Industry 5.0: The Industrial Evolution

Rethinking the Role of Industry

Image Source: TStudious/stock.adobe.com

By Matt Campbell, Mouser Electronics

Published April 25, 2025

In 2022, the European Commission released a report outlining its vision for Industry 5.0.^[1] The report serves as a guiding compass for legislation and business practices rather than a purely technical guide. Industry 5.0 is not defined as simply the next iteration of industrial revolutions, but a reframing of existing technology that prioritizes human-centricity, sustainability, and resilience (Table 1). Rather than being a purely economic vehicle, industry should use its size and influence to spearhead social and environmental well-being.

Table 1. Positioning Industry 5.0 against Industry 4.0. (Source: Industry 5.0, a transformative vision for Europe by Directorate-General for Research and Innovation (European Commission) is licensed under CC BY 4.0)

Each of the first four industrial revolutions was characterized by specific breakthroughs in energy and technology (Figure 1). Breakthroughs in coal-powered steam engines in the early and mid-1700s powered the First Industrial Revolution.^[2] No longer limited by the availability of suitable water and wind power, mechanized manufacturing became the foundation of the economy in industrialized countries.

Figure 1: The first four industrial revolutions were characterized by energy generation methods and technological breakthroughs. (Source: Author)

Part of the shifting role of industry comes from the shift in what industry actually is. The word “industry” may conjure imagery of factories and assembly lines, but tech giants dominate today’s economy.^[3] By creating the tools people use every day for work and leisure, these companies have closely tied industry with many aspects of the human experience. Therefore, the European Commission wants to align industry’s goals with the betterment of humanity.

This article covers the three pillars of Industry 5.0 that the European Commission has defined as guidelines for organizations and policymakers: human-centricity, sustainability, and resilience.

Human-Centricity

[Industry 5.0] empowers workers through the use of digital devices, endorsing a human-centric approach to technology.^[1]

The electronics industry focuses primarily on the technological impact of each industrial revolution, but the social impacts of the First Industrial Revolution motivated the human-centricity pillar in Industry 5.0. While mechanization and automation immediately improved industrial output and efficiency at the macro level, individual workers had to wait longer for their standard of living to improve. Economists disagree on when exactly the working class began to experience the economic benefits of industrialization, with estimates ranging from the early 1800s to the mid-1800s.^[4]

But even when workers started earning higher wages working in factories than they did on farms, they faced long hours, dangerous conditions, and cities that were not equipped for booming populations. Advancements in industrialization and automation have ripple effects on workers at work and at home. Industry 5.0 calls on organizations and legislators to take a more holistic view of technological advancements rather than looking at them in a vacuum.

A human-centric organization shifts from maximizing shareholder value to improving stakeholder value, and the stakeholders include the workers. Workers are seen as an investment, not a liability. The goal of technological innovations should be to augment human workers, not replace them entirely.

For example, instead of replacing workers when the workflow is upgraded, organizations could train their current workforce to work with new technologies. In earlier industrial revolutions, automation reduced the number of jobs for factory floor workers but opened new jobs in engineering and business management. Today, robotics and digitization continue to take on wider varieties of work, but humans are still needed to monitor these systems. Upskilling existing employees on new technologies protects their livelihoods and protects the company’s investment in the employees’ knowledge. According to a World Economic Forum report from 2022, 59 percent of workers will need reskilling by 2030.^[5] By taking a proactive stance in training workers, companies can retain talent while staying competitive with new advancements.

Industry 5.0 also advises companies to apply new technologies with the goal to augment, rather than replace, their workers. The guidelines encourage collaboration between humans and machines to benefit from both the computing power and strength of machines and the skills and critical thinking abilities of human workers. Workers should feel like they can trust new technology and that it is not a threat to their livelihood. In practice, this could be no-code/low-code automation solutions with intuitive human-machine interfaces (HMIs) that do not need a specialist to operate, cobots that work alongside humans, and augmented reality to help workers with complex tasks.

Sustainability

The new industrial strategy would need to be based on totally new targets and indicators for business performance and sustainability in business models rather than the rather “classical” headline indicators of competitiveness presented by the European Commission in July 2018 and enshrined in Industry 4.0, and only partly revised in May 2021.^[1]

The European Commission's report aims to make sustainability a compass for business decisions, rather than deprioritizing it behind profits and growth. Reporting how a business meets sustainability goals is mostly voluntary outside of the EU, and within the EU, sustainability reporting requirements have become law only in the last decade. Compared to the timeline of industrialization, a focus on sustainability is a very young concept. While modern manufacturing techniques are better at mitigating environmental harm, there is still a conflict of interest between industrial growth and environmental responsibility.

The widespread adoption of artificial intelligence (AI) and other compute-intensive applications highlights the relationship between industry and planetary boundaries. Power-hungry data centers require more electricity to keep up with demanding workloads, and their power consumption is expected to increase to over 1,000 terawatt hours in 2026.^[6]

With internet infrastructure on track to be responsible for 14 percent of global emissions by 2040,^[7] creating a model for sustainable digitization is a key goal for Industry 5.0. The European Commission's report says digitization must shift away from a consumption-focused Internet of Things into a less wasteful and more user-focused “digital for people-planet-prosperity.”1 Industry should consider the wider social and environmental consequences of digitization beyond just the bottom line.

One way industry is being incentivized toward sustainability in the EU is through the Corporate Sustainability Reporting Directive (CSRD), which was first published in 2022 after the European Commission's Industry 5.0 report. CSRD requires large EU-based companies and foreign companies with substantial business in the EU to investigate and report on their environmental and social impacts.^[8] CSRD went into effect in 2024 and superseded the Non-Financial Reporting Directive (NFRD), increasing the number of companies that must report and clarifying the scope of what reports must include. 

Beyond reporting on environmental impacts, the report calls for a circular economy to reduce waste by keeping materials in circulation. Electronic waste is a growing problem in the electronics industry as technologies and products become obsolete and replaced. In 2022, an estimated 62 million tons of electronic waste were produced globally, with less than a quarter of it being collected and recycled.^[9] Industry 5.0 imagines an economy where product lifecycles are designed to be circular to reduce waste and reduce the need to obtain new raw materials.

Resilience

Building resilience within our existing economy and transforming to a new set of economic ecosystems that are more resilient to future shocks and stresses should be Europe’s mission henceforth.^[1]

The European Commission released the Industry 5.0 report in early 2022, when many industries still felt the effects of recent supply chain disruptions. As a result, a key piece of Industry 5.0 is building industrial systems that are resilient to external shocks.

Before the COVID-19 pandemic, Industry 4.0’s data intelligence, combined with globalized supply chains, had led to organizations adopting a just-in-time (JIT) approach to inventory management. JIT maps raw material orders to production schedules so materials show up “just in time” for production. While JIT was a great strategy to avoid the need to manage extensive on-site inventories, the pandemic exposed how supply chain interruptions can travel like a shockwave through industries that depend on a consistent supply chain.

While some companies have begun to relax back into old JIT habits as the supply chain has healed, Industry 5.0 calls on organizations to rethink their supply chains to minimize vulnerabilities.^[10] A shorter supply chain is more reliable than a long and complicated one, so the report prioritizes decentralization as a key tactic for hardening supply chains. Local manufacturing, local food production, and local energy generation build resilience through redundancy compared to centralized solutions. The concept of decentralization also extends to the online world, imagining a decentralized Web 3.0 with a more distributed user-controlled infrastructure.

The technologies of Industry 4.0 provide ways for companies to build resilience in line with Industry 5.0’s goals. Entire processes or supply chains can be modeled as digital twins, enabling businesses to identify weak points in their assembly line or supply chain. Predictive maintenance, another Industry 4.0 feature, reduces unnecessary downtime. Industry 4.0 introduced these technologies with the goal of maximizing efficiency to maximize profit. Bringing these Industry 4.0 technologies into an Industry 5.0 context means considering the broader way these technologies can contribute to your human-centricity, sustainability, and resilience. A lean JIT supply chain might have less financial overhead than a “just in case” inventory backup, but Industry 5.0 calls on companies to consider more than just their bottom line.

Conclusion

Industry 5.0 is not another industrial revolution—it’s an industrial evolution. By encouraging organizations to see workers as stakeholders, prioritize sustainability, and build resilient systems, the new framework reimagines industry’s role by shifting its focus away from pure economic output and toward humanity’s well-being.

Sources

[1]https://data.europa.eu/doi/10.2777/17322
[2]https://www.worldhistory.org/article/2166/the-steam-engine-in-the-british-industrial-revolut/
[3]https://www.investopedia.com/biggest-companies-in-the-world-by-market-cap-5212784
[4]https://www.econlib.org/library/Enc/IndustrialRevolutionandtheStandardofLiving.html
[5]https://www.weforum.org/publications/the-future-of-jobs-report-2025/digest/
[6]https://www.iea.org/reports/electricity-2024/executive-summary
[7]https://doi.org/10.1016/j.jclepro.2017.12.239
[8]https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en
[9]https://www.who.int/news-room/fact-sheets/detail/electronic-waste-(e-waste)
[10]https://www.reuters.com/business/retail-consumer/big-us-retailers-just-in-time-inventory-habit-makes-comeback-2023-08-23/