An Explanation of Greening for SMEs
In fairly recent times, many small and medium-sized enterprises (SMEs) have begun to partake in the process known as greening, where they choose to become more environmentally sustainable. Such enterprises undertake different approaches to achieve sustainability, and they choose to make their businesses better by taking the fight against climate change. However, although very important, greening is not easy, and because of this, many businesses lack the motivation to take the risks that come with the change. To understand the process of greening, it is important to define each of the enterprises that tend to take on the challenge.
The first type of businesses that typically pursue greening are eco-innovators. Eco-innovation is defined as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations that reduces environmental impact, with or without intent (OECD, 2009[21]).” Sometimes greening pursued by eco-innovators is purposeful, and other times it happens naturally. Nevertheless, eco-innovation has the potential to change business practices, social norms and institutional structures through the reconsideration of sustainability.
SME eco-innovators tend to pursue greening in two ways: investing in new technologies and innovations, and switching practices. For eco-innovators, this causes massive risks, and many challenges are presented for them in an attempt to pursue greening. For one, the switch to new technologies can be extremely expensive (a trend that all SMEs will see), and as always, switching to a new business model presents other risks as well.
Much less common than innovators, eco-entrepreneurs find new opportunities caused by an upward trend in new values of sustainability. As such, they develop and solve problems as new trends rise, and are typically people who operate in highly specialized industries. Because of this, they are in need of a great deal of technical skill, which can be hard to find.
Like any new business startups, eco-entrepreneurs need investors and human resources to begin greening, and since greening is a relatively new concept, SME entrepreneurs often lack the resources to become more sustainable. Because of the expensiveness of greening, eco-entrepreneurs often switch between conventional and green business models in order to stay afloat. Aside from a lack of monetary resources, eco-entrepreneurs and innovators often require access to knowledge networks, research institutions and universities that have the ability to provide both knowledge based and entrepreneurial resources.
Finally, eco-adopters, the last of the SMEs, have found a spot in the world of greening. These SMEs green by uptaking new technologies, and unfortunately, as widespread as this group is, eco-adopters seldom holistically change their sustainability. For many, greening is pursued in order to be compliant with new governmental regulations, and for this reason, it is important to incentivize them to become more green. For example, while eco-adopters may use sustainable light-bulbs, they will hesitate to invest in energy efficient technologies.
As with every other SME, eco-adopters struggle with the expense that the new technologies bring. In particular, eco-adopters tend to need more human resources than others. Eco-adoption requires a number of managerial skills, interpersonal skills and technological understanding in particular.
To provide a more in-depth understanding, it is necessary to use examples of all three SMEs. For all three SMEs, the same model will be used, a plant store. For eco-innovators, the way to pursue greening would be to invest in sustainably farmed plant species, because consumers look for them more readily. In a different situation, an eco-entrepreneur may see a rise in sales of sustainable plants as greening has become more popular, and open a plant store, with some sustainable and some regular practices. Finally, an eco-adopter that is running a plant store may be forced to adopt some green practices brought on by the uptake in SME greening and increase in government regulations.
For all of these businesses, greening is taking a risk, but in the wake of climate change, it is the morally right thing to do. In many cases, greening is very financially rewarding, and it is likely that greening will become more popular in the near future. It is imperative to start to look for solutions to the many challenges of greening, such as reducing the costs of expensive technologies, improving access to human and knowledge resources, and minimizing the barriers to enter this ruthless economy where it is hard to survive. Anyone who can find their way however, has the potential to do something great, and succeed with these new opportunities.
Sources:
SMEs: Key Drivers of Green and Inclusive Growth
Shashwat Koirala Environment Directorate, OECD
