SME Sustainability: Key Considerations

Issues related to the establishment of a green economy are in the focus of the attention of scientists around the world. The global environmental crisis of recent years has created an additional incentive for the transition of the global economy to an innovative, environmentally-friendly development path, which implies a departure from the export-raw model of development.

Greening Small and Medium Enterprises

SMEs account for approximately 95% of all enterprises in OECD countries. Although the individual environmental impact of SMEs may be negligible, their combined impact may in many respects exceed the impact of large enterprises. For example, SMEs account for 60–70% of industrial pollution in Europe.

The key industries where SMEs have a significant environmental impact are:

• livestock
• construction
• metalworking
• waste processing
• food processing
• textile
• leather manufacturing, etc

Reducing the environmental impact of SMEs by meeting and exceeding environmental requirements in the manufacturing sector is a key factor in the successful greening of the industry and the services sector of the economy.

Opportunities for green manufacturing services are growing. Creative and innovative SMEs in the service sector, such as design and architecture firms or bio-energy solution developers, are making an increasing contribution to eco-innovation in a wide range of industries. New and young firms are particularly distinguished by radical innovations, such as technological and commercial opportunities, which were neglected by more reputable companies, and even redefine existing business models.

SME sustainability reporting is often a key to such kind of transformation, as it makes companies critically review their performance and develop sustainable development goals, which are powerful driver of eco-innovation.

Transforming Enterprises with Sustainable Thinking

Sustainable business development is a development that satisfies the needs of the present but does not jeopardize the ability of future generations to satisfy their own needs. In a nutshell, if we continue to develop production and consumption without worrying about what harm it does to the environment, we will endanger the life and well-being of future generations, as well as our own.

Sustainability for SME has become an increasingly integral part of any successful business in recent years. Today, investors and auditors and, most importantly, consumers are increasingly paying attention to how much this or that business cares about the environment and people:

• According to a study by Edelman, 64% of consumers choose products consciously and are ready to boycott them if the principles of the company’s business do not correspond to their ideas about caring for the outside world.
• According to the Cone Communications study, 89% of consumers are ready to change their brand if it does not embody the principles of sustainable development.

The offer follows demand, and today SMEs are forced to think about how to produce and sell their product with the least harm to the environment, recycle their waste, and be humane to their employees. In recent years, companies around the world are increasingly thinking about how to make their products less harmful to the environment and more attractive to the younger generation. And, as of June 2019, there are over 2,750 certified B Corporations across 150 industries in 64 countries, that is, they comply with international standards for sustainable development.

If at first, these ideas were important for the reputation of the business, sustainability in SMEs proved to have a strong business sense: every year, an environmentally friendly and responsible approach to business management pays off more and more.

Business is inexorably moving towards sustainable development. This is what investors, partners, and the end consumer want. And this is no longer a reputation cherry on the cake of the brand’s overall appeal — but quite tangible profit.

Benefits of Sustainability for SME

Benefiting society does not necessarily mean sacrificing profit. Those organizations that demonstrate a sincere commitment to the concept of sustainable development achieve better financial results than their competitors.

Sustainable development and commercial success are not contradictory; vice versa, the implementation of the principles of sustainable development by the company meets the interests of all its stakeholders:

1. Organizations that demonstrate a commitment to sustainable development have more opportunities to attract and retain highly qualified professionals.
2. Consumers are actively choosing those brands that they strongly associate with activities for the benefit of society as a whole.
3. A focus on sustainable development can provide financial and non-financial benefits to local communities, suppliers, and other partners of the organization.
4. The desire for sustainable development allows for a more constructive dialogue with regulators, and the principles of sustainable development are increasingly enshrined in law.
5. Investors are beginning to realize the benefits that the transition to sustainable development provides. Against the backdrop of the digitalization of the economy and social sphere of various countries, the need to recognize the existence of this relationship becomes even more obvious.

Rapid technological change destabilizes established business strategies and models, necessitating the search for a more sustainable foundation for implementing corporate principles. Thankfully, reporting on the positive or negative impact of an organization’s activities is becoming easier, and the ability to communicate make sustainability disclosures online entails a radical transformation of the model of interaction with key stakeholders.

Final Word

The needs of mankind are growing, and the main task is to learn how to satisfy them without harming the environment. Any production will be harmful to the environment. But obviously, humanity is not ready to abandon progress. So, the main task is to develop sustainability skills and change the paradigm of predatory attitude to nature and realize the multi-vector goal of achieving a balance between preserving the environment, health, and economic development.