Adopting Sustainability: Challenges for SME

The challenges of adopting sustainability – a look at the practical challenges facing SMEs in embracing sustainability
04
Sep

Adopting Sustainability: Challenges for SME

Sustainability brings cost savings and also profits, enhances a company’s image and boost employee satisfaction. 

We have heard all these, but still somehow fail to acknowledge that there are real challenges to adopting sustainability initiatives. 

This is especially true if you are a small and medium enterprise (SME). 

A Necessary Business Cost or Investment?

In trying to become a more responsible, more sustainable business, how can SMEs overcome the many constraints that they potentially face? 

Many businesses sometimes find that sustainability cost money, time, and also, does little in the short term, and this could be particularly true for SMEs.  

And while we say that SMEs should adopt sustainability practices, it is high time we try and make sustainability align to the business needs of the business operations.

 This is one step closer to convincing SMEs that carrying out sustainability is a business necessity. 

Being more sustainable costs businesses, and sometimes sustainability costs quite a bit, and this is not good news for SMEs, who often are not quite able to summon vast resources like the multinational firms.

 From certification to audits, to hiring sustainability specialists, to changing business operations and even how the product is made, it costs money.

And, we should not ignore the time spent, in getting internal processes and systems to adhere and to comply. 

Sustainability also costs in other aspects; giving up traditional practices may mean losing some customers, and going sustainable means attaining new customers. 

All these represent a need to consider the different costs sustainability brings to the business. 

Add to that, the seemingly different interpretation of corporate social responsibility (CSR) by many SMEs which Fenwick (2010, in Vaipeyi and Oberoi, 2015) implied seems to have contributed to SMEs having a different approach to CSR.  

 

Real Challenges

Aligning sustainability to a small business is not something one can do overnight, probably not even half a year. 

Trying to align sustainability with the small businesses, good as it may sound, has its own set of issues and challenges. 

Without an internal policy and human resources to make it possible, becoming sustainable may create more confusion, loss of resources (including time and money), loss of focus, and even customers.

Sustainability auditing for SMEs must consider the dilemma SMEs face, in delivering desired outcomes.

 Example, in changing the packaging to a more environmentally friendly one, traditional ties may be broken for the SMEs, some who may have used the same supplier for years. 

And, where many SMEs serve customers who have used their products for many years, changing the look and feel of the packaging might be something resisted.

 Is that not also sustainability?

The failure, or inability to bridge critical gaps, which sometimes may be outside the ability of the company to control, should also be looked at with empathy. 

Sustainability for the larger, multinational corporations (MNCs) is different from sustainability for the SMEs; sustainability for the MNCs is a long term investment; these are companies with resources, and also the human expertise to understand the importance and intricacies of say, for example, CSR.

 

A Ray of Hope

It takes more time for the SMEs to deliver sustainable business outcomes, and that is not entirely bad news.

 Consumers used to products made in the traditional ways get more time to switch, and the industry has more time to refine its approach. 

The necessary disappearance or ending of traditional businesses can be done in a way that does not cause too much disruption

For SMEs to discover that profitability and sustainability can co-exist is not impossible, but it takes time. 

And the time allows the springing up of new SMEs in the realms of sustainability. 

So, it is a win-win-win situation.

The value of sustainability is often hard to quantify, and again, that itself is not bad news.

 For the SMEs, the cost savings may not be as much as for the bigger corporations, but perhaps, for SMEs, the value of sustainability is no lesser to them than that for the MNCs.

 

What’s next for sustainability for SMEs?

Sustainability and SMEs can coexist, albeit in a different time frame, in a different form and a different framework. 

Policies for sustainability targeted at SMEs might be necessary, and the policies should play the role of partnering instead of enforcing SMEs. 

Certification in sustainability has been increasing in the recent years as businesses seek to obtain trust with consumers by undergoing checks and audits to verify the meeting of business standards. 

Certification should not be seen as the opposite of self-regulation, but sometimes as the result of self-regulation. 

How do we make sustainability an integral part of the SMEs’ business strategies

Unfortunately, I think, few have an answer to this question.

 For sustainability, or for that matter CSR to be a core in business, especially for an SME, we may need to experience a total shift in the way SMEs do business.

 We may need to reorganise the business ecosystem the SMEs are accustomed to, change the way the game is being played, have rules that specifically foster sustainability, remove barriers, incentivise actions, etc. 

There will be a need to focus on sustainability for SMEs, for example by having a dedicated ecosystem that builds capabilities in doing business with sustainability initiatives. 

Traditional products that consume too much and traditional ways of doing business that is polluting will have to evolve, or slowly die. 

Underwood et al. (2013) observed that CSR is often being defined broadly by many companies and that different companies define CSR according to their sectoral needs.

 That may not be a bad thing, as there are advantages in having CSR being defined broadly; sustainability initiatives are more easily created. 

 

Conclusion

In conclusion, there is much to do, and there is much we can all do, to enable SMEs to adopt sustainability. 

Sustainability for SMEs is nothing new, only that we do not often see them embracing sustainability in the forms we have come to understand.  

The ability to help SMEs identify and overcome the challenges that hinder them to adopt sustainable business practices will only serve to open our eyes to a wider dimension of sustainability.

 

Need advice on how your business can adapt sustainability and how it can work for you? Contact us right here.

 

References:

Vajpeyi, D. K., Oberoi, R. (2015). Corporate Social Responsibility and Sustainable Development in Emerging Economies, Lexington books

Underwood, S., Blundel, R., Lyon, F. (2012). Social and Sustainable Enterprise: Changing the Nature of Business, Emerald group publishing.

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