10 questions to help SMEs begin their sustainable pathway

This article highlights the benefits of conducting a sustainability appraisal and offers 10 questions to guide you along a sustainable pathway.

What is a sustainable business?

Put simply, a sustainable business is one that solves problems for people and/or the planet, while creating a profit in the process.

It’s not a business that creates a profit while creating greater problems for people and the planet.

That all seems pretty obvious, but knowing where to start can often feel overwhelming and confusing.

A sustainability appraisal can help you by taking a ‘helicopter view’ of your business and highlighting your current impact on society, the environment and the economy.

Why must we consider our social, environmental and economic impact?

When we talk about making more sustainable decisions it means considering the impact of those decisions on the economy, society and the environment because they are interconnected.

For example, imagine you run a delivery service business and your goal is to reduce your CO2 emissions by switching to electric vehicles.

Initially, this would require financial investment (economy) with the intention of saving money down the line in fuel costs (economy). As planned, it would reduce the CO2 emissions directly associated with your service and possibly improve local air quality (environment & society).

On the downside, the rare metals used in batteries are often sourced in horrendous mining conditions, creating an adverse social impact (society); and it remains unclear how electric vehicles (batteries included) can be re-used and recycled post-use (environment).

Clearly this is a simplified example, but it aims to show that becoming a more sustainable business means making decisions that consider economic, social and environmental impacts.

What are sustainability appraisals and how can they help?

The first step for any SME aiming to become more sustainable is to recognise your ‘here and now.’ Sustainability appraisals do this by providing an in-depth diagnosis of your social, economic and environmental impacts.

Over the past decade, there has been a rise in publicly available sustainability reports and appraisals. According to KPMG (2020), around 90% of the worlds 250 largest companies now report on sustainability compared to only 35% in 1999. While this is not the same for SME’s, the actions of large businesses often predicts trends that are adopted more broadly.

So how exactly can sustainability appraisals help an SME become more sustainable?

1. Sustainability starting point

When it comes to sustainability it can be overwhelming knowing where to start. A sustainability appraisal provides you with a clear starting point, highlighting weaknesses, risks and areas that you are already performing well in.

2. Sustainability decision-making tool

Once a sustainability appraisal has been conducted, it transforms into a sustainability decision-making tool. Essentially acting as a compass to guide your next steps in becoming more sustainable.

This is vitally important for SME’s; financial resources are often tight, so knowing exactly where to start and prioritising action is crucial.

3. Identify emerging trends

Conducting a sustainability appraisal allows SMEs to gain a competitive advantage by highlighting emerging trends allowing you to capitalise on opportunities.

For example, the circular economy presents a $4.5 trillion opportunity by 2030, meaning product-based organisations that shift to more circular business models through the provision of products-as-a-service, will gain significant advantages over sluggish competitors.

4. Increased trust from stakeholders

A proactive and authentic approach to sustainability will help SMEs increase the level of trust with customers and wider stakeholders.

5. Promoting your sustainability journey, with confidence

The areas where your organisation is creating a positive impact can be communicated, with confidence, to your stakeholders. However, SMEs often avoid doing this as they fear being accused of ‘greenwashing.’ This can be prevented if you also share where you are currently creating a negative (or less positive) impact and your strategy to tackle those areas.

Sharing your successes alongside your ‘dirty laundry’ will win you support, friends and help silence any critics on your journey to becoming more sustainable.

10 questions to get you started

As established, the point of a sustainability appraisal is to recognise your current impact on the environment, society and the economy. Thereafter, it becomes a decision-making tool to guide your route ahead.

To get started, answer each of the questions by giving your business a score from 1 to 3 (see scale) and write down the reasons why you have given that score.

1. Leading in your field - “we’re going beyond best practice”
2. Standard practice - “we’re complying with regulations”
3. Unsustainable - “we’re currently doing nothing to address this”

Environmental Impact

• What percentage of energy use is sourced from renewable sources?
• What are you doing to eliminate single-use plastic?
• Do you check the environmental (and social) impact of your suppliers?

Social Impact

• Do all employees feel psychologically safe at work?
• What is the organisations approach to supporting and engaging with the local community?
• What does the organisation do to attract a diverse and qualified workforce?

Economic Impact

• How is the organisation growing younger generations through the company?
• How is the organisation supporting the transition towards a Circular Economy?
• Do you publicly share information on the social and environmental impacts (good or bad) of your products and/or services?

Final Question — ‘The engine in your heart’

Now, this may seem like a strange question to ask when compared to the others. However, it is arguably the most important.

Milton Friedman’s infamous idea that “the social responsibility of business is to increase its profits” has no place in a world grappling with social, ecological and economic emergencies.

Organisations of all shapes and sizes that have a purpose beyond solely creating profit and place it at the heart of what they do, will survive and thrive in the 21st century and beyond. So, ask yourself?

• What is our purpose?

Summary

The fact is, if we are to solve our social, economic and ecological emergencies we must transform how we do business. Many SMEs are already doing this and there is an opportunity for more SMEs to pave the way towards a more sustainable world.

However, like any journey you have never travelled — you know where you want to go but you don’t know how to get there. This journey is no different and with so many factors to consider, having a compass to guide you (in the form of a sustainability appraisal) is crucial.

After all, your business must be a vehicle that creates positive impacts, sustainability appraisals are roadmaps that guide you and your purpose is the renewable energy that will drive you along your sustainable pathway.