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Sustainability in Business

Read why sustainability is becoming more important for businesses each month, as consumers demand to see more sustainable practices.
Sustainability in Business

Updated on 20/01/2021

Sustainability in Business

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There can be no denying that sustainability in business is a topic that’s of growing interest for businesses around the globe. With researchers uncovering new environmental and financial benefits associated with good, sustainable business practice, and consumers demanding more from businesses, now could be the perfect time for UK SMEs to re-evaluate their own practices.

To dive into this topic a little deeper and help businesses action positive sustainable sentiments, this article will:

What is sustainability in business?

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Sustainability is about looking at business practices, such as how products are supplied or how offices are run, and optimizing them to ensure that they aren’t having a negative impact on the environment in the long term.

In a business with sustainable processes, stakeholders and customers alike can make transactions with the understanding that the company is aiming to not deplete natural resources, (or even aspiring to become carbon negative, like Unilever) by continuing its daily operations

What’s more, sustainable businesses should also be profitable. It may not be enough to simply buy more sustainable ingredients at a slightly higher if it reduces the potential lifespan of your company. Instead, sustainability is more about finding long-term innovative solutions that maximise the value you get out of each aspect of your business and its operations. For example, a local coffee company could look to sell its waste coffee grounds to a local gardening business that can repurpose it as fertiliser - therefore opening up a new revenue stream while also recycling (and upcycling) produce.

Why sustainability is important for SMEs

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Sustainability matters to SMEs, and there’s one primary reason for this.

According to our own research, more and more customers are identifying a desire to buy sustainably sourced products from ethically conscious brands. We found that around 41% of consumers would not buy a product if it contained unsustainable palm oil, and 50% have avoided purchasing something because it used excessive single-use plastic.

A huge number of consumers care about the environment and want to see that the brands they’re engaging with and buying from echo that same sentiment. It therefore may also be important for brands themselves, no matter how small, to seize every opportunity to make an emotional connection with customers and reinforce a mutual understanding that sustainability matters. This could potentially yield new business opportunities, but let’s explore that a little further.

Is sustainability good for business?

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Many SME owners may tell you that there’s a trade-off to consider between adopting sustainable practices and maximising profits. Historically, one of the cheapest options for packaging goods has been synthetic, single-use plastics that don’t biodegrade quickly – with an example of this being supermarket shopping bags (which of course used to be free). On the flip side, biodegradable packaging options that may be considered more morally desirable aren’t always cheap.

That said, this may no longer be the case. Some research has debunked the idea that sustainably-sourced packaging is expensive; identifying how the cost of packaging can be understood with a simple supply and demand analogy. So, customer demand for sustainable packaging could in fact result in the price of sustainable packaging coming down overall.

Regardless of whether this is true, there could in fact be some merit in SMEs opting for a slightly more expensive, yet sustainable packaging alternative that may be at the slight expense of profit-margins. Why? Well, your prospective customer base may care more about sustainability than you initially realise, and so by visibly adopting sustainable practices, you could see yourself connecting with a larger audience base and building advocacy for your brand. Capgemini found that 64% of consumers report feeling happy and sharing an emotional connection when buying sustainable products.

Many larger brands, such as Lush, build their entire marketing strategy around sustainability – and there are clear long-term benefits of having a loyal and dedicated customer base. So, exploring how relevant this could be to your small business, and conducting some customer research to identify which factors influence their buying behaviours could prove to be a profitable venture.

What additional benefits can sustainable business practice yield?

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While it may be hard to quantify, it’s possible that your business’ ethos and public statement on sustainability could influence factors beyond your sales and customer engagement. That is, to say, that other brands or influencers you potentially look to partner with may consider what your brand really stands for when deciding whether they want to work with you.

The social media age in which we live causes most brands to publish their values and beliefs publicly, while giving customers the ability to comment on them, and so it’s possible that sustainable brands attract sustainable brand partners.

What’s more, a proper assessment of the sustainability aspect of your product offering could result in you discovering a new business opportunity. Perhaps if your manufacturing process yields a lot of excess plastic that isn’t recyclable, it’s possible that you could sell on that plastic to a company that’s able to extract any virgin materials and get the plastic to a state where it is recyclable. This would be mutually beneficial for both businesses, while also opening up a world of PR opportunities and positive CSR statements that reflect well on your activity.

It’s possible for a business to build its community by promoting and championing sustainable practices. So, it could be useful for businesses to really think about what they’re measuring during their production. By properly assessing what can be done with any materials bought, any waste, or any bi-produce of the manufacturing process, business owners could potentially uncover unnecessary costs, inefficiencies, or ways in which they could pivot their offering to make better use of that waste. Therefore, sustainability can lead to financial savings, growth opportunities, and CSR actions that build strong stakeholder credibility.

Examples of good sustainable business practice

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Bringing about sustainability isn’t always an easy feat, and the options for becoming more sustainable are vast – so here are a few examples of sustainable business practices that can help narrow your range of options as an SME owner:

1. Sourcing materials and power responsibly

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If there’s an opportunity for you to deliver your product or service using a type of material or perhaps machinery that lessens your business’ overall environmental impact, it may be worth considering.

To illustrate this, you could look at adopting energy from renewable sources. Across the globe, around $282 billion was invested in renewable energy capacity in 2019, with wind ($138bn) and solar ($131bn) leading the charge. As these renewable energy sources and technologies become more widespread, they also become more affordable and accessible.

This could potentially open new avenues for businesses to switch to sustainable energy providers, for example, or to switch to more efficient manufacturing technologies that utilize renewable energy sources as opposed to fossil-fuel based alternatives.

2. Enabling sustainable waste disposal

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Customers may feel better when they know that the waste produced by their product orders can be put in the recycling rather than a black bin. SMEs could consider exploring alternative packaging options from different suppliers to help make recycling possible.

What’s more, it’s important to assess whether businesses are unlocking the full potential of the stock they’re acquiring. If it turns out that a lot of food, for example, is going to waste – then not only is money being wasted on stock purchases which is bad for business, but businesses also run the risk of becoming known as unsustainable or developing a negative brand image.

This topic has been highlighted during the coronavirus pandemic by various UK initiatives to combat food waste, and part of the challenge is educating business owners on how to be efficient when forecasting sales and purchasing stock from suppliers (which encourages less waste).

3. Reworking internal processes to reduce environmental impact

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When we typically think about sustainability, we think outward. What are we selling, buying, or trading with, and how can that process become more sustainable? In truth, though, we can often look inward to find sustainable solutions.

By refining internal processes, such as the way comms materials are distributed throughout your small business or how weekly reports are shared amongst the team, you can take small steps toward a more sustainable future. It’s worth trying to put a carbon cost against each of your processes, both physical and digital, to fully gauge what your business’ environmental impact is.

The coronavirus pandemic, along with all its challenges, has necessitated the digitalisation of many internal processes for SMEs. This digitisation can have a mixed effect on the environment. On the one hand, many day-to-day tasks may require fewer natural resources to complete (i.e., paper), and going digital could mean that less commuting is needed, thus reducing pollution emitted from car exhausts.

On the other hand, however, the manufacturing process behind laptops and desktops may produce carbon emissions, which could cause a greater net harm to the environment than you’d otherwise find from daily activity over time. It’s hard to know the exact extent to which coronavirus has affected the environment in this way, however there are indicators that greener business goals are on the horizon when the pandemic subsides.

So, it may be worth trying to assess the environmental pros and cons of your activity, then implementing a more sustainable solution that your entire business can get behind if it’s feasible to do so.

Closing thoughts

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Being a sustainably run business is important. It’s not just about being sustainable, though, that matters - it’s also about how you communicate to your audience that your business actively champions sustainable practice and implements these sentiments in its daily activity.

Some steps you could take to showcase your sustainability include making eco-updates a part of your monthly newsletter, using social media to highlight your processes and improvements, and even publishing a sustainability statement on your website that clearly explains where you stand on sustainability issues.

Disclaimer

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This has been prepared by Esme Loans Limited for informational purposes only and should not be treated as advice or a recommendation. There may be other considerations relevant to you and your business so you should undertake your own independent research.

Esme Loans Limited makes no representation, warranty, undertaking or assurance (express or implied) with respect to the adequacy, accuracy, completeness, or reasonableness of the information provided.

Esme Loans Limited accepts no liability for any direct, indirect, or consequential losses (in contract, tort or otherwise) arising from the use of the information contained herein. However, this shall not restrict, exclude, or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

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