Sustainability & SMEs: The Integration Process – Trigger Points (People, Welfare, Community)

In most countries – large and small, developed and developing – the vast majority of businesses are small and medium-sized enterprises (SMEs). These businesses provide at least half of all jobs and not big businesses often perceived as the “backbone” of national economies. Following the same analogy, SMEs are the flesh and sinews. They have become accustomed to being concerned about the social and environmental impacts of the largest companies. However, in many countries the cumulative impacts of SMEs are just as great if not greater this is why SMEs need to integrate and sustain people, welfare and the communities in which they find themselves into their business strategy. 

Well-managed and healthy SMEs are a source of employment opportunities and wealth creation. They can contribute to social stability and generate tax revenues for one or many communities. According to the International Finance Corporation (IFC), there is a positive relationship between a country’s overall level of income and the number of SMEs per 1,000 people. The World Bank’s Doing Business reports indicate that a healthy SME sector corresponds with a reduced level of informal or “black market” activities. 

SMEs are known around the world to be the most avid employers of people in all economies and the people who often have access to the opportunities created by SMEs are the poor and economically disadvantaged. This is why the first trigger point for integrating sustainability is with people.

SMES are often advised to integrate the aspect of people first because it deals with social and ethical issues. Some considerations include: the kind of treatment they extend to their employees and whether it encourages social cohesion or not, protection of human rights, compliance with anti-fraud and anti-corruption policies, use of child labor, gender discrimination and even employees participation in management and profits; are to be considered in this process of integration. 

When SMEs are established or cited in rural areas, they are supposed to help improve rural infrastructure and the living standard of the people. With the increase in economic activities, more social amenities such as road, electricity, pipe-borne water, telecommunication facilities, etc., should be attracted to the area not just as a result of the presence of SMEs in the community but for improved standards of living of the people so they can better maximize the opportunities. 

Through people, SMEs develop a vested interest in community development. Being local, they can draw upon the community for their workforce and rely on it to do business. For the communities, the potential to provide goods and services tailored to local needs and at costs affordable to local people, is immense. Also, communities serve as an important source of employment, particularly for low-skilled workers, as well as women and young people, who usually make up the greatest proportion of the unemployed in emerging economies. Due to their flat management structures, their personnel fulfill multiple roles, which make them less vulnerable to unemployment during periods of economic downturn. Consequently, their small sizes and flexibility allow them to adjust to local market fluctuations and to weather local market shocks more comfortably. Collectively, SMEs have considerable environmental impact. SMEs are confronted with various challenges and the perception that their individual impact is not significant; it is unlikely that environmental concerns will figure high on their business agendas. By engaging with SMEs, assisting them with capacity building, and aiding them with compliance, particularly with environmental standards, large corporations can help SMEs integrate sustainable development thinking into their production processes and operations.

After engaging people within the organization and the immediate community, communication and periodic engagement will help any SME to sustain these relationships. In business, if an organization does something considered good, it becomes crucial to make sure your key customers, suppliers and community aware of these developments. A simple analogy would be to think of sustainability as assets and so, lack of communication can be likened to buying impressive IT equipment and never plugging them in. The most accessible and permeating opportunity lies in social media. Social media is a wonderful place to share and engage. Platforms such as Twitter, LinkedIn and increasingly, Google+ are amazing places to connect with sustainability experts, discover the best practice and routes to receptive audiences for your success stories.

The goal of this article, and the entire ‘Sustainability & SME’ series is to guide all businesses, especially small ones, on how to have sustainability integrated into their models away from the mostly reactive, ad hoc or informal practices. Nonetheless, the language and style of the series seeks to break the processes down into simple daily steps. Therefore, SMEs should learn to value and invest resources (time or money) like any other cost center with plans to maximize benefits. 

A few questions to answer are:

  1. Where are the biggest opportunities for my business? 
  2. What issues are most important (now and over the next months or years)?
  3.  What resources can be accessed?

The various responses to these questions and a few more follow up questions provide the basis to get professional advice and a sound plan. To start off, a clear vision and mission statement are important. SMEs should learn not to underestimate the power of a strong democratic values statement. Even if Business values are a handful of keywords (preferably unique and relevant) and they provide a foundation to help launch a sustainability integration journey, especially when deciding what not to do.

Furthermore, business entities after public or private sector jobs will find their potential clients check out their standards a lot, just as their possible or future CSR ethos and language. This is where to pay attention to for a common ground on values rather than superficially copy or exaggerate examples of similar values. It is important to develop them, practice them and also communicate them to all stakeholders. By demonstrating an understanding and also displaying evidence of sustainability integration, the business inadvertently receives a brand boost and improve the level of offered trust and the perceived size or maturity of the business.

In as much as we all want more value from organizations, SME-friendly banks and green product credentials, work-life integration, health and education; values has become the new currency of an informed global community. 

The time is now for a new breed of business, and it starts with SMEs.

In-Print

The Great Governance Debate – Towards a Good Governance Index for Listed Companies

Institute of Directors in association with Cass Business School

June 2015

Description: C:\Users\THISTLE PRAXIS\Documents\IoD Report Cover.JPG

Good corporate governance goes beyond having the right policies and structures in place. It is about ensuring that the needs and interests of stakeholders in an organization are taken into account in a balanced and transparent manner. Organisations and companies are often praised for good governance but the truth is that the term is indeterminate. What it means precisely has not been so well-established. With this is mind, the research which laid the background for this report set out to discover what good governance means and how to measure it – with the ultimate aim of encouraging the study of good governance and stimulating public debate on the importance of corporate governance.

This report used three different approaches to measure corporate governance of UK-listed companies: surveying perceptions of corporate governance by members of the UK business community; assembling quantifiable instrumental factors which are often associated with corporate governance; and statistically combining instrumental factors with perceptions to analyse factor weightings. It reveals that different questions gave different answers as different approaches produced different results and most importantly; that governance is a complex system as no single factor can determine how well a company delivers corporate governance.

The Great Governance Debate – Towards a Good Governance Index for Listed Companies stimulates debate on good governance and brings us closer to understanding how best to achieve it.



Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.