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Sustainability is about building resilience and flexibility into the SME business model, writes Shane O’Reilly (pictured), Director, KPMG Sustainable Futures

Sustainability can mean very different things to different organisations. At KPMG Sustainable Futures, we routinely see these differences and assist our clients in planning and executing sustainability strategies that work for them. At a high level, sustainability is the interdependent nature of environmental, economic and social issues, and how they can drive innovation, improve supply chain resilience and transition your business to a lower carbon economy delivering long term success for your business.

The impacts of environmental and climate-related change present a very real challenge to the public and private sector alike. In the first instance, it may seem that sustainability is the preserve of large corporates with dedicated teams in place to reduce carbon footprints, drive efficiency programmes and report on achievements.

However, SMEs are equally capable of positively impacting on sustainability. Indeed, SMEs have an essential role to play if the recent Programme for Government ambition of 7% per annum reduction in carbon emissions over the coming decade is to be achieved.

Sustainability is about building resilience and flexibility into your business model. Sustainable business practices offer new revenue opportunities which are driven by a strong demand for low emissions and sustainable products and services.

The key areas of focus for SMEs are:

In Association with

• Environmental: energy efficiency, reducing waste and water
• Social: employee engagement
• Measurement: evidence of achievements and communication

Environmental

SMEs understand sustainability is a key business driver and potential differentiator for their brand. The challenge for many SMEs is that the return on investment is not always clear from the outset. However, an effective sustainability strategy can be a profit centre, not an additional cost.

Key areas to target are energy, waste and water usage. The starting point is knowing how much you consume. Installing cost-effective meters that give real time usage can lead to positive reduction measures. The second critical element is engaging your most valuable asset: your people. Engage early and discuss potential resource efficiencies, beginning with small pilots to introduce circular economy thinking rather than a linear view of your resources. By reducing energy, waste and water, you lower your exposure to future carbon tax rises, reduce costs and ultimately improve profits.

Social

If your sustainability strategy is to have long term success, consideration must also be given to societal aspects. Again, a potentially daunting prospect for the SME sector, but one that is eminently scalable. Your employees play a vital role. They will welcome engagement and the opportunity to set common goals on diversity and inclusion, ethical and local procurement, and customer/community engagement.

The outcome is clear: (i) better staff retention, as people want to work for companies that do the right thing; (ii) bolstered morale; (iii) reduced recruitment costs; and (iv) improved profits.

Measurement

Evidence of your positive sustainability activity is of paramount importance, not just for the ever-savvy consumer, but also from a supply chain perspective. Demonstrating your sustainability criteria is increasingly your licence to operate, and is necessary when supplying into larger retail and global customers because you are viewed as a lower risk supplier which in turn helps to lower their impact.

As a measure of benchmarking, many larger sustainability reporting frameworks can be off-putting to SMEs. However, CDP for example has a ‘lite’ version for first time responders, so you can gauge your performance without public disclosure and build incrementally.

In summary, sustainability strategies should be a profit centre. To do it effectively you must: engage with staff and customers, quantify your improvements, benchmark performance, communicate your success.

Find out more at kpmg.ie/sustainablefutures