Going green will help SMEs stay in the black

Going green will help SMEs stay in the black

A new ESG report from RSM Australia has concluded that small to medium businesses (SMEs) that fail to prioritise more sustainable practices risk falling behind the rest of the food and beverage industry, especially as government investment and regulatory measures increase.

Small to medium businesses that fail to prioritise sustainability risk losing lucrative contracts from governments and large businesses that are vetting the green credentials of their supply chains, according to a new report examining Australia’s business ‘’greenscape’’.

Pressure on business owners is expected to intensify as governments step up investment and regulatory measures to achieve net zero targets by 2050 and more countries mandate sustainability reporting.

A new report, thinkBig Your guide to sustainability and ESG, by Australian professional services firm RSM Australia has warned that SMEs slow to move on sustainability risk losing increasingly eco-conscious employees, customers and contracts to more socially and environmentally responsible competitors.

RSM Australia Partner and climate change expert Tim Pittaway said SMEs that had a sustainability roadmap in place showcasing their environmental, social and governance (ESG) goals and progress would have a competitive advantage.

“The combined pressure from consumers and investors and stricter regulations has changed business partnerships. Supply chain management is emerging as a key factor in the sustainable business movement, with larger entities changing the way they engage with suppliers and distributors,’’ said Pittaway.

“Whether it’s just a few small changes or revolutionising your entire business, those that start now will be well-placed to maintain existing contracts, tender for new ones and be ahead of the impending regulatory curve to manage new requirements that are likely to be placed on businesses in the future.”

RSM Australia Partner and ESG expert Jacob Elkhishin said the challenge for SMEs was to ‘’go green without sliding into the red.”

“It starts at a strategic level. SMEs need to have a clear understanding of the sustainability opportunities and corresponding risks within their industry, as well as the expectations of their key external stakeholders such as suppliers, customers, insurers, financiers and investors,’’ Elkhishin said.

“They also need to remain on top of impending government changes and funding incentives that are available to support them in achieving their sustainability goals over the short, medium and long term,’’ he said.

“With strategic flexibility, SMEs are in a strong position to embrace sustainable and ESG-influenced initiatives to take advantage of the opportunities as they continue to evolve and shouldn’t underestimate the value from a competitive advantage perspective, as well as future-proofing business operations over the longer-term.’’

RSM’s thinkBIG report unpacks the drivers behind the global march towards sustainability – such as consumer behaviour, investor expectations, government regulations and industry change – and what they mean for SMEs.

thinkBIG was developed to provide valuable insights to the industry
thinkBIG was developed to provide valuable insights to the industry.

It also shares the stories of five successful Australian businesses and the practical ways they’ve put sustainability into action:

  • Ngeringa – a South Australian biodynamic vineyard and winery
  • Quality Global Supply – a NSW food manufacturing company that specialises in honey powder to promote honey consumption to help save the world’s diminishing bee population
  • GreenCollar – a nation-leading environmental markets investor in NSW and developer focusing on projects that have a measured positive impact on carbon, water quality, biodiversity, and the elimination of plastics
  • PURE Grain – a Queensland company transforming the agricultural supply chain through its digital door-to-door platform which connects grain purchasers with information they need from grain growers, including sustainability metrics

Elkhishin said RSM’s latest thinkBIG report was intended to provide a range of practical insights that may support SME’s strategic considerations around sustainable opportunities for their business, as well as associated risks.

“SMEs don’t have to go through the sustainability journey alone. RSM Australia has a wide range of professionals in different fields linked to sustainability and ESG, and you can leverage our expertise to create a clear path forward,’’ he said.

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