It is no secret that Queensland is at times considered a “behind the times” when it comes to sustainability and climate change, and by extension, energy efficiency and greenhouse gas emissions management.
But why would that be the case? One might argue it is because Queensland’s economy is still dependent on coal and other minerals, as well as agricultural commodities. However, these sectors only directly employ less than four per cent of the state’s labour force. At the same time, most mandatory legislation and regulations relating to environmental management, energy consumption and greenhouse gas emissions are targeted at those medium- to large-sized companies, leaving out a significant portion of the economy.
SMEs are what make the Queensland economy tick. Small business alone makes up approximately 97 per cent of all businesses in the Sunshine State, and employ approximately 43 per cent of all private sector workers. Yet, for SMEs, finding relevant sources of information that will provide the motivation and incentives necessary to get off on the right foot is a demanding task.
There exists myriad voluntary programs aimed at assisting SMEs to reduce emissions and increase their energy efficiency, each with their own labels, guides and labels. This can be quite confusing and SMEs may feel that this information does not get them at the right time, is not relevant to them or takes their own specific circumstances into account.
For many SMEs becoming more efficient and reducing the environmental impact of their business operations often means going beyond mere legal compliance. It is unlikely that SMEs will see “sustainability” in terms of brand image or reputation alone. Issues closer to home are much more likely to be of importance to them, such as drought, cyclones or current business conditions and unemployment rates.
Many SMEs would likely be content just to survive, and prefer not to have a cost burden to the bottom line of sustainability-related activities, nor participate in a voluntary program that may have a cost attached to it, such as transaction costs for program participation or verification services.
How do SMEs know whether the time and money invested in sustainability measures will actually benefit the business? There’s NABERS, the National Carbon Offset Standard, Low- and NoCO2 certifications, ecoBiz, Watt Savers, Kill-A-Watt, ISO14001, ISO50001, GreenTag… just to name a few.
The level of confusion among SMEs can mount as the number of initiatives and programs appear to multiply. While these may sometimes be required to respond to customer demands, they may not necessarily correspond to the capacity of the SMEs undergoing the process because these can be cost prohibitive, time intensive or complex. And how are SMEs to quantify measures that may not even be taken into account by the market and customers? There are many examples of SMEs having seen their environmental goals compromised because of the lack of a clear economic argument that properly demonstrates the value proposition, or customers questioning the credibility of their initiatives and certifications, leading to ambiguity.
The challenge here is that while customers may express concerns about sustainability and climate change, they do not always act accordingly. The question then is how to focus the communication of the value of sustainability initiatives. What type of message is important to the market and will resonate with customers that are interested in sustainable products and services?
It is crucial to understand the customers, that is, there is not much point in advertising “green” or “eco” if there is little demand or interest in the market.
This does not mean that such programs and certificates have no benefit at all. On the contrary, there is plenty evidence that suggests benefits accrue to SMEs that successfully implement voluntary energy or GHG emission reduction measures. Voluntary programs, for example, can help overcome some of the barriers such as a lack of SME resources and capabilities, lack of information around funding and SME-specific support, or low levels of understanding of environmental issues and opportunities.
However, the risk is that sustainability in and by itself assumes singular importance, both in making a business case and suggesting a competitive advantage. SMEs still need to run their business and should avoid taking decisions too rapidly and without all the information at hand, avoiding a lock-in into a pathway or cherry-picking specific initiatives based on, for example, cost alone without fully understanding how an initiative may affect the business’s bottom line and position in the market. Rather, it is useful to prioritise sustainability initiatives that are fit-for-purpose for SMEs by reviewing not only their operational procedures, but also their business strategies to redefine their role towards a more sustainable economy.
This requires translating and adjusting sustainability concepts, methods and language for each and every individual SME, while at the same time understanding their unique challenges and interests. Every business is used to running things their own way. And some SMEs may even be undertaking some sustainability measures without consciously having a sustainability strategy. What is needed is an appreciation that SMEs may have to deal with trade-offs between profitable business operations and sustainability, and therefore, may not jump on the sustainability bandwagon without questioning the value-add of sustainability measures.
Queensland SMEs are not disengaged from the sustainability conversation. Rather, they are looking for clues to help them make informed, relevant choices about which sustainability measures to adopt, including a clarification of the value proposition, all the way from the conception of a sustainability initiative through to how it is anticipated to affect the business.
Alex Stathakis is director of carbon accounting and reporting consultancy Conversio.