Sustainability for an SME – A Need Or An Option?

Sustainability for an SME – A Need Or An Option?

Sustainability for an SME – A Need Or An Option?

1280 720 Neera Gupta

The global marketplace has fundamentally changed in its awareness of and response to environmental issues and climate change. These days, environmentally responsible companies tend to have the competitive edge, which means Singapore SMEs from all industries cannot afford to be left behind

Spring Singapore

What is Sustainability?

The UCLA Sustainability Committee, in their charter, defined sustainability as: “The physical development and institutional operating practices, that meets the needs of present users, without compromising the ability of future generations to meet their own needs, particularly with regard to use and waste of natural resources. Sustainable practices support ecological, human, and economic health and vitality.”

What is Sustainability - SMEQuest

Need for Sustainability

Is an SME able to do without sustainability? Can its topmost objective be Growth versus Environment? Will it have any impact on their success journey?

To answer these, let’s look at the two perspectives for sustainability:

Economic Perspective

There is growing evidence according to a report, Embedding Sustainability in SMEs by the Association of Chartered Certified Accountants (ACCA), that sustainability initiatives, such as those to reduce an SME’s carbon footprint, energy, water, waste can help improve their bottom line. SMEs of all shapes and sizes—for profits and not-for-profits, public or private, across all industrial sectors—stand to yield significant benefits from adopting sustainable business practices. Consequently, by measuring these results, SMEs can also use it to differentiate themselves and attract customers.

Ethical Perspective:

A 2015 Nielsen Global Corporate Sustainability Report which polled over 30,000 consumers from 60 countries found that 66 per cent of global consumers were willing to pay more for sustainable brands, an 11 per cent increase from 2014. This goes to show, by embedding sustainability initiatives into their business, SMEs can engage their employees towards a common goal, which ultimately will strengthen their team, helps to retain and attract good employees and makes them more attractive to customers and investors.

The environmental, social and governance issues (ESG) will directly impact the economic viability of the enterprise whereby impacting the customers, the partners and the employes. Therefore every stakeholder needs to prioritise the ESG issues which can mitigate risk and create opportunities for SMEs. It is a virtuous circle – good for business, planet, employees and customers.

SMEs Sustainability Challenges

Taking action to mitigate climate change and ensuring economic growth are two key challenges that, if not managed well, could unravel the progress the world has made over the past few decades.

said Deputy Prime Minister Heng Swee Keat

Money, Time & Profit:To attain sustainability as a business model, involves high cost in hiring sustainability specialists, conducting regular audits, and getting certification. Whereby requires time & effort to change the internal process and systems and implement new ways of doing businesses by giving up the traditional practices. It may lead to losing existing customers, human resources, and short term profitability loss, thus creating more chaos within the organization. For SMEs to adopt sustainability is a much more significant challenge.

However, profitability and sustainability can co-exist; it needs time, effort, and resilience. SMEs have to embed sustainability into their agenda and provide training to their workforce. Being engaged with the same goals leads to team building and strengthens the culture of the company.

profitability and sustainability

Existing Business Ecosystem: Currently, the way the businesses are done has very traditional approach in terms manufacturing, use of product packaging, wastage of finite natural resources etc. To be part of Corporate Social Responsibility (CSR), SMEs need to change the way they conduct their business.

Sustainability strategy should be a profit center for the business. SMEs should start measuring their energy, water consumption, waste, and carbon in terms of future cost-saving, along with making the environment sustainable in the present. Simplifying the process and getting accurate, verified results will further encourage them to become great suppliers and win business versus only retaining it.

Repercussions of Not Adopting Sustainability

It is not yet mandated by Singapore law to adopt sustainability journey. Yet, it’s essential to notice the severe consequences that tag along the process of not adopting sustainability, both at the micro and macro level.

Here’s how:

Internal Repercussions:

High recruitment costs: People want to work for organizations that do the right thing. Sustainability initiatives will help SMEs to reduce the cost of recruitment, by automatically endorsing themselves as the right organization for future employees to be a part of.

Lack of supplies by more prominent brands: Sustainability is being forced down the supply chain by the more famous brands. Suppliers are important partners that help more prominent brands improve the efficiency of the processes and their sustainability profile of the products they sell. Big retailers and brands now insist on their supply chain partners having a sustainability policy in place.

External Repercussions:

New Business Opportunities: For an SME to stand out or to win a corporate or a government project, they will need to provide evidence against their company’s sustainability performance using verified data. Having proof of their sustainability performance is also necessary to back up their marketing efforts and could be used as an indicator for their customers.

Serious environmental repercussions: As per NASA, carbon dioxide emissions have increased by 411 parts per million, global temperature is up by 1.9 degrees Fahrenheit since 1880, Arctic Ice minimum has reduced by 12.8 % per decade, and ice sheets are reducing by 413 giga tonnes per year. In such hugely deterrent environmental conditions, if an SME does not adopt sustainability, they are only adding further statistics to the ones quoted by NASA, thereby, automatically certifying them as un-sustainable enterprise.

Sustainability for SMEs in Singapore

Sustainability for SMEs in Singapore

The Singapore Exchange has already incorporated sustainability reporting into its governance regime on a “comply or explain” basis.

As Singapore’s SMEs make up 99 percent of the country’s enterprises, employ 70 percent of the workforce and contribute nearly half the GDP, imagine the exponential effect if each of these firms were to take an aggressive, proactive approach to sustainable growth. Therefore the SMEs need to make sustainability as their Integral part of the company’s vision and mission. Sustainable practices do good business.

This year Sustainable Business Awards Singapore 2019 was organized on 25th June in the presence of Senior Minister of State for the Environment and Water Resources, Dr. Amy Khor. More than 80 companies participated. Among the awardees, the Best SMEs award was given to Sindicatum Renewable Energy Company, who have successfully developed and financed more than 17 renewable energy projects across South East Asia and Asia. 

Another good example is Greenpac, a home-grown green packaging company. From a one-woman firm that started in 2002, founder Susan Chong has created a multi-million dollar business that employs over 30 staff and provides eco-friendly packaging to Fortune 500 companies.

Some of the top Singapore firms such as SingTel, Olam International, Sodexo, City Developments Ltd are leading from the front in achieving UN Sustainability Development Goals (SDGs).

Singapore has committed to strive towards a zero-waste nation. This aspiration requires collective action across value chains. We all need to join hands; public sector, businesses and consumers, in order to bring this circular economy vision to reality…

Fang Eu-Lin, Sustainability & Climate Change Leader, PwC Singapore.

Sustainability is one of the most significant challenges of the 21st century and given the impact SMEs have on a country’s socio-economic outlook, they will be an integral part of the solution. So, whether or not an SME should adopt sustainable practices is the discretion of their decision-makers. However, in today’s highly competitive and aggressive market, for an SME to thrive (and not only survive), going on a sustainability journey is inevitable.

If you agree or disagree or have your views on the article, join our community and leave your comments!

Picture Source: Google 

Neera Gupta

Neera Gupta is the Founder and Director of Kit Kat Events & Marketing. She has more than 13 years of experience in the Events industry with global companies such as AMEX, CWT, IQPC. Along with that Neera is TV host, Emcee, Champion Networker, Marketing Guru, Women Empowerment Ambassador, Charity worker and Author of a bestselling novel, ‘Careful What You Wish For’. Did we mention she is also a dentist!!!

All stories by:Neera Gupta
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Neera Gupta

Neera Gupta is the Founder and Director of Kit Kat Events & Marketing. She has more than 13 years of experience in the Events industry with global companies such as AMEX, CWT, IQPC. Along with that Neera is TV host, Emcee, Champion Networker, Marketing Guru, Women Empowerment Ambassador, Charity worker and Author of a bestselling novel, ‘Careful What You Wish For’. Did we mention she is also a dentist!!!

All stories by:Neera Gupta

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