natural resources reduces significantly, and the stress on workers reduces.

The Industry 4.0 design requires transformation in multiple features of a manufacturing plant,

like modularity in design, scalability, compatibility, mobility, and universality (Alcacer & Cruz-

Machado, 2019; Herrmann et al., 2014). For example, small plant locations in the proximity of

end customers are preferred over large and remote manufacturing plants (distributed

manufacturing) (Rauch et al., 2015). Plants with modularity capable of mass customisation are

preferred over in-flexible and non-modular assembly lines capable of mass manufacturing (Shim,

Park, & Choi, 2017). The workstations (machineries) are deployed in such a way that they can

handle multiple product designs, can follow complex heuristic rules of production scheduling,

can auto-adjust to varying lot sizes (workloads) and bottlenecks, and can process a combination

of multiple despatching rules (like, first in first out, modified due date rules, minimum setup

rules, and slacking rules) (Shim, Park, & Choi, 2017).

As researched by de Sousa Jabbour et al. (2018), the Industry 4.0 design effectively supports the

ReSOLVE (Regenerate, Share, Optimise, Loop, Virtualise, and Exchange) model of a a

sustainability-friendly economy, popularly known as the Circular Economy. de Sousa Jabbour et

al. (2018) presented a five-step approach to achieving the ReSOLVE model of a circular

economy following a framework of sustainable operations management using suitably selected

Industry 4.0 technologies and cooperation among supply chain agencies in achieving clearly

defined performance indicators and achievable targets. Two aspects of Industry 4.0 design are

critical for achieving a circular economy – value creation and its capturing through technologies,
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processes, practices, performance measurements, and continuous improvements (de Sousa

Jabbour et al., 2018; Nascimento et al., 2019). The regeneration of energy resources and shared

manufacturing activities among multiple facilities for optimising per-plant energy consumption

can be achieved through the multi-plant flows-based processes and careful measurements and

monitoring in Industry 4.0 design (Alcacer & Cruz-Machado, 2019; Herrmann et al., 2014; de

Sousa Jabbour et al., 2018).

The looping attribute of the ReSOLVE model requires infrastructure for recycling and reuse of

the products reaching the end of life cycle (de Sousa Jabbour et al., 2018; Nascimento et al.,

2019). The looping process involves careful storage and sorting of reusable materials, treating

them for reusability preparations, and then feeding them into a system of remanufacturing

(Nascimento et al., 2019). Virtualisation and exchange requires virtual integration of flow-based

manufacturing processes spanning across multiple plants located globally (Herrmann et al.,

2014). In the research by Rosa et al. (2019), the Industrial Internet of Things and Additive

Manufacturing are highlighted as the most useful technologies for circular economy under the

Industry 4.0 framework. IIoT can sense the TBLM variables and provide the data needed by big

data systems and artificial intelligence to assess the key problem areas for improvements (Rosa

et al., 2019). Cyber Physical Systems (CPS) with attached IIoTs can help in multiple

enhancements in the product life cycle management for reducing wastes and also for making

products recyclable. Further, additive manufacturing can contribute to circular economy by

reducing wastes significantly because it does not leaves residues of unused raw materials.

Industry 4.0 system performance is centred at effectiveness of each process and all the

equipment (control systems, robotics, machinery, and processors) that play their roles in it

(Alcacer & Cruz-Machado, 2019; Yazdi, Azizi, & Hashemipour, 2018). Reduced rejections and
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wastage leading to high production efficiency is one of the core objectives of Industry 4.0. The

factors influencing effectiveness are performance (total cycles executed/total runtime), quality

(accepted goods/total goods), and availability (total runtime/planned production runtime) (Yazdi,

Azizi, & Hashemipour, 2018). These factors can be maximised by conducting a time-series

analysis of machine-generated data about what is happening in each component (such as, control

system, robot, machine, and processor) in a process cycle (Sivri & Oztaysi, 2018; Zhong et al.,

2017). Maximising these factors can help in achieving multiple TBLM objectives because the

overall intensity of many variables (like, energy consumption, natural resources consumption,

wastage, stress on workers, emissions, and heat generation) will reduce as a result of squeezed

timelines (Yazdi, Azizi, & Hashemipour, 2018). Enhanced production effectiveness is directly

proportional to enhanced sustainability.

Industry 4.0 model is designed to achieve all of these for targeted demand fulfilment (Kiel et al.,

2017; Yazdi, Azizi, & Hashemipour, 2018), and the culture of lean manufacturing acts as a

moderator (Iranmanesh et al., 2019; Resta et al., 2016). The IIoTs provide time-series data about

process performance attributes in real-time to BDA, which uses AI to determine and fine tune

factor variables determining production effectiveness (Kiel et al., 2017; Ren et al., 2019). The

maintenance reports and daily operating performances of each component, such as controller,

machine, and robot are monitored remotely by collecting real-time relevant data from the IIoT

sensors (Sivri & Oztaysi, 2018; Zhong et al., 2017). The next maintenance cycle or urgent

repairs of a component is determined dynamically based on its running and past performances

relative to other similar components. The AI decision-making engine analyses massive big data

repositories and determines the minimum required performance scoring for each component

based on the targeted demands and their deadlines (Kiel et al., 2017; Ren et al., 2019). The entire
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system is fully dynamic as the AI drives the triggers for repairs, maintenance, and replacements.

All fixed human-configured triggers and schedules are replaced by AI-controlled big-data-driven

dynamic triggers and schedules in Industry 4.0.

The Industry 4.0 technological change is a revolution, which can influence the key principles of

the environmentally-sustainable manufacturing processes through its core feature-based

technological capabilities deployed in globally connected virtual manufacturing plants through

cloud manufacturing (de Sousa Jabbour et al., 2018a; Lu, Peng, & Xu, 2019; Perez-Lara et al.,

2018). Design for environment, cleaner production, green supply chain management, sustainable

procurement, and circular economy variables under the ReSOLVE model are the key principles

of environmentally-sustainable manufacturing processes. The cyber-physical systems, big data

analytics, cloud manufacturing, additive manufacturing, and artificial intelligence systems in

Industry 4.0 framework enable the real-time visualisation and actuation capabilities, which in

turn enable automated operations-level decision-making capability, automated fault finding and

corrections and prevention capability, optimisation of tasks and maintenance capability,

automatic prioritisation capability, and many such new capabilities over the Industry 3.0

framework. As the cyber-space addressing and connectivity is extended to physical equipment,

machinery, and robotics, manufacturing facilities across the world can be part of a network

allowing flow-based networked execution of manufacturing processes. The key principles of

environmentally-sustainable manufacturing processes can be built as quality targets to achieve

multiple TBLM objectives automatically.

A crucial yet overlooked capability needed for sustainability under the TBLM framework is

about integrating human skills with technology. The TBLM training, technical training related to

TBLM, customers’ involvement in TBLM initiatives in an organisation, developing green

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content based on established standards (notably, ISO 14001), and inducting sustainable practices

in the skills and practices of suppliers are key influencers of effectiveness of meeting TBLM

objectives in organisational operations (Jabbour et al., 2013; Jabbour et al., 2015; Kannan, de

Sousa Jabbour, & Jabour., 2014; Teixeira et al., 2012; Teixeira et al., 2016). HR practices

relevant to TBLM and lean manufacturing practices are joint influencers in the same model

achieving goodness of fitment in the research by Jabbour et al. (2013). In a later study, it was

shown that technology practices relate statistically significantly with market, environment,

operational performance for sustainable production but lacks relationship with human resources

and organisational performance (Jabbour et al., 2015). Perhaps, the gap is in the lack of adequate

TBLM training practices. This gap is highlighted in the research by Teixeira et al. (2012) and

Teixeira et al. (2016) identifying misalignment between TBLM training and the required content

as a significant cause. As specifically highlighted by Teixeira et al. (2012), there should be co-

evolution between the training content and organisational TBLM practices. This means that the

training should become deeper and involved to align accurately as per the needs for meeting

TBLM objectives in the organisation. These findings are expected to apply in effectiveness of

Industry 4.0 in meeting TBLM objectives. Keeping in mind about technical aspects of Industry

4.0, the sophistication in training content is expected to be much higher. This reveals that

training employees on Industry 4.0 systems for TBLM practices will be a much bigger challenge

in the future.

The next section presents details of the methodology followed in this research.
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4. Methodology

Currently, there is little empirical evidence on contribution of Industry 4.0 framework to SAR.

This research is viewed as one of the earliest efforts in building this new field of empirical

knowledge. Hence, an exploratory qualitative method was preferred to collect primary data in

this research diving deeply into the experiences of industrial experts in “Production Engineering

through Networked Controllers” and “Information and Communications Technology for

Production Engineering” fields. The components of Industry 4.0 are being implemented in the

Delhi NCR industrial regions in North India. In the quest for reliable and valid industrial

evidences on the subject of interest in this study, a focus group discussion and analysis approach

was followed in this research (Nyumba et al., 2018). Focus group is recognised as one of the

approaches in qualitative methodology targeted to build collective consensus on a focussed

subject through collaborative narratives of the individuals having in-depth experience in that

subject (Flick, 2010). It can be achieved through focus group interviewing (Yin, 2011) and focus

group open discussion and analysis in the form of a debate (Barry, Steyn, & Brent, 2009;

Kitzinger, 1995). This research did not rely only on the focus group albeit followed a multi-

method approach for deriving more effective scientific outcomes (Mura, Longo, Zanni, 2020).

Conducting a focus group discussion and analysis in the form of a debate requires expert

moderation skills. The participants should be kept focussed on the subject matter, should be

motivated to reveal deep facts, and everyone in the group should get a fair chance to contribute

(Barry, Steyn, & Brent, 2009; Flick, 2010). Given the university teaching experience of the

author, he was able to use this method effectively treating it as a classroom debate on a highly

complex and sophisticated subject matter. The sampled group should have both homogeneity and
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heterogeneity characteristics (Kitzinger, 1995). For example, the group members should have

experienced a common phenomenon in different work environments.

A good focus group design should have 8 to 12 members, sessions of not more than two hours,

multiple sessions till a consensus is reached, very carefully selected group members, and defined

protocols for discussion, data collection, data analysis, consensus building, and moderation

(Grudens-Schuck, Allen, & Larson, 2004). In this research, two focus groups were formed as

summarised in Tables 1 and 2:

Table 1: Focus Group A – Information and Communications Technology for Production

Engineering

S. No. Age Current role Organisational Profile

1 32 Systems Architect One of the largest networking manufacturer
and software solutions global company
2 35 Systems Architect Same as above
3 33 Systems Architect Same as above
4 34 Product Specialist Same as above
5 33 Account Manager Same as above
6 39 Solutions specialist One of the largest ICT manufacturer and
industry automation solutions global
company
7 37 Client Manager – Smart A joint venture of one of the largest
Manufacturing Solutions process engineering manufacturers of the
world and a prominent industrial software
automation company

Table 2: Focus Group B – Production Engineering through Networked Controllers:

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S. No. Age Current role Organisational Profile

1 37 Production control Local Manufacturing Plant of a medium-
scale pan India manufacturing company
producing specialised chemicals; operating
Industry 4.0 model for slightly more than
one year;
2 35 Production management Local Manufacturing Plant of a large-scale
global manufacturing company working on
global specialised production contracts;
operating Industry 4.0 model for more than
four years;
3 42 Production management Same as above
4 41 Production management Same as above
5 40 Production management Same as above
6 44 Supply chain management Same as above
7 39 Managing Director and one Two manufacturing plants of precision
of the Owners glass cutting and fitting; running a ICT
vendor-managed pilot on Industry 4.0 for
more than six months
8 40 Director and one of the One manufacturing plant of electrical
Owners fittings; running a pilot on Industry 4.0 for
more than six months and now planning for
its full-scale rollout

The Focus Group A was formed of employees of three large-scale global companies that have

collaborated to offer Industry 4.0 solutions in India. These companies have a long presence in

India. The second focus group was formed by some of their prominent clients in the Uttar

Pradesh side of Delhi NCR region (comprises five heavily industrialised districts: Noida, Greater

Noida, Ghaziabad, Meerut, and Gajraula). The researcher approached the members of the first
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focus group through a senior representative of one of the companies that he had met in the

proceedings of a conference. On learning about his research interest and his design of focus

group discussion, the senior representative invited him to conduct the two focus groups using

one of the conference rooms in his Noida office. He also helped in recruiting the members for the

two groups. The Focus Group A was interested in exploring how the existing Industry 4.0

solutions can contribute to SAR and the Focus Group B was interested in the existing Industry

4.0 solutions offered by global vendors in India could be applied for effective and credible SAR.

Their interests in the outcomes of this research were purely academic for enhancing their

knowledge about influence of Industry 4.0 solutions on SAR capabilities.

Both the focus group discussions were conducted separately. The respondents were requested to

conduct an active brainstorming to write down definitive facts on flip-charts pertaining to the

two research questions of this research (Section 2) presented to them. The definitive facts were

related in the form of an empirical structural construct, which was discussed critically pertaining

to their relevance, and practical application in the industries studied in this research.

The results of the focus group discussion were used as foundation knowledge to conduct

interviews with the individuals in the head of production and similar roles reflecting seasoned

operations experience. Five such individuals agreed for interviews. To test the outcomes of the

focus group discussion through independent perspectives, this time the respondents were chosen

from the manufacturers in the cities of Kanpur and Lucknow (both these cities are about 500

kilometres away from the Delhi NCR region). Out of the five respondents, four were heading

operations in Kanpur-based industries and one was heading operations in a Lucknow-based

industry. Kanpur is a heavily industrialised city. Lucknow is not as heavily industrialised but has
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the benefit of hosting multiple head offices of industrial plants located in Kanpur and other cities.

The researchers could meet their respondents in Lucknow itself.

Each respondent was asked the same two questions as discussed in the focus group discussion:

(a) How the existing Industry 4.0 solutions (in-general) can contribute to SAR?

(b) What existing Industry 4.0 solutions offered by global vendors in India could be applied

for effective and credible SAR?

The next section presents the results of both the methods followed in this research.

5. Industry 4.0 for Sustainability Accounting and Reporting (SAR) – A

Primary Analysis

In this section, the results of the two Focus Group discussions and a primary analysis of the

influence of Industry 4.0 on SAR following the GRI framework are presented. Before delving

deep into the attributes of Industry 4.0 influencing SAR, a brainstorming session was held by

both the focus groups for highlighting the key material topics in the GRI framework that are

expected to be influenced by Industry 4.0. After multiple rounds and rejecting the choices based

on collaborative debate, the finalised version after combining the outcomes of the two focus

groups are presented in Figure 3. The choices (underlined) were common in both the focus

groups. The primary analysis is focussed on these material topics only.

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Figure 3: SAR areas in the GRI framework expected to be affected by Industry 4.0 framework –

an outcome of the two Focus Group Discussions and Analysis

Three key industrial solutions were discussed by both the focus groups: Cisco’s Industry 4.0

communication systems, Allen Bradley’s and Rockwell’s (combined) Smart Manufacturing, and

IBM’s Industry 4.0 and Cognitive Manufacturing. These industrial solutions are combined by the

focus groups as they are synergised for Indian markets. These solutions were used by the focus

groups as baselines for their debating because the participants were familiar with them. The

purpose of this research is not to position them albeit is to use them for creating a list of key

Industry 4.0 attributes and analysing their possible influences on SAR of the material topics

identified (underlined) in Figure 3.

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Using the flip charts method mentioned in Section 5, the attributes of these industry solutions

were listed and their influences on SAR of one or more material topics in the GRI framework

were debated. As the author was the moderator of both the focus groups, he could standardise the

names of attributes and their encodings. The final outcome was two constructs in which, the

influences of the attributes were shown on the material topics highlighted in Figure 3. The two

constructs were produced by the two focus groups. Given that this research is interested in the

construct coming out from a final consensus between the two groups, only those attributes of the

industry solutions debated and their influences on GRI material topics were retained that were

common in the outcomes of the two focus groups. The finalised construct showing the Industry

4.0 mapping with GRI material topics and GRI disclosures is presented in Table 3:

Table 3: Mapping of the Industry 4.0 attributes with the GRI material topics with reasons, as
reflected in the finalised construct

S. Industry 4.0 Attribute Mapping GRI Disclosures under the Material Topic
No. with GRI
Material
Topics
1 Digital Signature of GRI 301: Disclosure 301-1 Materials used by weight or
each component and Materials volume
material Disclosure 301-2 Recycled input materials
used
Disclosure 301-3 Reclaimed products and their
packaging materials
2 Multi-functional IIoT GRI 301: Same as Serial No. 1
Sensors on each Materials
component and
material packaging
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S. Industry 4.0 Attribute Mapping GRI Disclosures under the Material Topic
No. with GRI
Material
Topics
3 Cognition (smartness; GRI 301: Disclosure 302-1 Energy consumption within
self-awareness and self Materials the organization: data collected from sensors
diagnosis) of each GRI 302: Disclosure 302-2 Energy consumption outside
component Energy of the organization: data collected from sensors
GRI 303: Disclosure 302-3 Energy intensity: data
Water collected from sensors
GRI 305: Disclosure 302-4 Reduction of energy
Emissions consumption: data collected from sensors
GRI 306: Disclosure 302-5 Reductions in energy
Effluents and requirements of products and services: data
Waste collected from sensors and some tests
conducted
Disclosure 303-1 Water withdrawal by source:
data collected from sensors
Disclosure 303-2 Water sources significantly
affected by withdrawal of water: data collected
from sensors
Disclosure 303-3 Water recycled and reused:
data collected from sensors
Disclosures 305-1 to 305-7 All forms of
emission disclosures identified by GRI: data
collected from sensors
Disclosure 306-1 Water discharge by quality
and destination: data collected from sensors
and some tests conducted
Disclosure 306-2 Waste by type and disposal
method: data collected from sensors
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S. Industry 4.0 Attribute Mapping GRI Disclosures under the Material Topic
No. with GRI
Material
Topics
Disclosure 306-3 Significant spills: data
collected from sensors
Disclosure 306-4 Transport of hazardous
waste: data collected from sensors
Disclosure 306-5 Water bodies affected by
water discharges and/or runoff: data collected
from sensors
4 Machine-to-machine Same as Same as Serial No. 3: All sensory and testing
Communication Serial No. 3 data can be communicated freely through the
through Internet Internet
5 Real-time data Same as Same as Serial No. 3: the cognition data from
collection from sensors Serial No. 3 each component and material package can be
collected in real time from sensors
6 Predictive analytics Same as Same as Serial No. 3: Predictive analytics shall
Serial No. 3 help in time-series forecasting on all the
variables collected through sensors and test
reports
7 Common Same as Same as Serial No. 3: Every sensory data can
communication Serial No. 3 be communicated and stored through common
language and protocols language and protocols
8 Prescribed corrective Same as Same as Serial No. 3: Predictive analytics shall
and preventive actions Serial No. 3 help in taking strategic and operations-level
for best performance actions to continuously improve GRI
performance
9 Dynamic scheduling Same as Same as Serial No. 3 +
through flexible Serial No. 3 + Disclosure 404-1 Average hours of training per
machining GRI 402: year per employee
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S. Industry 4.0 Attribute Mapping GRI Disclosures under the Material Topic
No. with GRI
Material
Topics
Labor/Manag Disclosure 404-2 Programs for upgrading
ement employee skills and transition assistance
Relations programs
GRI 404: Disclosure 404-3 Percentage of employees
Training and receiving regular performance and career
Education development reviews
Intensive programs shall be needed to migrate
the employee skills to the new automated
systems and processes of Industry 4.0;
thereafter, training and education will also
become an automated process given the
significant visibility into the running
components and processes;
10 Dynamic production Same as Same as Serial No. 9 +
engineering processes Serial No. 9 + Disclosure 204-1 Proportion of spending on
GRI 204: local suppliers
Procurement Continuous replenishment shall become an
Practices automated capability, which will also reflect
breakup of suppliers receiving replenishment
orders.
11 Individualisation Same as Same as Serial No. 10
through customer- Serial No. 10
specified production
specifications
12 Continuous control Same as Same as Serial No. 10
systems and Serial No. 10
engineering
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S. Industry 4.0 Attribute Mapping GRI Disclosures under the Material Topic
No. with GRI
Material
Topics
13 Dynamic and Same as Same as Serial No. 10
continuous scheduling Serial No. 10

14 Autonomous dynamic Same as Same as Serial No. 10

and flexible automation Serial No. 10

15 End-to-end global Same as Same as Serial No. 10

integration and Serial No. 10
visibility of operating
clusters of components
16 Automated robotic Same as Same as Serial No. 10
loops of sensing and Serial No. 10
actuation
17 Model-driven Same as Same as Serial No. 10
production engineering Serial No. 10

18 Continuous data Same as Same as Serial No. 10

collection and storing Serial No. 10
in cloud big databases
19 Real-time dashboards Same as Same as Serial No. 10 +
showing real-time Serial No. 10 Disclosure 201-1 Direct economic value
production insights + GRI generated and distributed
201Economic Disclosure 201-2 Financial implications and
Performance other risks and opportunities due to climate
+ change
GRI 203 Disclosure 203-1 Infrastructure investments
Indirect and services supported
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S. Industry 4.0 Attribute Mapping GRI Disclosures under the Material Topic
No. with GRI
Material
Topics
Economic Disclosure 203-2 Significant indirect economic
Impacts impacts
Real-time production insights shall provide in-
depth analytics on economic performance of
the components and processes running on
them, which will not only justify efficiency of
operations albeit, will also justify efficiency of
sustainable value generation. At a larger scale,
integration of global plants and distributing
production processes across global units can
reduce global carbon footprints and emissions
caused by a large-scale globally spread
manufacturing company.
20 Cloud-based integrated Same as Same as Serial No. 19
global operations Serial No. 19

21 Continuous health Same as Same as Serial No. 19

monitoring of each Serial No. 19
component
22 Predictive forecasting Same as Same as Serial No. 19
of repairs, Serial No. 19
maintenance, and
replacements
23 Virtual Engineering Same as Same as Serial No. 19
with Machine Learning Serial No. 19
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To understand how the two focus groups arrived at Table 3, their pattern of analysis is presented

in Figure 4. The focus groups analysed the GRI standards in the context of the level of

investments proposed by the vendors over a longitudinal plan. Initial investments require setting

up new IIoT sensors or modifying the existing programmable logic controllers (PLC)

infrastructures to IPv6 based sensing technologies and integrating them (through SCADA or

DCS), deploying systems for protocol conversions and real-time data collection, deploying big

databases, and deploying applications for real-time health monitoring, real-time machine

engineering, and dynamic production and scheduling. The Focus Group B concluded that this

system is sufficient to collect and view the data needed for reporting the selected material topics

and their GRI disclosures under “GRI 300: Environmental Topics”. Although, Focus Group A

proposed better analytical abilities for reporting the environmental material topics GRI 301 and

GRI 306 (Figure 3), overall both focus groups agreed that investments up to real-time monitoring

capabilities can improve GRI 300 reporting significantly. For example, equipment with longer

runtimes causing longer cycle times of emissions and other environmental hazards, and needing

operations fine-tuning, maintenance, or parts replacements can be easily identified.

The next level of investments is required in predictive analytics and forecasting, which involves

multiple sub-modules, such as predictive health monitoring, predictive forecasting for repairs

and maintenance, and predictive machine engineering, production, procurement, and scheduling.

This level will involve multiple industry-standard data engineering applications but may or may

not involve artificial intelligence (depends upon architectures made by different vendors).
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Figure 4: Simplified attributes of cloud-based Industry 4.0 framework – an outcome of the two

Focus Group Discussions and Analysis

At this level, improvements can be made at much larger scales extending numerous benefits to

workers. They shall be exposed to significantly lower stress and danger times because the

maximised production strategy can be migrated to optimised production strategy without losing

on outputs. Both the focus groups agreed that this level of investments can potentially develop

capabilities for collecting and reporting the data needed for the selected material topics and their

GRI disclosures under “GRI 300: Environmental Topics” as well as “GRI 400: Social Topics”.

Large scale enhancements in production systems can improve the working lives of employees

exposed to difficult work routines. The management – labour relationships (GRI 402) can
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improve by implementing organised and predictive processes for identifying potential threats and

equipment predicted to be causing excessive stress thus reducing risks to health and safety of

workers (GRI 403) and reducing security threats (GRI 410). Industry 4.0 will require new

training and skill-building under the new automated operations environment (GRI 404). There

may be some time needed for settling down in the new automated framework.

The two focus groups proposed that in absence of cloud-based integration and analytics

conducted by artificial intelligence, the “GRI 200: Economic Topics” are difficult to report.

Although, Focus Group B felt that GRI 204 (procurement practices) can be improved with

predictive analytics as the requirement is merely to report on opportunities given to local

suppliers, Focus Group A argued that an honest reporting of the larger economic benefits

extended to society will require longitudinal training of machine learning algorithms. Data

collected without cloud computing integration will be insufficient to gain such insight. Both the

focus groups argued that getting an overall insight into direct and indirect economic impacts will

require longitudinal analytics using data integrated through cloud computing and longitudinal

training of machine learning.

The next step followed in this research was an interview process involving five respondents as

discussed in Section 4. The two questions as stated in Section 4 were presented to them along

with the results of the focus group discussions. The respondents provided explanatory responses,

which were converted into definitive facts at the end of the individual interviews by involving

each respondent and achieving their agreements. The duplicate definitive facts were merged and

the final outcomes were as presented below:

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(a) Industry 4.0 solutions in-general and the specific offers made by multinational companies

in India may be more effective for environmental measurements and reporting (GRI 300).

(b) The aforesaid solutions may be useful for economic measurements and reporting (GRI

200) if contextual analysis and clear benefits relevant to the company can be conducted

objectively.

(c) The solutions may not be effective for social measurements and reporting (GRI 400) in

their current form because almost all the GRI topics under GRI 400 requires predictive

monitoring and involvement of AI-based decision making.

(d) Involvement of AI is essential for meeting the objectives of economic (GRI 200) and

social (GRI 400) topics.

(e) The foundation level of solutions comprising of cyber-physical systems and Internet of

Things may be used for operations and environmental parameters monitoring.

(f) Predictions of possible machine failures and timely maintenance using data collected

from machines shall be among the most useful value additions.

(g) The AI-driven automation capabilities will require prolonged maturity periods as AI will

need loads of historical data to make error-free actuations. It is possible that automated

actuations may seldom happen in small to medium scale Indian industries in of fear

malfunctions.

(h) Body wearables may be a good idea for monitoring health and safety, but their feasibility

and longevity in the work environments need to be assessed.

(i) The fundamental solutions comprising cyber physical systems, IIoT, and basic software

solution for monitoring and decision-making can be adopted after some customisations.

Advanced predictive analytics and AI-based automation may not provide any fruitful
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results for a long time; until the data sizes and AI training is sufficient enough to trust its

automation capabilities.

(j) Global integration, flow-based automated capabilities, and global sustainability

monitoring and localised resources control will require long periods of maturity. It may

be viewed similar to ERP and MRP implementation, which were matured after decades

of continuous improvement efforts. Industry 4.0 technologies may not be any different.

These results have provided an insight into the perspectives of practitioners regarding role of

Industry 4.0 in SAR following the GRI standards. Keeping these perspectives and the results

from focus group discussion and interviews in mind, an empirical formulation is presented after

critical discussion in the next section.

6. Critical Discussion and Empirical Formulation

Industry 4.0 is a good solution for sustainable manufacturing. The framework requires

significantly large scales of data collection, storage, and analysis on cloud computing (Gabriel &

Pessl, 2016; Kiel et al., 2017; Tao et al., 2014). The MRERPS and PPCSMS capabilities require

complete multi-plant integration for achieving effective automation in production and machine

engineering, and in scheduling (Trstenjak & Cosic, 2017; Wang, Liu, & Meng, 2016). Sensing

and actuation driven by real-time data collection and analysis is the foundation of Industry 4.0

(Abdmeziem, Tandjaoui, & Romdhani, 2016). However, they are not enough to develop

predictive capabilities. The end-to-end machine engineering systems need to be aware, conscious

and knowledge-driven within their augmented reality environment, adaptive to environmental

changes, and adaptive to multiple complex control strategies (Avishay et al., 2019; Romero et

al., 2016; Yao et al., 2017). This level of capability can only be achieved through implementing
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the complete framework. The role of Industry 4.0 in achieving the circular economy ReSOLVE

model will require sensing, actuation, predictive analytics, and automated decision-making

capabilities (de Sousa Jabbour et al., 2018; Nascimento et al., 2019). As reflected in the focus

group discussion and interviews, sensing and actuation, predictive analytics, and automated

decision-making are three levels of Industry 4.0 requiring three different levels of investments.

The solutions from multinationals operating in India comprise of all the three levels, but the

practitioners recommend beginning with sensing, actuation, and basic levels of real-time

monitoring and control as an optimum solution to begin with. The academic research studies

view predictive analytics and automation as critical capabilities needed for sustainable

manufacturing (de Sousa Jabbour et al., 2018 ; de Sousa Jabbour et al., 2018a; Kiel et al., 2017;

Ren et al., 2019; Sivri & Oztaysi, 2018; Zhong et al., 2017). The full system prescribed by

academic researchers involves machine-level data collection from the IIoT sensors, which needs

to be fed to advanced big data analytics systems for training the AI algorithms. However, the

practitioners have suggested taking a cautious approach based on their past experiences of slow

and tedious maturity paths of ERP and MRP systems.

Overall, Industry 4.0 appears to be fulfilling a crucial variable of integrating environmental

quality practices into planning and operations of an industry as suggested by Diabat & Govindan

(2011). In another research, Govindan et al. (2014) highlighted the challenge of industries

sticking to their existing inflexible practices and hesitating in adopting complex designs,

technologies, and processes. These are softer challenges of sustainable manufacturing practices,

which can be addressed through in-depth trainings and workshops (Jabbour et al., 2013; Jabbour

et al., 2015; Kannan, de Sousa Jabbour, & Jabour., 2014; Teixeira et al., 2012; Teixeira et al.,

2016). If the technical and soft trainings evolve with the maturity of sustainable manufacturing
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operations of an organisation, the challenge of resistance to implementing Industry 4.0

technologies shall be addressed. Companies in India would (possibly) never implement a

complete framework. They will prefer phased implementation based on evidences of maturity in

the system. From sustainability perspective, there will always be a tendency in India to

implement systems with lower investments amidst lack of complete understanding of the benefits

of sustainability practices on businesses (Govindan et al., 2014).

The global vendors targeting Indian industrial markets perhaps know about these challenges in

the Indian markets. From the focus group discussions, the concept of multi-level solutions

offered by vendors is clearly visible. However, on the basis of the concepts of MRERPS and

PPCSMS (Trstenjak & Cosic, 2017; Wang, Liu, & Meng, 2016) and the capabilities of globally

integrated manufacturing, engineering, maintenance, repairs, and replacements (Kiel et al., 2017;

Rauch et al., 2015; Ren et al., 2019), targeted demand fulfilment (Kiel et al., 2017; Yazdi, Azizi,

& Hashemipour, 2018), and lean manufacturing as a moderator (Iranmanesh et al., 2019; Resta

et al., 2016), Industry 4.0 needs to be implemented up to the third level defined by the two focus

groups. The actual implementation plan may be prolonged but this research, at a theoretical and

empirical level and agreeing with the recent studies by de Sousa Jabbour et al. (2018), de Sousa

Jabbour et al. (2018a), Kiel et al. (2017), Ren et al. (2019), Sivri & Oztaysi (2018), and Zhong et

al. (2017), proposes the need for complete yet maturity-driven implementation approach of

Industry 4.0 technologies at the three levels for achieving the goals of sustainable manufacturing

and the objectives of the circular economy ReSOLVE model. For SAR following the GRI

framework, even the complete implementation of the three levels of Industry 4.0 (sensing and

actuation, predictive analytics capabilities, and AI-driven automation) will not be sufficient to

cover all the topics in the TBLM.

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The three levels of Industry 4.0 and their attributes are presented in Figure 5. This design of

Industry 4.0 indicates that Indian companies might prefer a phased approach, and there will

always be differences between vendors and industrial reports and the actual field-level benefits

derived from each level. The challenge highlighted by Govindan et al. (2014) may be realised if

industries implement Industry 4.0 either at Level 1 only or at Levels 1 and 2.

Figure 5: Empirical formulation of contribution of attributes of cloud-based Industry 4.0

framework to GRI reporting

The empirical formulation in Figure 5 is an attempt to justify what can be expected by a

particular level of investments in Industry 4.0. This formulation is an outcome of in-depth and
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focussed discussion by professionals in the Indian industry, who are involved in decision-making

and implementation projects. Realisation of limitations of the three levels of Industry 4.0

capabilities positioned in India is a practical outcome. Further, the realisation that Industry 4.0 is

not a complete solution for sustainability is also a practical outcome, as the capabilities of all the

levels of Industry 4.0 are projected as contributing to a limited number of GRI disclosures under

the GRI material topics. This may be a pessimistic projection, however, and hence its validity

needs to be studied further in future studies. The next section presents the implications for theory

and practice of the empirical formulation and these practical outcomes.

7. Implications for Theory and Practice

Industry 4.0 presents a significant opportunity to achieve the goals of sustainable manufacturing,

and achieving the objectives of the circular economy ReSOLVE model. The recent studies by de

Sousa Jabbour et al. (2018), de Sousa Jabbour et al. (2018a), Rosa et al. (2019), and Nascimento

et al. (2019) presented the role of Industry 4.0 technologies in achieving different goals of

circular economy. The role of IIoT and cyber physical systems is widely recognised as the most

critical, but real-time visualisation, predictive analytics, and automation are recommended to

approach maturity in sustainable manufacturing through gradual integration with quality

management practices, and operational decision-making. This research study has elaborated that

approach through an empirical formulation of three levels of Industry 4.0 implementation. To

meet the empirical models presented by majority of the existing researchers (such as de Sousa

Jabbour et al., 2018 ; de Sousa Jabbour et al., 2018a; Kiel et al., 2017; Ren et al., 2019; Sivri &

Oztaysi, 2018; Zhong et al., 2017), Industry 4.0 technologies need to be implemented as a

complete solution. However, when analysing in the context of measurements and reporting of

sustainability variables under the GRI topics, only a partial coverage has evolved from the focus
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group discussion. The interview respondents have further cautioned against much optimism in

investing in Industry 4.0 given that the analytics and automation parts are driven by artificial

intelligence, which may take a long time to mature, provide accurate predictions, and make

correct decisions. As maturity of artificial intelligence requires training data collected from

historical records, the path may be much longer for small to medium manufacturers than large

companies. The lowest layer of Industry 4.0 technologies as per the empirical formulation has

been mapped with measurements and reporting of environmental topics as per the GRI standard.

To achieve measurements and reporting of economic and social topics, the layers of predictive

capabilities and AI-driven global practices are needed, even if their maturity might take a long

time.

Further, the research by Govindan et al. (2014) regarding reluctance by Indian companies in

adopting new technologies and practices is reflected in the results of both focus group and

interviews outcomes. Another group of researchers have tried to address this challenge through

their studies on the softer aspects of achieving sustainable practices (such as: Jabbour et al.,

2013; Jabbour et al., 2015; Kannan, de Sousa Jabbour, & Jabour., 2014; Teixeira et al., 2012;

Teixeira et al., 2016). These studies have found gaps in significance of human resources

management in meeting sustainability goals amidst lack of appropriate content and its depth for

training. To implement the empirical formulation of Industry 4.0 for SAR, the training programs

need to be aligned closely with the maturity level achieved by an organisation. The depth and

quality of the training content need to be enhanced continuously to meet the softer challenges in

implementing Industry 4.0 for SAR. The empirical formulation may be used as a high level

guideline on the way the training content needs to be enhanced with maturity when an

organisation transitions from Level 1 to Level 3.

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This research is based on focus group discussion and interviews involving small groups in Indian

small scale industries. The solutions proposed by prominent multinational organisations in India

were discussed in the focus group discussions. The perspectives evolving have some credible

validation from existing research studies. However, these groups are too small to evolve

recommendations having larger impacts. The perspectives may differ significantly within India

and multiple other developing countries. Further, there may be differences between perspectives

of manufacturing professionals in developing and developed countries. For example, in countries

like China and USA having matured manufacturing practices, companies may prefer to invest in

big data and artificial intelligence along with IIoT and cyber physical systems in early stages of

implementation knowing the time span they need to mature through continuous data collection

and training. Further, mapping of the three levels of Industry 4.0 with SAR TBLM topics under

GRI framework may be more exhaustive than what has evolved in this research. However, there

may be some aspects in this research achieving global acceptance. For example, the design of the

three levels of Industry 4.0 technologies based on their maturity may be accepted globally after

minor changes. Further, the strengths of these technologies in meeting the specified GRI TBLM

topics may be accepted globally although perceived as incomplete and non-optimistic.

Future validation of the mapping of empirical formulation of Industry 4.0 levels with GRI topics

may be undertaken by researchers in different economies. Varying perspectives are expected; but

more importantly, the reasons for change in perspectives need to be recorded. The empirical

world needs to draw a line between mere reluctance to adopt a complex technological framework

like Industry 4.0 and grounded theories on why and why not a mapping between an Industry 4.0

level and a GRI topic can be validated. With the perspectives captured from multiple economies,

the mappings on the either side of this line will get clearer and accepted globally.
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8. Conclusion

This research presented a study of the influence of Industry 4.0 capabilities on the material topics

of Global Reporting Initiative (GRI) model of sustainability reporting. Two focus groups were

formed to study this topic through in-depth group discussions. The Industry 4.0 capabilities were

derived in the form of attributes at three levels of implementation evident in India. The two focus

groups mapped the attributes carefully with individual GRI disclosures under the GRI material

topics. The final empirical formulation reflects that Industry 4.0 is not a complete solution for

comprehensive GRI reporting because only a limited number of disclosure requirements can be

implemented even if all the three levels of Industry 4.0 positioned in India are implemented.

Further, limitations of partial implementation are clearly reflected from the final empirical

formulation. Level 1 of Industry 4.0 is projected to contribute to disclosures related to five

material topics under GRI 300 (environmental topics), Level 2 of Industry 4.0 is projected to

contribute to disclosures related to the stated material topics under GRI 300 (environmental

topics) and two material topics under GRI 400 (social topics), and Level 3 of Industry 4.0 is

projected to contribute to the stated material topics in GRI 300 and GRI 400, and three material

topics under GRI 300 (economic topics).

The above findings were presented to five operations heads and the questions used for focus

group discussion were asked. The respondents credited IIoT and cyber physical systems to

mostly environmental performance monitoring, but were not optimistic about body wearable

sensors for health and safety monitoring. Especially, they cautioned against optimism in

deploying AI-based predictive analytics and automation. In their view, the traditional ERP and

MRP systems took ages to settle down and the Industry 4.0 technologies cannot be rushed, as

well. Companies will need to set their expectations right and allow them to mature gradually.
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It is difficult to judge the validity of this empirical formulation because this is a new area of

research. However, the formulation appears not too optimistic when compared with the empirical

results of existing studies in sustainable manufacturing and circular economy modelling. Hence,

future research studies are recommended to validate the mappings in this formulation to judge its

validity. There is a possibility that contributions of Industry 4.0 attributes to additional material

topics and their disclosures might appear through future studies.

In India, cautious and restrictive investments for meeting triple bottom-line sustainability goals,

and sustainability accounting and reporting will always be a barrier. Industry 4.0 offers dual

benefits in the areas of automation and operations efficiency, and in sustainability accounting

and reporting. However, the empirical formulation reveals that economic benefits will only be

visible after implementing Level 3 of Industry 4.0. Hence, the usual “what-if” doubt will be a

significant barrier in investing in complete implementation of 4.0. Perhaps, industries will

attempt to truncate the overall framework of Industry 4.0 in their respective settings citing

internal feasibility analytics. Pessimistic empirical formulations like the one derived from the

outcome of this research may only add to this barrier. It is essential that the validity of this

empirical formulation is tested further. If appropriate, its expansion is needed to drive better

confidence in Industry 4.0 for developing capabilities for sustainable accounting and reporting.

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Acknowledgements:

This research did not receive any specific grant from funding agencies in the public, commercial,
or not-for-profit sectors. However, we are very much grateful to Integral University for
providing us an environment and support to complete our research work.
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Kamlesh Tiwari: Conceptualization, Investigation, Methodology, Data curation, Writing-

Original draft preparation.

Mohammad Shadab Khan : Visualization, Formal Analysis, Writing- Reviewing and Editing,
Validation, Supervision, Resources
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Declaration of interests

✓□ The authors declare that they have no known competing financial interests or personal
relationships that could have appeared to influence the work reported in this paper.

☐The authors declare the following financial interests/personal relationships which may be considered
as potential competing interests:

Declaration of interests: As far as known to us, there are no competing financial interests or any personal
relationships with anyone that could have influenced our research and its outcomes and conclusions
reported. Our research is fully unbiased and neutral.
Kamlesh Tiwari (Author)
Mohammad Shadab Khan (Co-Author)