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How manufacturers can forge sustainable business models through innovation

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In the aftermath of COP28’s sustainability pact, the spotlight on Environmental, Social, and Corporate Governance (ESG) has intensified for organizations worldwide. Yet, for many manufacturers, complying with ESG regulations often feels like a bureaucratic chore rather than a strategic imperative. 

However, as consumer awareness around corporate sustainability rises, manufacturers face mounting competition. Mere compliance with sustainability standards no longer suffices; instead, embedding sustainability into their business models is essential. 

Sustainability goals serve not only as ethical imperatives but also as drivers for innovation and efficiency within manufacturing organizations. They spark a drive for modernizing processes and supply chains, enhancing cost-effectiveness, quality, flexibility, and revenue streams. 

Read also: Embracing the circular economy to enhance sustainability

However, embarking on a sustainability transformation presents challenges. Different corporate teams grapple with disparate focuses; sales department of a company may be focusing on the environmental claims that can be made about a product, the engineers may be wondering what material they should be using to reduce the carbon footprint about said products, and the procurement teams may struggle with the challenge of supplier collaboration, hindering cohesive decision-making. Siloed information, disjointed systems, and data fragmentation further impede progress. 

To thrive in a competitive landscape, manufacturers must prioritize key capabilities, including operational efficiency, responsible material management, and circular business models. Operational efficiency involves optimizing logistics, minimizing waste, and ensuring sustainable production costs. 

Circular business models require forward-thinking, considering products’ post-consumption lifecycle. Repurposing resources, such as electric car batteries, exemplifies sustainable circular models, minimizing waste and maximizing resource longevity. 

Unlocking these capabilities hinges on leveraging data and decision points across the organization. However, data remains concentrated, impeding informed decision-making. Manufacturers must establish robust data tracking mechanisms and employ tools like AI to democratize data access. 

Enter the ‘Twin Transition’—the symbiotic relationship between sustainability, Net-Zero transitions, and digital transformation. These endeavors must progress hand in hand, with each reinforcing the other’s efficacy. 

To embark on this journey, manufacturers must delineate Net Zero goals, prioritize ESG metrics, and integrate IoT sensors for data-driven decision-making. 

By harnessing data and technology, manufacturers can achieve stronger, sustainability-focused decision-making, propelling them towards a greener future while fostering business resilience and growth. 

As strides toward sustainability are made, manufacturers face an important choice. Embrace sustainability initiatives as integral to business prosperity, or risk falling behind in an increasingly sustainable world. Those who grasp the symbiotic relationship between sustainability, digital transformation, and business success will thrive in the evolving landscape of manufacturing. 

Bain & Company reveals challenges in achieving sustainability goals in the MENA region

A recent study by Bain & Company has highlighted a significant gap between the sustainability intentions and actions of organizations in the Middle East and North Africa (MENA) region. While 70 percent of MENA organizations have set ambitious sustainability targets, only a fraction are on track to meet them, according to Bain & Company’s latest insights shared by Samer Bohsali, head of the social and public sector practice in the Middle East. 

The report underscores the critical challenges hindering these organizations from reaching their sustainability goals. Notably, 40 percent of organizations do not integrate sustainability into their strategic frameworks, and 80 percent suffer from inadequate cross-departmental collaboration, treating sustainability as a peripheral issue rather than a core operational strategy. 

Further complicating matters is the disconnect between setting high-level sustainability goals and implementing them at the operational level. Less than 20 percent of companies ensure that the sustainability goals set by their leadership are actionable and feasible for the teams responsible for their execution. Additionally, organizational inertia and an excessive caution towards changing operational practices to incorporate sustainability measures are prevalent, with only 55 percent of organizations considering themselves adaptable enough to implement significant sustainable practices. 

Read also: Facing World’s Challenges through Innovation and Sustainability

Despite these challenges, the push towards sustainability is gaining momentum due to shifting consumer preferences and investor priorities. Consumers increasingly favor companies with strong sustainability credentials, and nearly two-thirds of investors consider a company’s sustainability performance when making investment decisions. 

Bohsali emphasizes that addressing these hurdles requires a holistic approach to embedding sustainability within organizational operations. This involves aligning sustainability with the organization’s overall strategy, enhancing cross-functional collaboration, ensuring the feasibility of sustainability initiatives, and fostering a culture of innovation to continually advance sustainable practices. 

The Bain & Company report also touches on broader implications for global sustainability efforts, particularly in relation to the United Nations Sustainable Development Goals (SDGs). With only 15 percent of SDGs currently on track globally, and many regressing, the need for concerted effort and strategic alignment in sustainability practices is more urgent than ever. 

Bain & Company’s findings and recommendations offer a roadmap for organizations not only in the MENA region but globally, to recalibrate their strategies and operations in line with sustainable development principles. This alignment is not only crucial for environmental and social welfare but also positions companies competitively in an increasingly conscientious market. As the world races against time to meet the 2030 Agenda and Paris Agreement targets, the insights from Bain & Company serve as both a warning and a guide on the path to a sustainable future. 

Formula E and Aggreko forge sustainability partnership

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Formula E, the premier electric car racing series, has announced a key partnership with Aggreko, a world-renowned provider of mobile modular power, temperature control, and energy services. This collaboration, set to last multiple years, signifies a major step forward in powering Formula E events with sustainable energy solutions across the globe. 

Under this new agreement, Aggreko is designated as the official provider for the electric racing series, committing to the use of renewable energy sources such as biofuel-powered generators, solar energy arrays, and advanced battery storage technologies to energize the races. This partnership is a cornerstone in Formula E’s strategic plan to slash its emissions by 45% across all scopes by the year 2030, a goal that has been rigorously validated by the Science Based Targets initiative and is set against a 2019 baseline. 

In a bid to electrify the racing experience, Aggreko plans to roll out six 300kVA batteries, each capable of charging the Formula E car fleet simultaneously. These batteries, along with various other capacities, will ensure the seamless operation of race circuits at every event location, boasting an impressive energy storage capacity equivalent to charging 84,000 mobile phones. 

Moreover, the initiative will see the integration of Stage V Hydrotreated Vegetable Oil (HVO) powered generators, offering a remarkable 90% CO2 emissions reduction compared to traditional diesel generators. This significant cutback in emissions is complemented by lower levels of nitrogen, sulfate, and overall HVO fuel consumption. 

Selected tracks will also see the installation of solar arrays adjacent to the circuit, further amplifying the environmental benefits brought forth by this partnership. 

David de Behr, Head of Sales at Aggreko Event Services, emphasizes the company’s commitment to sustainability, noting that their clean energy solutions are a perfect match for Formula E, the world’s greenest motorsport series. This collaboration underscores Aggreko’s dedication to supporting Formula E in its mission to dramatically reduce emissions and uphold its status as a leader in sustainable sport. 

Tiziana di Gioia, Chief Revenue Officer at Formula E, expressed excitement over the partnership with Aggreko, recognizing the company’s expertise and pioneering approach to sustainable, temporary energy solutions as vital to powering Formula E’s unique events in an environmentally friendly manner. 

Established in 1962 and headquartered in Glasgow, Scotland, Aggreko has grown to become a global leader in its field, boasting the largest fleet of temporary power solutions worldwide. With operations spanning 200 locations across 80 countries, Aggreko offers flexible, reliable energy solutions tailored to meet a variety of needs. 

This sustainability-focused partnership aligns with Formula E’s recent technological advancements, including a significant new partnership with Google Cloud. Marking the 10th anniversary of the championship, the 2024 Formula E season is set to be a landmark year, featuring the latest Gen3 cars competing across 16 global venues. The current standings see Pascal Wehrlein of the Tag Heuer Porsche Formula E team leading, closely followed by Nick Cassidy of Jaguar TCS Racing, with India’s Jehan Daruvala also making significant strides in the competition. 

  

Experts warn that climate change is threatening African rhinos with extinction

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Although African rhinos are renowned for being tough and hardy, climate change is one factor that is not sparing them. Experts have issued a severe warning to global conservationists and wildlife enthusiasts, stating that the survival of African rhinoceros’ herds is seriously threatened by climate change. The iconic species, which is well-known for its ancient appearance and declining population because of poaching, now confronts another threat: the effects of climate change.  

The terms “African rhino” relate to the rhinoceros (white and black) species. White rhinoceroses are found mostly in southern and eastern Africa, including Namibia, South Africa, Zimbabwe, Kenya, and Uganda. They are the second largest land mammal after elephants. White rhinos live in various environments, including open forests, savannas, and grasslands. Smaller than white rhinoceroses, black rhinoceroses are found in sub-Saharan Africa in South Africa, Namibia, Zimbabwe, Kenya, Tanzania, and Zambia. Due to poaching, habitat degradation, and other human-related concerns, both species of African rhinos are severely endangered, making conservation efforts essential to their survival.  

Recent studies conducted by leading environmental organizations have highlighted the vulnerability of African rhinos to the adverse effects of climate change. Rising temperatures, shifting rainfall patterns, and increased frequency of extreme weather events are all contributing factors that could potentially push these majestic creatures to the brink of extinction.  

Also read: The Sixth Mass Extinction Event; Are We in It?

According to wildlife experts, the complications of climate change on African rhinos are multifaceted. Shifts in rainfall patterns disrupt the availability of water and food sources, forcing rhinos to migrate in search of suitable habitats. Prolonged droughts exacerbate this situation, leading to scarcity of resources and heightened competition among wildlife species for survival.  

Moreover, rising temperatures contribute to habitat degradation, impacting the quality of vegetation and exacerbating the spread of diseases among rhino populations. Heat stress and dehydration further weaken the resilience of these animals, making them more susceptible to predation and disease outbreaks.  

Beyond the obvious dangers to rhino numbers, climate change has wider consequences. Rhinos are essential to the preservation of biodiversity and ecological balance because they are keystone species in their own environments. Their decrease can upset complex ecological interactions and jeopardize the integrity of entire ecosystems, with far-reaching effects on other species that depend on the same habitats.  

Conservation efforts aimed at protecting African rhinos must now encompass strategies to mitigate the impacts of climate change. Adaptation measures, such as establishing corridors to facilitate movement between fragmented habitats and implementing water management initiatives to ensure access to vital resources, are essential for safeguarding rhino populations against the adverse effects of a changing climate.  

Furthermore, global action to reduce greenhouse gas emissions and limit the extent of climate change is paramount to securing a future for African rhinos and other vulnerable wildlife species. Collaborative efforts between governments, conservation organizations, and local communities are needed to address the root causes of climate change and implement effective strategies for climate resilience and biodiversity conservation.  

The predicament of African rhinos serves as a sobering reminder of how intertwined human activity and the natural world are, particularly at a time when the world is trying to address the pressing issues brought on by climate change. We can only expect to save these amazing species for the admiration and cherishing of future generations by taking coordinated action and communal responsibility. 

Looming debt crisis threatens global sustainability goals

Emerging Market and Developing Economies (EMDEs) are facing a dire financial predicament that could jeopardize the global pursuit of the United Nations 2030 Agenda for Sustainable Development and the Paris Agreement. A new report by the Debt Relief for a Green and Inclusive Recovery (DRGR) Project reveals that a significant number of these economies might become insolvent within the next five years due to their efforts to ramp up investments to meet climate and developmental goals. 

According to the report, the external Public and Publicly Guaranteed (PPG) debt levels in these countries have more than doubled since 2008, with debt service payments hitting unprecedented highs. This financial strain is occurring at a time when investment in crucial areas such as health and education is more necessary than ever. Currently, nearly half of the world’s population resides in countries that spend more on servicing external debt than on these vital public services. 

From the archives: African Countries Aren’t Borrowing Too much: They’re Paying Too Much For Debt

The report highlights that out of 66 economically vulnerable EMDEs, 47 are projected to face insolvency problems by 2028 if they continue to pursue the necessary investments to meet internationally agreed-upon environmental and development benchmarks. These nations will likely exceed the International Monetary Fund’s (IMF) external debt solvency thresholds, pushing them into a financial crisis. 

Moreover, the situation is compounded by the inaccessibility of private capital markets for the majority of these countries. With bond yields outstripping projected growth rates, these economies find themselves in a precarious position where they cannot afford to roll over or issue new debt without risking their financial stability. 

In response to these alarming findings, the DRGR Project, drawing on past initiatives like the Brady Plan and the Highly Indebted Poor Countries (HIPC) Initiative, has proposed a comprehensive debt relief strategy. This strategy consists of three pillars: 

  • Significant debt reductions by public and multilateral creditors to restore debt sustainability and support the achievement of climate and development goals. 
  • Commensurate debt reductions from private and commercial creditors, with incentives to encourage their participation. 
  • Provision of credit enhancement and other supports such as temporary debt service suspension to boost fiscal space for essential investments. 

This approach not only aims to tackle the immediate liquidity and insolvency issues faced by these countries but also proposes a long-term vision for reforming the global debt architecture. The DRGR Project emphasizes that without substantial and immediate debt relief, at least 47 EMDEs are at risk of defaulting on their commitments to the 2030 Agenda and the Paris Agreement, potentially setting back decades of progress on global sustainability and development. 

As the DRGR proposal goes under review and discussion among global financial leaders and institutions, the international community stands at a critical juncture. The decisions made now will determine whether these vulnerable economies can navigate through their debt challenges without sacrificing their sustainable development and climate goals. 

Kenya has unveiled a nuclear agenda

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A recently unveiled strategic plan provides a roadmap for the establishment of Kenya’s first nuclear power plant with aims of bolstering the country’s energy capacity while reducing CO2 emissions. 

The plan follows the successful introduction of Kenya’s Nuclear Power and Energy Agency (NuPEA) and its 2020-25 plan, with the latest strategy setting out goals for 2023-27. 

Energy law expert, Jurg van Dyk of Pinsent Masons, said: “The strategic plan takes Kenya’s national development agenda, environmental considerations, and international climate change commitments into consideration whilst identifying focus areas of national importance.” 

These areas include the development of nuclear infrastructure, support and engagement with stakeholders, nuclear energy research and innovation, and hiring more people in the energy and petroleum sector. The plan also promotes strengthened collaboration with local and international research and academic institutes. 

Currently, Kenya’s domestic installed electricity capacity is around 3,073MW, consisting of hydropower, geothermal, thermal power, wind, solar and biomass facilities. The roadmap sets out plans to add nuclear energy into this mix in line with aims of lower CO2 emissions by harnessing an energy source which has low associated emissions. 

The strategic plan provides a timeline for the types of potential nuclear power systems deployable by no later than 2030, This will offer “significant advances in sustainability, safety and reliability, and economics”, said Sarah Burford of Pinsent Masons. 

NuPEA envisages construction commencing by 2029 and operation of the country’s first nuclear power plant by 2034. 

Burford said,: “Developments in the nuclear energy space will not only drive development through procurement, manufacturing and construction jobs for Kenya, but will assist in creating demand for African-sourced uranium.” As of 2022, Namibia and Niger produced 11% and 4% of the global supply of uranium. 

It is anticipated that the nuclear energy development proposed by the plan will require approximately Kshs. 38.233 billion (approx. US$273 million), which will primarily be drawn from the Kenyan government. NuPEA will seek funds from Kenya’s consolidated energy fund and its national research fund for the activities planned in the plan. NuPEA has further partnered with entities such as the International Atomic Energy Agency, Japan International Cooperation Agency, Korea International Cooperation Agency and US government, among others, for funding and research collaborations. 

“If NuPEA’s implementation of the strategic plan is as successful as the implementation of 2020 – 2025 strategic plan was, Kenya will successfully position itself as an African leader in nuclear energy research and energy generation, whilst simultaneously achieving Kenya’s goals of reducing its CO2 emission rate from energy generation,” Van Dyk said. 

Kenya’s strategic plan aims to position Kenya as the African leader in nuclear energy and electricity generation, while simultaneously fostering stronger partnerships and collaborations with international bodies and regional trading partners. However, Kenya is not the only African country exploring options for new nuclear. Egypt, Rwanda and Ghana, amongst others, are in the process of considering nuclear power as it “brings a promising future from a mining, technology and energy perspective”, Burford said. 

South Africa also recently took steps to amend its national nuclear regulations, bringing them in line with international standards by introducing additional regulatory functions, as well as making financial provision for the safe rehabilitation or decommissioning of nuclear facilities. 

Van Dyk said: “African countries’ increasing interest in nuclear energy is a result of prevailing energy deficits across the continent and the need to simultaneously promote economic growth while reducing CO2 emissions. Kenya will, for the foreseeable future, continue to play an important role in energy technological developments in Africa and remain a leader in the development of nuclear energy on the continent while promoting economic growth and meeting its emissions targets.” 

EU approves Corporate Sustainability Due Diligence Law

After enduring weeks of negotiations and revisions, the European Council has finally approved the Corporate Sustainability Due Diligence Directive (CSDDD). The directive, often referred to as CS3D, aims to establish stringent sustainability standards for businesses within the EU, focusing particularly on environmental, climate change, and human rights issues within their operations and supply chains. 

This new legal framework imposes liability on EU-based companies, as well as non-EU companies that conduct significant business within the EU, for environmental and human rights violations committed not only by themselves but also by their subsidiaries and suppliers. The directive marks a significant step in holding corporations accountable for their supply chains, pushing companies to undertake thorough due diligence processes. 

Read also: How Africans will be affected by EU’s Corporate Sustainability Due Diligence Directive (CSDDD)

However, the version of the CSDDD that passed was significantly toned down from its original draft, a development that has disappointed many sustainability advocates. Initially, the directive seemed set for swift approval, but the process was stalled when Germany announced its decision to abstain from voting. This decision influenced other countries like France and Italy to follow suit, leading to a lack of majority support in the European Council. 

This sparked 45 days of intense behind-the-scenes negotiations filled with political maneuvering and adjustments to the directive’s provisions. Throughout this period, drafts were circulated and frequently amended in an effort to garner sufficient support, with each version reducing the scope of the directive further. Despite the repeated attempts to place the CSDDD on the council’s agenda, it was continually postponed due to the evident lack of consensus. 

The watered-down directive, which has now been pushed through the European Council, will next face the European Parliament for final approval. This phase is crucial as the directive seeks to establish a new normative framework that could redefine corporate accountability in Europe, emphasizing sustainable practices and respect for human rights across global supply chains. The approval process in the European Parliament will be closely watched by businesses and sustainability advocates alike, as it will determine the practical impact of the CSDDD on corporate operations and their broader implications for environmental and social governance in Europe. 

How Microsoft is advancing the sustainability of AI

As Artificial Intelligence (AI) technologies continue to evolve, Microsoft is leading the charge in enhancing their sustainability, recognizing the significant environmental impact of these advanced systems. The tech giant has identified three key areas to focus on improving the sustainability of AI operations: optimizing data center energy and water efficiency, advancing the use of low-carbon materials, and boosting the overall energy efficiency of AI and cloud services. These efforts align with Microsoft’s broader commitment to responsible AI and ambitious sustainability goals. 

Related: Microsoft’s leap into sustainability with AI and data solutions

Datacenter efficiency: Microsoft’s approach to modern data centers, which are key in supporting AI and cloud operations, includes reducing energy and water consumption. The company is innovating in the design and operation of these facilities to integrate renewable energy sources and employ innovative cooling mechanisms that reduce reliance on freshwater resources. These strategies are part of Microsoft’s broader effort to make their cloud services more sustainable and less resource-intensive.  

Low-carbon materials: In building new data centers and other infrastructure, Microsoft is pushing for the adoption of low-carbon building materials. The company’s $1 billion Climate Innovation Fund is an investment arm aimed at accelerating the development and deployment of low-emission building solutions like green steel and low-carbon cement. These materials are essential to reducing the carbon footprint of new constructions, which are significant given the global scale of Microsoft’s operations. 

Improving energy efficiency of AI and cloud services: Beyond physical infrastructure, Microsoft is also dedicated to improving the energy efficiency of the software itself. By developing tools and models that require less power to operate, Microsoft is reducing the overall energy demands of AI technologies. This includes initiatives like the deployment of smaller, more efficient AI models that maintain high performance with less computational expense. 

Microsoft’s leadership in this field extends to forming partnerships and collaborating with other industry leaders through initiatives such as the Green Software Foundation, which promotes the adoption of green software engineering practices. These collaborative efforts are crucial for setting industry-wide standards that prioritize sustainability. 

Through these comprehensive strategies, Microsoft is not only addressing the immediate impacts of its own operations but is also setting a precedent for the tech industry at large. The company’s efforts to enhance the sustainability of AI and cloud services exemplify a commitment to responsible innovation that balances technological advancement with environmental responsibility. 

 

Sustainability bonds surge in 2024

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In a positive turn of events, the sustainable bond market has experienced a significant rebound in 2024 following a period of stagnation. The International Capital Market Association (ICMA) has welcomed the resurgence, citing “encouraging numbers” for sustainable bond issuance compared to the previous year. 

One notable trend observed in 2023 was the allocation of more than half of sustainable bonds to green spending, demonstrating a growing emphasis on environmental initiatives. Additionally, 17% of bonds were dedicated to addressing social responsibility concerns, indicating a broader focus on societal impact. 

While sustainability-linked bonds experienced a slight decline from 9% to 7% of total sustainable bonds, the first three months of 2024 saw a remarkable 12% growth in sustainable bond issuance compared to the same period the previous year, reaching $253 billion (€2.6 billion). 

Also read: Sustainable Finance Strategies: Mobilizing Resources for a Greener and More Sustainable Future

Despite the increase in absolute numbers, sustainable bonds represented a slightly smaller proportion of the wider bond market during the first quarter of 2024, dropping from 12% to 11% of all bonds issued. However, this decline was offset by significant growth in sovereign, supranational, and agency issuances, which accounted for 55% of sustainable bonds, totaling $138 billion—an 18% increase from the same period last year. 

Noteworthy developments in the sustainable bond market include Japan’s pioneering entry into the ‘transition’ bond market, marking the first sovereign to tap into this segment. Additionally, the African Development Bank made history by selling the first supranational “sustainable hybrid capital transaction” in alignment with the G20 Capital Adequacy Framework recommendations. 

Further diversification of the sustainable bond market was evidenced by the debut of countries like Romania, Iceland, and Ivory Coast, signaling growing global participation in responsible investing. On the corporate front, notable newcomers such as chemicals giant Dow, carmaker Mazda, and tourism firm TUI Group contributed to a 4% increase in corporate deals. 

ICMA continues to play a significant role in promoting credible sustainable bond markets through oversight of the Green Bond Principles and other global guidelines for issuers and investors. The resurgence of sustainable bond issuance in 2024 reflects a renewed commitment to responsible investing and underscores the importance of integrating environmental, social, and governance (ESG) considerations into investment decisions. 

As the momentum for sustainable finance continues to grow, investors and issuers alike are recognizing the potential for positive impact and long-term value creation. With sustainable bonds gaining traction as a preferred investment vehicle, the stage is set for further innovation and collaboration in the pursuit of a more sustainable future. 

 

NASA adopts sustainability in space operations

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NASA has unveiled the first part of its Space Sustainability Strategy, a significant step in enhancing the agency’s efforts to safeguard space environments. This new strategy, announced on Tuesday, highlights NASA’s commitment to maintaining the viability of space operations for future generations. NASA Deputy Administrator Pam Melroy emphasized the urgency of this initiative, noting the increasing congestion in space and the importance of preserving critical areas for the benefit of humanity. 

Historically, NASA has been at the forefront of developing and implementing sustainable space practices. The agency’s influence extends globally, with its best practices, analytic tools, and technologies becoming standards among space operators worldwide. The new strategy aims to unify these efforts across NASA, ensuring a focused response to the most critical sustainability challenges. As part of this strategic realignment, NASA will create a new directorial role specifically for space sustainability, coordinating activities across the entire agency. 

The strategy outlines key goals including leading global efforts in space sustainability, promoting equitable access to space, and ensuring that NASA’s operations contribute positively to sustainability in space. It addresses the complexities of modern space operations, which include the proliferation of low Earth orbit satellites and the advent of large satellite constellations, autonomous spacecraft, and commercial space ventures. These developments, while promising, pose additional challenges such as increased space traffic and debris, making the management of these issues critical. 

Related: Why Monitoring Space Weather and Space Environment is Important

The strategy was crafted with the guidance of a cross-agency advisory board and focuses on practical measures NASA can implement to enhance sustainability in Earth orbit. These measures include advancing methods to assess sustainability, finding cost-effective solutions to meet sustainability goals, encouraging the adoption of sustainable practices through new technologies and policies, and enhancing communication with the global space community. 

This comprehensive approach acknowledges the multifaceted nature of space operations, spanning from Earth orbit to cislunar space and beyond, into deep space and other celestial territories. The initial volume of the Space Sustainability Strategy specifically concentrates on Earth orbit, with subsequent volumes planned to address sustainability in the remaining domains, underscoring NASA’s holistic view of its role in stewarding outer space resources.