Sustainability: It’s not easy being green, especially for SMEs

Posted on 16 Jun 2013 by The Manufacturer

Reaching beyond flowery expressions of corporate values, Dai Morgan, research associate at the Centre for Industrial Sustainability, Institute for Manufacturing, investigates the practicalities of sustainability for manufacturing SMEs.

Large corporate powers such as supermarkets and car manufacturers are developing ever more advanced sustainable offerings and assurances for their customers. Whether this is driven by true customer understanding of the importance of sustainability or simply by fashion, it is inexorably leading to the introduction of new standards for suppliers to live up to.

This means that, by domino effect, sustainability is no longer a nice-to-have but a requirement further down supply chains. In increasingly challenging marketplaces, cash-tight SMEs need to understand how they can accommodate this trend, marshalling their limited resources to meet new requirements while remaining competitive.

But do many companies really understand what becoming ‘sustainable’ will mean for their business? What does compliance with new, stricter guidelines on business practices, processes and policy really require and can SMEs cope?

Want to learn more about becoming more sustainable?

The Manufacturer is hosting its Energy Management and Sustainability Conference on July 9th. The conference is free to attend – passes are allocated on a first come, first served basis for attendees of manufacturing companies.

Click here for more information and to register.

Lost in translation

Sustainability is no longer a niche interest. Every business wants to be seen to be involved in sustainability in some way – to the point that the word is often stripped of its meaning through being applied in so many different scenarios.

Definitions of sustainability that pepper corporate mission statements refer loftily to meeting the evolving needs of the global population or societal and environmental concerns. There are aims, but somewhat short on practical application for most manufacturers. In the end, in its simplest sense, sustainability is about survival. For businesses this means; can the company continue for several more years? Can the staff be paid? Can the stock be purchased and the goods shipped?

However, the term now relates not just to profit and survival, but encompasses different elements. Sustainability covers economic, environmental and social domains – sometimes called the ‘triple bottom line’.

To move towards true sustainability, a firm needs to address all three elements.

Dai Morgan, research associate at the Centre for Industrial Sustainability, Institute for Manufacturing

Connections and consequences

Environmental and social issues are important for a firm’s finances and so can be key to survival.

Reducing energy bills can be beneficial to the bottom line and, apart from reducing the impact on the environment, can increase business resilience to future shortfalls in energy production.

Thinking more broadly about what your stakeholders really value can help identify new business opportunities. From customers to employees and from other local businesses to distant suppliers, there may be opportunities to deliver more value using fewer resources.

A firm can be profitable without being sustainable, but it cannot be sustainable without being profitable.

Maintaining the economic lifeblood of the organisation is the most pressing reality faced by businesses on a day-to-day basis and one which is challenging with limited resources at one’s disposal. Under such pressures, waste management and energy reduction will not always seem an immediate priority.

Help is at hand, and it’s funded!

Practical & Innovative Solutions for Manufacturing Sustainability (PrISMS) is a programme for start-ups and small and medium-sized manufacturers in the east of England that want to grow their business while reducing their costs and overall carbon footprint.

Funded by the European Regional Development Fund and other funding agencies, and managed and delivered by IfM Education and Consultancy Services (IfM ECS), PrISMS gives companies free access to the support of experienced practitioners.

These experts work with start-ups and SMEs to identify and prioritise the areas that will have the greatest impact on their businesses and support them in improving their capabilities in these areas.

For example:

  • Start-ups: Assistance in developing a sustainable business model or ensuring they the skills and resources needed to scale up with growth are in place
  • Established SMEs: Help in determining the most appropriate markets and products around which to leverage sustainability and highlighting opportunities to increase profit by reducing both costs and environmental impact

Fully-funded places are available for 70 manufacturing SMEs with 10 to 250 employees and 50 product or technology-based start-ups.

To be eligible, companies must be based in the east of England, want to grow their revenues and create jobs and be able to show they have the potential – and commitment – to reduce their resource and environmental impact.

Feeling left out?

Even if you are not based in the east of England you can benefit from the PrISMS programme. A team of expert consultants from IfM ECS is available throughout England and Wales, and some of their work may be covered by other funding programmes, often supported by regional and local government bodies.

To find out more about what help is available to you contact Anna Rowntree, 01223 339814 or email [email protected]

New requirements, new challenges

The problem is that so many large customer-facing companies are now giving increased prominence to sustainability in their core business plans. They are sometimes required or chose to report on issues like the Carbon impact of products throughout their lifecycle. In many cases they expect to find savings from their supply chain, demanding a commitment to sustainability from their partners (p76).

But while it is easy for large supermarket chains to employ expensive consultants to guide them through the carbon measurement and reduction process, SMEs in the supply chain may not know where to start and often have no budget to hire a consultant to come in and analyse processes and practices as they struggle to comply with any new standards or guidelines.

In some cases there is some help from government bodies. Programmes like PrISMS (see box), which is designed for manufacturing SMEs and start-ups based in the east of England and supported by the European Regional Development Fund and other funding bodies. PrISMS provides SMEs with advice and help on how to make their business more sustainable without the financial burden.

A new opportunity to invest in your future

Difficult as it may sound to find ways to meet new market demands for sustainability, the benefits can outweigh the effort. Firstly, by complying with your clients’ standards, you have a competitive advantage over other suppliers and are more likely to be chosen in a tender.

Secondly, and perhaps most importantly, by doing things like reducing cost and waste and improving production and distribution processes, you will help your business stay profitable for longer making it more sustainable, in all senses of the word.