An incredible amount of attention and capital is currently being focused on ESG. This is not new and the trend is only gaining momentum. As the impacts of climate change become more evident, more volatile and more costly, even the companies in the far-flung, privately owned, remote tiers of supply chains will be unable to meet the growing demands of regulators, investors and (most importantly) customers to withdraw .
Almost every day, a different large, multinational company announces its latest climate pledge. Over 4,000 companies have announced climate targets and almost half have also committed to net zero commitments. Organizations like Companies for Net Zero are formed to bring leading companies together to share best practices and achieve their climate goals.
But while many of these companies have sufficient resources to afford outside consulting firms or hire sustainability experts, the vast majority of companies impacted by these pledges will be the underlying small and medium-sized enterprises (SMEs) that make up the company’s supply chains compose larger corporations.
In most industrialized countries, SMEs account for around 99% of all businesses, 70% of all jobs and contribute over 50% to GDP. And yet a February survey by the SME Climate Center found that “two-thirds of small business owners feared they could not reduce their carbon footprint, citing knowledge, funding and time. About 70% said they would need access to external funds to reduce their emissions.”
Cut through the noise
I can corroborate these poll results from my own daily interactions. I often speak to companies that are just beginning their journey and are working to prioritize resources for emission reduction activities within their value chain. Embarking on this journey can feel daunting and overwhelming. And it should!
The disciplines of supply chain management and sustainability necessarily encompass all aspects of any business, from design to sourcing to financing and distribution. And as if the scope wasn’t wide enough, the standards of climate disclosure and the court of public opinion are constantly evolving.
No single person or company should expect to achieve net zero goals alone or overnight. When you start training for a long-term goal, it’s important to remember a few things:
1. Just get started. Perfection is not the goal. progress is.
2. Record your course and keep making corrections along the way.
3. Don’t go alone. Find your tribe and hold each other accountable.
4. Don’t settle for less. Be uncompromising in your principles.
When we apply these rules to sustainable business practices, we should expect positive returns for our people, our planet and our profits.
There are solutions today for SMBs to decarbonize operations while not breaking the bank. I recently interviewed sustainability professional Kevin Mireles, founder of CutCO2.net, to discuss actionable sustainability solutions that can help companies reduce their carbon footprint and save money in the process.
Mireles launched its website in October as a one-stop shop to connect shippers with the insights and vendors they need to make a difference for the planet and their own bottom line. In his experience, companies can quickly get bogged down in time-consuming goal setting initiatives that lead to delays in action. While it is very important to ensure that our climate targets are science-based and time-bound, there is little excuse not to take quick steps that can result in immediate improvements in the bottom line.
He found that many service providers can deliver such solutions for shipping companies in the areas of e-commerce, warehousing, distribution, 3PL or fleet operations. There are dozens of areas you need to focus on for improvement, including packaging, transportation, energy use, and more. Importantly, many of these fixes are readily available and require minimal upfront investment.
So why aren’t more companies using such solutions? For exactly the same reasons outlined above in the SME Climate Hub survey: lack of knowledge and resources. Most logistics companies do not have staff experienced in purchasing renewable energy, installing on-site solar panels, or complying with GHG Protocol accounting standards. And traditional sustainability consultants lack knowledge of logistical operational constraints, service requirements, or regulatory compliance.
The way forward is clear for most companies. Customers, investors and regulators will continue to ask for improved environmental protection and more detailed information on climate risks. Even the smallest companies should expect to be affected. But the good news is that many of the changes that interested parties want to see are actually financially beneficial changes.
Reducing waste in corrugated packaging is a cost saver. Reducing your energy bill is a win for the environment and the bottom line. Reducing total mileage and fuel consumption saves trees and money. SMEs owe it to themselves and their stakeholders to invest in sustainable solutions today.
If you are looking to take the first steps towards building a more sustainable supply chain, Mireles and I are offering a virtual course in early December focused on providing interested SMEs with practical, sustainable ways to reduce costs.
Join like-minded business owners to network, find best practices, and implement solutions quickly. Course participation is limited and the session lasts only one, action-packed hour with many follow-up opportunities. We look forward to sharing more virtually and creating a plan that will increase your bottom line in 2023. Sign up here and enter the promo code “SaveMoneyandthePlanet” to get 50% off.