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The CSR/Sustainability business case for SMEs

This is probably the hardest sell in the whole area: How do we convince smaller businesses to engage in sustainability/CSR/corporate responsibility practices?

I’ve struggled with this for years. Having run an SME for a decade, written a policy report for the Government of the UK that touched on the area, and just spent a couple of days with small retailers grappling with the why and the how, I now have one simple conclusion:

Remove the jargon, and simply talk about saving money, better management and future opportunity.

A simple truism of course. That’s how you sell sustainability (or smarter business as I prefer to call it) to any firm.

But taking out the jargon and the moral argument matters much more in SMEs. They just don’t have time to think about anything outside of business management. That much is clear to me.

That doesn’t mean SMEs are immoral. Quite the opposite: Being less of a ‘machine’ than a large company, smaller businesses understand what individual productivity and motivation means more than any one else. One key person leaves, everything can change, fast.

And SMEs are much better connected to their communities and understand the value of relationships built over time. That’s not in any doubt.

This week I was with around 10 companies for two days. We spent the time discussing the business case for engaging stakeholders and others, how to get started, what best practice can look like, and the business case for doing so.

Most importantly, we talked about engaging suppliers. Many of the business managers, who often have two or three job titles, were sceptical that they could have any impact on suppliers when we began.

By the time we’d brainstormed for two days all of them could see how they could have an impact.

Start small, test, measure and communicate results, and see where it leads. They bought that.

The tipping point though, was when they understood progress is simply about better business management. About smarter capitalism. About helping suppliers save money. And then investing that money in further improvements.

That’s something they all agreed they felt they could sell to their CEOs and some suppliers.

It only made sense to them when we took the jargon out of the debate.

By the end of the two day workshop/training session I led, we all felt inspired that even a 25-50 person company could make a difference in their supply chain.

Selling sustainability as not just for the big brands is entirely possible.

I’ve just seen it happen. It feels good.

4 Comments

  1. Here's the big SME advantage: innovation. Developing different business models because SMEs can be more customer-centric, less reluctant to operate "business as usual".

  2. That's really encouraging Toby, well done!

  3. CF4

    It is a tough subject. The problem with this rationale is that assumes that there is always a win-win (business & environment). That is true at the low level of eco-efficiency, but the stuff that really matters either costs more (sustainable palm oil, FSC paper, green energy, MSC fish,…) or we should be doing/buying less of. My view is that Big business has to drive changes in small business by saying they will not buy from them unless they green-up. As we both agree, a tough subject.

  4. Chris Yates-Smith

    Last year we carried out an intensive study of the UK SME sector and sustainability.What emerged was;
    1) The entire SRI/CSR/Green/Ethical/Eco agenda has been a "top down" initiative,with just 10% of the Nations employers dictating the "rules" to the 90% of the Employers which is the SME sector.This is also true across the developed Nations.
    2) Since SRI,CSR etc, have litteraly thousands of differing definitions,practices,codes and approaches there is no consensus which would lead to commonality and therefore credibility.
    3)CSR,SRI, etc is purely based upon subjective, self reported criteria,therefore cannot be codified in terms of definitive advantage to companies.
    4)There is an absolute confusion of terminology, CSR,SRI, (and lack of common definition) therefore cannot be termed as Sustainability which has a more clear definition.
    5)Without doubt, the SME sector potentially has the greatest opportunity to tackle ESG issues, this sector is tactile and entrepenurial in approach,however, with mass confusion reigning as above and with the power of change being held in just 10% of the Employers, the ballance of power and knowledge is tipped in favour of the least able.
    6)A study of the UK SME sector demonstrated that just 2% of Chambers of Commerce and National Federations of Small Business had any knowledge of the definitions of CVSR/SRI based terminologies.
    7) Like it or like it not, the SME sector has always been starved of Capital and devlopment funding, commonly known as the Equity Gap, all available funding from banks, Business Angels and small VC funds are entirely guided by risk assesment, therefore since you cannot measure the financial impacts and corrolation to risk reduction and financial performance in the application of "Green, Ethical" and similar codes of practice in terms of risk reduction,( some of these practices actually increase business risk)there is no finacial imperitive to drive the change.

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