Recommendations for SMEs to overcome challenges related to sustainable business practices

Teksti | Ausra Putvinskiene , Nikolina Koporcic

The role of small and medium-sized enterprises (SMEs) in sustainable business practices cannot be underestimated. They represent about 90% of global businesses and play a vital role in the economic and social growth of any economy. However, unlike large corporations, SMEs face numerous challenges in implementing sustainable business strategies (e.g., Sonntag et al., 2022).

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Master thesis by Ausra Putvinskiene investigates these challenges and offers a simplified six-step framework for SMEs to use to be able to adopt sustainable business practices. The thesis explores Kiosked, an SME operating in the AdTech business. Seven employees were interviewed to determine their knowledge of sustainable development goals (SDGs), top management engagement, and the perceived impact of sustainability on business performance. Findings reveal that Kiosked sustainable business strategies are not used to their full potential due to a lack of awareness, as well as limited human and financial resources. An additional barrier is the perception that the company is too small to have any tangible impact on sustainability matters.

The results obtained from interviews are comparable to those revealed by the literature in terms of challenges that restrict SMEs from implementing sustainable business growth. Five main barriers that prevent SMEs from adopting sustainable business were identified: lack of internal resources and competencies, institutional factors, limited financial resources, lack of demand, and standardized tools. These barriers also include a shortage of government support, clear legislation, and funding programs for SMEs.

After identifying the challenges faced by SMEs in adopting sustainable business practices, it is essential to provide a clear and comprehensive implementation plan. The thesis proposes the following practical six-step framework that SMEs can use to implement and integrate sustainable business activities:

  1. Anchor in Top Management – The role of top management is central in launching a corporate sustainability plan with a defined vision and purpose supported by the management board. A company cannot have a sustainable strategy without such a mission, which is required by investors to generate sustained profits.
  2. Map – Once top management is committed to sustainability, it is vital to have a clear overview of the current situation and a strategy map. The next step is mapping the company’s social and environmental impact. The SDGs are a good checklist for mapping existing situations, opportunities, and barriers. Business Model Canvas is widely recommended as a tool for mapping sustainable business strategy, as it integrates sustainability into a core business. The tool aims to maximize positive impacts on society and the environment while minimizing negative ones. Visualizing these concepts on canvas improves conceptual clarity, understanding in the team, and third-party communication. It also lays the groundwork for creating a solid company strategy.
  3. Test – Stakeholders play an important role in businesses due to various reasons. If the sustainability program is tested with stakeholders before the official launch, it is more likely to succeed.
  4. Launch – The process of launching a plan and communicating its responsibilities to key stakeholders is as critical as the plan itself. It is important to inform and share knowledge with external stakeholders, who can benefit from this. It is also vital to educate employees on how to improve their focus and planning of sustainable practices. Employees need to understand the rationale behind any changes made in the name of sustainability.
  5. Implement – The implementation process ensures goals are met and requires follow-ups. It is advisable to incorporate sustainability into progress evaluations. It is also essential to note that declaring SDGs is not enough. Instead, companies require a long-term view to include SDG in their strategy.
  6. Report – This last step is the most challenging one. Reporting on social and environmental concerns using figures demonstrates that business handles such issues in daily operations (e.g., lowering CO2 emissions, the share of recycled material in final products, etc.). Companies should report missed objectives and causes as well. Existing reporting requirements are often overly complex. Therefore, it is important to create a simplified reporting framework for SMEs, as discussed in the literature as well (see e.g., Bold & Gregor, 2021; Val, 2022). Such simplifications would help SMEs report on sustainability more easily and decrease their administrative burden.

Thus, the sustainability in SMEs is a collective responsibility that requires cooperation and hard work from all the shareholders, including society, businesses, and governance (see e.g., Smith et al., 2022). While there is still much to be done, we can create a more sustainable world by working together towards a brighter future. SMEs play a significant role in this effort, and it is critical that they are aware of and understand the underlying significance of SDGs and prioritize sustainable practices in daily operations. By raising awareness and changing mindsets, SMEs can considerably contribute to a more sustainable future for all.

This paper is based on Ausra Putvinskiene’s thesis on Sustainable Business in SMEs, which can be found here (Sustainable Business in SMEs: case Kiosked – Theseus). The thesis is part of the master’s degree programme in Leading Transformational Change and is an excellent example of good practices, generalizable to all SMEs operating in similar industries. It is oriented towards the future and promotes workplace development. The topic is closely related to the expertise of Ausra’s thesis supervisor, Dr. Nikolina Koporcic, who recently published an invited editorial on the topic: Markovic, S., Koporcic, N., Barkemeyer, R., & Samara, G. (2023). Sustainability and Interactive Network Branding in fast-changing business environments. Business Ethics, the Environment & Responsibility (in print), as well as an edited book: Markovic, S., Lindgreen, A., Koporcic, N., & Micevski, M. (Eds.) (2023). Approaches to Corporate Social Responsibility: Knowledge, Values, and Actions. Routledge (in print).

Reference list:

  • Bold, F., Gregor, F. 2021. SMEs and the Future of European Sustainability Reporting Rules. SDG Investor.
  • Markovic, S., Koporcic, N., Barkemeyer, R., & Samara, G. (2023). Sustainability and Interactive Network Branding in fast-changing business environments. Business Ethics, the Environment & Responsibility (in print).
  • Markovic, S., Lindgreen, A., Koporcic, N., & Micevski, M. (Eds.) (2023). Approaches to Corporate Social Responsibility: Knowledge, Values, and Actions. Routledge (in print).
  • Smith, H., Discetti, R., Bellucci, M. and Acuti, D. 2022. SMEs engagement with the Sustainable Development Goals: A power perspective. Journal of Business Research, 149, pp.112–122.
  • Sonntag, R., Lewis, G.J. and Raszkowski, A. 2022. The Importance of Implementing SDGs by Small and Medium Size Enterprises: Evidence from Germany and Poland. Sustainability, 14(24), p. 16950.
  • Val, E. 2022. Why SMEs can’t afford to ignore sustainability reporting and how to get started. Sustainable Business Guide.

About the authors

Ausra Putvinskiene is an experienced professional with extensive expertise in sales and account management for B2B clients. She is currently pursuing an MBA at the Laurea University of Applied Science, while working as a global account manager in an IT company. Over the past year, Ausra has dedicated herself to deepening her knowledge of sustainable business and the SDGs, topics she is passionate about.

Dr. Nikolina Koporcic earned her Ph.D. in Economics and Business Administration in 2017, at the Åbo Akademi University. Currently, she is a Senior Researcher at Laurea University of Applied Sciences. In addition, she is the Visiting Senior Lecturer at the Luleå University of Technology, the Adjunct Professor at the University of Turku, and holds an affiliation with Åbo Akademi University. Nikolina’s research areas include co-creation of value, open innovation, corporate branding, entrepreneurship, business relationships and networks. In particular, she is studying the importance of Interactive Network Branding for small firms in business markets. Nikolina has published 16 peer-reviewed academic articles, 3 books, 8 book chapters, 22 conference proceedings, and 5 Laurea Journal articles.


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