Small and medium-sized enterprises (SMEs) are already making significant strides in championing sustainability, through implementing environmentally friendly practices throughout their operations. This may include using renewable energy sources, reducing water and energy consumption, and implementing waste reduction and recycling programs.
Many SMEs are working closely with suppliers and partners to ensure the sustainability of their supply chains. They may prioritise sourcing materials and products from environmentally responsible and ethical suppliers.
By integrating sustainable practices into their operations, SMEs can not only champion environmental stewardship but also set an example for larger corporations and inspire positive change within their industries.
According to a recent report, more than four-fifths of Gen Z consumers and three-quarters of millennials consider environmental sustainability in their purchasing decisions. These young consumers value companies that use responsible and ethical practices in all phases of production, from manufacturing to distribution.
That is an important finding as millennials (born between 1981 and 1996) currently make up the largest group of consumers, and Gen Z (people born in the late 1990s and the first few years of the new century) are set to overtake them in 2026.
Such a shift in consumer preferences is a golden opportunity for small- and medium-sized enterprises (SMEs) to fulfil promises of sustainability while also maximising profit margins. A crucial part of this effort will include taking steps to champion renewable energy.
Businesses everywhere are shifting to renewable energy because it’s often significantly cheaper than traditionally produced electricity. Solar power in particular is now recognised as the cheapest form of electricity, the International Energy Agency reports.
Beyond the cost reduction incentive, however, investing in renewables also empowers SMEs to be agents of change in their local communities. Hoymiles, a Chinese company that works on lowering renewable energy costs, points out that excess green energy created by increasingly efficient panels and micro inverters can be fed into the local grid.
And SMEs have greater potential to make an impact this way, especially in OECD countries (Organisation for Economic Co-operation and Development) like France and Canada, where they make up 99% of all businesses. Such community-based initiatives can also offer job opportunities and sustainable development, especially in areas often neglected by larger corporations.
However, going green won’t just bring SMEs cost efficiency, energy independence, and opportunities to grow in emerging markets. With sustainable practices becoming increasingly popular, businesses can also come away with enhanced prestige and value. This can help maximise customer conversion and loyalty, all while attracting new talent to business teams.
By promoting renewable energy, SMEs can also significantly influence the future of renewables. By going green, there are various potential scenarios which unfold; these businesses can motivate their competitors to step up their game and adopt sustainable practices as well; and they can contribute to a major shift in energy consumption among SMEs, increasing demand and inevitably creating jobs in the renewable energy sector. The problem is more pressing than one might think; according to OECD figures, SMEs produce 70% of Europe’s carbon emissions.
A surge in the use of renewable energy among SMEs can only lead to increased attention in other clean technologies. After all, producing electricity with solar power, wind turbines, or even hydropower is just the tip of the iceberg.
In the past decades, a wealth of innovations have been created with reduced carbon emissions in mind. For instance, in transportation, there are more and more electric cars and planes, as well as biofuels sourced from algae, sugar, and other organic compounds.
SMEs can add value to these technologies by adapting them to their own operations or even investing in the development of new ones. Doing so wouldn’t just be eco-friendly or humanitarian in nature. With climate change putting business assets at risk, choosing to champion both renewable and clean technology as a whole is also a sound business decision.
Businesses are faced with increasing pressure to integrate environmental, social and governance (ESG) reporting into their practices and business models. The pressure comes from multiple stakeholders. According to a recent poll, 88% of institutional investors put ESG on par with operational and financial considerations when making investment decisions; 60% of employees choose a place to work based on their beliefs and values, while 58% of consumers buy or advocate for brands based on their beliefs.
While many of the world’s biggest corporations are now committed to shifting their practices to address this mounting pressure, we should not overlook what is happening beyond these headlines, namely, how the less-visible SME and mid-sized enterprise segment of the economy is approaching this. According to the International Labour Organisation, they represent 90% of all firms globally, contribute to roughly 70% of employment, and drive up to 70% of global GDP.
How SMEs can take effective climate action
Achieving net zero emissions for small and medium-sized enterprises (SMEs) requires a combination of mid-to-long-term strategies with varying complexities. SMEs can enhance sustainability by using recycled materials for their product lines and adopting green supply chains through ethical local suppliers.
Employing renewable energy sources, green web hosting, sustainable search engines, and banking with eco-conscious institutions can further green their operations, some of which are comparatively low-level lifts. It is crucial to incorporate carbon emission reduction goals into business planning and set ambitious yet achievable targets for successful implementation.
In addition to these longer-term strategies, SMEs can take immediate steps to make a positive impact. Engaging their communities in climate action, such as planting trees for every product sold or encouraging eco-friendly behaviours through surveys and newsletters, can create a tangible difference. Involving employees is vital, and designating a sustainability champion can help drive green initiatives within the company. Educating staff on sustainability goals and providing actionable opportunities for participation, like signing open letters and supporting local initiatives, can foster alignment and engagement.
Collaboration is essential for bringing about structural change. SMEs can rally fellow business owners within their industry and networks to take collective action. By working together, SMEs can tackle the seemingly daunting challenge of combating climate change with greater resources and effectiveness, making a meaningful difference in the fight against environmental degradation.
