The sustainability challenge facing SMEs

SMEs account for over 99% of companies in the UK and surprisingly, over 50% of total emissions. Whilst recent headlines have focused on the pledges of big companies going carbon neutral, it's crucial that SMEs are supported in their transition to a more sustainable planet.

So what challenges do SMEs face?

The UK government has recently announced a 78% reduction in its emissions by 2035, a significant and challenging target. This means that every industry and company has to work to reduce its total emissions so that the planet can stay in line with the 1.5 degree target that is set to avoid the worst effects of climate change. So what are the challenges facing SMEs today?

• It's hard to get started. For industries and companies that have never had to measure their emissions before, it can be hard to know where and how to get started. With so much information out there, it can lead to an information overload which further increase the challenge in measuring and managing emissions.
• Lack of internal resources. With external carbon consultants costing upwards of £10,000 to measure a company's carbon footprint, it can put carbon neutrality out of reach for SMEs. To avoid paying these fees, some companies will assign the task to a person within the company who might already have enough on their plate.
• Low on the agenda. Combined with the above, some companies also feel that sustainability has no tangible benefits and that there isn't a clear financial use case. This can force companies to turn to tried and trusted methods like recycling instead of a full measurement. While this is undoubtedly important, recycling and paper waste can account for just 1% of a company's total footprint.

Why is now the right time for SMEs to take action?

Unlike large corporations, SMEs have the ability to take fast action on their emissions and reap the benefits immediately. So what are the benefits?

• Attract the right talent. Millennials make up 50% of the entire workforce and they want to work for more mission-driven, purpose-led companies. According to a study in 2016, 64% of Millennials consider a company’s social and environmental commitments when deciding where to work. This means that if your company’s policies aren’t strong enough, you might be losing out on attracting the best talent. Worse still, they might be joining a competitor who does.

• Retain your best performers. 83% of Millennials would be more loyal to a company that helps them contribute to social and environmental issues. Having a strong impact on the environment can reduce annual quit rates by 3% resulting in massive decreases in both the time and costs spent on hiring replacements.

• Boost your revenues and profits. In 2018, Unilever reported that sales of their sustainable brands grew 46% faster than the rest of the business and delivered 70% of its turnover growth. This data is further backed up by another study by the Harvard Business Review, which shows that “between 2006 and 2010, the top 100 sustainable global companies experienced significantly higher mean sales growth, return on assets, profit before taxation, and cash flows from operations in some sectors compared to control companies.” Consumer demand for sustainable products and brands is resulting in bottom line increase in revenues.

• Lower your company expenses. There is a common misconception that sustainability can increase your company’s expenses but this isn’t the case. Even simple energy saving measures like LEDs and renewable energy can drastically reduce emissions and save the company money. Having an environmental programme can save up to 15% of total expenses helping to outweigh any costs that have been incurred. Taking Marks & Spencers as an example, in 2007 they published their ‘Plan A’ blueprint which required suppliers to embed sustainability into their products. After only two years the programme broke even. Today, it contributes millions in cost savings for the company.

How you can take action

With the advance of new technologies like Dodo, it has never been easier and faster for companies to become carbon neutral. At Dodo, we invest in projects on your behalf that are natural, fully verified and registered through the Gold Standard to ensure that your offsets are actually capturing the carbon that your company has released. You can check out more on our projects here, where you can find more information about how we are investing in reforestation, peatland protection and reducing the amount of fuel used in cookstoves.

If you want to become carbon neutral, you can get a quick measurement of your emissions here!