Although the current trends and state of the economy are predominantly defined by large international companies and organizations, the favorable economic climate provided a rise in entrepreneurship worldwide. The rise of entrepreneurship marked the expansion of a new part of business, the small and middle enterprises (SMEs). Although SMEs have significantly fewer responsibilities than big corporations, SMEs now comprise a sufficient part of business, and their impact in terms of sustainable development is close to the effects of corporations. This essay will explain why SMEs should commit to sustainable development and sustainable development goals (SDGs), what key concepts and principles they would have to consider and what resources are required for the implementation.
There are several reasons why SMEs should commit to sustainable development. The first reason is that small business account for almost half of the workforce in the U.S. and almost 90% of all businesses in America (U.S. Small Business Administration, 2019). Because large companies have already been familiar with the concept of social responsibility for the last couple of decades, it is time for SMEs to implement the principles of social responsibility. Although sustainable development’s main point is saving resources for future generations, the concept of social responsibility addresses similar current issues in both society and the environment. The SMEs can begin their way to sustainable development by addressing their social responsibilities and taking actions that would benefit current society and future generations.
Aside from sustainability being an aspect of the social responsibility of business, there are several positive outcomes of implementing SDGs for small businesses that make the achievement of SDGs more attractive. Sustainability boosts the transition into new technological solutions, such as sustainable energy sources, which allows connection to the latest business tools and technologies. Moreover, sustainability requires expansive thinking and creativity, leading to original business ideas and increasing business processes’ effectiveness. For example, renewable sources of energy in business help reduce additional costs for the company in the long term. Thus, sustainability is closely related to the financial performance of the company. Various sources emphasize the sustainability aspect of business activities and suggest that financial and environmental KPIs are interdependent (Shashi et al., 2019). The suggestion is made upon the fact that sustainability promotes innovation and collaboration and leaves a psychosocial impact on employees and customers that switches their thinking from short-term profit-driven decisions to long-term thinking.
With the growing trend in customers shaping the market for customer goods and services through increased requirements for business from the customers, the right decision for the SMEs is to meet the customers’ expectations. Being proactive and reorganizing the strategy following sustainability-driven goals is easier and faster for SMEs than for large companies. The benefits of flexibility allow SMEs to have a competitive advantage over other businesses and provide them an opportunity to capture a necessary share of the market. Changing the strategy and implementing the sustainability goals is harder for large companies as the implementation of changes requires a bigger amount of resources. Small businesses, on the other hand, have flexibility in that term and do not require significant financial or human resources for the implementation of sustainability-driven goals. In other words, being proactive than reactive could help SMEs to meet the customers’ expectations, which is why small businesses need to implement sustainability to their strategies earlier than their competitors.
The amount of effort and resources required for implementing sustainable development goals into the business’ strategy depends on the company’s current strategy, mission, and vision. Depending on those factors and ideas, different companies might consider different concepts, principles, and trade-offs of sustainable development. One should remember that sustainability as a concept is geared towards society in general, meaning that sustainable development is composed of both individual and collective efforts. Universal sustainability includes different spheres of activities like human rights, labor, environment, and anti-corruption. The prominent role of SMEs in addressing universal sustainability is to incorporate the SDGs and the principles of sustainable development into the life of society through introducing the concept to the employees and customers. The businesses need to focus more on increasing the engagement with customers and workers, as that would help them to alight their new sustainable development-oriented strategy and goals with the employee’s individual goals. The younger workforce is more attracted to workplaces in modern companies that utilize sustainability principles. Having a workforce that supports the company’s mission and vision helps motivate the employees and increase business productivity.
One of the common and suitable SME principles widely used right now is the Triple Bottom Line framework that comes from the area of social responsibility for businesses. The framework implies that additionally to measuring their financial performance results, the businesses should also measure and address their social and environmental impact. The framework was developed as an improved version of the double bottom line model, which presented an answer to the bottom line of final net profits of the business in accounting. The framework provides a system of tools that help evaluate the business’s performance in social and environmental areas in addition to the financial results of the company’s activities. Not only the businesses but all organizations like non-profits and government entities are also encouraged to use the Triple Bottom Line framework to actively participate in the goal of reaching sustainability.
The Triple Bottom Line framework could be used to reflect the process of implementing sustainable development goals in business and to report on the business’s commitment to sustainable development principles. Although the SMEs face significantly fewer costs for implementing sustainable development in their strategy, the best measure for the committee reports is to set certain milestones specific for different SMEs. Because SMEs could be drastically different in the number of employees or net worth, measuring their commitment with financial costs would lack objectivity. Thus, businesses are encouraged to set SDG-related milestones, such as reducing the amount of waste to 10% and increasing the renewable energy sources in manufacturing. Providing reports with updates on the company’s commitment to SDGs would paint a good image of the company regardless of the business’s size.
In conclusion, this essay explained why it is important to increase the number of SMEs that incorporate sustainable development and SDGs into their activities. SMEs comprise a large part of business in the U.S. and account for almost half of the nation’s workforce, which means that their collective impact is close to being equal to the big companies and corporations. In addition to that, SMEs have a competitive advantage of the flexibility to adapt to the growing requirements for business in a society with fewer resources. In implementing the principles of sustainable development in their strategies, the SMEs might consider the concept of the Triple Bottom Line which helps to measure the social and environmental impact of business together with financial performance. As SMEs are different in size and scale, they should set specific sustainability-oriented milestones to demonstrate their commitment rather than counting implementation costs.
References
Shashi, P., Cerchione, R., & Singh, R. (2019). The impact of leanness and innovativeness on environmental and financial performance: Insights from Indian SMEs. International Journal of Production Economics, 212, 111-124. Web.
U.S. Small Business Administration Office of Advocacy. 2019 small business profile. Web.