We are pleased to share the results of our sustainability survey, which gathered views from directors at more than 200 small and medium-sized (SME) manufacturing companies. The survey revealed that two in three manufacturing business owners and decision-makers rank sustainability as being of high or very high importance in their organisation, while the top sustainability priority for 2023 for industrial business owners is to formalise their sustainability strategy with clear goals and KPIs.
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While awareness surrounding sustainability has grown, the majority of SME manufacturers remain in the foothills of the journey. That's why Made Members gathered for a Masterminds roundtable to explore the common barriers to sustainable manufacturing and how to overcome them.
The discussion revealed that larger SMEs are significantly further ahead in their sustainability journey compared to the average small business. From their understanding of related terminology and regulations to the scope and complexity of programs, larger SMEs are well-versed in sustainability. This is reflected in the fact that the two larger organisations present at the roundtable both had dedicated sustainability managers, a role not present at any of the ten smaller companies represented.
The primary barrier SMEs face in becoming more sustainable is a lack of pull or pressure from the market. Attendees noted that almost all the changes they have made as a business are the result of customers or legislation making something necessary to continue trading. The lack of pressure from the market is why SMEs have been slow to adopt sustainability practices.
However, sustainability is becoming a key procurement criterion. Requirements are starting to cascade down the supply chain faster than business leaders anticipate. Take reporting on Scope 1, 2, and 3 emissions. Large companies have been required to report publicly on their Scope 1 and 2 emissions since 2019. This will become mandatory for all UK businesses, including SMEs, by 2025. Scope 3 reporting is voluntary, but it could become compulsory as early as December 2023. Many organisations are choosing to get ahead of future requirements by getting a handle on their carbon emissions now.
The Sales Director at an energy consultant noted that SMEs should not assume that none of this applies to them, as their customers may have legal requirements to report on emissions. The director advises that SMEs should not risk being denied a contract because they don't have the answer or even a basic awareness of what's required. Being able to evidence where an SME is and that their company is on a sustainability journey is becoming increasingly important.
Despite many not yet facing direct pressures to become more sustainable, manufacturers are still becoming ‘greener’ because their cost-saving or productivity initiatives are also creating environmental improvements. For instance, choosing to source UK-made components may have been done to reduce supply chain disruption, but those parts will also have a much smaller carbon footprint.
SMEs must act to keep up with larger companies in terms of sustainability. Even though sustainability is not yet a pressing issue for some SMEs, it will soon become a requirement for them to compete in the market. By taking steps towards sustainability, SMEs can enjoy cost savings, enhanced reputation, and competitive advantages.