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This project, conducted by four graduate students at New York University’s Wagner Graduate School of Public Policy (NYU Capstone), examines the business case for sustainability, with special consideration for small and medium-sized enterprises (SMEs). By examining underlying motivations, information sources on sustainability, and how companies make decisions, the report suggests strategies for assisting SMEs in implementing sustainability programs. From September 2011-April 2012, NYU Capstone performed a literature review and conducted a series of interviews with associations, industry experts, and seventeen businesses in the United States, most of which were SMEs.
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NYU Wagner Capstone Presentation to the U.S. EPA
Environmental Sustainability:The Business Case for Small and Medium Size Enterprises (SMEs)
Rebecca Ackerman, Nerissa Clarke, David Glick, Josh Mandell
Why Focus on Small Businesses?
• 26.8 million small businesses in the US
• Represent 99.7% of all employers
• Employ 49.2% of private-sector workforce
• Little previous information
Research Questions
1. What factors motivate an SME to consider sustainable practices?
2. Where does an SME find information on sustainability?
3. What factors go into the decision-making process for a company?
Methodology
• Researched• Developed• Surveyed• Compiled• Presented
Survey: CompanyCharacteristics
Annual Revenue of Companies Interviewed
under $1 million
$1 - $10 million
$10 - $50 mil-lion
over $50 million
Number of Full-Time Employees
under 10
10 to 50
50 to 100
100 to 500
over 500
Spectrum 8 Theaters
“It’s the whole package that motivated us to adopt sustainability into our business. We wouldn’t have installed solar panels on our roof without the financial incentives from the government, but we see it as a good cost-saving tool. It is helps us to generate community goodwill and to differentiate ourselves from our competition.” --Keith PickardSpectrum 8 Theater
Motivators
What factors motivate a company to adopt greener business practices?
Motivators
Leaders
hip
Cost Sav
ings
PR/Engagem
ent/B
randing
Culture
GrowthRisk
Steward
ship
Quality
Regulat
ion
0
2
4
6
8
10
12
14NYU Capstone Reported Motivators
Motivators
Leadership• NYU Wagner Capstone Survey: 76% of respondents listed it as
#1 motivator.
Motivators
Cost Savings• #2 Motivator -- 53% identified as primary driver.
Motivators: Challenges
Costs
Risk/Competition
Lack of Information
Behavior ChangeCoordination Internally/Externally
Lack of Control
Product Quality
Time Constraints
0
1
2
3
4
5
6
7
8
9
NYU Capstone Reported Challenges
Motivators: Challenges
Cost• Up-front and operational costs are prohibitive
• Cost is both a leading motivation (#2) and deterrent (#1) to adopting sustainable business practices
• Our Findings suggest:– Actual costs and ROI of programs may vary by industry/firm– Some industries/firms receive better information than
others– Our sample may not be representative of all SMEs
Motivators: Challenges
Risk• Companies perceive the costs to
outweigh the gains• 3 of 17 companies noted risk as a driver for
adopting greener business practices. • However, risk associated with competitive
price-cutting as the greatest obstacle (tied with costs) at 8 of 17.
Motivators: Challenges
Risk• Changing market conditions
is another risk that can stall companies from investing in green initiatives.
• Example: The film industry goes digital• New energy efficient film
equipment will result in large amounts of waste
Motivators: Challenges
Special Challenges for Start-ups• Start-ups face unique challenges in generating
revenue and minimizing cost, resulting in hypersensitivity to otherwise normal challenges.
• Focus on immediate growth
Information
Where do SME’s find information on environmental sustainability?
Information
Information Sources
Consulting firms
White Papers SurveysDirect service
Academia
ConferencesJournals
Lecture Events
Government Agencies
SBA
EPA
ChambersWord of Mouth
Employees
NeighborsCustomers
Business Networks
Trade Associations
Sustainability Specific
Organizations
Trade shows
Expert Guest Speakers
Internet Research
Company websites
Google Search
TwitterIndustry wikis
Media
Newspapers
Blogs
Magazines
Newsletters
Information: Scope
• Different definitions of sustainability• Customization
Information: Metrics• No Measurement Capability• Difficulty Knowing Where Success Is
Companies Need:• Cost Benefit Analysis• Return on Investment• Customer Benefit
“The information on sustainability is not obvious right now. You need to be really motivated and willing to search it out.”
~Spectrum 8 Theater
Information: Quality
• Plenty of Information Available• Quality over Quantity
Information: Insights
• Communication of Ideas• Business Networks
• Availability of Metrics
Decision Making
How do SMEs make decisions regarding environmental sustainability?
Decision Making:Large Companies
New Idea Introduced
Decision ProcessFormal
HierarchicalMetrics-OrientedDiscussion among
Top Execs and Board of Directors
Decision Making Criteria Profit
Return on InvestmentMarket Share
Company StrategyIndustry Trends
SalesCost Reduction
RiskBrand Equity
RetentionRecruitmentReputation
ImplementationRoll-Out Strategy
Change Management
ProcessInternal
CommunicationEmployee Buy-in
Decision Making:SMEs
New Idea Introduced
Decision Process:Informal
Owner/Manager Driven
Input sought from various stakeholders
Decision Making Criteria:Upfront Cost
Cost Recovery PeriodCompany Values
Customer DemandRisk
Return on InvestmentCommunity Goodwill
Implementation:Quick
All hands on deck
Selling The Business Case for Sustainability
Persuasion Techniques:
1. Identify - Company objectives - Company values - Major business challenges
2. Identify Personal Interests of Key Decision-Makers
3. Research Relevant Sustainability Options - Strategic solutions to real business challenges
4. Anticipate Opposition - Costs, staff resources, intangible results, lack of relevancy
5. Prepare Information in a Way Your Audience Will Understand - Facts - Language - Presentation
6. Present a Realistic Implementation Strategy
7. Be Prepared to Take Ownership Over the Process
Decision Making: Challenges
Conflict between short and long term
Perceived Trade-Off between Social and Environmental Causes
“A part of the reason that Dalberg does not see environmental sustainability as a necessity is that
it is a socially oriented business already. Employees think of the social impact they are having and therefore overlook or simply don’t think about the
more operational environmental impact.” ~Dalberg
Decision Making: Challenges
Decision Making: Challenges
Lack of Control
Research Insights
Facilitating change from various perspectives…
Research Insights
• System-Wide Change
• Organizational Change
Research Insights:System-Wide Change
Communication of Information• Informal community based networks• Trade Associations• Utility Companies
Develop Collaborative Solutions• Bulk Purchasing• Small Business Networks
Organize and Target Information by Industry
Bundle Environmental Initiatives Together• Frame sustainability agenda items as
a comprehensive package, not individual options
Baseline Measurement is the First Step• Set sustainability goals to encourage
progress• Then incentivize employees
Research Insights:Organizational Change
Conclusion
“While the city government provides some good ideas that we might never have thought about, maybe there could be
more help actually getting it done.”
~Blue Bottle Coffee
“If a student group or someone came in and did the analysis for free and did some follow up to assist with implementation, we
would go green.” ~Dalberg
Moving Forward
Green
Core?
Questions
