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Small and medium-sized businesses can lead the agenda on sustainable growth

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Smaller companies are already the bedrock of most domestic economies. With the right tools and support, they could well become the foundation of sustainable economic growth, too.

This article first appeared in the Guardian.

"Small businesses arguably have the most control over whether or not they are truly sustainable," says Adam Sever, UPS small business segment marketing manager.

Although global corporations tend to dominate the business pages, a healthy small business sector is essential to a prosperous economy. These small and medium-sized enterprises (SMEs), defined by the European Commission as companies employing fewer than 250 people and with an annual revenue of less than €50 million (£39 million/$57 million US), are also playing an increasingly important role in ensuring economic growth is sustainable.

The small business sector makes a huge contribution on multiple fronts: from employing a diverse workforce and engaging with their local communities to bringing jobs to employment black-spots.

Brimming with potential

Just look at the numbers. In 2013, more than 99 percent of the 4.9 million registered businesses in the United Kingdom were SMEs. They employ more than 14 million people and account for an estimated gross value added of £376 billion, equivalent to half (49.8 percent) the U.K. economy.

"Our model of the big company that employs thousands of people based in huge offices isn't necessarily the way the world is moving," explains Stephen Pegge, external relations director at Lloyds Banking Group.

Lloyds' annual survey of SMEs last year revealed that a quarter of businesses thought of sustainability as their top priority in 2014, while 52 percent recognized the cost benefits of implementing sustainable business practices.

A similar trend is unfolding in the United States, too. "Small businesses arguably have the most control over whether or not they are truly sustainable," says Adam Sever, who works with U.S.-based small businesses for UPS. "Since they are typically private and often have the founder at the helm, ‘small biz' can really adhere to a value set if they choose."

On the global stage, U.S.-based B Corp. is encouraging SMEs – and larger businesses – to pin their sustainable colors to the mast. It provides a framework for companies looking to benefit society as well as their shareholders, explains director of communications Katie Kerr, who adds that B Corp. certification acts as a signal and a guarantee that the company practices what it preaches.

"We're building a movement of people using business as a force for good – and this means good for workers, good for communities, good for the environment and good for their bottom line," she says.

Identifying business benefits

Yet many SMEs still struggle to see sustainability as anything other than an extra cost and more red tape, says Lloyds' Pegge. "If it's seen as Big Brother telling you what to do, making life too complicated, then the danger is people will do the minimum necessary to comply," he says.

He believes government could make things easier for SMEs through the statute book. What's needed, according to Pegge, is "simpler, clearer, easily manageable regulation that is less prescriptive, but at the same time encourages and rewards high standards and innovation."

Jane Pritchard, enterprise and culture director at Business in the Community, says it's important for organizations like hers to make the business case for sustainability and inspire small businesses to take it up.

But the concept of sustainability has moved on from simply "greening the business," she explains. It's now about "having a positive societal impact" and making sure employees are engaged in the community. "They can differentiate themselves from other businesses," she says. "They can create a unique selling point out of being sustainable."

Mobile technology company SwiftKey, based in Britain, is one business that's gone down this route. The company makes a smartphone app keyboard that learns how you text and improves autocorrect over time. As part of its commitment to sustainability, the company offers its employees an extra two days' annual leave to take part in volunteering.

As well as benefiting the local community, the policy has helped create a motivated workforce, with low levels of employee sickness and turnover, explains Lucy Yu, SwiftKey's vice president for people and culture.

"We tend to find that our public profile encourages like-minded people to join the company, and so it creates a virtuous circle of more employees signing up to community-oriented activities," she says.

Pegge sees other potential benefits for SMEs, especially with many larger corporations needing to meet regulations about the sustainability of their supply chains. "The businesses that do have high standards of sustainability know that they're going to be more successful at tendering," he says, and that can lead to longer, more secure contracts – the holy grail for most SMEs.

Large company support

Larger corporations can also get involved with mentoring schemes to support SMEs, while other programs, such as Movement to Work, are helping to reduce youth unemployment by encouraging larger businesses to ask their supply chain to recruit young people.

As well as being suppliers, SMEs are hugely important to large corporations as customers. UPS, for instance, offers a range of products and services designed to help its smaller business partners operate more sustainably. "Our customers are always challenging us to give them options that are more efficient," says Sever. One such service is UPS carbon neutral shipping. For just a few pence a package, businesses can offset the carbon impact of their shipments. UPS then uses the funds to support offset projects – such as reforestation or renewable energy – around the world.

Pegge is optimistic as he looks ahead to the next Lloyds business survey. "Businesses increasingly get this issue," he says. "In many ways, they are leading the agenda."

Learn more about carbon neutral shipping.

Learn more about other UPS sustainability solutions.

Learn how other small businesses built their companies on sustainability and succeeded:

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