Going Green for Growth: Why Sustainability is Crucial for SME Businesses

Going Green for Growth: Why Sustainability is Crucial for SME Businesses

In today’s world, sustainability has become one of the most crucial aspects to consider, including in the way one runs a business. Adopting sustainable practices and going green isn’t just about doing the right thing for the environment, but it’s also related to making smart business decisions that can help SME businesses to grow and thrive in the long run, especially if they incorporate it in their business model and strategy.

In the ASEAN context itself, 65% of SMEs have confirmed that sustainability has been taken into consideration, realising the importance and concern for their business. This includes working on key focus areas such as developing new business models, improving resource efficiency, and streamlining products and services towards a more sustainable way. 

What does sustainability in business mean? 

Sustainability in a business context means adopting practices and strategies that enable companies to operate in an environmentally, socially, and economically responsible manner, while ensuring long-term success and profitability. This involves the capacity and commitment to balancing the needs of the business with the needs of society and the environment by taking into account the impact of business practices on people and the planet. 

  • Environmental perspective: 

From an environmental perspective sustainability for business refers to reducing the environmental impact of business operations. This could be done by minimising waste, using resources efficiently, considering adopting a circular economy model, reducing carbon emissions, among others. 

  • Social perspective: 

From a social perspective, sustainability for business means being able to be socially responsible and contributing positively to society. The quality of a company’s relationships and engagement with its stakeholders becomes critical in this perspective. This includes treating employees fairly, ensuring a safe working environment, ensuring customer satisfaction, as well as doing activities that engage with the community and doing volunteer work.

  • Economic perspective: 

From an economic perspective, sustainability for business means ensuring long-term financial success by adopting sustainable models that could promote economic growth and prosperity. Companies can do this in various ways such as investing in sustainable technologies, adopting circular economy models as their business model, and conducting sustainability assessments or impact analyses before making decisions.

The Benefits of Incorporating Sustainability into SMEs Business Model

The benefits that can be gained in our effort to incorporate sustainability into our business can actually be seen through one of the success stories from certain businesses – for example, the waste cooking oil business. Back then, who knew that from cooking oil waste we could run a business with many value-adds in terms of social, economic, and environmental aspects. 

In this case, several SMEs in Southeast Asia are known for their track record and brand image for turning waste into energy by focusing on incorporating sustainability matters into their business model. They tried to utilise the circular economy model by reusing and recycling the cooking oil waste into biodiesel. 

  • Increased efficiency and cost savings: looking into the economic and environmental perspectives, the practices of waste reduction, energy efficiency, and sustainable supply chain management can help SMEs to reduce operational costs, save money, and increase efficiency. By taking this consideration, SMEs can have a better chance to increase profitability and competitiveness. 

This Indonesian company gets the benefit of increasing efficiency and saving production costs. Since they rely on household cooking oil waste, the cost of raw materials becomes more affordable. SMEs who want to consider a similar business can gain revenue of up to USD 13,000 per month. Similar to that, an entrepreneur from Kuala Lumpur, Malaysia is known to receive RM3,000 monthly income from the same business model and is able to export it to Kedah.

  • Improved reputation and brand image & access to new markets and customers: looking into the social perspective, one of the key focus areas is ensuring employees’ well-being and customer satisfaction. Companies who look after these points while running their business would be more likely to improve their reputation and brand image as people might have a strong positive point of view towards the business practice. This will help strengthen their business in the long term as they retain loyal customers and attract more sustainability-conscious customers.

In addition, sustainability has become one of the main considerations for consumers , which affects their decisions and thus shapes their lifestyles. By having a sustainable lifestyle, customers are more aware and seek products and services that align with their concerns too. Hence, by incorporating sustainability into a business model, SMEs can align themselves with the growing demand for sustainable products and services and eventually could expand their market share and customer base. 

Looking at the examples above, having a unique value proposition of turning waste into valuable energy like biodiesel, not only improves a company’s reputation and brand image but also gained broader access to new markets and customers. This is because the business has an export market opportunity to the Netherlands, China, Korea, and many other countries. Moreover, the estimated global biodiesel market size is projected to reach USD 73.05 billion by 2030.

  • Funding opportunities: by complying our business with regulatory, environmental, and social needs, we will have a stronger presence and become more attractive in the eyes of investors and lenders. Thus opening up our business to new and more exciting funding opportunities. Additionally, many government institutions and investors are now focusing on specific investments in the sustainability area.

One of success stories recorded from the business of used cooking oil is Thailand’s Bangchak Group. With a similar model and solution, the business gained a joint venture agreement with a total investment of US$220 million to scale up their business and becoming the leading Sustainable Aviation Fuel (SAF) from cooking oil waste. 

In conclusion, taking consideration of adopting sustainability aspects into the business model is essential to achieve more economic growth, ensure a long-lasting positive brand image, and avoid any legal, financial, and environmental risks. Business models that incorporate sustainability have become appealing not only to customers and the government but also to investors. As a result, it can unlock SMEs’ possibility to receive even more funding. We can be more conscious in adopting sustainability by starting from reducing energy consumption, using alternative products for plastics, creating a safe working environment for employees, and many more.


Disclaimer: The information provided to you in this blog post is intended only for general information purposes only and does not constitute legal or other professional advice on any subject matter. The materials and the information provided are not intended to be and do not constitute an advertisement or solicitation. In no event will Funding Societies be liable to any party for any direct, indirect, incidental, special, consequential or punitive damages for use of such information by you or any unauthorised third party.

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