SMEs: The Value Challenge
Social and environmental action can improve the performance of small and medium enterprises (SMEs). This report shows how to find the value.
Small and medium enterprises (SMEs) often adopt social and environmental actions as a way to improve both society and their own financial performance. But finding economic arguments in favour of sustainability can be challenging.
At the same time, numbers aren’t the only measure of success. For example, sustainability actions might improve employee retention or community relations.
They asked: “How can SMEs assess the value of sustainability efforts?” Through discussion, they identified three strategies, based on concrete examples and emerging research ideas.
The report details these strategies, illustrated with mini-cases from SMEs. The report was written by Marie-France Turcotte
, REDD director, with a team of collaborators.
Here are highlights from the full report.
Research and experience show the value of these approaches.
Focusing on the short term often edges out sustainable options. While an SME can expect to see some short- and medium-term benefits from a sustainability approach, strategic investments will pay off most significantly in the long term.
SMEs that are sustainability leaders say that their organizations evaluate sustainability as a long-term investment.
Many studies show that companies that adopt sustainability practices generally have stronger financial performance, although it’s not always clear why or when this is true.
SME leaders encourage companies not to get stuck on measurement. In other words, it’s worth taking an action even if it’s hard to quantify its benefits. Leaders say that sustainability actions can make a company more attractive to skilled and motivated workers, help control operational risks, and support innovation (e.g. through eco-design).
While you can’t measure all the benefits of your sustainability actions, SME leaders say it’s important to measure impacts that can be captured in numbers, such as electricity savings, reduced waste, or fewer accidents.
Measuring those impacts helps companies integrate environmental and social performance into economic performance. This kind of measurement is especially important at the beginning of an initiative, to quickly show successes and build organizational support.
Life Cycle Assessments (LCAs) let companies better understand opportunities to reduce costs and risks, while improving productivity and public perception.
LCAs quantify performance in environmental areas including greenhouse gas (GHG) emissions, water footprint, ecosystem impact. An LCA can also assess social impacts, using such indicators as occupational health, employee turnover, customer satisfaction, communication quality, and contributions to a community’s quality of life.
SMEs should consider how each approach fits with their specific situation. Don’t necessarily follow each step as in a manual; consider what works for you.
Explore and experiment on your sustainable journey, and draw on your community for advice. Please share your insights with REDD/ NBS: firstname.lastname@example.org
This report is designed for:
- SME leaders and staff looking to increase their understanding and action around sustainability.
- Environmental and social justice organizations interested in partnering with SMEs
- Industry associations that want to support the collective success of their member organizations.