Industry 4.0 and 5.0: what are the differences?
Industry 5.0, defined by the European Commission as the natural evolution of Industry 4.0, is the result of a radical shift in thinking, one that is designed to reposition the concept of industry in the current socioeconomic context. It is not limited to the automation and interconnection of production processes, but focuses on people, environmental sustainability and the development of solutions of resistance and resilience with respect to territorial, social and environmental changes. It is an adaptation of the ways of understanding business organizations as a whole to the new demands that technology and digitization have brought to light. In this content we will explore the differences between Industry 4.0 and 5.0, and how the requirements for accessing the tax benefits provided for related investments change. From Industry 4.0 to Industry 5.0 The evolution from Industry 4.0 to Industry 5.0 represents a significant leap in the industrial landscape, shifting the focus from a technocentric to a humanocentric approach in the way we understand business. Unlike Industry 4.0, which focused primarily on automation and efficiency of production processes, Industry 5.0 places people at the center, valuing their well-being and that of the community. The human-centric approach is embodied in several aspects: people as a key resource: advanced technologies do not replace workers, but become tools to enhance their capabilities and improve the quality of work safety and well-being: the goal is to reduce work risks and create a positive and inclusive work environment; Inclusion and accessibility: technologies are used to facilitate the integration of people with disabilities into the world of work; Social innovation: technological development is used to solve social problems and improve people’s quality of life. From the fourth industrial revolution to the development of Industry 5.0, digitization has played a key role. The use of technologies for data analysis, remote control of industrial machinery, and monitoring and reporting of consumption has enabled companies to make processes more efficient, sustainable, and safe. This automation process allows many employees to focus on more craft and creative tasks, increasing their satisfaction and generating added value. The shift from Industry 4.0 to 5.0 represents an evolution from the use of technology to automate, digitize and speed up business processes to the use of artificial intelligence, machine learning and Internet of Things solutions to support employees in their daily activities. What does the Transition 5.0 Plan include? Several incentives have been disbursed over the years and dedicated to the digital, technological and sustainable transition of enterprises: starting with the Industry 4.0 Plan and ending with the more recent 5.0 Transition Plan. Incentives and tax breaks provided in the form of tax credits for capital goods for the digitization and sustainable transformation of enterprises. The Transition 5.0 Plan, published on February 26, 2024, allocated thirteen billion euros for companies that invest in tools for digital and energy transition, using innovative technologies for sustainable productivity. Tax breaks come in the form of tax credits, the percentage of which varies depending on the savings achieved by the company (which must record a 3 percent improvement in energy efficiency or 5 percent improvement in the production process involved). The tax credit percentages under the Transition 5.0 Plan for companies depend on the size of the investment and the percentage of reduction in energy consumption. The amount of the tax credit varies depending on the size of the investment: 35 percent for investments up to 2.5 million; 15 percent for investments over 2.5 million euros and up to 10 million euros; 5 percent for investments exceeding 10 million euros, up to a maximum limit of 50 million euros in eligible costs per year per beneficiary enterprise. The tax credit can increase to 40% or 45% if the investment is shown to result in energy savings: Higher than 6 percent for 40 percent credit; Higher than 10% for 45% credit. What investments are eligible for tax credit under the Transition 5.0 Plan? capital goods with operation controlled by computerized systems and/or managed through appropriate sensors and drives; Systems for quality assurance and sustainability; devices for human-machine interaction and improving workplace ergonomics and safety in Logic 4.0; programs and applications purchased by companies (such as software, systems and system integration); Supply chain management systems aimed at drop shipping in e-commerce; software, platforms and applications for logistics management and coordination with high service activity integration features; software and digital services for immersive, interactive and participatory enjoyment, 3D reconstructions, augmented reality. Digitizing business processes: an entry channel to a 5.0 future Digitization in industrial processes, from a 5.0 and sustainable perspective, is a crucial breakthrough for companies. By integrating advanced technologies such as artificial intelligence and the Internet of Things, companies can optimize operational efficiency, reduce energy consumption and improve product quality. This transformation not only fosters greater productivity, but also enables more sustainable practices, helping to reduce environmental impact. In addition, digitization relieves employees of repetitive tasks, allowing them to engage in more creative and value-added tasks. In this context, the synergy between technological innovation and sustainability is not only a necessity, but an extraordinary opportunity to build a responsible and prosperous future. Find out how we can be of support to you in your digitization journey.
What is the purpose of the ESG score and what role does it play within the ESG Assessments?
The ESG score is an assessment of a company’s performance and performance in relation to corporate sustainability. The key areas that determine the ESG score are, as the acronym suggests: environmental, social, and governance. The ESG score influences investors’ choices, both for reasons related to Social Responsibility and for reasons of financial reliability, as it is believed that companies with a high ESG score can perform better financially in the long run and are less prone to external risks such as climate change. Usually, the ESG score is embedded within a broader path, such as the Assessment, a tool that measures a company’s sustainable commitment and can provide the set of long-term sustainability goals to be pursued. In this content we will examine the definition of ESG scoring and the impact it has within our ESG Assessment. What elements does the ESG score consist of? The ESG score can be divided into three categories, all of which are useful in making up the final assessment, namely: the environmental score, which refers to the impact that business activities produce externally. It includes aspects such as carbon emissions, natural resource use, energy efficiency, waste management and raw material sourcing; the social score, relating to factors such as respect for human rights, labor standards, diversity and inclusion, data security, transparency in communication choices and all those elements attributable to Corporate Social Responsibility; the governance score, which is used to assess a company’s operational standards and management practices. To achieve a high score, a company must perform self-auditing, regularly measure and evaluate its performance, maintain good relations with regulatory authorities, and manage risks effectively. The combination of these three categories provides a specific picture about a company’s ESG performance; an element that, when placed within the broader context of the ESG Assessment, forms the basis for devising an effective and lasting strategy for pursuing sustainability goals. Why aim to have a good ESG score. Having a good ESG (Environmental, Social, Governance) score brings numerous benefits to companies, including: improved image and reputation: companies with a high ESG score demonstrate adherence to a concrete idea of Corporate Social Responsibility, thus being more attractive to customers, investors and partners; risk reduction: a good ESG score helps reduce financial, legal, and operational risks related to environmental, social, and governance issues. For example, a company committed to environmental sustainability is less vulnerable to environmental incidents and physical/weather events related to climate change, being resilient and able to cope adequately with any regulatory changes; access to more advantageous capital: investors who consider ESG criteria when choosing investments are increasingly numerous and willing to finance companies with good scores in this area. This translates into access to capital with lower interest rates and more favorable terms; attract and retain top talent: candidates are increasingly attentive to companies’ ESG policies and prefer those that demonstrate a concrete commitment to this area; development of competitive advantage: a good ESG score can distinguish a company from its competitors, giving it a competitive advantage in the marketplace in terms of corporate image, employer branding, and accountability to users and investors; greater growth opportunities: companies with an ESG approach are more likely to seize new business opportunities related to the transition to a more sustainable economy. To achieve a good ESG score, companies must implement concrete environmental, social and governance policies and practices. Calculate your ESG score with our ESG Assessment The ESG Assessment activity consists of assessing how well environmental, social and governance sustainability principles are integrated into the company’s strategies, policies, objectives and activities, i.e., how well these are actually translated into daily activities and organizational methodologies applied in the company. Our ESG Assessment platform, after careful evaluation of the responses provided about the environmental, social and governance areas examined, provides a numerical value, the ESG score, which summarizes the company’s sustainability performance. It also examines industry best practices and indicates areas and actions useful for future improvement. Our ESG Assessment platform follows international standards and procedural rules, such as those issued by the Global Reporting Initiative for corporate sustainability reporting, which are called GRI Standards. For an approach to sustainability that enables organizations to maintain a competitive position and achieve stable returns while creating shared value over the long term, it is critical to measure business decisions and the real-world impacts they have on ESG to identify strengths and critical areas where work needs to be done. Our ESG Assessment helps the organization identify strategic areas to act on and how to do so, to progressively build a sustainable and successful approach. Consisting of three phases: questionnaire, analysis and report, with our Assessment companies can develop a long-term strategy based on an analysis of their sustainability performance and industry best practices. Find out your ESG score with us
