(Why sustainability is good for business)
There are a hundred and one things facing most businesses today. Whether you are in a turnaround position or growth, I have heard some businesses say: “for the love of the world, how can you even ask me to consider sustainability issues at time like this! We are an SME we don’t have the money (or) it doesn’t really affect our business!” My response is simply it does, and in a number of ways. From an economic perspective, it can actually save companies money; from a social standpoint, more people (customers/consumers and employees) are considering whether companies are actively sustainable before they join them or buy from them; and of course there is the environmental impacts to consider. These are the key issues that most companies think about when the topic arises but there is a fourth: Opportunity and Risk. All directors of a business, no matter what size, have to give risk and opportunity consideration. What is in the best interest of the company and what are the risks of taking action or in some cases, not taking action? The economic disruption has opened many potential opportunities, and sustainability is one of them. It also means when a company considers its risk, the issue of sustainability should be reviewed. The decision process has to be very well considered and not just dismissed out of hand because there is a misconception of costs involved in the short term, when it could result in significant long term gain.
Put simply the express train has arrived and if you don’t board now, it will cost you dearly within the next 12–24 months. Don’t sleepwalk into the trap of thinking ‘let’s get our business back on track and see what we can do to survive’ but instead approach it with ‘let’s get the business on the right track to thrive.’ Allow yourself to future think.
The concerns and worries a business may have at present about changes in consumer demand and their dissolving finances are all genuine. But the time is now to future think and to consider the reasons why you should make sustainability part of your agenda in order to pivot and evolve. If you are not, I can assure you your competitors are, and your customers and the larger corporations are all heading in the same direction.
Looking back at history, it has at the time been hard for some companies to future think and move away from their trusted way of doing things, in part because of the costs. I cast my mind back to renewable energy and the move away from coal or even more recently, the move from diesel cars to electric. Yes, it can be expensive in the initial period, but that will only be for a short period of time. Slowly, the SME is beginning to embrace change and becoming more and more sustainable, in part due to pressure from the consumer, policy and the larger corporate’s that rely on the SME sector as part of their supply chain. If you sleepwalk into the next three years, you will find yourself in a position where it will cost you more money to change. By that time, it will be harder to pivot — not impossible, but harder.
Stop and consider how quickly things are moving. A prime example in this very unusual time is the way we have all embraced technology that was already there to rapidly transform our working practices to accommodate remote working on a colossal scale. Partnership is key to success. By learning to work together in collaboration almost as one organisation with multiple companies, you can share the burden. Explore and see where and with whom those opportunities live. Bring people onto your board that have diverse thinking and contacts.
It is the responsibility of the board and, if you have one, a non-executive director to ask questions and ensure that sustainability is on the agenda and not merely as an afterthought. It forms part of the risk management and identifying opportunities for the business. And us directors all know that we must act in the best interests of the company. The market is moving like an express train; blink and your opportunity might vanish and leave you with the relics of the dinosaur.
COVID-19 has accelerated disruption and the normal has been destroyed. We can imagine change and human capital plays a fundamental role. There are concerns around climate change and modern slavery that are forming at the centre of our evolved consumer world. The world is understanding this position and governments and policy bodies have understood that post-COVID-19 we have to build back better, and investment is key. The change is across all organisations — just look at the way pension funds are changing how they allocate their funds by making a conscious decision to review the sustainability policies of the companies they invest in. The voice of the consumer has always been strong; what is so different now is the pandemic has allowed us all to revisit and re-evaluate our lives and business.
Larger corporates now have sustainability targets that have a direct impact on society and their success. They are now communicating their sustainability objectives to the SME supply chain and auditing them. If you want to join the party, you need to be making inroads to being more sustainable. Is the message loud and clear — can it hear it above all the other noise? Look at Honda for instance, who switched to an EU commitment to reducing embedded carbon and have implemented a supplier system of Gold, Silver and Bronze. If you fall into the Gold or Silver band you become a preferred supplier; at a very minimum, to be part of the supply chain you need to fall within Bronze. The message is blowing like a loud speaker — adapt or we cannot do business with you.
In this disruptive time, own your own destiny. As an SME you have an advantage of agility, you can move fast. Change is possible, you just need the mindset. After all, everything starts with a thought — Rethink the Future Now.