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Sustainability in Mid Size Companies: Meaningful or Meager Contributions?

Just how mainstream is sustainability? Some say that there is real momentum; others say quite the opposite. As is usually the case – the truth is probably somewhere in the middle.

For sure there are many brilliant examples of businesses with significant sustainability efforts. In fact, the US had 20 companies appear in the top 100 of Corporate Knights 2015 Global 100, an index of the Global 100 most sustainable companies in the world.  Among them were big companies like Biogen (# 1), Allergan (#2), Johnson & Johnson (#18), and Coca Cola Enterprises (#26), to name a few.

Sustainability is definitely mainstream for larger companies.  A 2015 G&A Institute study shows that 75% of the S&P 500 is actively engaged and reporting on sustainability activities.

But what about those in the middle?

According to an Economist article entitled The Mighty Middle: “America has around 197,000 mid size firms. They are those with annual revenues between 10 million and 1 billion. Together they employ 40 million people in the country and account for one third of private sector GDP (equivalent of the economies of India and Russia combined).”

This is not insignificant. It’s especially of note when we think about how these mid size companies are networked with large and small ones along the supply or value chain.  And many of these companies have begun to feel (and respond to) pressure from the larger companies they supply, and from the capital markets, to develop a sustainability strategy.

Why are mid size businesses so important for achieving mainstream sustainability?

There is little doubt that strong action by these businesses is essential to achieving mainstream sustainability. They are the potential “change agents” or conduits for sustainability transformation. Their collective action on key issues could really move the needle. We’re talking about critical areas of environmental, social, and economic sustainability like climate change, resource conservation, and broad-based human and economic prosperity.

Sustainability practitioners like us call these critical areas the new normal challenges. And it is in this new normal that we are aiming to inspire mid sized businesses to take on the challenge.

What are some of the obstacles? How do mid size businesses overcome them?

Mid size businesses face some obstacles to implementing sustainability strategies. But they are not insurmountable. Some of the most common barriers include:

  • Lack of awareness for the need for sustainability
  • Misperception about the cost of sustainability
  • Belief that sustainability is only relevant for large businesses
  • Uncertainty around the process and steps to take
  • Lack of funds, human resources, and capacity or knowledge
  • Not knowing where to turn for help in navigating the process

Despite these perceived barriers, sustainability can yield a number of immediate benefits. These include reducing costs, meeting customer expectations, and engaging employees. It also supports innovation and rationale for developing new products and services. These practices help improve the bottom line. They also advance sustainability outcomes within economies (markets and supply/ value chains), society (communities and workforces), and the environment (ecosystems and atmospheres).

Let’s look at an applied example: responding to climate change

Climate change is one of the most important environmental issues of our time. Through energy use, transportation, and other activities, all businesses contribute to global greenhouse gas emissions. Although it’s easier to find fault with big industries, mid size businesses (collectively) contribute a large portion of commercial emissions. Actions big and small are needed by all businesses to reduce emissions.

This calls for action (and leadership) at a grand scale. The businesses that show leadership on climate change adopt strategies. These strategies break down to actionable undertakings to:

  1. Inventory and track greenhouse gas emissions (GHG).
  2. Establish a GHG management plan with targets and initiatives for reduction.
  3. Seek opportunities for reducing energy consumption (e.g. buildings, travel).
  4. Pursue energy efficiency and shift to renewable energy (when feasible).
  5. Consider opportunities to purchase certified green-e offsets. Or, for a better alternative to offsetting, consider “onsetting” instead.
  6. Offer innovative products and services that address climate change.
  7. Use purchases and investments to influence the behavior of suppliers.
  8. Request money managers to invest in sustainable companies.
  9. Offer education and awareness programs on climate change issues.
  10. Work with others to influence local and federal governments to take action.

All of this (and more) is doable and can make a big difference in the aggregate. Mid size businesses have a tremendous opportunity to progressively reduce climate-changing emissions from their operations and supply chains. And save money too! But, it is not just about profitability – it is also the right thing to do!

All this points to a crucial change.

The most important take away(s):

  • Sustainability is a management platform for innovation and business success, not a barrier to profitability or economic vitality.
  • Even entrenched issues like climate change can be addressed (even if incrementally) by businesses large, medium, and small if all do their part.

A growing number of businesses of all sizes are awakening to the reality of our times (the new normal). The time for business as usual is over. The very real challenges and opportunities facing humanity and business need to be seen through new eyes and with an open mind. This is today’s reality, regardless of where you sit in the scheme of things.  It’s why we’re building affordable online tools here at Sustrana.

Are you up for the challenge?

To learn more about how you can become a sustainable business, email me at lgiudice@sustrana.com