Improving the efficiency of supply chains can be green and cost-effective for smaller firms

Until recently, going green was seen as a luxury that not all businesses were able to afford. For many smaller firms, the prospect of embracing sustainability was hard to balance against the investment of time and resources it could entail.

But the tide is turning. Leaders of smaller companies are recognising that operating sustainably makes good business sense too. By giving customers the environmentally and socially responsible products they increasingly demand, companies can safeguard their success in the future. And with vast improvements in technology over the past decade, green measures from efficient lighting to energy-usage monitors are more affordable than ever – and can in fact bring cost savings.

With improvements in technology, green measures are more affordable than ever

The change in attitudes is borne out by new research from HSBC. The bank defines sustainability as balancing environmental, social and economic considerations while making business decisions. In a survey of 1,400 leaders at mid-market enterprises in 14 countries and territories, 59 per cent said sustainable business practices would improve their growth and profitability. And for 30 per cent of the executives polled, sustainability is one of their most important long-term objectives.

Those in the mining, utilities and manufacturing sectors are particularly likely to see sustainability as a priority, according to our survey, which may reflect the pressure that such industries already come under to address their environmental impact.

Video: Sustainability and smaller firms

Watch a short animation highlighting some of the findings from HSBC’s survey.

Practical steps that firms can take to put sustainability at the heart of their business include:

  • Looking for efficiencies in their supply chain that can be both green and cost-effective. For example, solutions which mean that raw materials travel shorter distances can help cut emissions and save transport costs

  • Adapting to customers’ changing preferences by changing the business model. Environmentally-conscious consumers may respond well to products sourced and produced in a sustainable way, which could boost revenues

  • Investing in renewable sources of energy such as wind turbines and solar panels as part of broader efforts to manage their environmental footprint

  • Introducing and enforcing codes of conduct and policies on issues such as human rights and relationships with local communities

  • Reporting on Environmental, Social and Governance (ESG) performance. Transparency can be an important first step in winning consumers and investors’ trust

What is encouraging is that many smaller businesses are already capitalising on trends and taking action, despite not always having the expertise or means of their larger competitors. The right support and advice from organisations such as banks and trade associations could help them go a step further.


Measuring the market of smaller firms

Smaller companies make a significant contribution to global economic growth and employment. In 2017, HSBC commissioned a study examining their role in 14 countries and territories. The report, including key findings from a survey of 1,400 businesses employing between 200 and 2,000 people, gives an insight into the challenges and opportunities these businesses face. Read more on the HSBC Commercial Banking website.

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