Small to medium-sized businesses (SMEs) have a crucial role to play in sustainability, despite some thinking they are too small to make an impact.  SMEs make up around 90% of businesses globally; while individual SMEs may have a smaller impact compared to larger corporations, their collective action can have a significant effect on environmental impact.   

In this episode, our host Will Richardson explores the question: are you ever too small to make a difference? To shed light on this topic, he is joined by two experts who assist SMEs on their sustainability journeys: Sarah Whale, Managing Director of Profit Impact, and Andy Hawkins, Chief People, Planet, and Purpose Officer at Business on Purpose.  

This episode of the Sustainability Solved Podcast is sponsored by Good Citizens.   

Good Citizens is an eyewear brand like no other. Born to untrash the planet of single-use plastic.  Good Citizens turns a discarded single-use plastic bottle into a pair of 100% recycled frames. It took them 752 days & 2500+ failed attempts to perfect the first pair of sunglasses. Even more unique, the modular system means you can repair each part in seconds. So, if your dog munches on them, it’s all fixable. 

Use this discount code GREEN20 to get $20AUD off and help untrash the planet.  

Highlights: 

• Sarah and Andy both share the belief that no business is too small to make a difference. 
• Sarah emphasises that it starts with individuals and their actions, regardless of whether they belong to a big corporation or work independently. 
• Andy illustrates this by using an analogy of playing football without a goalkeeper, where even individual contributions add up to make a significant difference. He cites historical figures like Nelson Mandela and Florence Nightingale who made a tremendous impact despite being part of a bigger system.  
• Many business owners find it challenging to make sustainability a top priority. Sarah and Andy agree that time restraints, prioritisation, and limited resources are common challenges for SMEs.  
• Will points out that some businesses may consider financial constraints as a reason for not prioritising sustainability, however engaging in sustainable practices can strengthen a business’s financial position.  
• Andy adds that B Corps have reported positive financial outcomes, trading at 28% above GDP. He plans to conduct research to further investigate these benefits and explore the barriers that prevent businesses from measuring and improving their social and environmental impact.  

Resources: 

Profit Impact 

Business on Purpose 

B Corp Certification: Benefits and Requirements 

B Lab Global 

Innovate UK 

John Brown (Don’t Cry Wolf) 

(-16 LUFS) SS Too Small To Make A Difference

SUMMARY KEYWORDS

business, businesses, sustainability, b corp, small businesses, impact, clients, profit, good, andy, b2c, sarah, suppliers, small, sector, supply chain, financial, smes, carbon, investment

SPEAKERS

Will Richardson, Sarah Whale, Andy Hawkins

Today, we ask, Are you ever too small to matter?

And I'm joined by two people who help SMEs become more sustainable. Sarah Whale is the Managing Director of profit impact. And Andy Hawkins is the self styled C3PO. That's Chief People, Planet and Purpose officer at Business On Purpose. Welcome to both of you.

Thank you. Well, lovely to be here.

Thank you so much. Will, it's great to be here.

So first of all, do you think a business can ever be too small to make a difference?

So I definitely do not think any business is too small to make a difference. So this weekend, I did some youth work. And one of the games that we played was to play football without a goalkeeper. And as a result, lots more goals were scored than when we have got a goalkeeper. And in that same way, even though someone might just be one part of a bigger machine, or a bigger part of the economy, that can for sure make a big difference. And we looked with that youth team, at people in history who have made a big difference be at Nelson Mandela, or Florence Nightingale or all these different things. So in the context of a business, collectively, lots of us can make much more difference than one single business in isolation. So I'm a huge fan of small businesses collectively making a big difference.

Brilliant. And Sarah, what are your thoughts?

I agree with Andy, but I would even take it back to individuals, you know, it starts with people doesn't it? So you can be you can be a massive corporate, you can be an individual person, it's all about the outcomes. And what you achieve, you know, you can have one person doing a brilliant thing, or a big company doing nothing, you want just want that one person doing that brilliant thing. So I actually think it's irrelevant what size business you are. It's what are you actually doing?

Yeah, we'll be going on to this later on. But what resonates to me with both of you is you've both got two quite different business models, but very, very SME focused and they're brilliant, brilliant business models that really help SMEs as well. And so it's kind of it's, I can't wait to draw, draw this out and talk about SMEs. And so what what reasoning Do you hear from small business owners about why they don't want or need to think about sustainability?

So I don't think it's they they won't spend the money? I don't that's generally I don't get that impression. It's about giving up their time. That's the big one that I see that, you know, we never quite gets the top of the priority list. But also, there's something a bit broader that most businesses on average and last eight and a half years. So we're asking people to do things today for the long term benefit over the long term, whereas not many, not many businesses are going to last for the long term is the reality actually.So yeah, that's, broadly what I think it's not it's not enough of a priority.

And Andy what do you think?

You know, most things do come back to priorities. And therefore these see, especially in the early days, getting businesses up and running, they've got so many different plates to spin, they just don't see the sustainability and the social impact piece as sufficient enough of a priority. And, you know, we get that all three of us have started businesses, and we know that exact same thing. But what's been interesting is taking clients on that, you know, B-Corp journey, or their sustainability journey, is they actually recognize they can achieve quite a lot. Initially, with a little bit of education and some effort. I think, you know, their mindset is it's this huge thing that is going to completely derail their business. But the reality is by making some small changes and adjustments and doing some measurement, they can actually get insights that help them make those changes in a way that doesn't need to significantly detract from their business. So it's almost that education piece of education. And it's, it's not that bad, is it?

No. It's interesting, Sarah, you say it's you don't think it's financial? Whereas I would actually not disagree. I agree with what you actually said. But also say that some businesses would say it's financial. And they can't do it, because, uh, maybe it is that prioritization. And rather than pay for it no schmoozing that clients, they could pay for one of your services, you know, because it is, because it can come to that. And so therefore, we'd be remissed to push that aside, because I think that doing what you guys do actually, almost make the business stronger and more financial.

Yeah, completely. I mean, I, I've been saying this for a long time, I use the phrase utterly compelling. Now, I am an accountant. Don't hold that against me. And mathematically, this is just utterly compelling. Okay? Because if you if you don't do this, you're building quite a lot of risk into your business. If you do do it, you're building competitive advantage. So in in my mind, and I have one thing I've learned is I need to push this out more is that the ROI on this is just, it's off the scale. It really is. It's just so compelling to do. That's what I honestly believe and on the numbers I've seen,

Will, just on that as well, I'm doing some research with a couple of masters students at Bristol University this summer. One of them is doing a, You're a B Corp now, did you derive the benefits that you thought you would get? So that's one of the things she's doing? And then the other master's student is doing a piece of research on? What are the barriers that stop you measuring your social and environmental impact and improving it? So yeah, it will be an interesting piece of research. I'll happily share that with you at the tail end of the summer. But we see that there are gaps in both of those aspects of knowledge. And I'm interested to see what those researchers come up with. Yeah. So might I say that that's so fascinating, because one of the challenges that we face, which might tie a little bit into what you're saying, Will is that there are people that like to see evidence before they commit to something. So on my first month of launch, someone said, Come back to me when you got five user cases, it might be a while because we're building long term benefit. And so that information Andy would be hugely beneficial. I'm doing with minnow shillings, who's a regenerative expert, what we want to do is to fast forward the financial impact of a whiskey distillery that turns regenerative to one that doesn't, yeah, what is that long term financial impact? And I think that's going to be a very interesting piece of work, which, again, I'll definitely share with you.

I think that's it, there's so many ways to slice that carrot. And it's we're starting to learn now about that, because I wouldn't have you ever thought about what you just said, If I'm honest, Sara, it's not you know, but you've just come at it from a completely different angle. And so on that business cases for SMEs to become more sustainable, what, what do you think they are.

So there's a very good chap called Bob Willard, and he is certainly was until recently on the board for B Lab Global and Future Fit and he's another accountant. There are a few of us. And he has done some brilliant work and a lot of research. And he has built up this business case, and I'm going to be using it for the for the whiskey company when I find them. And over five years, you can increase your profits for service business by 50%. If you go down this route, if you don't, you're looking at 16% decrease the profits. Now in terms of what that might look like, that might be a bit of a drop off on customer retention and brand reputation. Or you might have to recruit some more people in your team over time, it might be easier if you have that sustain, it should be easier if you can evidence your sustainability. So the average cost of recruiting an employee in the UK is 13,000 pounds. Now clearly it depends what function they're in what sector your location etc. But if you take that as an average 13,000 Pound it doesn't take a lot to think right well, we will very very quickly get our get a good ROI on that. Okay, so it's potential taxes, plastic taxes, it's the increased cost on the environment is the carbon price, the carbon price is a big thing that's coming down the line for people. So there's lots of different things that add up and actually over time are really going to positively or negatively financially impact a business, depending on what they've done is just logical and mathematical. When you look at it, you take a step back and you look at a business's p&l, what's going to happen to those lines over the next five to 10 years, and they're going to be transformative.

And when organizations come to you, and they're kind of questioning why, or what they should do, what what do you normally say is the business case?

Well, I think B LAB themselves did some research a couple of years ago, and they said that B corpse are trading at 28% Plus better than above GDP. So they've done some research themselves. I want to dive a little bit more deeply into that, hence why we've commissioned this research study. But the general areas that people anecdotally report that they improved on are a Sarah alluded to employee attraction and recruitment, and importantly, employee retention as well. They do also go through the B Impact Assessment spot a number of risk areas that they've not really ever considered or thought about. So there's a question of, you know, if you've managed or spotted or mitigated a risk, you know, that's not money that you've necessarily spent, but it is potentially money that you've saved by coming across a, you know, a bit of a crossbar subsequently. The other thing, you know, a lot of businesses that I deal with are relatively new startups. So a lot of them are reporting that they're finding it easier to get investment, if they're going out for private equity or VC, they are finding it easier to attract that investment into their business, because the investors see the B Corp process has been a degree of due diligence, we're now looking at whether they invest or don't invest into a company. So that's been the main areas that people have anecdotally reported back, but with this research we're doing we're looking to see if we can put some actual numbers around that those anecdotes,

yeah. Our friend, John Brown, put something on LinkedIn. He said, Just because you're a B Corp doesn't mean that you're a good, solid business. And it was all around there seem to be a lot of organizations that actually haven't got their business model properly sorted yet. And they become a purpose driven business. You know, and I think what resonated with me on that post was, I see it myself, I think some of the first B corpse, one of the reasons why they were B corpse quite early on was because they had solid business models. They were very good at what they did. And now we're getting this trail of companies and organizations that lesson and what that 26%, you know, that you said, everyone knows about that? And they go, Oh, well, I don't really need to necessarily make sure my business model is really good. I'll just become a B Corp. And then more more businesses will come and use me. And I don't know, I know, this isn't in our line of questioning. But I think it's really important to talk about,

it's really important. And in fact, somebody from innovate, UK spoke to me about this. And they are actually quite worried about this. What they're seeing is new businesses coming in and really looking to establish purpose driven businesses, which is great. Okay, but what some people have these people there, they don't want to align themselves with money because they think it doesn't fit with purpose. You know, they think, right? It's all about saving the planet looking after people. And that's hugely important. So don't get the business model, right, the financial model underneath, correct. And they all they are worried. So you've got two different groups of people. You've got the profit growth over here, and the purpose growth over here, and you need you absolutely, we should not, we should not mistake financial planning, actually, for you know, hard nosed profit growth. They're two different things. You've got to have solid financial plans in place to protect your people as well. And your suppliers, you've got to have that in place to be an ethical business. Actually, you need to have sound financial plans.

Yeah, I totally agree. And we encourage companies to keep an eye on on the Profit Ball as well. We're certainly not encouraging them to You should not look at profit in total favor of purpose. I think if the clients that I've helped probably have the 350 have been startup a, you know, a year one, and 250 have been more established. But all of the clients that I've worked with have generically been quite good clients in the first place, you know, the purpose wise, I've not had to sort of convert them from devil incarnate into Angel Gabriel, they've all been good at first place. But what this has done is enabled them to focus on some areas that they're missing out on. But when you come back to pure customer service, decent product, repeat by referrals, those kinds of things, if you're missing out because your service is poor, or if the products that you're selling is poor, your business model is not going to survive, no matter what level of purpose you might put around that. If you're promoting a poor service or a poor product, you're going to be found out and you're going to be found out quite quickly. And I don't think just because you're a B Corp, a stops you from being in that zone, as it does with any others, I think perhaps we'll clients have got a higher expectation of a B Corp that their service is by definition going to be exemplary, and their product is going to be exemplary. So I think there's a slight challenge with with that. But yeah, you've got to have good products and good service in order to then be purposeful.

And that's what worries me, actually is. And it doesn't surprise me that Innovate UK have spoken to you Sarah about it. Because what we'll have, and the knock on effect is actually really quite bad is you've got people working in businesses, and they'll have friends that work for said, profit driven business. And then you've got friends that work in said purpose driven business that actually aren't doing an amazing job, but they are such a great place to work for, you know, they've got all the stuff that's coming out, but their cash flow is literally going down. And they won't be around in a year and a half, two years, they potentially may get investments from hype, you know, for seed rounds, high net worth individuals that believe in what it is that they're doing. And but yeah, actually, the amount of money they're spending to retain those people and make them all feel very good about themselves is not a business in itself. We all hear about people that give presents to people and they're like the best people in the room, because you always get a present off that person. But actually, that doesn't mean that they're a nice person. It just means they're very good at giving presents. And you could I look at that as a business. And I It worries me because actually businesses that are profit driven, and purpose driven, have to almost fight against those other businesses. And they have to justify why they're not gonna give all the perks, because actually, they've also thinking about the profit.

Yeah, it is worry, we do need the finance community, and it is coming. But we need the Finance community to step into this space. I think there's a little bit of fear that people don't still don't quite understand what, what is this, and they see it as a little pillar that sits outside of business, but actually, it's something that needs to be integrated throughout. So I think once we get there, we will be okay. But for businesses now setting up I mean, for profit impact for my business, it's a real balancing act, because I'm I've got to stay financially sustainable. I've got five clients, it's really, really quite tight. And I've written and my impact report this one not released it yet, but I put my financial strategy in profit impacts Impact Report. And my decision is that I am not going to be seeking investment until I see us move out of the early adopter phase. Because effectively what you're trying to do what you will be doing by getting investment, when you don't have enough customers, you're actually paying for somebody to come in and pay for your team. And that you have to have a sustainable business model before you get that investment. Because it's I feel it's unethical, actually. And it will just put the founder team under real pressure to get returns for those investors. So yeah, it's a really important piece. Yeah.

And look, going back to the advantages that small businesses have over larger, larger businesses, corporations, what are they when it comes down to sustainability? Do you think?

I mean, what I've seen is that small businesses compared with large businesses is large businesses have generally got a lot of process and policy in place, but are less able to maneuver and make changes within the business whereas smaller businesses are much more nimble in terms of their decision making process, but they are generally devoid or certainly look light of the processes and policies that put some, you know, solid foundations into the business. So it's two slightly different, and some are obviously in the middle. But when we're taking smaller clients would be cool. If it's more about, you don't need to change your ethics, or you're doing a lot of the good stuff anyway, let's put some process and policy around there. Whereas the larger clients that I've worked with have got a lot of process and policy, but they might need to have a look at some of their decision making that they're making to see, can they move slightly, but they take longer to make those decisions and put those changes into the business? So there are two slightly different models, but that kind of working together working towards a common middle ground?

Yeah, I would agree completely with with Andy there. We keep agreeing. But it's true. I mean, I guess we live in it. So we see it a lot, don't we? I mean, I think it's elephant versus cheetah. You know, if you're a large company, it's gonna be really tricky to make change quickly. So I'm not saying you won't get there. But you'll be moving at an elephant's place, because you've got so many different teams and structures and processes to really change. And that's why we see greenwashing is not necessarily because the businesses want to kind of pretend they're doing something, it's actually it's actually really hard when you're a big business, and just the sheer complexity of it. Whereas if you're a smaller business, you're more like a cheetah. And you can move much quicker, I think with small businesses and Andy's Andy is right. And when you look at the B Corp, the BIA, I'm certainly what's coming down the line with the standards which at a fundamental level I agree with with the the enhanced standards, but for some businesses is going to be quite heavy in terms of what they need to do. So there is a little bit a little bit of risk. So I think, I think the advantages for small businesses, they can move quickly. The disadvantages, there's quite a lot to do if you want to do it well. So you might need to kind of prioritize what you're going to do.

Okay, brilliant. And on that. On that note, take a break. Thank you both.

Welcome back, do you think is there more guidance and financial help available for some business sectors than others in this space?

I've not seen that, per se. Again, I can only judge on on the 300 clients that I've helped but of those 25% of being kind of digital agencies. So marketing, PR website, building that kind of sector, another 25% of in food and beverage. So we've seen a lot in that sector. 10% have been recruiters. So that's been the slice of the 300 that I've seen, but I've not seen any particular marketplace support specifically for one sector over above another sector.

You mentioned b2b businesses then. So do you think sustainability is more important if you're a b2b business or a b2c business,

so I think it's important to both, I think b2b long term, it's really important. So I'm working within a large advertising agency at the moment, need a bit more finance and sustainability, to be honest, and I'd like but that's what I'm doing at the moment to keep profit impact financially sustainable. Now, they have got a very interesting client mix. And I'm looking at their client MCs, and there's some risky customers in there from a sustainability perspective. And I'm looking at their numbers. And I'm thinking right, now I know they're going for B Corp. Okay. What are they going to do? You know, what are they? Well, they can do and the The truth is, b2b businesses over the long, long term are gonna have to hive off some of their customers, they're going to lose some of their customer base. And that's going to be a direct hit their profit. So the brand risk and the customers for b2b are big over the long term. The b2c I think it's short is bit more immediate, I guess, is what I'm trying to say. So because the more that, you know, the more the customers are buying now, and consumers are more, they will move more quickly, right. They then b2b customers. So it's quite it's quite risky. A b2c test which product pace? So as a lot of risk in product based businesses, b2c businesses, because they're going to have to find a way to transition into circular economy. Yeah, it's going to be harder for them to pivot, I think is where I where what I believe for b2c, whereas b2b can pivot. All they'll need to do a top level is to get the environmental impact, right, get their social side. Right. And that is, that is not too difficult. I don't believe their biggest challenge is their customer base. And they're going to have to really plan for that.

And if you've got any extra thoughts on that,

no, I don't I don't see particularly being, you know, harder or easier compared with b2b or b2c, I think, you know, they've both got different, slightly different challenges. One of the differences I do see is service rates versus product related, I think service can change and make the changes more easily and more quickly than product related businesses. But product related businesses can make, you know, quite big differences with some small changes. If you're a service related business, your bar is not set very high in the first place, because you're not producing an awful lot of carbon carbon footprint comparably. But when you're a manufacturer, and you're making stuff, you do have a larger carbon impact. So even though it's slightly more difficult, the upside is you can make more difference.

Okay, small businesses, of which we'll sit in, and, for the most part probably work with as well, particularly, you guys, which is why we're talking about it, but this is supply chain, you know, a lot of those businesses will be in a supply chain, they're not the Marks and Spencers with, you know, at the top of the tree. They are an organization that is working within it. So that advertising agency that you're talking about Sarah will be in the supply chain of all of their clients because they're delivering a service. So have you seen examples of smaller businesses joining forces to make a bigger sustainable impact within the supply chain,

I've got an example. So one of the one of the big cohorts that we all know and love is Cotswold Fayre. So they got back 400 suppliers in their supply chain, and they had 35 ish of which were a B Corp. So what they wanted to do was put together a B Corp cohort model so that they could then work with their suppliers, which are generally smaller artisanal suppliers. So they've been able over the last year or two been able to double the number of B corpse that are in there. So I think that that ripple effects and that impact effect, you know, a cultural flare up and it will use that within their supply chain. And that is then had an impact within their suppliers suppliers. So if one was to, you know, ring fence that that total impact that's been captured or improved, I think the way that cultural fair have done it has been a really healthy way of doing that. And there are a number of larger suppliers now that are using these frameworks be caught being one of them to actually try and drive impact through their supply chain. I think that's a healthy thing to do.

Okay, so have you got anything else to add?

No, I haven't seen And I've actually actively tried to make it happen through some of the programs we do. It has not been easy. I do feel that supply chain isn't the be all and end all. But I do think it's, I do think is a great opportunity to leverage some change, just not happening enough.

What do you think, are the easy sustainability wins for small businesses that don't require an expert or a lot of money?

For me, it would be just having a go at measuring it. I think a lot of companies think we're just small, it doesn't really matter. Which brings us all the way back to where we were at the beginning, you know, can a small company make a difference? And I think you should just get on and try and measure it in the first place. If, if you and I were to run 100 meters, well, you might well do a slightly better time than me potentially. But, you know, we at least need to run 100 meters and set a standard for how long it takes us to run that 100 meters. And without that it's difficult to measure, are we improving? Or are we going in the wrong direction, I think it's exactly the same for small businesses with their sustainability, carbon footprint, all of that sort of stuff, you need to just measure it. And once you've measured it, there might well be some indicators that come out that show you where the majority of your carbon sits, especially within your scope, three supply chain, and you can you can then start having a dialogue and discussion with the company that is responsible for that. And so I just think it's going to give you some insights, that measurement is gonna give you some insights that will help you dictate and determine that where you want to put some initial effort into

great and Sarah.

Yeah, it's a really interesting question. I fundamentally don't agree with quick wins. With this, you were trying to, you know, move to a move as all along to a better place. I think we could do quick wins to make us feel better. And there's nothing wrong with that. And crikey, we feel need that, don't we? But I do think work out your starting point, is the best thing to do. So work out where you're starting. Somebody says something to me a few months ago, and it really resonated. You know, don't make a decision without a strategy, get your strategy first, and then do it otherwise, you just, you know, you're just doing something just to say you've done it, you know, you can maybe post something on LinkedIn that you've you know, you've you've measured to carbon or whatever. Get it right at the beginning. Yeah. Yeah,

yeah. Why are you doing? That's my opinion. Thank you both so much for coming along. today. It's been absolute pleasure listening to you and understanding more about how SMEs are making a difference. Thank you. Well, thank you.

Thank you. Well, thank you for all you're doing. Keep up the fantastic work.

And you Andy. It's been all the good stuff.

And that's it for this episode of Sustainability Solved, the sustainable business podcast. Thank you so much to Sarah Whale, and Andy Hawkins. I'm Will Richardson at the Green Element Group an environmental consultancy with over 20 years of experience. For more information on Green Element and everything else we discussed today. Please check the show notes. If you have any feedback or questions you can get in contact with us @greenelement on social media.