As your SME expands, it’s easy to let environmental, social and governance (ESG) factors slip down the priority list, but it pays to make them a priority.
There are many reasons to make sure your business is as sustainable as it can possibly be. Not only is it good for the planet, but it can also improve your financial performance because customers, suppliers and investors increasingly favour companies set up with environmental, social and governance (ESG) beliefs at their heart.
But how do you make sure that the green principles you instilled when you launched your business don’t disappear as it grows? Alternatively, how can you make your growing business more sustainable if you haven’t paid much attention to environmental issues so far?
Alexandra Smith, co-founder of FuturePlus, a software platform that enables businesses to understand, measure, manage and communicate their sustainability progress, says ESG can often appear to be complicated and time consuming – and end up being pushed down the priority list.
“We believe, however, that it can be easy and incredibly valuable for organisations to make substantial steps to a more sustainable future by setting small, achievable goals on a continuous basis,” she says.
FuturePlus, which is owned by The Sustainability Group, a consultancy firm, works with companies to understand how sustainability can fit into their business model, prioritising the changes they want and need to make, then breaking those priorities down into achievable steps.
By ensuring your targets are realistic, you can achieve them even as your business grows.
“It’s always easier to implement small, incremental changes as you grow than to retrofit large reforms when you have scaled,” says Alexandra. “Companies that embed sustainability into their core business strategy tend to be more resilient and have a longer-term perspective, which makes them more attractive to their key stakeholders.”
Measure your progress
When your company begins to grow, it can be difficult to stay on top of every aspect of the business, including its sustainability strategy. For that reason, it’s important to measure your progress so you can evaluate your achievements – and failures – and make changes if required.
“We all know it’s important to measure what matters,” says Alexandra. “It allows us to set goals, track progress, celebrate successes and makes it simpler to communicate both internally and externally. What’s most important is to measure what you value and not just what’s easy.”
A good place to start is by understanding what’s important to your business, your stakeholders and for your future success. “Measuring both where you are now, as a baseline, and where you want to be in the future provides you with a roadmap to success,” says Alexandra. “It also gives you the time frame required to make the changes your business will benefit from.”
Start carbon budgeting
As your business expands, it’s likely that decisions will be made that conflict with your sustainability beliefs, such as the increased need for travel or working with suppliers from around the world.
One way to offset these changes is to begin carbon budgeting. This is where you set an annual carbon allowance (say, 50 tonnes) and subtract from it every time you do something such as fly to visit a client (say, five tonnes).
Similarly, carbon pricing means every purchase made by the business has an internally agreed price for the carbon impact of that purchase added to it, thus creating a more transparent indication of the environmental impact of your decisions.
“If you spent cash like you do carbon, you’d go out of business pretty quickly,” says Adam Bastock, founder of Small99, a platform that guides small businesses to net zero and can help companies create a carbon budget.
Adam adds that policies such as carbon budgeting or carbon pricing can help bring existing staff and new hires on your sustainability journey with you.
He says: “Bringing sustainability into daily KPIs [Key Performance Indicators] and ensuring that your sales targets or rewards are tied to this is important, but it needs to be handled appropriately so that the team is engaged rather than it feeling like a chore.”
It’s never too late
Don’t worry if your business is growing rapidly without sustainability at its core. You’re not alone and there’s always time to make the changes that will support a better future for you and for the planet.
“It’s never too late to become sustainable if you have the right tools and help,” says Alexandra. “Businesses that are taking action to improve their social and environmental impact will be more attractive to both customers and investors. Companies who take charge now will also be better adapted to the legislation we know is coming down the track.”