Best practices for sustainability in SMEs

Organisations are feeling pressure from stakeholders, including customers and investors, to be more transparent about sustainability. While transparency on its own is a good thing, it doesn’t directly improve shareholder value – but having sustainability initiatives in place can make a difference in an entity’s financial performance and provides the assurance stakeholders are seeking.

More than half of small and medium-size enterprises (SMEs), according to a 2013 UK survey by Lloyds Banking Group, are adopting sustainability strategies to save money.

A CGMA report, Ten Key Elements to Sustainable Business Practices in SMEs, says that finance plays a key role in formulating and implementing sustainability initiatives, defining the metrics that determine goals, and also monitoring progress. In the report, SMEs’ experience was that “sustainability not only serves altruistic motives, but is also smart business because it can deliver higher profit – both in the short and the long term.”

The report includes case studies and key lessons from the organisations profiled. Here, according to the report, are ten elements of sustainable business practices for SMEs:

  1. Take a broad view of sustainability. Understand the main drivers, risks, and opportunities for your organisation. Finding creative ways to be a good corporate citizen can benefit your employees, customers, and suppliers. It also will benefit the business.
  2. Define in detail what sustainability means to your company. A clear definition and clear measures for success will lead to sustainability practices that focus on “the right goals”.
  3. Engage all stakeholders. If you include customers, suppliers, investors, and employees in a discussion about sustainability, it’s likely the strategy that results will be all-encompassing.
  4. Remember that you are not alone. Best practices for sustainability can be found around the world. National, international, and industry-specific initiatives exist that can help businesses become more sustainable. Tap into that knowledge and experience.
  5. Establish responsibility and communicate widely. The organisation should know who is guiding the initiatives. New programmes and strategies tend to lose momentum quickly when senior management isn’t delivering the message. Management also can appoint “sustainability champions” throughout the organisation to help communicate the importance of sustainability to all levels of the company.
  6. Take it step by step. Making small changes can lead to significant effects in the future. A move toward sustainability is an evolution, not a revolution. For example, a commercial freight company in the UK expanded its defensive driving courses to include topics such as optimal tyre pressure and minimising brake wear.
  7. Walk the talk. In short, don’t view sustainability as a marketing venture. Stakeholders will see through that if no real progress is being made.
  8. Tie sustainability to profit. Resource efficiency can benefit the environment and reduce costs. For example, establish a clear link between using less water and electricity and improving profit.
  9. Measure, monitor, and review. Tracking progress is vital to establishing the value of sustainability initiatives. Develop clear metrics, review them regularly, and continue to set reachable goals. For example, Aéroports de Montréal, the airport authority in Montreal, Canada,  charts energy consumption, rate of waste recycling, greenhouse gas emissions, and the number of employees using alternate modes of transportation.
  10. Invest in the future. Sustainability initiatives don’t always require large capital investments. Many SMEs in the report said the biggest investment was management’s time.

Related CGMA Magazine content:

“Investors Yearn for Sustainability Disclosures”: Institutional investors want more sustainability information from corporate disclosures in most regions, a new survey shows.

“How to Make Your Supply Chain Hum”: Companies that sell into and source from markets worldwide compete on their supply-chain capabilities. Find out what supply-chain leaders do to boost their revenue and earnings.