We have launched a mini-series! As part of the Ye! Enterprising Youth: Learn Series, Ye! is collaborating with ITC's Trade for Sustainable Development (T4SD) Programme, offering a 4-part mini-series on sustainability. In this series, we will provide practical and actionable insights to young entrepreneurs on sustainability, certifications, trade, trends, and markets, as well as address why having sustainability integrated into your business model can lead to greater profitability.
Part 1”What is sustainability anyway?” happened on the 4th December 2020 and was led by experts from the T4SD team, who shed light on the basics about how sustainability in business came about and became a key trend in today’s business environment. We discussed why it matters to SMEs and took questions from the audience about how youth entrepreneurs can bake sustainability into their business model. Here are some highlights and key takeaways.
What is sustainability?
Despite different perspectives and approaches in practice, the most widely referred to definition of Sustainable Development is from the 1987 Brundtland Report,
“Development which meets the needs of current generations without compromising the ability of future generations to meet their own needs.”
In the context of business operations, a sustainable business is built with consideration for three pillars: environment, society and economy. The bottom line is ‘do no harm’ to people or environment while still making a profit. For instance, a sustainable palm oil company adopts policies to address deforestation; a sustainable coffee company manages their operations in a manner that conserves nature and provides better livelihoods for the people who grow and process coffee.
To provide visibility and understanding amongst consumers, certain frameworks and labels are used to define which products or companies are sustainable. We asked the audience which they were most familiar with and Rain Forest Alliance was most recognized. However, there are a myriad of labels including FSC, Fairtrade, and Utz. Additionally there are tools and international frameworks that can guide a universal understanding on sustainability and provide a path for regulation. The UN’s Global Compact is one such framework.
As a young entrepreneur, you might think sustainability standards are irrelevant to your company. You may think these types of labels and standards are only applicable to larger companies or corporations that conduct business on a global level. However, sustainability matters for SMEs too and can provide a clear advantage or Unique Selling Point (USP) of interest to certain consumers or buyers.
Why sustainability matters to your business?
Demand from consumers
In the words of Seth Godin, "people do not buy goods and services, they buy relations, stories and magic.” Consumers, particularly Millennials, increasingly demonstrate their preference for brands that embrace purpose and sustainability. A recent study has shown that products marketed as sustainable grew almost 6 times faster than those that were not. Recognition by consumers that a business is environmentally responsible boosts customer loyalty and helps with attracting new groups of customers. And we all know, the customer comes first! Therefore, if the Gods – the customers, want ‘green’ products, you’d better get ready to transform, or risk losing out to your competition!
Success in business
Over the years, the criteria on sustainability has transitioned from ‘nice to have’ to ‘must have’ in many industries. Not only has sustainability become a requirement for certain legal regulations and policy administration, but it has also become increasing emphasized by governments, the market and civil society. Social responsibility by large corporations, a.k.a. Corporate Social Responsibility (CSR) is now a critical component of how many large corporations interact in the world and something that big chunks of corporate budgets are spent on. Thus, acting responsibly towards nature and humanity is no longer a luxury, but something that can determine your company’s success.
Take the example with respect to cost and efficiency. Utilizing more clean and renewable energy, may take a large investment up front, but in the long-run it can potentially reduce a company’s costs overall and increase consumer support. A company providing decent and safe conditions for work can significantly reduce the occupation-related risks and interruptions to production, which in turn, ensure the productivity and loyalty of employees and reduce insurance expenditures. In addition, having a reputation as a sustainable or environmentally responsible company can make your business more attractive to potential employees seeking work in the labor market. Thereby making your company more competitive and ideally, more successful!
Positioning for funding
Despite different criteria and portfolio focuses among finance institutions and investors, positioning your enterprise as a sustainable company provides your business with a distinct competitive advantage. Having a business model that is sustainable or environmentally responsible with a lower negative impact on people and planet can set your business apart from your competitors and support your enterprise to secure funding.
In today's business environment, certain investors and financial institutions are more concerned with the long-term sustinability or the environmental impact of a business. Some investors even use this as a pre-condition or selection criteria for enterprises attempting to secure funding. Impact investors around the globe are particularly interested in businesses with a social benefit component or which operate with sustainability in mind. Therefore, for businesses that adhere to sustainability standards, getting to know various impact investors is a great place to begin your search for funding.
At the end of the presentation, we took some questions from the audience and the T4SD team provided answers.
Question: With limited budget and access to technology, what can I do to transform my company into a ‘green’ business?
Young entrepreneurs running small businesses often find it challenging to access to the latest technologies on a limited budget. However, with the development, scale up and decreasing costs related to various technologies, it is becoming cheaper and simpler to utilize technology to become more sustainable and to reduce environmental impact. Particularly in the agricultural sector, Blockchain is increasingly used to trace and monitor global supply chains, thus decreasing costs for suppliers and farmers. On the other hand, Satellite technology is being used to help farmers to access data and imaging that can support them to assess and identify rich soil, monitor growth, crop conditions, characteristics and irrigation requirements.
Apart from adapting advanced technologies to enhance sustainability, sometimes it just takes a change of mindset and approach at the individual level. For example, the experts from T4SD introduced the concept of “Regenerative Agriculture”. This describes farming and grazing practices that, while increasing the yield, could reverse climate change by rebuilding organic matter in soil and restoring soil biodiversity. This in turn, improves the overall environment and allows for greater yields.
With respect to the application on the ground, ‘rotational grazing’ could be one of the strategies adopted by farmers. The farmer integrates livestock grazing with many different species of saleable crops. Livestock such as cows and chickens help to cycle nutrients so the farm thrives without any synthetic inputs, allowing organic soil to gradually increase nutrient counts. No technology needed! Just access to information and data!
Additionally, it may be difficult for youth entrepreneurs to identify the most relevant sustainability standards or framework for their business to adhere to. However, here the sustainability map and T4SD website can provide guidance and support for SMEs looking to identify which label works for them.
Question: Despite my intention to make my company more sustainable, my employees are not supporting the decision. What should I do?
Another challenge raised by the audience related to managing and handling potential resistance from the employees, while transitioning to a more sustainable business model. Some employees might not be able to see the relevance of such a transition, or they may lack the motivation to undertake such an overhaul. The solution proposed was to engage and educate.
By engaging your employees, educating them on the why, the how, and the potential positive outcomes and finally, seeking their buy-in and support, you can attempt to help them understand your rationale for transitioning to a sustainable model.
In addressing issues of staff buy-in, ensuring your employees understand the value of sustainability is an important starting point. When undergoing operational changes, it is critical that employees have a chance to ask questions, voice their opinions and play a role in designing and implementing the sustainability plan. Ensuring that staff contribute to the process is a good way to gain their confidence.
Question: What does T4SD offer to SMEs?
Through the T4SD programme and its platform, ITC helps businesses, regardless of their position in the value chain, chart their path to more sustainable trade by better understanding the sustainability initiatives landscape and facilitating connections with business partners. T4SD offers various capacity building activities, e-learning courses, and tools. They also champion approaches to monitoring and building the sustainabile value chains. They have released a number of reports on this topic, including The State of Sustainable Markets 2020 report, Standards Map, Sustainability Community, Sustainability Network and Sustainability Trends. For more details, click here.
Interested to learn more about useful tools for sustainability and how you can adapt your business to be green?
Register and join our upcoming sustainability webinars:
Part 2 ：Navigating the sustainability map tool to support your enterprise
10:00 – 10:45 (CET), 17 Dec 2020 on Zoom. Register here.
Watch the full recording of the Part 1: What is sustainability anyway? below: