Getting started on sustainability strategies

January 23, 2024 | 5 minute read

For any small business owner, operating more sustainably can seem resource-intensive, taking capital and time. You may think, “How significant is our carbon footprint, anyway?” “How much of an impact can our company really have on the community?” While the effort might appear to outweigh the impact, considering sustainability in business decisions is quickly becoming necessary. Sustainability means running a successful business today in a way that does not negatively impact society and the environment for future generations. The concept has taken hold in the business world because it is a means to operate more efficiently and cost effectively, mitigate risks, create business opportunities, and engage more with customers.

 

Sustainability is not just for big business

  • Small and mid-sized businesses (SMEs) are the backbone of our economy, driving innovation and employing 47% of the U.S. workforce (Small Business Administration). Worldwide, small businesses generate nearly 70% of jobs and GDP globally. And they generate 60-70% of global carbon emissions. While an individual company’s environmental and social impact may be comparatively small, the cumulative impacts of small businesses are vast. In fact, SME suppliers’ combined footprint is, on average, five times greater than their corporate counterparts, according to environmental nonprofit CDP (World Economic Forum).

 

Even if implemented on a small scale, sustainability can benefit your business. Reducing material waste, using energy-efficient lighting and equipment, and creating opportunities for flexible employee work schedules can all add up. In many ways, small businesses are already well positioned to implement sustainable practices. Let’s look at key sustainability actions you can take.

 

A breakdown of sustainable business practices

There are two key areas to consider for sustainable business – environmental and social impacts – each with key actions:

 

  • Environmental: Minimize your carbon footprint and impact on the environment by reducing how much waste your company generates, conserving energy and reducing the use of resources such as water and paper.
  • Social: Positively contribute to society by creating an inclusive, safe and fair workplace, working with ethical business partners and giving back to communities.

 

When you implement these sustainable practices, there are clear environmental and social benefits; it is also good business. Research from organizations like Harvard Business School, McKinsey and SAP shows that sustainability yields bottom-line returns and is a competitive advantage. For example, switching to LED light bulbs, which use up to 90% less energy than traditional incandescent lighting and last up to 25 times longer, reduces energy costs (U.S. Department of Energy).

 

The growing importance of sustainability has many potential impacts on small business owners. It factors into your company’s attractiveness to investors, lenders and customers. Most (91%) global insurers believe that sustainability will impact their investments, and 60% of consumers report buying brands on values such as their climate change stance (PwC; Edleman). Investing in sustainable practices can also affect business opportunities, with more corporations choosing suppliers that adhere to specific social and environmental standards. It can also help your company stand out to consumers who, more than ever, are considering sustainability when deciding which companies to work for and buy from.

 

A focus on sustainable supply chains can impact small businesses

  • Half of the world’s largest publicly traded companies have goals to cut their greenhouse gas emissions to as close to zero as possible (Net Zero Tracker). These “net zero goals” mean businesses in their supply chain must also reduce emissions. This could impact which suppliers these companies choose to work with and could have ripple effects on the job market and other social issues. Small businesses in supply chains for industries like consumer goods, information technology, pharmaceuticals, transportation and retail could see impacts in the near future. Notably, Amazon will require suppliers to share their emissions data and create reduction goals and report on progress starting in 2024. Microsoft, Walmart, Apple, Salesforce and AstraZeneca have similar expectations (CNBC).

  • Social criteria such as diversity, equity, health and safety are also increasingly significant factors in supplier selection. For example, many companies give preference to women or minority-led businesses. In addition, it is common for large companies to require suppliers to adhere to the principles in their code of conduct.

Tips for getting started

Each business has different sustainability challenges. For example, a legal practice may rely much more heavily on paper records than an advertising agency, making recycling or switching to online record-keeping more pertinent to lawyers. Following are three simple steps to help your company get started.

 

1. Assess your business

Consider the following questions as they relate to sustainability.

Environmental

  • What are your energy costs? Are there ways to reduce energy without making new purchases?
  • What are the costs to upgrade lighting, heating, and other building amenities?
  • Do most employees drive to work or as part of their role?
  • Does your company receive and use a lot of paper? Are there some processes that can be done digitally?
  • Are you using the most energy-efficient and cost-effective shipping and delivery methods?
  • How much waste does your company generate? Are there more eco-friendly materials that can be used?

 

Social

  • Do your employees feel supported and engaged in their jobs? Is there a way for employees to provide feedback?
  • Are you attracting a diverse group of job candidates?
  • How does your company interact with the local community?

 

2. Build an action plan

Once you determine areas of opportunity, the next step is to develop a management plan. Start small and set measurable goals and timelines. For example, you might identify potential cost savings by switching to LED lights and decide to transition within a year, changing bulbs as they die out. Or you may need more local community engagement to grow your customer base. Partnering with a local organization can improve your standing in the community and broaden your clientele. A solution might be setting a goal to discuss partnership opportunities with a new organization within six months.

 

3. Learn from experts

If you need more information and assistance on implementing environmental best practices, there are free resources available to help you:

 

 

Also, consider forming a sustainability committee with your employees to help tackle sustainability as a team.

 

As part of Bank of America’s pledge to decarbonize our financing by 2050, we are committed to working with companies of all sizes on sustainability strategies. Learn more about Bank of America’s sustainability initiatives at Making an impact.

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