02 Sep How a focus on sustainability can drive further growth for SMEs
Irrespective of size, no company has avoided the impacts of the pandemic. The sheer scale of the effect on UK businesses is highlighted by the £139.5 billion of Government aid allocated to the private sector.
Some of this investment will be passed to small to medium enterprises (SMEs) across the nation to support businesses in their next stage of recovery. Over a quarter of SMEs have closed for extended periods over the last 18 months. As SMEs focus on recovering and building back better, they now have an opportunity to support our efforts in tackling climate change and building back greener.
In collaboration with this development is the Enterprise Research Centre (ERC), an independent body focusing on the productivity and growth of SMEs. Its latest report, ‘Drivers and Performance Outcomes of Net Zero Practices’, explore the gaps in knowledge and supports SMEs on the concept of Net Zero and how sustainability can enhance a business.
As the Climate Agenda continues to progress in the lead up to COP26, the challenge remains regarding implementing sustainable practices for businesses. There is still a perception that it can be counterproductive, expensive and hinder further business growth. The latest ERC report explores these feelings and highlights that implementing net-zero measures can stimulate growth in SMEs.
The UK Government has committed to reaching net-zero carbon emissions by 2050, but there are still growing calls for further action in sustainability. The recent ERC Business Futures Survey discovered that 70% of SMEs believe that the environment should come before profit, a feeling that highlights the changing attitudes of businesses and consumers. The challenge for SMEs focuses on adopting and implementation of business practices that can contribute towards reaching net-zero.
Organisational Changes
Economic and beneficial changes are accelerating the growth of SMEs. Investing in net-zero based training enables businesses to focus on implementing new measures and enhances the knowledge of employees. SMEs are benefitting further from the communication and development of changes in regards to packaging and advertising. Increased transparency also delivers improved relationships between a business and the customer.
Technical Changes
Improving the production process can support net-zero plans by implementing cleaner and more efficient production measures that can transform the entire production process. In the case of SMEs, businesses can adopt technologies that alter the way gas or water utilities operate or transfer these to a greener alternative. An example of this in action is the recent change Tesco made to the packaging of its cheese. By changing the shape of their product, the leading supermarket giant reduced its plastic packaging by over 260 tonnes a year. This innovative change applies a relatively simple lesson. Implementing sustainable methods can reduce costs while enabling and even improving growth and customer satisfaction.
One key area of the ERC report was assessing the main drivers and barriers for SME’s working towards net-zero so we could enable how industry and the government can support businesses.
Some of the main internal drivers include the reduced costs, enhanced image and reputation and increased efficiency in supply chain plans. External drivers include rising demand for low carbon products, supportive government grants, and added pressure from environmental regulations and taxes.
It is critical that the government and policymakers enable action rather than create barriers. Regulations and laws associated with SMEs must encourage low carbon development and reward SMEs that indicate clear environmental progress.
Investing in further research in sustainability is a productive choice for SMEs to explore. Studies suggest that only around 20% of businesses invested in environmental research and development, yet studies clearly show it can support further growth.
Reassessing the production process and how it can be sustainability improved is rewarded. Grants and subsidies exist and offer a chance for SMEs to build back greener. Transforming the way we think and operate is a difficult task for SMEs, but the recovery from the pandemic is a unique opportunity to implement greener measures.
The ERC Report found that pandemic has motivated SMEs nationwide to adapt their business models and change how they operate. The increasing customer demand for SMEs to place more emphasis on sustainability will transform the future of business.
Competition is rising, especially in regards to innovation in business that supports the environment and sustainability. As we continue to evolve and find new ways to become more sustainable, research shows that those dedicated to net-zero will yield the highest rewards in terms of growth.
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