Small is beautiful Sustainable & Responsible Business for SMEs

Transcription

1 ICCSR Small is beautiful Sustainable & Responsible Business for SMEs

2 1 2 + Small%is%beautiful% Sustainable+&+Responsible+Business+for+SMEs+ % 29 October a session was held at The materials collected On th Nottingham University Business School as part of the MBA Business Practice Week. The objective of this session was to deepen our understanding of responsible and sustainable business, and how actors such as Business in the Community (BitC), United Nations Global Compact (UNGC), and University of Nottingham might support SMEs to be more sustainable and responsible in future. This event forms part of a series of activities organized by the ICCSR that are linked to the 5th LEAD Symposium on The Future Corporation. ICCSR aim to create forums that bring together experiences and perspectives on vision, strategy and practice for sustainable & responsible businesses of the future. by ICCSR ahead of the symposium will help identify key characteristics of what sustainable business could and should look like in the future. Considering how it will be governed, capture value and manage its impact on society, integrating sustainability into strategies and operations. Pivotal to this vision is the role of small and medium enterprises (SMEs) that comprise 95 percent of registered companies worldwide. This business sector has incredible potential to unleash new types of business models that are more closely connected with communities and less impactful on the environment. This report aims to explore this potential. Paul Caulfield Director of MBA in CSR

3 Small%is% beautiful%! Small is beautiful was facilitated by the ICCSR, to explore the challenges and opportunities for small and medium enterprises (SMEs) in implementing sustainable business practices. Participants comprised MBA and MSc students, representatives from Business in the Community (BitC) and practitioners working in and with SMEs. Representatives from the United Nations Global Compact (UNGC) joined the event remotely from New York for the final presentations and question and answer session. Opportunities+for+being+a+more+sustainable+&+responsible+business+ For SMEs with a clearly articulated set of values, it was relatively straightforward to define what being a sustainable and responsible business meant for them and to align their values with their business practices. Business benefits for SMEs included: enhancing brand image and increasing community support and goodwill by engaging with local community initiatives; generating positive publicity through local media channels; strengthening employee morale and commitment (e.g. through employee volunteering); cutting costs (e.g. by reducing waste and energy consumption); using CSR as a differentiation strategy (e.g. through cause-related marketing), thereby increasing market share or tapping into new markets (e.g. ethical consumers); and using CSR as a lever for innovation, with SMEs taking advantage of their agility to become trend setters in sustainable and responsible business. There is also potential for SMEs to access sources of finance, expertise, or other incentives to implement sustainable business practices. For SMEs in economically disadvantaged areas, involvement in community initiatives, such as volunteering in schools and offering work placements, can also generate value for local businesses, by enhancing the employability of young people, thus developing both the future workforce and the future customer base. 3

4 Potential+for+positive+social+impact+ It was noted that locally owned, independent businesses tend to create greater multiplier effects for the local economy, since a higher proportion of profits and wages are retained and recirculated within the community, in comparison with big corporate chains. Thus mutual benefits for SMEs and local communities was a key theme, with community development, capacitybuilding and empowerment of stakeholders being seen as creating virtuous circles for local businesses and communities. Strategic CSR, which integrates sustainability and responsibility into SMEs core business practices, was seen as offering greater potential for social impact than philanthropic activity alone (e.g. fundraising for good causes). Multiple impacts can be created for different stakeholder groups, such as enhancing employees personal and professional development, whilst also raising their social and environmental awareness and increasing their wellbeing. Social enterprise SMEs and those for whom social or environmental value was the primary mission of their business, were particularly committed to making a positive difference to their local communities. SMALL+IS+BEAUTIFUL+ SMEs and CSR, 1 including: the lack of financial and human resources and expertise; SMEs lack of awareness of CSR concepts; SMEs lack of influence within supply chains, with larger businesses and other, more powerful actors; and challenges of measuring less tangible impacts of CSR, such as effects on employee morale and community goodwill. Despite being embedded in and part of their local communities, many SMEs do not identify readily with the CSR label, or actively promote their community engagement initiatives and environmentally responsible business practices as CSR. It was acknowledged that some SMEs, with a short-term focus on keeping their small businesses afloat and lacking a sustainability strategy, may be more resistant to CSR initiatives, such as employee volunteering, or adopting strict ethical codes, perceiving these as incurring additional business costs. Cross-sector partnerships and collaborations were also mentioned as means by which SMEs can work together and with others, to address shared social or environmental concerns, which individual SMEs would be unable to tackle alone. Challenges+of+being+a+more+sustainable+&+ responsible+business+ Despite the diversity of the SME sector and the wide range of business types and contexts, several common challenges emerged. Many of these barriers mirrored findings in the academic and practitioner literature on Support+from+other+businesses+/+local+ actors+ Networking with other businesses and sharing ideas and best practice was seen as an important means of promoting sustainability amongst SMEs. This could involve peer support, coaching or mentoring opportunities; disseminating information across networks of local businesses; holding business networking meetings with a!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1!E.g. Spence, L. J. (2007). CSR and small business in a European policy context: the five C s of CSR and small business research agenda Business and Society Review, 112(4), Murillo, D., & Lozano, J. M. (2006). SMEs and CSR: An approach to CSR in their own words. Journal of Business Ethics, 67(3),

5 CSR focus; and positive competition, such as SME business awards for achieving social and environmental impact. Partnerships and longer-term collaborative initiatives between businesses could enable the pooling of resources to tackle social or environmental concerns, as well as sharing expertise and providing mechanisms for engaging in joint CSR initiatives, such as green deal energy saving schemes. This was viewed as a form of collaborative advantage, invoking Porter and Kramer s idea of business clusters as mechanisms for creating shared value 2. SMALL+IS+BEAUTIFUL+ its Access Pledge, aimed at creating a level playing field for SME suppliers. Some SMEs could enlist support from their trade or industry bodies with implementing CSR. There is also potential for large businesses to increase the capability of SME members of their supply chains, by supporting them to embed CSR strategies. It was noted that collaborations could extend beyond the business sector, developing multi-stakeholder and crosssector partnerships, which could play a role in supporting SMEs to address social or environmental issues. This could include local government, universities and local voluntary sector actors, through mechanisms such as local enterprise partnerships. Support+from+national+actors+ BitC plays a key role as a convenor of SMEs, facilitating peer support, collaboration and the sharing of best practice, as well as directly supporting SMEs to implement sustainable and responsible business practices, e.g. through its employee volunteering programme; its responsible business awards scheme; its online benchmarking tool tailored to SMEs; and!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2!M.E. Porter and M.R. Kramer, Creating Shared Value, Harvard Business Review, 89/1-2 (January/February 2011): 62-77! Government support for SMEs, by creating a flexible and proportionate regulatory framework, needs to be implemented alongside incentivising responsible business practices. This includes requiring public bodies to take social and environmental issues into consideration when tendering for public service contracts, 3 as well as ensuring a more level playing field for SMEs through fair sub-contracting arrangements. 4 Governments are also well-placed to provide access to funding opportunities and tax incentives to support SMEs efforts to become more sustainable, as well as providing access to expertise and disseminating best practice. National media outlets were also viewed as having a role in encouraging sustainable and responsible business practices in the SME sector. Support+from+global+actors+ At an international level, initiatives such as the United Nations Global Compact (UNGC) play an essential role in setting!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 3 E.g. The Public Services (Social Value) Act !E.g. The Merlin Standard 5

6 (UNGC) play an essential role in setting standards for working in a global environment. These standards and reporting requirements need to be accessible and proportionate for SMEs. Separate frameworks, guidelines, tools and indicators may be appropriate, tailored to the needs of SMEs. Global players can also assist SMEs by setting standards for large corporations to work effectively with their SME suppliers, so as to build the capacity of SMEs to implement sustainable and responsible business practices. Global actors can create opportunities for engaging in open dialogue with SMEs, taking into consideration feedback from SMEs on the accessibility and proportionality of standards and funding schemes (e.g. from the European Regional Development Fund). They can also create platforms for addressing challenges facing SMEs in implementing sustainable business practices and promote international collaboration and the sharing of expertise amongst SMEs. SMALL+IS+BEAUTIFUL+ and share research findings regarding CSR with SMEs. There is potential for MBA and MSc students to work with SMEs to overcome challenges, such as measuring social impact; promoting their sustainable business initiatives effectively; identifying new ideas for implementing sustainable business practices; and co-creating new products and services that generate social, environmental and business benefits. Closing+thoughts+ Many of these opportunities involved collaboration and identifying win-win scenarios. SMEs can be agile and dynamic and this, when combined with strong values and being embedded within, and committed to, local communities, creates exciting opportunities for generating social and environmental value. SMEs were seen as the small building blocks for greener success and the engines of economic growth. Comprising around 99% of businesses around the world, perhaps it is time to recognise that SMEs hold the future in their hands. Support+from+academia+ Universities can provide facilities, such as incubation spaces for SMEs and create networking opportunities. They have the expertise to assist in setting up innovative, cutting edge SMEs (e.g. clean energy companies), bridging the gap between primary research and the commercialization of new scientific discoveries. Universities can offer student internships, placements, knowledge transfer projects and collaborative research opportunities, including partnerships with SMEs for undertaking doctoral research. The ICCSR team would like to extend their thanks to all participants, in particular BitC, the UNGC and, most importantly, our guests from business and other organisations for giving up their valuable time to make this event a success. Videos from the event can be seen here:! l-is-beautiful By working in partnership with SMEs, universities can bring together theoretical and practitioner expertise 6

7 SMALL+IS+BEAUTIFUL+ This report was compiled by Kathryn Wing, Doctorial Researcher with ICCSR. Kathryn s reseach considers succesful partnerships between businesses and non-profit organisations. 7

8 ICCSR For more information International Centre for Corporate Social Responsibility Nottingham University Business School Jubilee Campus Nottingham NG8 1BB