LONDON, NEW YORK, and TORONTO - The Chartered Institute of Management Accountants (CIMA), the American Institute of Certified Public Accountants (AICPA), and the Canadian Institute of Chartered Accountants (CICA) today released a comprehensive international research report underlining the growing emphasis small and medium-sized enterprises (SMEs) are placing on sustainability as it becomes increasingly crucial to business performance.
'SMEs Set Their Sights on Sustainability: Case Studies from the UK, US and Canada', uses concrete examples to show how smaller companies can lead the market and become champions of sustainable practice. It also reveals how the finance function can play a central role in this process.
The report focuses on nine case studies - three each from the UK, U.S. and Canada - showing smaller companies who are taking different approaches to the same core issues, all using sustainable practices to their advantage.
While compliance with regulatory requirements remains the most common driver of business sustainability, profitability and other strategic factors are increasingly significant. A sustainable business is more robust and more efficient; it appeals to customers' changing values, strengthens relationships with suppliers and positions the brand as a good corporate citizen. It can reduce the variable costs of running a business while driving profitability.
The report builds on a joint survey completed at the end of last year. The survey by the three accounting bodies revealed that 33% of smaller companies involved had a sustainability strategy in place, and an additional 23% had plans to formulate a strategy in the next two years, emphasising that sustainability is a growing priority.
Sandra Rapacioli, Head of Sustainability at CIMA, said: "We are seeing a shift in culture. SMEs are looking past survival and recognising that successful sustainability performance translates to long-term success. Many are maximising sustainability practices by also linking them to short-term goals, such as cost efficiency and competitor differentiation."
"One leading UK stationery and business supplies provider is a great example. Initially skeptical, the company has not only reduced energy costs by an average of 5% year-on-year for the last four years, but has also increased sales and profits by differentiating itself as a sustainable supplier."
Sue Coffey, AICPA Senior Vice President, Public Practice and Global Alliance, said: "One of the lessons from the case studies is that finance professionals often play a key role in defining and guiding sustainability strategies, in part because they are used to navigating different parts of a business and keeping an eye on the big picture. It's one more example of the value the finance function can bring to an organisation."
By 'walking the talk', one U.S. midsize bank has reduced its power consumption by 40% with a solar installation, while maintaining a profitable business model making commercially viable loans to customers financing renewable and energy-efficient projects.
"Collaborative studies provide a valuable snapshot of what is happening across several jurisdictions," stresses Nicholas Cheung, National Practice Area Leader for Sustainability at CICA. "SMEs are interesting to study because they usually have more agility than large multinationals to make meaningful change and clearly demonstrate the benefits that come with sustainable business practices."
A multifaceted Canadian food company profiled in the publication maintains that sustainability is beneficial as people are looking for companies that are doing something positive. The company makes a profit, but it also goes into schools to teach children about growing food and making healthy snacks, sources 90% of its produce locally, consults with urban gardeners and funds community projects. The company notes that people are less tolerant of operations just seeking to maximize profit, and are looking for enterprises that are environmentally and socially aware.
In many SMEs, finance professionals play a critical role in formulating and implementing a sustainability strategy. They have the skills and tools required to define the metrics that determine the effort's goals and progress, and help foster the vital link between investment in the strategy and the commercial benefit that accrues.
'SMEs Set Their Sights on Sustainability: Case Studies from the UK, US and Canada' is available at http://www.aicpa.org/InterestAreas/BusinessIndustryAndGovernment/Resources/Sustainability/DownloadableDocuments/Sustainability_Case_Studies_Final%20pdf.pdf.
Key findings on implementing sustainable business practices in SMEs
Strategy and planning:
- Take a broad view of sustainability. Understand the key sustainability drivers and opportunities for your organisation. Finding innovative ways in which your company can be a good corporate citizen will yield benefits.
- Define in detail what sustainability means to your company. A clear definition to which everyone in the company can refer, and clear success measures, are central to a sustainability policy.
- Engage all stakeholders. Involvement in sustainability discussions allows their voices to be heard, and the strategy will be more likely to meet everyone's needs.
Execution and alignment:
- Remember that you are not alone. National, international and industry-wide initiatives exist to help businesses become more sustainable. Engage and tap into their knowledge and experience.
- Establish responsibility and communicate widely. Have senior management drive the policy, but appoint sustainability champions and communicate the importance to every level of the company.
- Take it step by step. Evolution not revolution.
- Walk the talk! Customers and investors are wise to 'greenwashing', so never make the mistake of seeing sustainability as purely a marketing exercise.
Performance and reporting:
- Tie sustainability to profit. Resource efficiency, for example, benefits the environment and reduces the cost of running a business.
- Measure, monitor and review. Develop clear metrics, review them regularly and whether progress is fast or slow, keep setting realistic attainable targets.
- Invest in the future. Investing in sustainability does not always require huge capital expenditure. Many SMEs say the largest investment is management time.
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