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Media
release
EMBARGO
- 11AM 20th October 2009
SMEs FINDING SUSTAINABILITY BENEFITS OUTWEIGHT
THE COST
Research
Introduction – The Sustainability Index and the SME Sector
Research Finding – Willingness
to Take Lead and Sacrifice for Sustainability
Research Finding – Sources of
SME Pressure for Sustainable Action
Research Finding – 50,000 SMEs
Actively Pursuing a Next Step
Research Finding - Barriers to
Sustainable Action
Research Finding –
Attractiveness of Sustainability
About the Researchers and Media
Contacts
Half of all
Australian Small and Medium Enterprises are willing to take
action to become more sustainable even if it has a negative impact on
their financial performance in the short term. This 51%
equates to 153,000 businesses nationally. Leaders pointed that aside from costs, a lack of information,
distrust of
sustainability claims and the availability of practical
choices were the major barriers.
Results suggest that currently more than 50,000 SMEs
are pursuing a sustainability initiative. When asked
to quantify the results, 46% said it would be at a cost, 31% would
achieve an increase in sales with 37% realising an increase in overall
margins.
The survey was conducted by AFS, a specialist market research company,
and Net Balance, which is Australia’s largest sustainability
advisory and assurance firm.
According to the Australian Bureau of Statistics, there are more than
300,000 small and medium businesses in Australia that employ over four
million people, or 42 per cent of the total number of people employed.
AFS Executive Chairman Drew Le Grand said together they generated 46
per cent of Australia’s gross domestic product.
“A quarter of SMEs believe that sustainability is a selling
proposition for them, a tangible opportunity to differentiate from
their competitors.” Mr Le Grand said.
The results show more than 1 in 5 of all business are finding pressure
coming directly from customers (including government procurement) to be
more sustainable.
Net Balance Director Terence Jeyaretnam said over the past 12 months,
more than two thirds of the businesses surveyed had taken steps to
become more sustainably competitive and influence is coming from a
range of stakeholders.
At the moment 55% of all SMEs are influenced in some way to become more
sustainable. The major influencers in SMEs were internal
cultures or through promoters offering sustainable alternatives.
“Sustainable behaviour is highly subject to forces of
influence from wider stakeholder groups due to the nature of the
topic. Therefore, it is not surprising to see that
competitors, government, customers and suppliers as well as employees,
family and friends are all influencers when it comes to transforming
SMEs into more sustainable businesses.” Mr
Jeyaretnam said.
Owners, general managers, chief executives and financial officers of
800 businesses employing five to 200 people were interviewed as part of
the survey.
The businesses are members of 14 industries, including manufacturing,
business services, retail, IT&T, agriculture, healthcare,
education, personal services and logistics and transport.
Mr Jeyaretnam said he was surprised to find that more than 20% of
business leaders in the SME sector had chosen to redirect their
personal portfolios into ethical investments of some kind.
AFS and Net Balance devised an SME Sustainability Index by measuring
the respondents against 21 environmentally sustainable activities
weighted according to their complexity. The first results was
an index of 14.10 out of a possible 100.
“While SMEs have identified that being sustainable is good
for business, they note that the barrier to become sustainable is still
high as sustainable alternatives are too expensive with over 50%
believing that this is the case” Mr Jeyaretnam said.
“There is still a significant credibility barrier to be
bridged by green communicators and those that make green claims, as
identified by both a previous What Assures Consumers study by Net
Balance and this AFS study” said Mr Jeyaretnam.
Close to half (46%) said there was no availability of practical choices
to allow them take their next step.
Mr Jeyaretnam said of those who did know their next step, half are
seeking to improve energy efficiency, reduce waste or save water; 18%
are formally auditing and planning; 17% were changing to
sustainable work practices, buying sustainable infrastructure or
shifting to a sustainable supplier as their next step.
The
Sustainability Index
The AFS SME Sustainability Index is a quarterly survey of Australian
Small and Medium Enterprises (SMEs). The Index measures each
SME on 21 Sustainable activities. Interviews are undertaken
with business decision makers in organisations employing 5 to 200
people. The survey provides a statistically representative
sample for this business sector by interviewing 800 decision makers
across 14 industries, making the results accurate to +/-3.5% at 95%
confidence. The initial score was 14.10 out of 100.
In the interview respondents identify
their
business performance, major concerns, regional orientation and if they
export. The survey collects classification information such
as title, gender, age of the respondent and the length of time in
business. A summary of environmentally sustainable activities
includes making reductions in paper, water, packaging, waste, energy
and chemicals. Respondents may indicate activities in areas
such as sustainability orientated employment, community engagement,
purchasing policy, grant access and the development of green
products. Each respondent considers whether these activities
were undertaken in the last twelve months. The responses are
weighted by their complexity to undertake to produce an Index
score. The Index score represents Australian SMEs adoption of
the 21 activities. A score of 100% equates to all SMEs are
performing each of the 21 activities. A detailed report of
industry specific scores (and potential scores) will be presented in a
future report and made available to Government.
Independent review of the data and its claims is undertaken by Net
Balance, a leading Sustainability Assurance Practitioner of the AA1000
Assurance Standard for corporate Australia. Through the Net
Balance Foundation advises SMEs on improving sustainability
performance.
Download
.pdf version of the LAUNCH media release (7 pages.)
The Australian SME
Sector
The survey is in accord with Australian Bureau of Statistics (ABS) data
of Small and Medium businesses. At last count this represents
some 306,617 firms (2007.)
Category
Employees
Number
%
Large firms
200+
5,876
0.3%
Medium-sized
firms 20-199
78,304
3.9%
Small
firms
5-19
228,313
11.3%
Micro-enterprises
0-4
1,699,277 84.5%
According to the ABS, the SME sector
accounts for around 73% of all actively trading businesses in
Australia, employing 4 million+ people or 42% of total employed
persons. It is estimated to contribute 46% of the value of
Australia’s domestic production.
ABS Sources: Cat. No. 8165.0, Cat. No.1321
[Further
comment available – see
Media contacts.]
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Research Finding
– Willingness to Take Lead and Sacrifice for Sustainability
When asked 'would you be
willing to make your business more sustainable, even if it had a
negative impact on your financial performance in the short term?'
Of those who were aware of
the term, Yes 51%, No 40%, Don't Know 9% - Total 738
Results are indicating
that, to over 50% of Australian SME’s, being sustainable has long
term advantages even if they feel that there may be some financial
downsides in the short term. Other benefits of being sustainable
such as reputational and talent attraction also may play a role in this
sentiment.
[Further
comment available – see
Media contacts.]
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Research
Headline – Sources of SME Pressure for Sustainable Action
Sustainable
behaviour is highly subject to forces of influence from wider
stakeholder groups due to the nature of the topic – environmental
protection and social justice that concerns all. Therefore, it is
not
surprising to see that competitors, government, customers and suppliers
as well as employees, family and friends are all influencers when it
comes to transforming SMEs into more sustainable businesses. As
sustainability becomes more common a norm, the level of influence will
keep going up.
When asked is your business
being influenced in any of the following ways to become more
'Sustainable'?
If Yes (55%) which ones...
1. Pressure from customers including government procurement
policies 23% of all SMEs
2. Competitors using sustainability as a brand
differentiator
16% of all SMEs
3. Your suppliers promoting sustainable
alternatives to you
29% of all SMEs
4. By family, friends or within your business
30% of all SMEs
[Further
comment available – see
Media contacts.]
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Research
Headline – Attractiveness of Sustainability
A
quarter of SMEs said customers would be more likely to buy from them if
they were seen as more sustainable. Of those who were adapting
their
businesses to be more sustainable 26% said a 'sustainable image' helped
them to recruit the best talent in their industry. A
quarter of SMEs
believe that sustainability is a selling proposition for them, which
makes sustainability a tangible opportunity to differentiate from their
competitors.
1. Would customers in your
industry be more likely to buy from you if you were seen as more
sustainable?
All
SMEs
Yes 25% No/DK 75%
[Further
comment available – see
Media contacts.]
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Research Headline - Barriers to Sustainable Action
The research indicates that when business leaders are
seeking to become more sustainable 29% are
unable to trust claims, 46% find there is no availability of
practical choice, 52% believe sustainable alternatives
are too expensive and overall half cannot find the appropriate
information.
Research
Headline – 50,000 SMEs Actively Pursuing a Next Step
1. Do you know what your next initiative will be on Sustainability?
Yes – 14% of all SMEs leaders
knew what their next step on the journey to becoming Sustainable was.
When asked to identify what that is:
- 50% are seeking to improve energy efficiency, reduce waste or save
water;
- 18% are formally auditing and planning as a next step;
- 17% were changing to sustainable work practices, buying sustainable
infrastructure or shifting to a sustainable supplier; and
- 15% were either intending to promote their sustainable products
or get involved with the local community.
Of
those who knew what their next step was 31% said their next step
would actually increase sales, 37% that it would increase their gross
margins and 33% indicated it would decrease their costs.
[Further
comment available – see
Media contacts.]
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Media
Release Copy
About AFS
'Smart askers'
AFS 'Smart
askers' is an information services company, specialising in survey data
collection across Australia and New Zealand. AFS is recognised for its
superiority in reaching business decision makers; all projects run with
AFS have ISO quality accreditation.
About Net
Balance
Net Balance is Australia’s largest sustainability advisory
and assurance firm with offices in Melbourne and Sydney. Net
Balance works with some of Australia’s largest corporate and
brands on sustainability and with SMEs through Net Balance Foundation (www.netbalance.com).
Media
Contacts
Net Balance
Terence
Jeyaretnam Net Balance – Director
Contact for expert analysis: +61 3 8641 6400
Ross Wyatt Net Balance -
General Manager
Contact for expert comment: +61 3 8641 6400
AFS 'Smart
askers'
Drew Le Grand - AFS
Executive Chairman
Contact for research comment: +61 3 8789 4444
Brett Galvin - Media
Co-ordinator
Contact for urgent details: 0400 324 705
brett.galvin@afs-smart.com.au
Download
.pdf version of the LAUNCH media release of 6th October (7 pages.)
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