small medium business sustainability

André Gonçalves - Editor & Head Of English Market

After studying and working in HR, André studied sustainability management at Lisbon's School Of Economics & Management. He is responsible for the English speaking market of Youmatter since 2018.

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Should small and medium businesses have a CSR and sustainability strategy? Or is it just for large corporations? How can SMEs implement a sustainability strategy and report it? Let’s take a closer look at these questions.

A More Sustainable World Needs Small And Medium Businesses Onboard

Small and medium-sized enterprises (SMEs) might see CSR and sustainability as not of their business. Owners perhaps think these buzz words are only relevant to large companies who have the money, the people and the means and the for a smaller business, the administrative and financial costs exceed the benefits.

Nonetheless, SMEs that successfully introduce sustainability issues into their business development strategy can have multiple benefits. From reduced risks (across their supply-chains, for instance) to innovation opportunities, higher operational efficiency, lower costs or a positive brand association a well-implemented corporate social responsibility strategy can be of great value to SMEs.

SMEs are the backbone of both national economies and the global supply chains of larger organizations. Alone, their impact is small but altogether, they have a huge impact as they account for about 90% of all businesses. Therefore, it is crucial that SMEs join the sustainability transition.

Sustainability In Small And Medium Entreprises: Get Employees Aboard

Let’s start by looking at the positive side. It is likely easier and faster to embed sustainability into a small-medium company than into a large one. SMEs have simpler structures (regarding space, staff or relationship with stakeholders) and change can be implemented more quickly.

On the other hand, SMEs have a more limited amount of resources (such as staff or money) which may be seen as a strong barrier to the development of a sustainability strategy. However, sustainability-related tasks can be added (with reasoning) to the current functions of employees.

People want to be part of a journey to contribute to a better environment and society – as it is most commonly seen in corporate volunteering initiatives. So if they are asked about their desire to contribute, explained what that will likely mean, how it is managed with their current tasks and get to have some training (there are free quality ones available): many will go for it and they’ll likely become a sort of sustainability ambassadors large companies have. This shared goal/journey will also help strengthen the organizational culture.

The Logical Next Step In Developing A Sustainability Plan In SMEs

According to Steve Malkin from The Planet Mark™ sustainability certifications, companies need to focus on reducing carbon, energy, water, waste. He says this can be accomplished by engaging employers to start looking for improvements in resource efficiency – which costs only time.

By assessing (we’ll get there just now) and reducing their carbon footprint, companies reduce their operational costs and can manage better and more efficiently their daily activities, Malkin says to eco-business.

Understanding an organization’s impacts is a crucial part of a sustainability strategy. However, there is too often a tendency to go in any direction and start wherever with random initiatives such as advertising new recycling bins. This is both time-consuming and misleading. Companies need to first measure and then report: and only then they’ll be able to improve their operations and reputation. But even before that, they need to frame the context in which they make business.

Starting A Sustainability Plan And Reporting It In SMEs

Sustainability reporting, i.e., disclosing an organization’s most significant impacts, should start with SMEs sharing what their business is about, how they work and how they are managing their impacts. Even if when starting organizations don’t produce a report, the following guidelines can help establish a structured idea on where to start and what to do.

The Global Reporting Initiative (GRI) suggests organizations should start by identifying, prioritizing and defining their sustainability issues. They should do so with 4 principles in mind: sustainability context, stakeholder inclusiveness, materiality, and completeness.

1 – Sustainability In SMEs: Sustainability Context

SMEs should reflect upon the context around them: how can they contribute towards a more positive future on a local or regional level? What is their current performance and in which ways does it have negative social and environmental impacts?

Thinking how sustainability topics relate to the long-term organizational strategy of an SME in terms of business risks and opportunities is also important to start with.

2 – Stakeholder Inclusiveness

It is very important that for an organization to identify who are its stakeholders, i.e., all the parties – from employees to NGOs, the media or government bodies – interested in their activities. This will allow a better response to their expectations, interests, and concerns.

Carefully mapping the stakeholders an organization considers it is accountable for to be able is, therefore, helpful in the sense it makes sure the relevant information for them is collected.

3 – Materiality Analysis: SMEs And Sustainability

After assessing their context, different risks, opportunities, and impacts will likely be identified. In the midst of many different possible roads to follow, it becomes important to identify which issues are most relevant to be addressed. And that’s what a materiality analysis is for.

And how to assess which topics are important enough to be further thought of and possibly addressed and reported? The answer lies somewhere in between the issues that present a significant risk to an organization and its area of operation and the mains concerns and topics of interests of the most relevant stakeholders: which can be found via a materiality matrix.

4 – Completeness Of Sustainability Information In SMEs

SMEs should think (and include in their sustainability reports) about what their scope and boundaries are. They should prioritize giving detailed information to stakeholders regarding the information they have/are collecting so their most significant economic, environmental and social impacts are accurately shared.

Sustainability And CSR Challenges In Small And Medium Enterprises

After reading the 4 principles above, developing a sustainability strategy may look like a huge challenge for SMEs. And it is. Especially from a perspective that these guidelines, together with many certifications (which help the process and give further credibility) are expensive and complex for the scale of small-medium enterprises.

But let’s keep present the idea that SMEs, like all size companies, can have very significant benefits from adopting sustainable business practices. Despite the initial high costs of integrating and reporting sustainability – which can be reduced if employees are motivated and involved – the benefits might be more than offset by cost savings.

Reduced business risks, the ability to meet the expectations of consumers, employees and suppliers for responsible products and services and, therefore, a positive brand association will likely make initial costs nothing more than a safe investment. Moreover, start slowly and go bigger as your SME gains traction and momentum and perhaps then, larger costs with specialized consultants or with a certification can be a safe (and more expensive) next step.

Remember: as SMEs measure their impacts and integrate sustainability into their core business model, they’ll start getting proof of their environmental and social performance. That helps differentiate from the competition and gets a new target of consumers increasingly looking for responsible businesses with a higher purpose other than just profits. Start ASAP.

[Photo by You X Ventures on Unsplash]

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