Primer: Business Sustainability for SMEs
What is business sustainability?
Business sustainability makes firms resilient so they are better able to adapt to change. Sustainable businesses are prepared for the future because they:
- Create long-term financial value
- Understand how their actions affect the natural environment and try to reduce their impacts
- See their ties to others – for example, employees and community – and contribute to positive social changeThese firms go beyond short-term financial goals and consider environmental and social implications – both in their day-to-day operations and when making long-term investments.
In many ways, SMEs are the original sustainable businesses. Close links to customers, employees and suppliers, and the integration of business with family life mean that SMEs are often better than large firms at understanding communities and the natural environment. Sustainability and the legacy of the firm are a part of SMEs’ day-to-day activities – even if they don’t call it “sustainability.”
Sustainability can have financial, environmental and social benefits that reinforce each other.
Saving money - Sustainability involves reducing waste and unnecessary energy, fuel and other inputs. All these actions can save companies money.
Managing business risks - Sustainability helps firms get ahead of supply chain pressure and ever-stricter regulation. Firms adopting sustainable practices early avoid a costly rush to comply.
Maintaining strong "license to operate” - In order to do business, companies need to be seen positively by key groups, sometimes called “stakeholders.” Sustainability means maintaining strong relationships with:
- Employees. Treating employees well increases their job satisfaction and makes them more likely to stay with the company. Other sustainability initiatives can also increase employee loyalty: company-sponsored volunteering is an example.
- Customers. Customers who know about a company’s sustainability actions think better of the company and are more likely to patronize it. Companies that have integrated sustainability into their business systems may also find new market opportunities.
- Local community. Community connections can have multiple benefits. For example, keeping neighbors informed about actions that might affect them, like a building expansion, will make projects go more smoothly.
- Other companies. Peer companies increasingly value sustainability in their partners. Other companies can also provide sustainability advice and collaborate on sustainability initiatives.
- Regulators. Sustainable practices help companies meet legal requirements. As an added benefit, companies in compliance get new permits more quickly.
Citizenship - Sustainability reinforces the integrity and legacy of the owner-manager, especially for family-owned firms. More than this, taking responsibility for actions is in keeping with the role of a business person as a leader and responsible citizen.
SMEs can take simple, achievable steps to become more sustainable. Even a very small firm can reinforce its position as a responsible member of the community without becoming a “sustainability expert.” Actions can be “quick wins” or “deep changes.”
- Quick wins are easy to accomplish and don’t require a lot of expertise or effort.
- Deep changes require that you take stock of your business and identify opportunities that are a good long-term fit.While more time consuming, deep changes may have more significant payoffs and result in enduring positive social change.
Here are some examples of quick wins and deep changes. Sources for more information are also included; details on those sources are in the next section.
, Montreal’s football club employs 180 people. The club has reduced energy use and waste, in part through collaboration with its partners: Montreal’s public transportation company, venue owners and cleaning services providers.
As a result of these collaborations, a free shuttle between a metro stop and the stadium reduces car traffic, more efficient lighting at the stadium reduces energy consumption during matches and better waste management after the matches has led to 14 tons of waste reduction per season.
The team is actually “carbon neutral,” producing no net greenhouse gas emissions, due to its energy efficiency efforts and purchase of carbon credits. The club is also active in the community. Players tour schools, raising awareness of environmental issues and encouraging students to stay in school.
This primer was developed by Dr. Laura J. Spence, Professor of Business Ethics & Director, Centre for Research into Sustainability at Royal Holloway, University of London, UK. We appreciate the input of the NBS SME and Industry Association Councils and of the Bloom Centre for Sustainability.