How can small enterprises become more sustainable?
Consumers in Europe are increasingly environmentally conscious, this results in becoming more aware of their day to day lives and choices on the environment. It can be seen in the purchasing behaviour of consumers in the past years where decisions are being driven by the sustainability indication and ethical aspect of a brand prioritizing products and services with an “Eco-friendly” mark. Even the European member states are accelerating the deployment of sustainable and circular policies. One of the latest to date is the banning on single use plastics which was brought into effect on July 3rd 2021 in the European Union; meaning that single use plastics such as: straws, cups, cutlery, plates but also balloon rods are banned while other products will have to be labeled putting also pressure on manufacturers of disposable plastics whom will have to start contributing to processing the waste. However, the big question remains as with all these laws and regulations changing rapidly and being implemented as well as end use consumers, shareholders applying pressure; how can small & medium sized organizations become sustainable? This question is a multiple layered one, as sustainability itself can be interpreted and defined in various forms depending the context and the target.
For small & medium sized enterprises “sustainability” is often combined with words such as: “expensive investment”, “unattainable”, “uncertainty”, “lack of technology” to name a few. Moreover, the first thing SMEs are faced with when wanting to become more sustainable is a hoard of consulting firms and otherwise promoting solution(s) based on solely reporting and no guidance and which are often paired with a certain high cost. Fact is that an organization needs to first understand what sustainability has to do with their for instance, mission and vision whether it is aligned or not. By having that information, the organization has a starting point to go on their sustainability journey; indeed, by rushing through certifications and labels and marketing campaigns whether through social media channels or else without understanding what sustainability has to do with the organizations’ aims and values as well as their long term goal(s) the result(s) won’t be impactful positively on the long run and on the contrary might bring averse results for an organization and its brand (ex. greenwashing practices). Once a starting point is outlined, case studies (Sustainability Footprints in SMEs: Strategy and Case Studies for Entrepreneurs and Small Business by L. James 2015) show that more often than none going green for SME’s does not need to be linked to high costs and unattainable goal(s), Furthermore, already in 2017 a Unilever report showed that 1/3 of the 20,000 adult consumers they surveyed across five different countries, examining their spending habits, would rather purchase from sustainable businesses (https://www.unilever.com/news/press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.html).
Small enterprises business environmental, social and economic impact is consequential even if often SMEs think otherwise as they do not see themselves part of a cluster. Nowadays environmental crises as well as sanitary crises with the covid-19 pandemic spread all over the world consumers, not only in the European union, are starting to go green with their “wallets” as they are more informed and everyday consumers learn more about climate change and its effects as well as their impact and responsibility as end consumers, hence an acceleration in changing their buying habits and consumers’ demands.
Small enterprises business once having understood what sustainability and circularity means within their context can start with the first step which is to understand their current carbon footprint. Having this information and understanding what it means, will help identify the areas where changes will have the most impact and will help design a roadmap to becoming sustainable having the transparency to acknowledge that this is a journey.
This sustainable journey is often triggered either by a business development question, a problem within the organization or its outside environment, a need from the organization or its consumers or suppliers or changing legislation and regulations. SMEs often get a report or audit explaining / pointing out what is not sustainable and what is not efficient often only from an economic perspective which leaves SMEs with the misconception that sustainability is an unattainable goal and a costly one; but these sustainable reports do not outline what is already sustainable, what know-how in the sector/industry already exist that the organization can pertain in and what steps can be created and implemented within the organization in order to become more sustainable. SDG’s are often referred to but not explained as to how it affects a particular SME, same can be said of the models used in these sustainable audits / reports such as the 9R-strategies, the Social and Governance factors (ESG), 7s model by MCKinsey, the Generic Five Level (5FL) Framework to name a few.
Regardless of the sustainability model used its implementations success depends on behavioural change. SMEs search for know-how solutions embedded in Tech innovative solutions but disregarding Social innovation. It is a mistake, as social innovation is crucial for creating systemic change necessary to become truly sustainable and circular as an organization regardless of size. At Greenable for instance, we have created a sustainability consulting platform which includes The “Sustainable Transformers” founders Siu Lie Tan and Roel Remkes, whom with an “Intrinsic Sustainable Transition Model” created by them help SMEs become self-sufficient in the transition to a sustainable and circular system(s).Bearing in mind that being sustainable do comprise challenges and that there is no fixed path to obtain sustainability, thus in co-creation with the SMEs make a lasting contribution to the organization itself as well as society and the sustainable transition.
Several key steps can already be taken by SMEs on their journey to become or be more sustainable. The covid-19 world pandemic brought much distress and negativity into the world however it did show how remote working for many SMEs did not mean less effectiveness. Indeed, remote working contribute positively to the environment as there are fewer cars on the road, idling in traffic, creating a more flexible work-life balance for employees whom benefit from less hours spent commuting and it equates less CO2 being emitted into the air. Already this small adapting working method significantly help reduce a business’s overall carbon footprint. Further, as a domino effect fewer people in the office mean more financial saving on stocking, lighting and heating the workplace. However, if employees do need to commute to the workplace public transport benefits is a good incentive to reduce the CO2 emissions by means of costs reimbursement or employee reduction it will stimulate employees to choose for public transport instead of private cars hence switching to a greener commuting habit. Another step towards sustainability that requires minor change by an SME is re-strategyzing company purchases into greener products and habits: avoid plastic cups for coffee and tea, if printer paper is necessary use recycled, use cleaning products that are sustainable and that can be recycled, use composts (do not throw that orange peel in the bin, see the Dutch initiative: https://declique.nl/). Buy sustainable furniture and instead of throwing it away after use bring it to second-hand stores or repair/refurbish shops. SMEs can make energy efficient upgrades such as going for energy neutral systems (sun-panels, boilers) which will reduce their carbon footprint but also have a positive impact on the financial aspect as energy bills will be reduced. For many small businesses, their supply chain has a considerable impact on their own footprint. Hence, by choosing greener business to do business with, by prioritizing suppliers that are already taking sustainable steps it will impact the SME positively. All these steps listed above have an almost immediate effect on an organizations carbon footprint and thus on its contribution to sustainability. As shown, it does not necessarily need heavy investment however it does need a systemic mindset change.
According to the United Nations, Micro, Small and Medium-Sized Enterprises (www.un.org/en/observances/micro-small-medium-businesses-day) and the World Bank Small and Medium Enterprises (SMEs) Finance (www.worldbank.org/en/topic/smefinance), SMEs account for around 95% of businesses globally and are responsible for +50% of employment worldwide; making SMEs key employers and contributors to the economic outputs of modern global economy. Hence, the importance in helping SMEs transitions towards sustainability and circularity as they can play a significant part in progressing towards SDGs goals aligned with the 2030 Green Deal. Every organization has a different level of impact on the planet, but as a whole, we all contribute to climate change, pollution and the waste crisis; teach sustainability journey will be unique but the importance is to start now.