Time for SMEs to take steps towards sustainability
RAPID economic development over the past few decades has taken a substantial toll on our natural resources. Climate change, as described by the United Nations, has become the greatest threat to human security, and has evolved beyond just an environmental problem. Sustainability has grown to become an increasingly urgent focus for businesses, with many implementing a “triple bottom line” framework – which integrates social, environmental, and financial outcomes to evaluate sustainability.
There has been a surge in eco-conscious investors in the Asia Pacific region, with 70 per cent claiming sustainability is a significant factor in their investment strategy, compared to 57 per cent just a year ago. Sustainability also influences consumers’ purchasing decisions – 60 per cent of consumers globally rate it as an important purchase criterion.
Businesses can no longer get away with being oblivious to the impact they have on the environment and communities they operate in, nor should they delay implementing sustainable practices to mitigate them. This extends not only to large enterprises, but to small and medium-sized enterprises (SMEs) who make up the overwhelming majority of businesses worldwide.
Oftentimes however, many SMEs lack the fundamental information or guidance on how to successfully implement environmental, social and governance (ESG) practices. According to UOB’s SME Outlook Study 2022, 3 in 5 small businesses in Singapore agree with the importance of incorporating sustainable practices in their businesses, but remain unsure of how to start.
Using energy-efficient office equipment, recycling materials, or going paperless are small wins that SMEs can make regardless of where they are on their sustainability journey. For some small businesses, sustainability additionally inspires and drives product innovation.
gush, a local Singaporean company specialising in sustainable paints and advanced building materials, invented a paint that transforms walls into passive air purifiers. Their products are odourless and have anti-mould, anti-bacterial and humidity-regulating properties.
The founders both suffered from childhood asthma, exacerbated by the annual haze season. This shared experience inspired them to find a way to improve air quality indoors, and make spaces healthier for building occupants.
Another brand making a difference in the world is Luxe Botanics. The beauty brand invested over 18 months on research and development to launch its line of all-natural, cruelty-free and and highly efficacious skincare products. The brand also opts for eco-friendly packaging, minimising the use of plastic, and their products are free from animal- or petrochemical-derived ingredients and synthetic fragrances.
Working with partners that share the same sustainability ethos can be an easy initial step. Xero is one such partner, committed to making a positive impact on the environment and societies it operates in and assisting small businesses to meet their sustainability goals.
Xero achieved carbon neutrality in 2021 and has further committed to various ESG initiatives to support local businesses and communities, including providing SMEs with sustainability guides and resources, as well as offering charities and non-profit organisations 25 per cent off their subscription fees.
Leading the region, the Singapore government has announced that it will issue S$35 billion of green bonds by 2030 to fund green infrastructure projects. This initiative will provide SMEs with more opportunities to collaborate with government agencies or large corporate enterprises on green projects, as well as learn about green technologies that can potentially transform the business.
Financial institutions are also lending a hand, with the DBS Foundation recently launching a new grant programme available for SMEs dedicated to creating innovative sustainability solutions.
In a tough economic climate, SME owners are often preoccupied with the bottom line, but incorporating ESG initiatives can lead to new business opportunities, creative, groundbreaking strategies and an increased competitive edge.
In a world where stakeholders are demanding that businesses be more accountable for their impact on the environment and their communities, doing good can also be good for business. And with support from the government, financial institutions and partners like Xero, it is the perfect time for SMEs to take that first step towards sustainability.
Joseph Lyons is managing director of Xero Australia & Asia.
