Driving Sustainable Business Principles: Growth plans for SMEs & MSMEs

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In 2015–16, Plan A – the Marks & Spencer blueprint for doing business – delivered a £185m net benefit which the company has been able to reinvest into the organisation. By promoting greater efficiency and sustainability across a number of areas such as energy consumption, logistics, waste reduction and packaging design, M&S is growing its business, while creating a positive impact in its markets, for its customers and crucially on the environments in which it operates.”

With the economic recession in Nigeria between 2015 and 2016, many businesses were caught unawares and unprepared to handle the ripple effects it had on the economy. Many SMEs and MSMEs reportedly suffered great losses because production and procurement costs as well as other operational costs increased by over 100%.  Apart from factors like the increasing inflation rates, fluctuating foreign exchange rates, and shrinking consumer spending SME and MSME owners in the country have sited the country’s lack of infrastructure that encourages business growth as a major debilitating factor that has stunted the progress of enterprises in Nigeria.

However, in the face of recessions and obvious challenges, businesses can remain impactful, stay competitive, and outlive unstable traditional business models wherever they exist. The key is embracing sustainability practices and managing implementation of these principles, which should be treated as a priority and from the Board level. Sustainable business practices are economically viable, socially responsible and take into consideration environmental practices. Businesses that adopt sustainable practices in their operations create value that sustain or enhance the systems and resources upon which the values depend and they tend to thrive better.

Lessons to learn from

The statistics below reveal the urgent need for both private organisations (SMEs, MSMEs and large corporates alike) and government institutions to integrate sustainability practices into their decisions and operations. The foregoing stresses areas businesses can plug into to create value, drive sustainability measures on their operations and processes and make impact.

  • The human population has more than doubled in recent years, and is expected to grow from 6.1 billion to 9 billion by 2050.
  • Underground aquifers are being depleted.
  • 15-24 global ecosystems are in decline.
  • Global emissions of carbon dioxide has quadrupled since the 1940s.
  • Nearly half of the world’s old growth forests are gone.
  • Municipal waste has grown by 30% in developed nations just since 1975.
  • 75 percent of the major marine fish stocks are being fished at or beyond their biological limits.

In Nigeria, the Central Bank of Nigeria’s enforcement of the Nigeria Sustainability Banking Principles (NSBP) has ensured that all financial institutions adopt nine principles of sustainability in their business operations. In adopting these principles, financial institutions are also required to report on their activities, key milestones and progress attained each year. A critical look at the top five financial institutions in Nigeria today reveal their commitment to implementing business practices to ensure the sustainability of the business.

Looking beyond financial institutions, for SMEs and MSMEs the Sustainable Development Goals (SDGs) are a good place to start in a bid to drive sustainability measures in their processes. As a step in the right direction, the Nigerian government has integrated the SDGs into its national policy and planning through the Nigerian Economic Recovery and Growth Plan (NERGP). The plan is the nation’s medium term plan for 2017 – 2020 strategically developed to restore the country’s economic growth after the recession while leveraging on the ingenuity and resilience of the average Nigerian.

The Marks & Spencer case

Retail giant Marks & Spencer, reported that even in the face of natural disasters that have triggered volatility on the cost of raw materials like rice and cotton, the company is working with its supply chains and other stakeholders to reduce the effects from the impacts of climate change. They are also finding ways to keep abreast of innovations that affect and change the patterns in consumer behaviours.

For businesses to thrive in today’s changing environment, the strategic agenda/must take into consideration the adopting of sustainability practices that will have far-reaching consequences on the business and its operating environment. Sustainability is a business approach that seeks to build long-run competitiveness without unduly compromising short-term profitability and cash flows.

For Marks & Spencer the agenda was a business-wide transformation that involved 32 million customers, 83, 000 employees and thousands of suppliers and partners world-wide. In doing this, the business took a critical look at their environmental footprint and set their business agenda with this in mind. The company made a commitment to be 50% more energy efficient per square feet in the UK by the year 2020 and followed through with this commitment by sourcing all their UK and Ireland electricity from renewable sources. By doing this, Marks & Spencer has been able to increase demand for renewable energy technologies and innovations making sure that the sector remains viable not just to the business but also making renewable energy attractive to other private organisatons.

An overarching objective of an organisation’s social responsibility should be to contribute to sustainable development. Putting it in context, sustainability goes beyond corporate social responsibility (CSR). It sees the fundamental need to wind down the dysfunctional economic and business models of the nineteenth and twentieth centuries while allowing new ones to evolve. These models accommodate the teeming human population living on a planet that is already in ‘ecological overshoot’. At the heart of socially responsible practices are community projects where organisations can connect not only with the people in a society but make lasting impact on the communities themselves.

Marketplace – marketplace

initiatives to improve the social or

environmental performance of the

supply chain or customers.

Workplace – workplace initiatives

to ensure fairness, build a better

working environment, develop

employees etc.

 

 

 

 

Workplace
Marketplace

 

Responsible Business Strategy

 

 

 

 

 

Community – community initiatives

such as donations, volunteering or other support.

 

 

 

Communication

 

 

 

 

Irrespective of the sector of the economy or size of the business, sustainable practices are more easily adopted and maintained when:

  • There is Board buy-in: decision making on sustainability practices should transcend from the top to the bottom. Board members should play a crucial role in providing strategic direction for the organization and chart the course for the adoption of these principles through the overarching business goals and objectives.
  • Commitment to sustainability programs are ensured: developing in-house programs like waste management initiatives, electricity use, water conservation and paper management initiatives will work to ingrain sustainability practices in organisations’ business operations.
  • Stakeholder engagement is made a priority: investing in both internal and external stakeholders of an organization is an integral part of developing sustainable practices. Customers, suppliers, employees, competitors, etc. need to be considered in decisions pertaining to best practices, energy efficiency, fair wages, safe working conditions.
  • Supply chain management is properly structured: businesses can make it a priority to deal with sustainable friendly vendors who are open to embracing sustainable business practices, and can make negotiation terms based on these practices.
  • Community Investments are considered: ensuring that local stakeholder relationships within communities are cultivated and embedded into business operations will strengthen local ties between businesses and the communities they operate in.

 

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