Future Proofing SMEs for a Green Recovery
- by Bobby Lambert
- Jul 6, 2020
- 6 min read
A key emerging theme across all sectors of the global economy is sustainability. In the private sector, especially with large public companies traded on the markets, many investors are seeking so called Environment, Social and Governance (ESG) standards as a condition of investment. Basically, this means that investors want businesses they invest in to explicitly behave in a manner that meets a minimal bar for ethical behaviour and social responsibility.
Mandatory Green Procurement Practices within 3 years
As a result, many businesses are changing with the times. Otherwise, they see investors selling out of their stock as the fund administration industry responds to demands from their clients to invest in ethical businesses. Some of the largest wealth funds in the world, from the Norwegian Sovereign fund to the Anglican Church have committed to an ESG based investment strategy.
More generally, for more than thirty years, since the Montréal Protocol banning chlorofluorocarbon (CFC) gases, accords and plans are what drive environmental action at a governmental level. This then translates into changes in how goods, services and construction projects (works in the industry argot) are commissioned in public procurement. In Ireland, now that a strongly green programme for government has been approved, we can expect to see an unprecedented level of green interventionism as part of the programme, in order to meet the nation's commitments under the legally binding Paris Agreement of 2015.
It's not just public sector organisations that are focusing on green policies
Companies that want to secure and/or retain public work will need to be able to prove their ESG credentials, regardless of their size or sector. This is already a mandatory requirement for many public procurement contracts. Companies interested in staying ahead of the curve can build competitive advantage by taking action now. Obtaining environmental certification from a reputable third party is one way of doing this.
Invest today for broader benefits tomorrow
In Ireland, the current tripartite Programme for Government 2020 is committed to mandatory Green Procurement Practices within 3 years for all procurement. Bear in mind, the green recovery objective for Ireland will not just be focused on ensuring that greenhouse gas emissions remain below the levels that had existed prior to COVID-19. Instead, the green recovery focus is much more ambitious and long-term. It aims to ensure that we reduce overall greenhouse gas emissions by an average of 7% per annum until we achieve net zero emissions by 2050. This commitment is part of an established global trend. Undoubtedly, 'green strings' will be attached to all future government funding and procurement. Therefore, now is the time for progressive small to medium-sized enterprises (SMEs) to improve their environmental performance.
The Programme for Government includes a range of supports for a green recovery post COVID-19. SMEs can use these green recovery supports to future-proof their business as Ireland's economy decarbonises. Existing environmental certification schemes provide a framework for doing this. While there are strong strategic reasons for doing implementing an environmental certification framework, the benefits for SMEs in going green become self-evident once firms engage in the process.
The cost savings from environmental certification are significant .... €5 - 50k per year
There are four hard benefits for SMEs from environmental certification. These include:
- Cost savings.
The cost savings from environmental certification are significant, with EcoMerit certified members realising savings of between €5 - 50k per year.
- Optimal environmental and business performance
By monitoring and reducing waste, water and energy consumption, businesses not only reduce costs, but also engage staff in doing what's right, which has been shown to improve overall business performance.
- Grow your customer base.
Developing sustainable practices in a business provides additional benefits to customers that do business with a sustainable company. We have yet to encounter a story of customers leaving a business because they have obtained environmental certification. We can recite countless stories of new customers won, in part, because of a sense of shared values or respect for a company demonstrating its commitment to our ecological common wealth.
- Manage risk.
Efficiency and effectiveness improves when risk management improves. Businesses that become sustainable identify where their biggest impacts lie. This allows businesses to put improvement plans in place to allow them grow the business sustainably. The risk of energy waste, water waste or poor waste management practices is reduced each year.
As well as saving money, SMEs future-proof themselves to procurement policy changes. Many large multi-nationals are also looking for similar policies, so it is not just public sector organisations that are focusing on green policies. As we look to the future, customers, including the next generation of buyers, increasingly care about more than just price and quality. They want suppliers to prove and improve their sustainability performance.
Irish SMEs will have to play their part
Sustainable procurement policies have been commonplace at large multinationals such as Tesco and Amazon for several years. These giants only source from companies that comply with their sustainable sourcing standards. An SME engaging with sustainability through environmental certification becomes a more attractive supply partner to such organisations. In addition, the Programme for Government 2020 commits to the implementation of a sustainable public procurement policy. As such, an environmental management system will increasingly become mandatory for public sector contracts in line with the government's green recovery initiative.
As mentioned above, Ireland is committed to achieving an annual reduction in emissions of 7% over the next 10 years. Irish SMEs will have to play their part in delivering this challenging target. The good news is that this can be done, whilst turning a profit. EcoMerit's certified base of customers are proof of this. Furthermore, their data records show that over the past 10 years, companies that have obtained and retained EcoMerit certification have delivered, measured and sustained reductions of over 9% per annum, saving some 70 tonnes of CO2 eq annually, whilst cutting their costs. If applied at scale across 10,000 of Ireland's larger SMEs, annual savings of 1 million tonnes of CO2 eq are possible.
As a leading Irish environmental certification company, EcoMerit has been helping Irish businesses to improve their environmental performance for over 10 years, through a continuous improvement model of certification focusing on waste, water and energy consumption.
As part of a Sustainable Energy Community registered with the Sustainable Energy Authority Ireland, EcoMerit member companies enjoy enhanced access to grants and finance whilst demonstrating their commitment to sustainable energy in Ireland. EcoMerit's Oversight Board provides assurance that the environmental certification is in line with best practice.
EcoMerit is committed to Ireland's green recovery post-Covid. We look forward to working with SMEs to improve their environmental impact through our proven and practical model. By working with EcoMerit, we believe that SMEs can future proof their businesses, save costs and make their companies into more attractive supplier options for public and private sector customers.
For more information, visit our website to arrange a chat about environmental certification and performance.
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