SMEs represent a very large part of the Belgian economic fabric: they generate more than half of the total added value and provide employment to 65% of the workforce. The voluntary commitment of SMEs to integrate responsible conduct into their strategy contributes directly to the implementation of the Sustainable Development Goals (SDGs), while also allowing them to reap the benefits from this process.
At first, entrepreneurs may be reluctant because of obstacles or constraints, such as the efforts required both in terms of budget and staff allocation. To address these understandable concerns, it is important to identify the benefits that all companies, and in particular SMEs, can derive from integrating responsible conduct into their strategy.
What Are the Benefits for SMEs in Adopting Responsible Conduct?
A Competitive Edge
Responsible conduct can provide SMEs with a significant competitive advantage:
- when entering into contracts with other companies wishing to ensure that their co-contractors adopt high standards of social, environmental and governance compliance;
- in winning public contracts which include social and environmental clauses;
- when developing new and innovative products and services that are more appealing to consumers who pay attention to these values, thus expanding their customer base;
- in obtaining subsidies. The institutions that grant them often make their payments conditional on objectives related to responsible business conduct.
An Ethical Duty, an Attractive Factor for Involving (Future) Employees
SMEs are organisations whose size leads to strong employee support for the projects and commitments of "their" company. This support is all the more important if the company's orientations are in line with their values and their aspirations as citizens.
It has been shown that when a company is committed to preserving the environment and enhancing the well-being of its staff, it motivates and retains its employees. They are also concerned about the respect of workers’ rights all along the production chain.
The implementation of these priorities helps to attract new talent.
Involved and motivated workers also reduce the risk of absenteeism.
A Commercial Advantage, an Attractive Factor for Customers
Consumers have more leverage with SMEs than with large multinational corporations. It is therefore in the interest of SMEs to act in ways that respect consumer choices and to be transparent in their management of the risks of negative consequences of their activities.
Implementing responsible business conduct helps to enhance the company's image and reputation. It boosts consumer confidence, retains old customers and attracts new ones.
It therefore allows the company to transform the efforts it makes to meet the ethical and societal expectations of consumers into a commercial advantage.
A Financial Advantage
In the short run, developing and implementing a responsible business strategy generates administrative and other costs, but in the longer run, it provides financial benefits.
The efficient implementation of a responsible business strategy helps to curb rising operating costs. The reduction of absenteeism or better management of electricity consumption will also result in significant savings.
Committed investments are also likely to generate higher returns. In the environmental field, investments aimed at reducing energy impact (better insulation, installation of solar panels, etc.) will lead to a reduction in operating and production costs. The same applies to water savings, waste reduction and the transformation of production rejects.
The implementation of a sustainable strategy can also be achieved by pooling the additional costs that it may generate (sharing office space, equipment, administrative costs and expenses, etc.). The flexibility of the SMEs structure tends to facilitate this type of management.
In addition to reducing costs, this strategy can lead to increased profits by attracting new customers and new markets.
An Attractive Factor for Investors
A responsible conduct also attracts investors who want to invest their capital in supporting projects and economic growth that are sustainable. Such an approach can also facilitate borrowing at more favourable rates.
For the company, access to additional capital will improve its thought process and allows it to:
- assess its strategic sources of supply;
- further its understanding of the market in which it operates;
- strengthen its commercial relations;
- consider new markets.
An Inspiring Approach
Any sustainable transition initiative can inspire other companies, suppliers or customers who can in turn adopt better practices. Consumer demand is also part of this logic.
A Factor of Resilience
Companies that engage in responsible conduct prove to be more resilient than others. Now that the time for recovery has come, public policies will favour the sustainable economy. It seems appropriate to pursue sustainable objectives in order to benefit from the aid that will be granted.
A Proactive Approach
The earlier a company voluntarily engages in responsible conduct, the less it will have to transform itself when responsible conduct becomes legally binding. Companies that have implemented it, will be ahead of the curve in their investments when these constraints are imposed on all and they will then be rewarded for their current investments.
Responsible Conduct Initiates a Virtuous Circle
Adopting a responsible business strategy socially, environmentally and in terms of governance helps to raise the company's visibility and provides significant financial benefits. It also is an effective way for the company "to manage risk, diversify its activities and increase its productivity.”
When a company acts responsibly, it acquires qualities that make it more attractive and successful. It gains access to new markets, attracts new capital, retains the best teams. In short, it enjoys advantages that allow it to gain respectability, further reduce its social and ecological footprint while becoming more competitive. This makes it a truly more ethical company, more respectful of human rights and the environment.