It is undeniable that sustainability issues present significant challenges to companies' performance, although a few still believe it is possible to succeed without this type of concern. It has become increasingly clear that success without a genuine concern for sustainability is an uphill battle.
The Profit, Planet, People "trilemma" underscores this reality. If it is clear that without Profit, there can be no meaningful consideration for the Planet & People, what is even more apparent is that without prioritizing Planet & People, there will be no Profit, and sustainable Profit becomes an elusive goal.
Moreover, this reality will reach all business dimensions very quickly. Traditionally, sustainability has been viewed as a priority primarily for large companies. However, the landscape is rapidly evolving, and small and medium-sized companies (SMEs) are now confronted with the same imperative.
These challenges are no longer exclusive to corporate giants. SMEs must adapt and embrace sustainability as an integral part of their business strategies. In my opinion, SMEs have a unique opportunity to create a competitive advantage, something hardly possible for large companies.
The terrain of sustainable positioning within larger companies is already well-established and fiercely competitive. We are already in the "territory" of license to operate.
Companies such as Unilever and IKEA paved the way fifteen years ago, reaping the benefits of their early adoption and benefiting today from this "business case for action." Today, competing in this dimension is complex and requires creativity and investment.
However, the space remains largely unexplored for SMEs, particularly in the Portuguese market. I sincerely believe that SMEs that can now position sustainability at the center of their business strategy will have the opportunity to create a competitive advantage that the large ones will hardly find anymore.
While many businesses are compelled to compete solely on price, there is space for SMEs to break free from this constrained approach and embrace sustainability to stand out in the marketplace.
But why is this opportunity so critical for SMEs?
Firstly, it is essential to acknowledge that the pressure to become more environmentally and socially responsible is not going away. European legislation is becoming increasingly stringent, imposing sustainable practices on companies across the board. SMEs must adapt to meet these requirements or risk exclusion from the supply chains of larger corporations that demand sustainability.
Rather than viewing sustainability as a threat, it is crucial to recognize it as a tangible reality. By reframing these challenges as opportunities, SMEs can position themselves at the forefront of sustainable business practices. Unlike larger companies, they can enter this competitive space without intense rivalry.
To truly succeed in today's business landscape, SMEs must grasp the immense potential that lies in aligning their business with sustainability concerns. And several success stories of SMEs in Portugal prove it is possible to follow this path successfully. We will be exposing these stories from time to time in this message.
Have a great and impactful week!
Nuno Moreira da Cruz
Executive Director at the Center for Responsible Business & Leadership
This article refers to edition 197 of the "Have a Great and Impactful Week" Newsletter.