Our thinking

The great divide: Focus on the business 99%

12 December, 2019

Given 99% of all businesses in the UK are SMEs, it’s impossible to see a path towards tackling climate change or inequality that doesn’t include them. The decisions small businesses make every day around how they develop and deliver their products and services, and who they employ and how they employ them have the capacity to create a wave of change. If we are going to be able to mitigate and manage the impact of climate change, small businesses must be on board. If we are going to move towards a more inclusive society that works for everyone, they must play their part.

This is anything but easy. The number one concern for many small businesses, particularly in uncertain times, is to keep afloat. Most don’t have the capacity or the resources to map the full social and environmental impact of their business and work out how to address it. They may well engage in piecemeal activity that responds to specific consumer concerns or passion points of their own – for example, sourcing recycled paper or cutting waste – but they struggle to carry out anything more comprehensive. And less prominent issues, or those that are harder to address, tend to get left off the agenda completely.

This creates an urgent need to find a way to activate and engage this silent mass of businesses in order to generate change on the issues of our day and make it a democratic and inclusive process.

The path forward has to be realistic. For starters, we need a clear and simple framework that helps businesses work out where they should be focussing their efforts and what they need to do. There are some issues which are common to all businesses where guidance and tools for change can be standardised. There are also some issues which will be business-specific – but guidance can still be provided around how to identify these and what to do.

We also need an incentive system to drive uptake, and to close the loop in making action worthwhile for small businesses. This means providing grants and subsidies for specific activities, particularly those which have an extended payback time. New buying models for certain investments should also be part of the mix – small businesses can club together and share assets, localities can pool resources for businesses in their area to access or share, and service providers can accept alternative payment types or exchanges.

We also need to find a way to help businesses get the credit for the action they take – along with the consumer value that will bring. We firmly believe that demonstrating leadership on social and environmental issues is one of the best ways to create cut through and encourage people to walk towards a business or brand. That’s as true for a small company as it is for a larger one. Even for a one-man-band like a local window cleaner, adding to their leaflets that they manage their water and chemical use, or have found the most efficient environmental solutions, provides a strong differentiator and call to action for consumers

It’s hard to see this happening without the government playing a part – and I expect a focus on a responsible business framework for all businesses will be part of the post-Brexit agenda. But there is also a role for bigger organisations to play here – and a potentially powerful one. The most obvious mechanism for all big companies to utilise is their supply chains. The choices they make about who to procure from, the principles of selection they put in place around these choices, and the practical help and assistance they give their suppliers could combine to make a big difference.

Then there are sector specific ways to help – financial services companies that want to be an engine for transformative change could provide sustainability finance specifically for small businesses. Insurance companies could offer shared insurance products for shared assets. Suppliers of core sustainability services and supplies can ensure they structure and price their offers in a way that drives uptake from small businesses.

Closing the gap on the 99% is vital. The 1% can help.

By Giles Gibbons