A Guide to Small Business Sustainability Resources
Written by: Hilbert College • May 10, 2023
A Guide to Small Business Sustainability Resources ¶
Businesses worldwide face fundamental challenges, such as economic uncertainty, geopolitical conflicts and supply chain disruptions. Another issue that continues to rise up the ranks in priority is sustainability.
According to the 2023 Deloitte CxO Sustainability Report, 85 percent of business leaders in global companies think growing the economy and meeting climate change goals can be done at the same time. Over the past year, 75 percent of organizations have invested more in sustainability.
Sustainability is important to corporate strategy. What about small business sustainability though? Small and medium enterprises (SMEs) account for 90 percent of businesses worldwide, employing about half the global population, according to the World Bank. This data suggests that small business sustainability can have a significant impact on everyone. Two-thirds of the 60 percent of small businesses reporting plans to reduce their carbon impact cite a lack of skills and knowledge to step up their sustainability and climate action efforts, according to the SME Climate Hub.
This guide aims to provide an overview of small business sustainability strategies and discuss the role of business leaders in setting the sustainability vision at their organizations.
What Is Small Business Sustainability? ¶
Business sustainability describes efforts to reduce the negative environmental impacts of running operations. For many organizations, sustainability is considered a standard business practice.
Business sustainability prioritizes achieving financial viability while making an impact on sustainability. How does a business know if its sustainability measures are working? Large companies often establish environmental, social and governance (ESG) policies to drive their sustainability efforts. These efforts can also include developing green products and entering into sustainability partnerships. For many investors, ESG disclosures reveal important information about a company’s risk factors and performance. This is a key reason that large businesses are increasing their sustainability investments.
Sustainability has also become an investment strategy because it can produce business benefits. This includes attracting more sustainability-conscious customers. For example, a McKinsey & Co. report shows that more than 60 percent of consumers would be willing to pay more for products with sustainable packaging.
For a small business, sustainability steps don’t have to involve implementing ESG policies. However, small business sustainability does require integrating sustainability into business practices.
Business owners looking to implement sustainability practices can take simple steps, such as conserving natural resources and minimizing waste. Examples are moving to digital receipts, using recycled packaging materials and improving their facilities’ energy efficiency. Small businesses can also focus on creating a work culture that promotes environmental awareness.
Three Main Pillars of Sustainability ¶
Small businesses embarking on their sustainability journey need to consider the three main pillars of business sustainability: environmental responsibility, social responsibility and economic responsibility.
Environmental Responsibility ¶
The primary focus of environmental responsibility is preserving and restoring the environment, which is essential for promoting human health. Common environmental responsibility practices include reducing the carbon footprint and conserving water. Small businesses partaking in these activities can help the planet. They can also reap the rewards of financial savings and improved efficiency.
Social Responsibility ¶
Businesses following the pillar of social sustainability aim to treat employees fairly, including providing flexible work schedules and better family benefits. Socially responsible businesses also support their communities, locally and globally, through various activities, from fundraising to investment in community programs. From a global perspective, social sustainability means that businesses ensure that their supply chains are ethical—free from child labor, following fair labor practices and providing safe working conditions.
Economic Responsibility ¶
Every business must be profitable to survive, but that doesn’t need to come at the expense of the previous two pillars. Economic responsibility focuses on balancing profitability with sustainability. Businesses following this pillar ensure compliance, proper governance and risk management. They also understand that natural resources are essential to economic sustainability, so it’s crucial to extract resources in a sustainable manner without harming the environment. This helps ensure the continued availability of resources and contributes to long-term economic sustainability.
Small Business Sustainability Resources ¶
For individuals ready to direct their small businesses in a more sustainable direction, the following resources provide valuable information on what sustainability in business is, how to implement it and why it matters:
Forbes, “The Role Small Businesses Can Play in Building a Sustainable Future”: This resource discusses how small businesses can take the lead in creating a sustainable future for everyone.
Green Business Bureau, “Why Is Sustainability Important in Business?”: This resource presents a case for business sustainability, highlighting the issues at stake and different benefits of sustainability.
Harvard Business Review, “Sustainable Business Went Mainstream in 2021”: This resource highlights some of the biggest themes and stories related to sustainability in business.
Business Benefits of Sustainability ¶
Sustainable practices can offer financial advantages, expand audience reach and more, while also positively impacting society and the environment. While various reasons exist as to why businesses should embrace sustainability, the primary benefits include the following:
Reduced Costs ¶
Sustainability can help businesses reduce costs. These savings can be derived from energy efficiency, clean energy use and circular economic practices. Operations managers, who determine what processes and raw materials are needed to successfully run a business, can help implement cost reduction strategies that include waste reduction initiatives, recycled products and compostable packaging.
Increased Profitability ¶
Sustainability projects can accelerate business-building opportunities, especially among eco-conscious customers and partners, creating the potential for increased profitability. Cost reduction efforts born of sustainability programs can also improve the bottom line, translating into higher profits.
Growing Market for Sustainable Products ¶
Consumers are driving the demand for sustainable products. With more consumers interested in environmentally friendly offers, small businesses can embark on introducing or expanding their sustainable products.
Enhanced Brand Image ¶
Brand image is a significant factor influencing purchasing decisions. As more customers are interested in environmentally responsible practices and increasingly willing to pay more for sustainable products, businesses need to communicate their commitment to eco-friendly and sustainable goods. A sustainability mindset demonstrates a commitment to ecological responsibility and can set a business apart in the field.
Competitive Advantage ¶
Sustainability can provide a competitive business advantage in several ways—for example, improved efficiencies and reduced costs lead to greater profitability. Additionally, younger consumers, like the Generation Z demographic, prioritize the environment and are likely to buy products from a sustainable company. Businesses that can meet that demand can gain an edge over their competitors.
Lower Carbon Footprint ¶
Small business sustainability practices focused on lowering the carbon footprint, such as transitioning to a paperless workplace or reducing electricity use, can lower costs and enhance profits, while simultaneously aiding the environment. Lowering the carbon footprint also prepares businesses for a likely future in which stricter regulations are the norm.
Greater Employee Satisfaction ¶
In the future of work, employees are predicted to place higher priority on value and purpose than on compensation. By implementing sustainability practices, organizations can demonstrate that their ideals for business go beyond profits. Additionally, implementing measures such as flexible work and time off can enable employees to maintain performance and motivation.
Sustainability Strategies for Small Business ¶
With 1 in 3 consumers preferring eco-friendly products, small business sustainability is taking on a new sense of urgency, and ignoring it will put businesses at a disadvantage. Instead, savvy organizations can leverage the strong incentive for sustainability to create new products and reposition current offerings to meet the rising demand. Individuals looking for guidance on how to set up a small business sustainability plan need to understand the role of the triple bottom line: a business framework that focuses on people, profit and the planet.
What Is the Triple Bottom Line? ¶
The term “triple bottom line” was coined in 1994 and is a management approach with sustainability at its core. It helps organizations move beyond profit and loss to gauge their impact on three scales: social, environmental and economic. Included is understanding how its business operations affects employees, neighboring communities and the global ecosystem as a whole. Ethical business practices and fair treatment of customers and suppliers are core components of the triple-bottom-line approach.
4 Steps to Developing a Sustainability Plan ¶
Every business is different, and every organization’s sustainability strategy will vary. However, the four key steps below can serve as a foundation for an effective small business sustainability program.
1. Understand Sustainability ¶
The significance of small business sustainability is no longer in question. However, although the term “sustainable” is often used interchangeably with terms like “environmentally friendly” or “eco-friendly,” small business sustainability—while still emphasizing environmental concerns—also considers financial stability that allows a business to continue functioning in the future.
2. Identify Areas For Improvement ¶
The small business sustainability process often begins with assessing current operations to identify room for improvement. The process typically involves data collection and analysis to assess sustainable consumption and production patterns. This may include looking into energy and water use. Assessments should be ongoing. This allows businesses to improve their sustainability performance and gradually progress toward larger goals.
3. Find Opportunities for Solutions ¶
Building a small business sustainability strategy can begin with small goals. Business can begin by focusing on low-hanging fruit, including implementing simple measures such as using LED lights, reminding employees to turn off equipment and installing additional recycling bins. These opportunities prioritize sustainability efforts with minimal investment, efforts and costs, laying the groundwork for a long-term sustainable business model.
4. Take Action ¶
Since every business is unique, actions toward sustainability may not be the same as the others. One of the first actions a small business can take is providing sustainable products to its customers. Other actions can include encouraging remote work and offering public transit benefits, which can reduce commuters’ carbon dioxide emissions. Energy efficiency provides multiple benefits, including decreasing a company’s energy bill and carbon footprint. Another option can include buying carbon offsets, which can help mitigate the environmental impacts of running a business.
The Role of Business Leaders in Setting the Sustainability Vision ¶
Business leaders play a front-and-center role in driving efforts to make their small businesses environmentally sustainable. Servant leadership—a management philosophy that focuses on helping employees succeed and grow—is ideal for driving small business sustainability initiatives. However, other leadership styles can also be effective in setting the sustainability vision.
Regardless of the leadership approach, business leaders undertaking this initiative are responsible for driving the sustainability agenda. This includes setting the tone on the urgency of sustainability and defining key performance indicators (KPI). Measuring sustainable performance through KPIs can include tracking progress and evaluating the effectiveness of actions. For example, environmental sustainability indicators can include monitoring carbon dioxide emissions and energy efficiency improvement efforts against targets. Social sustainability KPIs can include measuring how a business handles diversity or supports employees’ work-life balance.
To succeed, leaders must promote sustainability culture and practices. They should also empower their organizations to engage proactively and create measurable impact. Additionally, business leaders must demonstrate a commitment to integrating sustainability in core business strategies over the long term.
Sustainability Is Good for Business, Good for the Planet ¶
Small business leaders can make a tangible difference in the world, amplifying the importance of sustainability inside and outside of their organizations. Individuals who apply the principles of business management can use their skills and knowledge to achieve profitability for their companies, while creating meaningful change that’s good for people and the planet.