The benefits of going green for small businesses

19 July 2018: Becoming more environmentally sustainable is not only viable for small businesses, but could yield even greater benefits as these small and medium enterprises (SMEs) grow.

This is according to Stanton Naidoo, Executive General Manager: Property & Asset Management Services at Business Partners Limited, who mentions that many SME owners still mistakenly believe, that going green should only become a priority once a fledgling business has managed to establish itself as a profitable enterprise.

“In fact, the advantages of implementing sustainable practices and strategies into an SME far outweigh any cost implications. In relation to this, a study by McKinsey & Company1 has revealed a strong correlation between resource efficiency and financial performance among businesses. It has also shown that businesses with well-rounded sustainability strategies are more attractive to investors and funders. As an example, investments by funders into sustainable and socially responsible businesses have increased by 22% in the US and Europe markets,” says Naidoo.  

He points out that aside from the long-term, positive implications of sustainable business practices, the fact remains that the increasing cost of essential business resources such as fuel, electricity, water and materials are all adding additional pressure to business operations.

Naidoo says that it is not only possible to become more sustainable without breaking the bank, but it also becomes increasingly costly to delay implementing sustainability measures. “There are affordable ways to “green” a small business, if tackled with an innovative mind-set. But as a business grows, it actually becomes more expensive to bring in large scale sustainable measures. If business owners delay it for too long, they may find that they have unnecessarily wasted massive amounts of cash throughout the years, and that their operation has become very expensive to convert to “green” measures.”

With this in mind, Naidoo states that entrepreneurs can consider any of the following steps when endeavouring to green their SMEs:

Fit energy-efficient lighting: It is estimated that lighting in the residential and commercial environments combined consumes approximately 50% of South Africa’s electricity2. Although energy-efficient LED lighting can be more expensive, the cost can easily be offset by the fact that these consume between 70% and 90% less energy.

Insulate the roof: While this may only be possible for property owners, there is a strong case to be made for this measure if renting the business premises. Optimised insulation is often the single biggest difference one can make at a relatively low cost. 

Install solar panels: The cost of installing renewable energy generation technology can be offset by the tax benefits involved. The Income Tax Act allows businesses to enjoy accelerated capital allowances, in respect of renewable energy spend, as a tax deduction. These tax incentives contribute towards driving down operating costs and one can enjoy a return on the capital investment over the shorter term. 

Opt for portable water tanks: Installing a fully functioning grey-water system might be beyond the reach of most owners of existing buildings because of the cost of re-doing the plumbing system. However, installing large portable water tanks to capture rainwater is an affordable step towards sustainable water use.

Use recycled materials, and find ways to recycle as much as possible: Recycled building materials are cheaper and more sustainable, and can be made to look brand new. Waste materials from other manufacturing companies (such as furniture makers) can also be incorporated in other businesses; and finding opportunities to recycle the business’s own resources, all present opportunities to save money, become more efficient and be noticed by potential clients and partners. 

Work with experts: Sustainability has become a specialised industry and one would not be unwise to seek the advice of a service provider that specialises in this field. From architects, to energy consultants and recycling experts, professional help often pays for itself in savings and valuable learnings. 

“Paying attention to more responsible and accountable behaviour can yield good benefits, and SMEs that embrace environmentally conscious and sustainable practices may find better ways to close the gap between themselves and larger competitors. Building a business on the principles of best practice as soon as possible is imperative for local SMEs that aim to become industry leaders,” concludes Naidoo.

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