Sustainable Development; Competitive Advantage for SMEs

Private companies for a long time have existed to satisfy major stakeholders such as shareholders who need a return for their investment, customers who need quality products, government who need takes and so forth.

Changes in stakeholder expectations over the last couple of decades on companies has thrust sustainable development goals onto the door step of every company.  Championing sustainable development is not a small program that you run in your corporate social responsibility department but is becoming part of the organizational value proposition.

Avoiding negative publicity has been the major factor that has necessitated most companies to try incorporate sustainable development albeit in a very ad hoc and incoherent manner leading to wastage of resources. The explosion of social media has complicated the matter further ; with any news on violation of human rights (Employees), severe pollution and the likes spreads like wildfire and leaves an unforgettable mark.

At the same time, business leaders are learning that clean operations and higher growth can go hand in hand. Now that customers, investors, activists, and even a company’s own employees are voicing concerns about environmental impact, a greener record does more than simply guard against public-relations disasters. It can bolster a firm’s reputation.

Companies that champion sustainable development will not necessarily loose competitive advantage.

In cases where pursuing sustainable development increases operational cost, the merits that comes with a good reputation can actually offset the incremental cost.

Finally with government under pressure to implement Sustainable development goals, it makes sense that at some point they will start developing regulations on the same such as the one recently witnessed in Kenya on plastic paper bags.

To stay ahead of regulation SMEs must strive to establish industry standards around sustainable development goals that intersect with their respective value chains. An example is  SMEs in the bottling water sector  or fruit juice can develop an industry framework on water use efficiency.

Such a move is not only strategic but ethical as well. By cooperating with NGOs and nonprofit groups, companies can learn to adapt early to shifts in stakeholder interests, and put themselves in a position to help create—rather than react to—new regulations.