Can SMEs react in time?
“Businesses in Northern Ireland are putting the rest of the UK to shame.”
NetRegs, a government organisation set up to give free environmental advice to the SME sector, has recently completed its biennial survey of 7,000 small to medium sized enterprises (SMEs) and published findings showing that the majority of smaller businesses in the UK (80%) would be quite unlikely or very unlikely to spend money on improving their environmental performance within the next twelve months; 45% of businesses in England stated that investment was very unlikely over the next year.
Businesses in Northern Ireland, on the other hand, are putting the rest of the UK to shame not only in their actions but also in demonstrating their business acumen by leading the way in improving their energy and water efficiency, which has doubled in just two years - higher than anywhere else in the UK; some 85 per cent are recycling their waste, up from 73 per cent in 2007 - the highest figure for any UK country and more than half (56%) now have measures in place to reduce the harm they do to the environment, according to the survey.
If, as some business analysts propose, the SME sector is part of the turnaround story for the UK as well as being a sector that is able to learn from, and leapfrog, the problems assaulting the larger company sector, then these latest figures are a cause for concern. The business case for creating a more sustainable operating model is well established and comprises two parts:
1. Take zero cost measures to reduce your energy usage; this reduces your operating costs. THEN…
2. Use some (or all, if you choose) of the savings you have created to implement further carbon energy reducing measures to continue your strategy of sustainable business practice
What’s missing in the SME story, as highlighted in the report, is the second part of the equation; most companies (and this applies to all companies globally) have taken measures to reduce their carbon energy usage as a driver for cost reduction. What too few organisations are doing is benchmarking their cost base before actions are taken or measuring, and then ring-fencing, the savings after actions have been taken.
At best this is short-termism, which is to be expected from the larger companies who are still hampered by old-economy paradigms; SMEs, on the other hand, have the capacity and the operational flexibility to take the strategy through to its conclusion and leverage their actions in positive PR ways that are not possible for many larger organisations. If they are not careful the SMEs will lose the initiative and the cycle of conservative growth and merger or acquisition will merely repeat itself, resulting in an economy that looks very much like that of the past 10-15 years and thus equally susceptible to the same risks and market forces which have led to the economic decline we have witnessed over the past 18 months.
The SME sector has an opportunity to sidestep the inadequacies of the current business model and create value to consumer and investor alike, value which has the potential to make some of them leading players in their vertical…
But there are no shortcuts; they need to do what the large corporates are apparently incapable of doing – follow through to step 2 and invest the savings into more significant actions which will deliver not only additional savings within a short ROI period but also deliver measurable market share growth.
