Adopting sustainable practices is increasingly critical to small to medium enterprise (SME) businesses' long-term survival, and key to empowering future growth. If SMEs can't demonstrate sustainability practices they risk losing contracts and customers as many bigger businesses' supply chain models mandate environmentally positive sustainable partners.
Businesses are proactively and reactively taking a sustainability-based approach to their operations to meet mandatory carbon emissions reduction goals and avoid 'greenwashing' regulatory actions, — as investors and other stakeholders, business partners, employees and consumers, are showing preference and demand for brands presenting strong sustainability practices.
A large number of Australia's 2.5 million SMEs are leveraging their ability to readily adapt their businesses to incorporate greener values — some 80 per cent of SMEs already have implemented green ambitions into their strategies locally1.
The positive green practices in play by SMEs include asking their suppliers about what they are doing to reduce their environmental impact, where their products originate, what raw materials are used in their manufacture, how they are made and if labour conditions meet international standards.
The three ESG pillars provide a guide as to the foundational areas of focus businesses can take to be consciously sustainable. Here are some key areas for each of the ESG pillars that are useful to businesses seeking sustainability improvements:
Adapting sustainable practices across areas such as essential services, employment policies, partnerships and community engagement can also provide opportunities for SMEs to achieve cost savings and build stronger relationships with the communities where they operate.
On an operational level potential areas to address sustainability benefits in may include:
The Environmental Protection Agency (EPA) has information on every material or product that businesses can recycle in Australia2. Joining forces with environmental organisations such as the EPA can help keep you on track with tangible carbon reduction goals.
These actions can also help build your brand and your customer base among those who share the same principles and want to contribute via their purchasing decisions. Ideally commitment to sustainable values should be embedded in your business's mission statement.
Being able to tell a compelling sustainability story about your business can help attract quality talent as company values that people are proud to align with are becoming an important differentiator in employer preferences.
There is considerable support and resource materials and guidance via government and sustainability organisations that businesses can leverage. These include:
The Gallagher Climate and Sustainability practice is dedicated to guiding businesses through the complexities of sustainability risk, climate change and transitioning to low-carbon emission practices.
Our aim is not only to support businesses in achieving their sustainability goals but also to help insure effective understanding in managing any potential risks that may emerge from sustainability initiatives and actions.
Sustainable insurance practices involve a responsible and forward-looking approach to identifying, assessing, managing, and monitoring risks and opportunities associated with environmental, social, and governance issues.
1How SMEs are leading the way to Australia's net zero ambitions, Inside Small Business, Oct 23
2What materials can my business recycle?, Environmental Protection Agency, 26 Sept 2022
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