ESG certification is critical for SME vendor sustainability

You are a certified sustainable organisation and many of you have developed your ESG programme.  

As part of your mandate, it is your responsibility to demand your vendors also become certified sustainable, right? But what happens? Either via your own procurement department or directly from the vendor, you hear – “We would LOVE to, but we are an SME (small to mid-sized enterprise with under 500 employees) and there are NO certification programs designed/priced for us. All the good programmes are built for big companies and are too expensive and/or time-consuming for us.”  

What do you do? You shrug and accept it.

SMEs are critical in driving ESG impact

67% of world employment is via SMEs. The engine that drives the world economy is the SME. If we hope to positively impact our world, SMEs must be involved.

If you read no further, remember this point – there are global sustainability certification/carbon neutral/ESG programmes that are designed and priced specifically for SMEs. Every one of your vendors, no matter how small, can become certified sustainable via a legitimate, global, audited, programme. 

However, SMEs have different needs than big companies. They are less marketing-centric and more sales-centric. Their brands are not supported with big ad budgets, but rather face-to-face interaction.

But what has the internet created...and COVID-19 accelerated? The internet has created a platform for consumers (B2B and B2C) to pre-review that SME without its input and decide yes/no based on the perception of satisfaction of need.   

What is a major need for those consumers? If that SME is certified sustainable. Seven out of 10 consumers will move their business if they find a certified sustainable company.  

How are certified sustainable SMEs that promote their certification as a differentiation tool performing against their non-certified competitive peers? They are growing dramatically faster. Studies show more than 75% growth (some studies show 2000%).

Sourcing a sustainable ESG programme

So, if your vendors could find a programme that is designed and priced for them, becoming certified sustainable would actually help them satisfy more than just you; it would help them satisfy a majority of their prospects/clients, positively impacting brand, competitive position and growth.   

If interested, what should your SMEs look for in a sustainability certification programme?

Below are the eight components they should want in a programme.

1. Employee Performance/Health Enhancement - Sustainability is not just about energy savings or Greening Up; it is also about people. If a sustainability certification programme does not have a ‘people piece’ that helps improve performance and health of your employees, it is not a true sustainability programme. Every organisation suffers from the Big 5 — employee insomnia, stress, anxiety, physical pain, and mental acuity. Studies show the cost of the Big 5 to organisations is 5% of the company’s GDP, every year. Net, we start here, as it typically has the biggest impact on an organisation.  

2. Certify the business, not the box - People care about things that affect people. Building certifications care about the energy reduction of the building (ie, box); but are not interested in what goes on inside the box, which is what people care more about. This includes things like people (mentioned under number one), water, waste, safety, community, vendors, clients, et cetera. Further, building-centric programmes are hard to promote and tie to sales/revenue. It is hard to grow sales by saying “buy more of my product as I office in an energy efficient building.” But, with a sustainability certification of your business, that statement becomes “buy more of my product as it is made by a sustainable company.”

3. Third-party audit – Any certification programme must have a third-party audit process separate from the entity selling you the certification, to maintain credibility. Without this, an organisation can make exaggerated claims and the certification loses credibility and value to the marketplace.

4. Use a respected and integrated global standard to maximise credibility – The sustainability industry is maturing and coalescing around a few key standards that cover sustainability certification, carbon neutrality, UN SDGs, and ESG planning. If you want to maximise the market’s positive response to your organisation’s receipt of a sustainability certification, select a standard that is globally known, respected and integrated into all the programmes and protocols the world is following. 

5. Promotion of the certification – If you want to benefit on the revenue-side of your P&L, pick a programme that incorporates promotion into its service to help you maximise your differentiation and revenue-side benefit.

6. Continual improvement – Find a programme that lets you come as you are; and follows the concept of continual improvement. This will allow your organisation to start from wherever it is, move at its own pace, achieve goals, enjoy the process and start believing in the benefit of always striving to be a little bit better.   

7. Annual update – Current equals credible. You want a programme that annually updates and includes the date as part of the certification.  

8. Cost – Yes, we could have started with this, as cost is always a factor. But, we end with it, as the above define the value you are seeking. Then, the components of your cost include

• the money you pay for the certification

• the money you pay for the improvements to qualify for the certification

• the cost of the audit (if it is a legitimate program)

• the cost of your staff’s time. You need a certification program that delivers on the above seven points without crashing on any of the four components of cost.

Benefits for SMEs beyond ESG

The good news is there are sustainability certification programmes that deliver on all eight of the above points. If your SME vendors follow this guide, they will find a programme they will be happy with.

They will be doing the right thing for the environment. Their staff will be happier, healthier and more productive. Their costs will go down.

They will differentiate from their peers, which will have a positive impact on brand and sales efforts. And, the entire programme will be affordable – both in cost and time.

About the Author

David Goodman is the CEO of Edenark Group, the world’s premier environmental sustainability certification/carbon neutral/ESG planning programme for SMEs (small to mid-sized organisations).