There is an unbelievable amount of attention and capital focused on ESG at the moment. This is not new and the trend is only gaining momentum. As the impacts of climate change become ever more apparent, volatile and costly, even those companies in the far-flung, privately held, remote tiers of supply chains will be unable to escape the growing demands of regulators, investors and (most importantly) customers.
Nearly every day another large, multinational corporation announces its latest climate pledge. Over 4,000 companies have announced climate targets and nearly half have also made net-zero commitments. Organizations like Companies for Net Zero are emerging to bring together leaders in the space to share best practices and operationalize their climate targets.
But while many of these firms are sufficiently resourced to afford third-party consultancies or keep sustainability experts on retainer, the vast majority of firms impacted by these pledges will be the underlying small and medium enterprises (SMEs) that make up the supply chains of the larger corporations.
In most developed countries, SMEs account for around 99% of total companies, 70% of all jobs and contribute over 50% of GDP. And yet, a February survey by the SME Climate Hub found that “two-thirds of small business owners said they were concerned they would not be able to 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 confirm those survey results based on my own daily interactions. I frequently talk to firms that are just getting started on their journey and working to prioritize resources to emission-reduction activities within their value chain. It can feel daunting and overwhelming to get started on this journey. And it should!
The disciplines of supply chain management and sustainability necessarily include every aspect of every business, from design to sourcing to finance to distribution. And if the scope wasn’t large enough, the standards of climate disclosure and the court of public opinion are both constantly evolving.
No single person or company should expect to reach net-zero goals alone or overnight. When you start to train for any long-term goal, it’s important to remember a few things:
1. Just get started. Perfection is not the goal. Progress is.
2. Chart your course and then 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 applying these rules to sustainable business practices, we should expect positive returns for our people, planet and profits.
Identify opportunities
There are solutions available for SMEs today to decarbonize operations and not break the bank in the process. I recently interviewed sustainability pro Kevin Mireles, founder of CutCO2.net, to discuss actionable sustainability solutions that can help companies shrink their carbon footprint and save money in the process.
Mireles launched his site in October to be a one-stop shop to connect shippers with the insights and vendors they need to make an impact for the planet and their own bottom line. In his experience, firms can quickly become bogged down in time consuming goal-setting initiatives that result in delayed action. While it’s very important to ensure our climate goals are science-based and time-bound, there is little excuse for not taking quick steps that can provide immediate improvements to the bottom line.
He found that many service providers can deliver such solutions to shipping companies in e-commerce, warehousing, distribution, 3PL or fleet operations. There are dozens of areas to focus on improvements, including packaging, transportation, energy usage and more. Importantly, many of these fixes are readily available and require minimal upfront investments.
So why aren’t more companies taking advantage of such solutions? For exactly the same reasons listed above in the SME Climate Hub survey: lack of knowledge and resources. Most logistics companies don’t have personnel on staff who are experienced in purchasing renewable energy, installing onsite solar or complying with GHG Protocol accounting standards. And traditional sustainability consultants lack knowledge of logistics operating constraints, service requirements or regulatory compliance.
Take action
The path forward for most companies is clear. Customers, investors and regulators will keep asking for improved environmental stewardship and more detailed information about climate risks. Even the smallest businesses should expect to be impacted. 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 savings. Lowering your energy bill is a win for the environment and the bottom line. Reducing total miles traveled and fuel consumed saves trees and dollars. SMEs owe it to themselves and their stakeholders to invest in sustainable solutions today.
If you are looking to take the first steps toward building a more sustainable supply chain, Mireles and I will be offering a virtual course in early December that will focus on delivering practical, sustainable cost-reduction opportunities to interested SMEs.
Join like-minded business owners to network, find best practices and quickly implement solutions. The course attendance is limited and the session will last just one, action-packed hour with plenty of follow-up opportunities. We look forward to sharing more virtually and creating a plan that adds value to your bottom line in 2023. Register here and enter promo code “SaveMoneyandthePlanet” for a 50% discount.
