The importance of strategic partnerships for sustainable growth

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1 The importance of strategic partnerships for sustainable growth some good practices examples from INSME Christin Pfeiffer

2 INSME International Network for Small and Medium Enterprises in brief

3 The Association comprises 92 INSME Members based in 37 countries (14 OECD- 23 non-oecd) in 4 Continents including: - 19 Governmental organisms and intermediaries, - 19 International Organizations; - 12 international NGOs and - 42 networks and intermediaries in the field of innovation and technology transfer

4 INSME s Global Outreach

5 INSME 2004 INSME % 10% 6% 4% 72% Africa Middle East Latin-America Asia Europe

6 Members main sectors of activities Environment Energy and renewables Biotechnology Agro-industry/agro-food ICT/information society Transport/logistics

7 9th INSME Annual Meeting The Governance of Innovation Co-organised in collaboration with: IZKA Development Agency Hilton Izmir Izmir, Turkey 21st to 24th of May 2013 No participation fee for INSME Members

8 Sustainability in Small and Medium Enterprises - Models and good practices

9 Small and Medium Enterprises should more and more play an important and active role concerning sustainable growth as they are the backbone of the global economy.

10 The majority has already understood the crucial importance of the concept of Corporate Social Responsibility (CSR) and work daily on implementation of sustainability strategies in their enterprises Numbers and facts from the recent empiric studies from European Commission and Ernst & Young stated a clear trend

11 Entrepreneurs do not limit their contribution only to an internal benefit, but take also the impact on the external dimension (outside their company) into consideration The Concept of Corporate Citizenship

12 Awareness is an achievement, agreement is a positive development, but what finally counts is Implementation. doubts to be able to increase revenues and remain competitive thanks to sustainability

13 Especially in small and micro businesses the commitment and conviction of the individual entrepreneur is of paramount importance: the brave ones understood the value increase due to the improvement of proper image thanks to sustainability management. In diverse cases cost reductions and image profiling helped those entrepreneurs to reach market leadership.

14 Sustainability management is motivated by: - Economic advantages and growth rates (as it is paying off) and - Social engagement The European Commission has carried out a study that showed that there is still no systematic approach in SMEs. Barriers are often the lack of personnel resources and financial means. Good practices might help to convince further SMEs to jump on this train

15 Some indicators on sustainability for SMEs:* Ecologic dimension Economic dimension Social dimension Use of raw materials Operating result Number of employees Energy consumption Equity ratio Number of trainees Water consumption Waste water production Profiability on own funds Profiability on debt capital Health rate Accident rate Air emission Return on Investment Labor turnover Waste water emission Net added value * All the three dimensions have the same weight no distinction

16 For all three dimensions separate strategies have been developed: - Efficiency strategy - Consistency strategy - Sufficiency strategy On this basis different concepts have been elaborated: a) Corporate Social Responsibility, b) Corporate Citizenship and c) Corporate Governance Source: WISO-Diskurs, Friedrich-Ebert-Stiftung www.

17 Large corporations highlighted the increase of competitiveness and oblige their satellite enterprises as well as their whole supply chain to develop strategies on sustainability management and monitor its impact. Also customers are more and more sensibilized and ask for products and services that guarantee the respect of environmental sustainability at least.

18 Also policy makers are aware of the paramount importance of sustainability and incentivize SMEs to act accordingly. Specific programs are a huge helping hand, but the personal conviction to invest in sustainable growth of the single entrepreneurs is the real crucial point No further regolamentations are requested by enterprises (recent empiric study)

19 New professional profiles have been created with regards to sustainability management Crucial is the knowledge in: - Energy savings and eco-efficiency - Use of renewable and green energy - Increase of materials efficiency - Evaluation and selection of suppliers - HR management with regards to environmental issues Initial Sustainability Check tool as good practice (see:

20 Still missing: An adequate networking capability among all actors in the context of sustainable development and growth. Networks as INSME, NGOs, industrial associations and labor unions shall play an active role here and are already giving a notable contribution.

21 In the current moment of global financial crisis and connected difficulties, SMEs mainly concentrate on mere survival. Why should they invest in a sustainability strategy and add a dedicated management and monitoring to their already overloaded priorities?! top five reasons why Source:

22 1.) Because sooner or later every business will have to pay attention to sustainability in order to stay in business Pressure and demands are coming from governments, consumers, employees and customers as Transparency is no longer optional Recent trends include not only corporate reporting on environmental and social practices, but also tracking and reporting (so the whole supply chain is involved)

23 2.) Because your company can obtain more business through commitments to sustainability Many big enterprises are asking for labeling to become eligible to stay on their suppliers list; the SMEs have to submit data concerning their sustainability policies and practices. Practical example: the case of IBM s procurement rules

24 3.) Because you can save on your bottom line energy prices have increased notably during the last years and have been the greatest source adding to the cost increases in SMEs Diverse programs have been developed to increase eco-efficiency and Brazil has some good practices to showcase to the world.

25 4.) Because you can add to the top line through innovation Sustainability is driving innovation worldwide: working together accross organizational boundaries is the highest factor to succeed in the sustainability space ; networking is therefore of paramount importance. (Quote: SAP Chief Sustainability Officer Peter Graf) innovation is where SMEs can have a major role as they are more flexible, often more creative and willing to experiment. Also the reaction time to eventual modifications if challenges require them is lower and SMEs can better adapt to changing market needs.

26 5.) Attract, retain and engage talent Often SMEs face the challenge that talented young workers prefer industry; the trend says that the young generation want their employers to be environmentally friendly even by sacrificing salary The development of their own sustainability strategies might help to attract most suitable human capital Initiatives sponsored by the European Commission etc. help to make this happen; IT platforms and other tools allow access to global discussion and good practice.

27 5 good selling arguments to assist your clients and make them understand that investing in sustainability is a smart business strategy

28 Green business models vs. classical green businesses Green business models are business models which support the development of products and services (systems) with environmental benefits, reduce resource use/waste and which are economic viable. These business models have a longer environmental impact than traditional business models. Source: Green Paper: Green Business Models in the Nordic Region:

29 Often those new business models are linked to a higher risk ability as they might be very complex to be evaluated by SMEs at the beginning Innovative Business Models with Environmental Benefits Source: European Commission: /pdf/nbm_report.pdf

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31 5 useful hints: - Build a business based on service - Create Community based on resource sharing (and make use of social networks!) - Find treasure in someone else s trash - Reuse and repair (consider also inter-sectorial approaches!) - Build for long-term sustainability (as eco-efficiency and quality is requested now by the customers!) Source:

32 Some good practice examples: Brazil: Centro SEBRAE de Sostenibilidad (CSS) - with the dedicated strategy to disseminate knowledge and achievements for micro and small enterprises to stimulate entrepreneurs to adopt sustainability management practices. - CSS has created a net of collaborators in each State of Brazil that works to bring all stakeholders involved together and to spread the culture on this subject all over the country. - At the beginning there were two main priorities: Residues management and energy efficiency - In one year CSS has given benefit to more than 5000 people and enterprises that will work as multipliers and spread the knowledge on Sustainability around Brazil. - More details:

33 Another good practice example from Italy: Treviso Tecnologia has launched or is part of interesting activities: The LCA living lab experience for SMEs Development of a diffuse laboratory on two sites that georaphically cover the area of north-east Italy (started in 2011) Main aim is to rise awareness of importance of LCA to SMEs, out of them (85%) manufacturing units 30 companies have accessed audit and consultancy services through regional co-funding and an agreement with the National Agency for Energy and Environment (ENEA) is under definition

34 Another good practice example from Italy: Less Energy more Efficiency Since 2010 member of Energy Efficient Buildings association, a Brussels based lobbying entity, that accelerates the adoption of the 20/20 goals by construction industry; Energy efficiency is intended as one of the main drivers for sustainability at a glance Particular attention is given to industrial building efficiency. A local (self!) initiative has been set-up, at regional level, namely a bio-construction district including 40+ companies A very interesting side effect is the establishment of a new service oriented to consumer evangelisation on energy efficiency and sustainability in collaboration with a faculty of psychology of the University

35 Another good practice example: Rainforest Alliance 25 years A label on food products (and more) Their innovative approach: The Rainforest Alliance uses the power of markets to arrest the major drivers of deforestation and environmental destruction: timber extraction, agricultural expansion, cattle ranching and tourism. We work to ensure millions of acres of working forests, farms, ranchlands and hotel properties are managed according to rigorous sustainability standards. And by linking those businesses to conscientious consumers, who identify their goods and services through the Rainforest Alliance Certified seal and Rainforest Alliance Verified mark, we demonstrate that sustainable practices can help businesses thrive in the modern economy. Good practice concerning labelling (certification) and use of networking and consumer involvement (social networks) Source:

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37 Creativity is allowing yourself to make mistakes. Art is knowing which ones to keep. (Scott Adams) Innovation is allowing yourself to make mistakes and risk. Business is achieving economic, ecologic and social benefits?

38 Thank you for your attention!! Christin Pfeiffer Secretary General