Sustainability ranks as pressing priority for SMEs in 2014

A quarter of small and medium sized enterprises (SMEs) say sustainability will be one of their top three priorities this year, despite the fact many are struggling to move beyond implementing simple green measures.

According to research from Lloyds Bank Commercial Banking, while SMEs are quite comfortable undertaking traditional activities such as energy saving and recycling, a significant number have still yet to adopt a broader range of sustainable business practices.

The study found for example, that SMEs are less likely to offer a clear business code of conduct (46%), work responsibly within a supply chain (42%) or operate an ethical sourcing policy (25%). It also highlighted the fact that there are still businesses who do not believe there are any benefits to be gained from implementing such practices.

However of those businesses that have implemented sustainable business practices, most believe there are clear benefits in doing do. More than half (54%) believe it helps reduce their costs, just under a third (3%) believe it increases their profitability, while more than two-fifths (42%) cite that it makes a positive contribution to the environment.

Of those businesses that still have no sustainable business practices, more than two-fifths (44%) say they will start investing over the next five years. The key motivations of these future investors are to reduce costs and increase profitability (52%) and make a positive contribution to the community (28%).

Interestingly, there was a clear difference in terms of levels of engagement across different sectors. All healthcare companies stated that they engaged in some sort of sustainable practice compared to just nine out of ten in the leisure (90%) and professional services (91%) sector and just under nine out of ten (88%) in financial services.

Looking ahead, a third of SMEs expect to increase their investment in sustainable business practices over the next five years, while two-fifths (42%) expect their investment to remain flat. Only a small minority (2%) think they will cut back on spending in this area.

Commenting on the findings, Lloyds Banking Group’s external relations director Stephen Pegge said that businesses were now clearly seeing the benefits of sustainability.

“But for SMEs, sustainability also means interacting with charities, social enterprises and the community in which they operate; working responsibly within their supply chain and engaging with the next generation through for example, apprenticeship schemes,” he observed.

Last year edie carried an exclusive report warning that SMEs face being put out of business unless they start implementing resource risk strategies. According to the article, many smaller firms are not aware of the threats they face from volatile commodity markets that are now a reality further down their supply chains.

Maxine Perella

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