Four key sustainability strategies for SMEs from 2020 onwards
- Traditionally, sustainability is associated with going green or environmentally-friendly initiatives. However, sustainability strategies for SMEs is also about remaining economically viable in the long run.
- Due to the COVID-19 pandemic, the Singapore government has downgraded its GDP forecast range to between 0.5 and 1.5 percent for 2020. SMEs should thus plan for worst-case scenarios.
- By implementing sustainable practices, SMEs can weather challenges such as supply chain inefficiency, hiring talent and economic crises.
Sustainability is arguably one of the biggest buzzwords of the past decade, garnering increasing public attention and ranking high on the global legislative agenda.
In Singapore, companies are eager to adopt sustainability strategies but slow to implement them. Approximately 88 percent of enterprises understand the benefits of environmental policies, but only 64 percent have them in place. Singapore firms also struggle to find time and funding to advance their sustainability agendas.
This problem is not new. Many enterprises have difficulty embracing sustainability because sustainability itself is vaguely defined.
‘Traditionally, sustainability is associated with “green” or environmentally friendly initiatives. In recent years, more enterprises are learning that corporate sustainability also includes their ability to remain economically viable in the long run. This makes it easier for start-ups and even small, family-owned enterprises to buy into the value of sustainable practices.
That value is underscored by the ongoing COVID-19 pandemic. As everyone is busy dealing with daily preventive measures and varying country policies (from rapid testing to social distancing), businesses are going beyond the usual rules and making unorthodox choices to continue operating and innovating while minimising their losses.
Sustainability strategies for SMEs from 2020 onwards
The challenge for small and medium-sized enterprises (SMEs) is figuring out which sustainability concepts to adopt and how to embed them into their operations while meeting stakeholder expectations. Below are a few examples:
Embrace the philosophy behind science-based targets
Science-based targets provide companies with paths towards creating competitive advantages in the transition to a low-carbon economy. This is often achieved through new technologies and business practices.
The leveraging of science and technology for sustainability can be observed in Singapore’s cleaning industry.
Local SMEs like A-Force Maintenance Pte. Ltd. are turning to robotics and automation to modernise its operations and ensure long-term survival. Founded in 2011, it provides commercial cleaning services across condominiums in Singapore, 60 MRT stations and army camps of the Singapore Armed Forces.
To modernise its operations, A-Force Maintenance is investing in robotics to improve productivity and service quality, as well as reduce wastage. Robots offer the benefit of automating highly repetitive tasks. Autonomous sweepers allow janitorial teams to perform time-consuming routine tasks more quickly and efficiently.
Robots can also gather data to standardise cleaning speeds and thoroughness, ultimately improving client satisfaction.
Plan for worst-case scenarios
ISO certification is another of the sustainability strategies for SMEs that helps keep enterprises going. Certifications such as ISO 23301 for business continuity management (BCM) allow SMEs to have effective contingency planning and faster response times to problems like security breaches, disasters, and terrorist incidents.
The importance of BCM is highlighted by the current COVID-19 pandemic. Apart from the cost to human life, the pandemic is heavily impacting the economy, forcing SMEs to shutter and lay off their workers.
The Singapore government downgraded its GDP forecast range to between 0.5 and 1.5 per cent for 2020. This is worse than the previous projections of growth, which were as high as 2.5 percent.
Even with suspended or downscaled operations, businesses will still have to shoulder various costs while ensuring they have enough funds to reopen in the future. Short-term solutions to meet immediate needs should also be considered—for example, time-limited invoice financing or purchase order financing for SMEs.
Invest in efforts to retain and acquire talent
Talent acquisition and retention remain fundamental challenges for any SME. In Singapore, 26.5 percent of 150 SMEs surveyed struggle with manpower issues.
One workaround is by creating an employer value proposition (EVP) communicating the company’s image and reputation as an employer. The EVP answers the question on many jobseekers’ minds: Why should I work for you? According to PwC, compensation is no longer the primary consideration of young people. Instead, candidates are more concerned about training opportunities, workplace behaviour and company culture.
Companies with EVPs include Internet marketing company, HubSpot, which was voted the eighth-best place to work in Singapore in 2020 by Glassdoor. HubSpot credits its success to a company culture built around its values of humility, empathy, adaptability, remarkability, and transparency (HEART).
Boost supply chain efficiency
Supply chains are the low-hanging fruit of sustainability—and for good reason. The process of manufacturing, packaging and delivering goods is rife with inefficiencies and opportunities to improve throughput.
Unfortunately, the supply chain is a blind spot for many Singapore firms. Only 8 percent of enterprises monitor their full supply chain, which is far below the global standard of 15 percent.
Optimising SMEs’ supply chain can be as simple as mapping it. Begin with an inventory of suppliers to identify opportunities to improve inefficiencies while making a positive social impact.
For example, New Balance worked with fewer suppliers based on the company’s sustainability criteria. This criteria includes factors such as environmental protection, working conditions, terms of employment, and legal and regulatory compliance.
SMEs can also work with supply chain and logistics specialists to expand their operations at scale. While Singapore’s SMEs are Asia-Pacific’s top exporters by revenue, the cost and efficiency of cross-border shipping and last-mile fulfilment give smaller merchants pause.
Partnerships with regional logistics providers like Ninja Van, Box24, and PopBox offer opportunities to optimise these final stages for small retailers.
Reaping the rewards of sustainability
“Doing well by doing good” is a universal concept that is turning out to be a need rather than just a fad. By implementing the sustainable practices listed above, SMEs can weather challenges such as supply chain inefficiency, hiring talent and economic crises.
The key is to start small. While SMEs already face the practical challenges of maintaining profitability and growth, small steps go a long way towards setting up the business for long-term success.
This article originally appeared in the Entrepreneur's Digest print edition #91 and has been edited for clarity, brevity and for the relevance of this website.
About the Author
Anand Periwal | Head of Partnerships | Validus Capital
With 15 years’ experience in growth and transformation advisory in the banking sector across Asia, Europe and the Middle East, Anand has held key roles with large banks and management consultancy firms. At Validus, Anand is responsible for driving strategic partnerships to accelerate growth for Validus and its customers. Working with external partners in the region, ranging from tech companies to large corporates and financial institutions, he identifies collaboration opportunities, drives innovation and unlocks shared business value.