The importance of Small and Medium Sized Businesses

When you think of the contribution of businesses to the sustainability agenda, from environmental degradation through to carbon emissions, naturally thoughts are of large multinational companies, disasters like the recent BP oil spill in the Gulf of Mexico and the increasing trend of sustainability reporting and corporate responsibility actions amongst reputation dependent organisations. However, whilst both public attention and research has historically focused on these larger businesses it is important to recognise the contribution of small and medium sized enterprises (SMEs), those businesses with fewer than 250 employees.


In the UK SMEs are integral to the economy, make up a surprising 99% of all businesses and contributing significantly to GDP, job creation, innovation and entrepreneurship, making them integral to any planned transition towards a more sustainable economy and society. However, the relative importance of SMEs for sustainability is more than just their contribution to the economy. Hillary’s (2000) research even claims that these smaller businesses may collectively be responsible for as much as 70% of all global pollution. Whilst these figures are perhaps surprising, collectively SMEs have a huge impact on the environment.


Academic research, including that of Shaper (2002), suggests that awareness of environmentally friendly options available for smaller businesses is poor, with companies less likely to put in place environmental improvements than larger companies. Whilst this paints a bleak picture of the contribution of SMEs to the sustainability agenda, on the other hand it also represents a huge opportunity for improvement. A recent Carbon Trust analysis showed that whereas large businesses have potential energy (and resultant carbon) savings of approximately 8%, SMEs have savings of up around 20%. Furthermore, recent evidence from the 2007 Federation for Small Business report ‘Social responsibility and the Small Business Owner’ illustrates that despite many small businesses being unfamiliar with terminology surrounding sustainability 92% of respondents surveyed considered their business to be socially and environmentally responsible, illustrating willingness to toe the line with sustainability.


Knowledge and awareness are the main barriers for SMEs, with many perceiving actions as costly and their environmental impact as negligible. This is where the challenge lies in influencing SMEs to take up sustainable behaviour. One way of achieving this is to raise awareness of the potential options available and best practice industry examples, essential in helping lead the way for smaller businesses which may lack the knowledge and skills of some larger organisations. This is something that has been recognised by the International Green Awards, which will present both the Best Green Entrepreneur Award (or Start-up) and the Best Green International Business Award (Medium) at their annual event on the 24th of November 2011, helping illustrate that large businesses and organisations are not the only ones able to take action on sustainability.


Interesting Further Reading:

Hillary, R. (ed.) (2000) Small and Medium-Sized Enterprises and the Environment. Greenleaf Publishing: Sheffield.

Schaper, M. (2002) The challenge of environmental responsibility and sustainable development: Implications for SME and entrepreneurship academics, In Füglistaller, U., Pleitner, H., Voleryand, T. and Weber, W. (eds.) Radical Changes in the World: Will SMEs Soar or Crash? Recontres de St Gallen: Switzerland , pp.525-34.



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