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Researchers Make Business Case for Sustainability

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Posted: Wednesday, November 27, 2013 1:32 pm

Local governments are increasingly adopting sustainability-based initiatives, but many of them limit their efforts to those within their direct control such as bike paths, greening public buildings, recycling programs, LED street lights, etc. The vast majority do not proactively engage local businesses in their sustainability efforts.

Now, two Colorado researchers are working with local governments to study and engage small and mid-sized companies (SMEs) in the path to sustainability.

In the coming weeks and months, Sustainable City Network will be following the Sustainability4SMEs research project being conducted by Graham Russell and Martha Young. As the project develops, the researchers will post periodic reports and present case studies and best practices as they emerge.

The two are actively seeking municipalities interested in surveying local businesses to benchmark and track their progress toward sustainability.

The Value Proposition

There are many practical reasons for municipalities to engage SMEs in sustainability initiatives. First, companies account for the largest proportion of energy consumption, water usage, carbon emissions and waste generation. To leave them out of the sustainability effort limits the extent to which the community can become genuinely sustainable.

But there is a broader, perhaps more compelling, argument for municipalities to encourage local companies to adopt sustainable business practices. Most large corporations recognize the benefits of sustainability as a driver of cost reduction, innovation, competitive advantage and enhanced profitability. The business benefits of sustainability have become the driver for large enterprises to develop broad sustainability-based strategies.

For example, giants like IBM and GE have generated billions of dollars in new revenues through comprehensive strategies, Smarter Planet and Ecomagination, respectively. These strategies are delivering innovative products and services to address global resource- and climate-related challenges. WalMart has achieved hundreds of millions of dollars in cost savings by improving the energy efficiency of its stores and vehicle fleets.

SMEs have been much slower to embrace the principles of sustainable business as a source of competitive advantage and improved financial performance. In fact, what works for WalMart and IBM can work just as well for SMEs, but it’s hard to convince them that this is so. SMEs are the backbone of the American economy and its primary source of innovation and job creation. They also represent the majority of business activity in local communities. If large numbers of SMEs can be encouraged to become more innovative and competitive through sustainability-based strategies, it follows that local economies, and cumulatively our national economy, will become more robust and create more jobs.

Understanding SMEs

Russell, who teaches sustainable business in the University of Colorado, Denver MBA program has 25 years of top management experience in the environmental services industry. Young has been an industry analyst and writer for 20 years. She co-authored four books on virtual business processes (cloud computing) and project management for IT.

The two have joined forces to examine the reasons why some SMEs are taking green business actions while many others are resistant to the adoption of sustainable business practices. More importantly, the project is providing industry specific case studies demonstrating the return on investment and roadmaps to implementation to change this situation. The research is ongoing but Sustainability4SMEs has already learned that there is an urgent need to reframe the sustainable business message largely in financial benefit terms rather than in terms of environmental or social obligation.

Further, leaders of SMEs are more likely to pay attention to the sustainability message if it comes from trusted mainstream business advisors than if it comes from non-profits, green consultants, activist groups or others with perceived vested interests. Trusted advisors include trade and industry associations, chambers of commerce, small business associations, local economic development agencies and accounting firms.

The preliminary dataset shows that a major opportunity exists for municipal governments to develop compelling educational programs and practical tools that will encourage and support local businesses to adopt sustainable business practices as part of their wider efforts to create a vibrant and economically robust local community. There are pockets of excellence across the country where towns and cities have done just this: Fort Collins, Colo., Dubuque, Iowa, and Howard County, Md., readily come to mind.

Participating in the Survey

Sustainability4SMEs has accumulated the largest body of empirical data in the U.S. to date on SME-related sustainability issues. And now, Russell and Young are using this information to develop compelling case studies to share with communities across the U.S. to help create actionable roadmaps and resources by industry vertical that may be used both by SME leaders and the organizations that support them to define and implement relevant and achievable sustainable business strategies.

The findings will be published in a series of papers and, eventually, a comprehensive book on smaller company sustainability. Learn more about the research at Sustainability4SMEs.com.

As part of the research project, Young and Russell have developed a survey that municipalities can use to capture baseline data on the sustainability of their local business community. The 28-question online survey takes about 10 minutes to complete. Sustainability4SMEs will share the local results with host communities and use the aggregated results to benchmark and track progress on a national scale.

The results will include a summary of what local business leaders are thinking and doing, or not doing, about implementing sustainable business practices to help create a more vibrant and prosperous local economy.

Visit Sustainability4SMEs.com for more information, or contact Russell and Young at grahamr@sustainability4smes.com or marthay@sustainability4smes.com.

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