Simplifying Sustainability and ESG for SMEs
We are constantly reflecting on how we can simplify Sustainability and ESG for small and medium size businesses (SMEs). We want to help you figure out what you need to do and how.
As Simon Sinek advises, it is best to start with the ‘Why?’. Why does the company exist? What problem has it been set up to resolve? What need has it been established to meet? What is the purpose of the enterprise?
We can categorise most corporate purposes into solving an environmental or a social problem or meeting an environmental or social need. Take for example, discoverIE plc - we declare an interest as Rosalind is a board member 😊. The company’s purpose is “to improve the world and people’s lives” and it does so by creating innovative electronics that go into much larger machines and equipment for the renewable energy (environmental), medical, transportation and industrial & connectivity sectors (social). Or, take a favourite of Helen’s by Tony’s Chocolonely whose purpose is to “make 100% slave free the norm in chocolate!”. We may each have a view on the importance of a particular need or problem, but that doesn’t stop it from being ‘someone’s’ need or problem.
The majority of companies want to achieve their purpose without causing harm and, I would dare say, do so by complying with laws and certain standards of integrity.
As Professor Colin Mayer, of the Enacting Purpose Initiative puts it, “the purpose of business is to solve the problems of people and planet profitably, and not profit from causing problems”.
This is why actions to manage environmental and social harm that your business might cause fits into supporting your corporate purpose.
Yes, there is a cost. But just as you recognise the value of investing in infrastructure (whether it be an office or a laptop), a bookkeeping system and in people to achieve your purpose profitably, so will investing in actions to manage your environmental and social impacts and to ensure you don’t trip over when it comes to complying with the law or behaving ethically.
We want to help you decide the most effective and cost-efficient actions you can take for your business.
We describe a simple “plan, do, check, improve” tool, that you can use to design and implement an effective E&S management framework. This article covers the first two steps in the planning stage of the tool.
Step 1: Identify and prioritise your specific environmental and social (E&S) risks and opportunities using Triplo ESG’s free E&S checklist
For example, if you’re in the fashion and textiles industry you might be using a lot of water or producing a lot of waste in off-cuts. If you are in logistics, the carbon emissions of your transport operations will be one of your significant impacts.
In deciding on your E&S risks and opportunities consider what might be important to your investors, customers, employees or neighbours and the business opportunities involved in addressing these risks and opportunities.
Step 2: Write and publish a Sustainability Policy. This is a series of short statements outlining your commitment. The policy should highlight how you will be
meeting today’s needs and solving today’s problems without compromising the resources and ability of future generations to the same
carrying out your business in a way that does not cause environmental or social harm and builds on environmental and social benefits.
What should I include in my Sustainability Policy?
We have created a Sustainability Policy template that you can use as a guide. It’s important to remember, however, that it should be specific to your company. We recommend that your policy is not more than two pages long and should include some of the following elements:
The wider context: Start by acknowledging why Sustainability is important for your corporate purpose.
A statement of your commitment and scope: Simply state that you’re committed to making positive changes.
Your priority areas: State your main E&S impacts and the areas you have chosen to prioritise (this is where step one in the planning stage comes in). We would recommend between two and five areas – don’t try and boil the ocean in day one.
The actions you are taking: Include a bullet point list of the actions you’re taking or going to take to address your priority areas. You could also highlight targets that you have set and when you’re aiming to achieve them by. Measurable targets are better (we’ll provide tips on how to measure and report in the next article).
Accreditations: If you have any certifications, you should include a statement about them (examples include ISO 14001, ISO45001, ISO9001, BCorp, Fairtrade). These could save them a lot of time in complying with your customers’ requirements- especially if you are a supplier to big companies.
Senior Management Sign-Off: Those at the top of the company should sign their names to the Sustainability Policy – this demonstrates your company’s commitment to making real change.
To stand out, your Sustainability Policy should be:
Honest: Set realistic targets and be transparent about your progress. Don’t be afraid to be open about the challenges you face. It helps build trust between you and your employees, customers and investors and prevents accusations of greenwashing.
Easy to find and understand: Your policy should be on your website for customers and shared with your employees and business partners. Use language that is easily understood by anyone who is not well-versed in your industry or in Sustainability/ESG.
Continuously reviewed: Your Policy should be reviewed and updated annually to reflect progress and changes in your company – such as new ESG issues, targets and new milestones reached.
Some benefits of having a policy are:
It is one of the first things investors will ask to see to decide if you are managing your E&S issues
Responsible larger enterprises will expect suppliers to have a policy
It is a great internal communication tool to let your employees know about your commitments and goals and help them understand their role in changes that are being made
It is a great external marketing tool that can set you apart from others and help build trust with your customers.
Have a look at these examples of Sustainability Policies.
Example 1: Crystal Doors (a door and window manufacturer in Rochdale) have a simple and effective Policy.It clearly states their impacts, commitments, and the specific actions they are taking.
Example 2: Vantage (a retail marketing company) clearly detail the actions they are taking to address their major E&S issues. It also highlights Vantage’s targets.
Example 3: Adexchange (a media company) have an easy-to-follow Policy that is centred around how they will help the local community.
Example 4: Although Mondi is a large global manufacturing company, their overarching Sustainably Policy is still short and clear – it’s two pages long and highlights their main objectives.
You will see that crafting a policy isn’t that overwhelming. Be inspired to go forth and make a difference!
In our next article we will go through steps three and four of developing an E&S Management framework covering responsibility & leadership and designing action plans.
Written by Rosalind Kainyah MBE, an authority on Sustainability and responsible business with over 30 years of combined legal, international, executive and board level experience, and Helen Stickler, Co-Founder of Triplo ESG.