Sustainability: A Strategic Necessity for SMEs in South Africa

Published: 5 April 2023

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    Now more than ever, sustainability has become a critical issue for businesses of all sizes, and particularly for SMEs that make up the backbone of the economy in South Africa. The world is changing rapidly, and businesses are facing a growing list of challenges, from climate change and social inequality to digital disruption and economic uncertainty. While the importance of sustainability is widely recognised, there is still much to learn about how small businesses are approaching this issue and what challenges they face. To shed light on this topic, we conducted a survey with a group of 500 SMEs to learn more about their sustainability practices and attitude to the challenges at hand.

    Prioritise sustainability to gain a competitive advantage

    Sustainability is no longer just a moral imperative, it’s a strategic necessity for any business looking for long-term growth. When asked if SMEs have noticed any benefits as a result of incorporating sustainability into their business operations, 41.6% reported improved customer relations, 37.8% achieved cost savings, and 30.3% experienced improved brand reputation. These findings underscore the growing importance of sustainability for SMEs and suggest that businesses that prioritise sustainability may gain a competitive advantage in terms of customer loyalty, cost efficiency, and reputation management.

    Use environmental practices to save money and improve efficiencies

    When it comes to sustainable strategies, SMEs seem to be focusing on a variety of initiatives. According to our survey, the most commonly employed strategy is recycling waste, with 34.1% of respondents reporting that they prioritise this practice. Water conservation was the second most popular strategy, with 28.1% of SMEs indicating that they have implemented water-saving measures. Employee education programmes were also popular, with 26.9% reporting that they provide their staff with training and information on sustainability practices. These findings suggest that SMEs are adopting a range of strategies to promote sustainability, from resource conservation to education and awareness-raising, in order to reduce their environmental impact and increase efficiency.

    Innovate by embracing sustainability practices

    When asked what sustainability means to them, our SME respondents identified a range of practices and approaches. The most common response was sourcing environmentally-friendly materials, with 40.4% of respondents indicating that this was their top priority. Similarly, 40% of SMEs identified ethical suppliers as a key aspect of sustainability. A significant proportion of respondents, 39.4%, reported that they are focused on reducing their reliance on electricity. Finally, 31.5% of SMEs indicated that recycling was a central component of their sustainability strategy. By embracing sustainable practices and values, SMEs can position themselves as responsible and forward-thinking businesses that are committed to creating a better future for all.

    Load shedding is (and will continue) to be a major growth roadblock

    39.2% of respondents have rated load shedding as having a severe impact on their business operations, whereas an alarming 51.3% of respondents have stated that the Energy Crisis has had the largest impact on their business (more than Covid-19). This high level of impact highlights the severity of the problem and the urgent need for innovative solutions to mitigate its effects. Load shedding can lead to loss of revenue, reduced productivity, damage to equipment, and even potential loss of customers. It is crucial for businesses to take proactive measures to reduce their energy consumption, diversify their energy sources, and invest in energy-efficient equipment to minimise the impact of load shedding on their operations.

    Embracing sustainability is a form of future-proofing

    The results from our survey highlight the growing importance of sustainability for businesses of all sizes. The findings demonstrate that SMEs are adopting a range of strategies to promote sustainability, from resource conservation to education and awareness-raising, in order to reduce their environmental impact and increase efficiency. It also can be seen that the practices implemented most widely are the ones with the lowest barrier to adoption, so it is critical for SMEs to find new, innovative and implementable solutions for their businesses. And with over 75% of businesses not having a set Environmental, Social and Governance (ESG) strategy for the next 12 months, it is clear that a strong focus is needed in the short term. 

    By prioritising sustainability and taking proactive measures to mitigate the impact of load shedding, SMEs can position themselves for growth, innovation and success, in the short term, and the long term.