Manufacturing News

SMEs said to be hamstrung on climate change

Australia’s small and medium businesses lack leadership on environmental issues, leaving many stranded and unable to make changes that will reduce their carbon footprint and boost their bottom lines, a new survey has revealed.

The quarterly survey shows that while 66 per cent of 800 small and medium enterprises (SMEs) want to take action on climate change, many feel powerless because they do not know how.

Despite nearly three-quarters of small and medium businesses believing they are environmentally friendly, the SME Sustainability Index derived from the survey shows they are actually doing very little to reduce their carbon footprint.

The survey was conducted by AFS, a specialist market research company, and Net Balance, Australia’s largest dedicated sustainability advisory and assurance firm.

According to the Australian Bureau of Statistics, there are more than 300,000 small and medium businesses in Australia that employ over four million people, or 42 per cent of the total number of people employed.

AFS Executive Chairman Drew Le Grand said together they generated 46 per cent of Australia’s gross domestic product.

“The owners and managers of these businesses want to take action on climate change and believe their actions will have a significant impact but there is a shortage of guidance from industry groups and government,” Mr Le Grand said.

“Our research shows that more than 70 per cent of Australian SMEs are investigating, adapting or adopting environmentally sustainable processes as a priority in their operations.

“For many SMEs reducing their paper, water and energy use and cutting their waste, is lowering costs and benefiting their bottom line, but more complex activities could boost their profits even more and have a greater impact on climate change.”

Owners, general managers, chief executives and financial officers of 800 businesses employing five to 200 people were interviewed as part of the survey. The businesses are members of 14 industries, including manufacturing, business services, retail, IT&T, agriculture, healthcare, education, personal services and logistics and transport.

Net Balance Director Terence Jeyaretnam said over the past 12 months, more than two thirds of the businesses surveyed had taken steps to become more environmentally friendly.“

Over 50 per cent of SMEs are concerned about their businesses’ contribution to climate change,” Mr Jeyaretnam said.

“But what is more striking is that more than a third of the decision makers in these businesses are willing to take action even though they are not concerned about the impact their businesses are having on climate change.”

AFS and Net Balance devised a SME Sustainability Index by measuring the responses of the businesses surveyed against 21 environmentally sustainable activities weighted according to their complexity.

“Many businesses are undertaking simpler activities, including reducing paper, water, packaging, energy and chemical use and cutting waste,” Mr Jeyaretnam said.

“But more complex activities, such as community engagement, greener purchasing policies, access to grants and the development of green products, are still to be investigated and adopted.

“The resulting index of 14.1 out of 100 shows that while they are willing to make environmentally friendly changes to their businesses, they are in fact doing very little to reduce their carbon footprint.

“It is also surprising that despite the global financial crisis, most of the businesses surveyed were more concerned about energy efficiency (40 per cent) and managing waste (33 per cent) than their ability to access credit (27 per cent).”

Mr Jeyaretnam said one in four organisations found that a “sustainable” image helped them recruit the best employees.“Seventy per cent of businesses said finding the right talent for their business was a major concern,” he said.

“International experience shows that businesses which develop a reputation for sustainability can attract the best recruits.”

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