Consumers around the globe are demanding businesses embrace sustainability and environmental protection as the world transitions to a carbon-free future.
A 2019 Abacus Data survey1 found that 61 per cent of Canadians support a Green New Deal, described by the pollsters as “a massive government jobs program and investment in clean energy, green technology, and electrification.” The COVID-19 pandemic is only accelerating the trend, our research has revealed. Two in five (41%) Canadian businesses told our new Navigator Resilience: Building back better report (PDF, 73KB) that the pandemic has led them to believe that sustainability is more important than ever. But even before the coronavirus, HSBC research also found that consumers have been fuelling the drive towards sustainable supply chains.
An increasing number of major investors, as well, from the trillion-dollar Norwegian sovereign wealth fund2 to private capital titan BlackRock3, have pulled their money out of fossil fuels. It’s not for altruistic purposes — returns from oil and gas investments were underperforming before the COVID-19 pandemic.
HSBC, in fact, recently launched a new environmental, sustainability and governance (ESG) reporting service that provides asset owners, like insurance companies, pension funds and sovereign wealth funds, with independent measurements of how focused their listed assets are on ESG issues.
It’s never been more clear that organizations of all sizes must have an environmental sustainability policy. Some jurisdictions, like the European Union, are even preparing to implement sustainable investing requirements4.
Small- and medium-sized enterprises need to satisfy consumer and regulatory demand for sustainability while expanding their own market share.
How to do so?
Engage with your staff
Brainstorm with your staff, particularly those on the front lines of product development, sales and manufacturing. They may have data, information and ideas on how to develop green products or how to make supply chains more environmentally friendly.
“Making sure your staff feel they’re contributing to sustainability efforts will ensure company-wide buy-in,” says Dana Krechowicz, Senior Sustainable Finance Manager, HSBC Bank Canada. “That could very likely result in a plethora of innovative ideas for new, greener products or supply chain partners.”
Develop eco-friendly products
Try developing products that respond directly to consumer demands for sustainable options. If you’re a clothing manufacturer, for example, use recycled or upcycled materials in your designs. And consider how all the raw materials involved in making the various components of your new product are extracted, processed and manufactured. How and whether materials are mined, drilled, grown or harvested makes up a large portion of your final product’s carbon footprint — and will either entice or repel potential customers. This kind of direct approach works well for SMEs because they are generally able to develop and bring products to market much faster than larger competitors, meaning they can respond to consumer sustainability demands as they evolve.
Canadian companies, in fact, are known for their agility in responding to the fluctuating Canadian dollar, and scaling up or down in response to changes in trading with the United States.
Focus on green salesEven though every industry has its unique challenges, SMEs must look for ways to put in place greener, more environmentally friendly sales operations. If you’re a small food retailer, for example, only sell locally sourced produce or use local suppliers for packaging and other supply chain needs — and make these efforts front and centre of any advertising or marketing campaigns because of the consumer demand for these types of initiatives.
Engage with your local communitySponsoring local events, sporting teams or projects, or volunteering in the community can give any SME a serious sustainability boost by helping companies build connections with not just potential customers, but local supply chain partners. It also shows would-be customers you’re engaged in the community, which could result in an increase of sales and profits, fuelling further sustainability investments.
“Consumers are changing,” adds Krechowicz. “They’re asking more questions about a company’s carbon footprint before they part with their money.”
By embracing sustainability, SMEs can position their businesses ahead of their competitors. In an era of heightened awareness about climate change, consumers will become loyal customers if they know that buying products or services won’t have a detrimental impact on the environment.
Contact HSBC to find out more about how your business can set itself apart in a more sustainable world.
2 World’s biggest sovereign wealth fund to ditch fossil fuels, The Guardian
4 Asset managers lobby Brussels to delay sustainable investing rules, Financial Times
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