Ina Opperman

By Ina Opperman

Business Journalist

Sustainability makes small businesses more competitive – survey

Must small businesses now also worry about climate change although they are not part of big business? Your customers might want you to.

Sustainable practices make small businesses more competitive according to a recent survey that showed that SMEs share the underlying belief that they can position themselves as stronger, more forward-thinking businesses that are committed to creating a secure future for all by embracing sustainable practices and values.

According to alternative business funder Retail Capital, a division of TymeBank, that conducted the survey with its SME base to learn more about their sustainability practices, sustainability has become a critical issue for businesses of all sizes, particularly for SMEs that make up the backbone of the economy in South Africa.

The world is changing rapidly and businesses face a growing list of challenges, from climate change and social inequality to digital disruption and economic uncertainty. It feels like every aspect of business is under the microscope these days.

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“While the importance of sustainability is widely recognised, there is still much to learn about how small businesses approach the implementation of sustainable practices and the challenges they face. The results of this survey shed light on this topic, along with insights into just how much SMEs prioritise incorporating sustainability practices as an integral pillar of their business model, says Miguel da Silva, managing executive of Retail Capital.

Findings include that prioritising sustainability can help small businesses to gain a competitive advantage, using environmental practices can save money and improve efficiencies, innovation is part of embracing sustainability practices, rolling blackouts is and will continue to be a major growth roadblock and embracing sustainability is a form of futureproofing.

Prioritising sustainability

Da Silva says sustainability is no longer just a moral imperative but a strategic necessity for any business seeking long-term growth. When asked if they noticed any benefits from incorporating sustainability into their operations, 41.6% of the respondents reported improved customer relations, 37.8% achieved cost savings and 30.3% experienced improved brand reputation.

These findings underscore the growing importance of sustainability for SMEs and suggest that businesses prioritising sustainability can gain a competitive advantage in terms of customer loyalty, cost efficiency and reputation management.

Using environmental practices

SMEs seem to be focusing on a variety of initiatives when it comes to sustainability strategies. According to the survey results, the most common strategy is waste recycling, with 34.1% of respondents prioritising this practice.

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Water conservation was the second most popular strategy, with 28.1% indicating that they implemented water-saving measures. Employee education programs were also popular, with 26.9% reporting that they provide training and information on sustainability practices for their staff.

Da Silva says these findings suggest that SMEs are adopting a range of strategies to promote sustainability, from resource conservation to education and awareness-raising, to reduce their environmental impact and increase efficiency.

Embracing sustainability practices

The SME respondents identified a range of practices and approaches when asked what sustainability means to them. The most common response was sourcing environmentally friendly materials, with 40.4% of respondents indicating that this was their top priority while 40% identified ethical suppliers as a key aspect of sustainability.

A significant proportion of respondents (39.4%) reported that they focus on reducing their reliance on electricity, while 31.5% indicated that recycling was a central component of their sustainability strategy.

Rolling blackouts a major roadblock

A total of 39.2% of the respondents said rolling blackouts have a severe impact on their business operations, while an alarming 51.3% of respondents said the energy crisis had the largest impact on their businesses, more than the pandemic had.

“This high level of impact highlights the severity of the problem and the urgent need for innovative solutions to mitigate its effects. Load shedding is leading to a loss in revenue, with a quarter of businesses saying they are seeing a reduction in basket size, reduced productivity and damage to equipment.”

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Da Silva says it is crucial for businesses to take proactive measures to reduce their energy consumption, diversify their energy sources and invest in energy-efficient equipment to minimize the impact of load shedding on their operations.

“We also see negative supplier reactions to load shedding, which is compounding the problem. The survey shows that businesses have seen a 31% increase in late payments, which will inevitably have a huge knock-on effect along the supply chain.”

Form of futureproofing

The results from this survey highlight the growing importance of sustainability for businesses of all sizes, Da Silva says. “The findings demonstrate that SMEs are willing to adopt a range of strategies to promote sustainability, but more needs to be done.”

The practices implemented most widely are the ones with the lowest barrier to adoption, so it is critical for SMEs to find new, innovative and implementable solutions for their businesses. With over 75% of businesses not having an environmental, social and governance (ESG) strategy in place for the next 12 months, it is clear that a strong focus is needed from the wider business community to find ways to help businesses plan and execute strategies because there is clearly a desire, he says.

“Prioritising sustainability and taking proactive measures to mitigate the impact of load shedding, SMEs can position themselves for growth, innovation and success in the short term and the long term.”

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