SMEs FINDING SUSTAINABILITY BENEFITS OUTWEIGH THE COST

Half of all Australian Small and Medium Enterprises are willing to take action to become more sustainable even if it has a negative impact on their financial performance in the short term.  This 51% equates to 153,000 businesses nationally.  Leaders cited that aside from cost, a lack of information, distrust of sustainability claims and the availability of practical choices were the major barriers.

Results suggest that currently more than 50,000 SMEs are pursuing a sustainability initiative.  When asked to quantify the results, 46% said change would be at a cost, 31% expect to achieve an increase in sales with 37% realising an overall improvement in margins.

The survey was conducted by AFS, a specialist market research company, and Net Balance, which is Australia’s largest sustainability advisory and assurance firm.

According to the Australian Bureau of Statistics, there are more than 300,000 small and medium businesses in Australia that employ over four million people, or 42 per cent of the total number of people employed.

AFS Executive Chairman Drew Le Grand said together they generated 46 per cent of Australia’s gross domestic product.

“A quarter of SMEs believe that sustainability is a selling proposition for them, a tangible opportunity to differentiate from their competitors.” Mr Le Grand said.

The results show more than 1 in 5 of all business are finding pressure coming directly from customers (including government procurement) to be more sustainable.

Net Balance Director Terence Jeyaretnam said over the past 12 months, more than two thirds of the businesses surveyed had taken steps to become more sustainably competitive and influence is coming from a range of stakeholders.

At the moment 55% of all SMEs are influenced in some way to become more sustainable.  The major influencers in SMEs were internal cultures or through promoters offering sustainable alternatives.

“Sustainable behaviour is highly subject to forces of influence from wider stakeholder groups due to the nature of the topic.  Therefore, it is not surprising to see that competitors, government, customers and suppliers as well as employees, family and friends are all influencers when it comes to transforming SMEs into more sustainable businesses.”  Mr Jeyaretnam said.

Owners, general managers, chief executives and financial officers of 800 businesses employing five to 200 people were interviewed as part of the survey.

The businesses are members of 14 industries, including manufacturing, business services, retail, IT&T, agriculture, healthcare, education, personal services and logistics and transport.

Mr Jeyaretnam said he was surprised to find that more than 20% of business leaders in the SME sector had chosen to redirect their personal portfolios into ethical investments of some kind.

AFS and Net Balance devised an SME Sustainability Index by measuring the respondents against 21 environmentally sustainable activities weighted according to their complexity.  The first results was an index of 14.10 out of a possible 100.

“While SMEs have identified that being sustainable is good for business, they note that the barrier to become sustainable is still high as sustainable alternatives are too expensive with over 50% believing that this is the case” Mr Jeyaretnam said.

“There is still a significant credibility barrier to be bridged by green communicators and those that make green claims, as identified by both a previous What Assures Consumers study by Net Balance and this AFS study” said Mr Jeyaretnam.  Close to half (46%) said there was no availability of practical choices to allow them take their next step.

Mr Jeyaretnam said of those who did know their next step, half are seeking to improve energy efficiency, reduce waste or save water; 18% are formally auditing and planning;  17% were changing to sustainable work practices, buying sustainable infrastructure or shifting to a sustainable supplier as their next step.

Further Research detail and images can be found at www.afs-smart.com.au/afss2.html

About AFS 'Smart askers'
AFS 'Smart askers' is an information services company, specialising in survey data collection across Australia and New Zealand. AFS is recognised for its superiority in reaching business decision makers; all projects run with AFS have ISO quality accreditation.

About Net Balance
Net Balance is Australia’s largest sustainability advisory and assurance firm with offices in Melbourne and Sydney.  Net Balance works with some of Australia’s largest companies and brands on sustainability and with SMEs through Net Balance Foundation (www.netbalance.org).

Full details, expert comment, and images at: www.afs-smart.com.au/afss2.html