Ideas Shop Sustainability Report

Ideas Shop Sustainable Business Practices Survey in association with Chartered Accounting Firm BDO Spicers

www.ideasshop.co.nz

Published in March 2009 by Ideas Shop Ltd

Sustainable Business Practices | At a glance The Ideas Shop Sustainable Business Practices Survey was completed during March 2009. Of the 401 New Zealand small and medium-sized enterprises (SMEs) surveyed, almost all undertook some form of environmental, employment or social sustainable business practice. However, the level of business commitment to sustainability varied significantly depending on the location and the size of the business.

Methodology + + + + +

401 respondents across New Zealand Businesses employ between 5 and 50 staff (ie SMEs) Error rate of +/- 5% Organised into metropolitan and non-metropolitan areas 50% response rate of those contacted for a telephone survey.

• Sustainable business practice is regarded by most SMEs as important and something they will be working at over the coming years. • The survey results allowed us to categorise SMEs into five segments – from the small Eco-Warrior segment who undertake the maximum number of sustainable business practices and incorporate them into their way of operating, to unconvinced businesses who are cynical about the sustainability movement and complete sustainable activities almost by accident. • The number of people the business employs and the size of its turnover has a direct relationship with their likelihood of operating sustainably. • Around a quarter of SMEs (metropolitan and non-metropolitan) have a formal commitment to operating sustainably. • Around 10 percent of small and medium-sized businesses report on their sustainable business practices. • 95 percent of SMEs undertake at least one of seven environmental measures. • The most common environmental measures are sorting waste, saving power and conserving paper. • SMEs have flexible employment practises, with at least half offering staff at least one option for working flexibly. • Around 35 percent of SMEs offer their people wellness benefits such as independent financial advice or health/fitness benefits e.g. counselling. • 93 percent of small and medium-sized businesses undertake at least one charitable activity. • 87 percent surveyed donate to charity. Others sponsor events and provide pro bono goods and services. • Time and money are the biggest barriers to SMEs incorporating sustainable business practices. Being sustainable means incorporating good economic, social and environmental principles into products and services, long-term business planning, day-to-day operations and interactions with customers and suppliers. It’s about making intelligent business decisions and the best long-term use of talent and resources to improve the overall quality of life1.

www.business.govt.nz/General/Sustainable-business

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Introduction Sustainability is the biggest opportunity and challenge that businesses face. Developing strategies to take on sustainability is vital for the long-term survival of enterprise. The drivers are clear – and the change in thinking required and the associated challenge for business is significant.2 Among the 401 New Zealand small and medium-sized businesses surveyed, almost all undertook some form of environmental, employment or social sustainable business practice. However, the degree of commitment varied significantly depending on the location (metropolitan or non-metropolitan) and the size of the business. More than half of SMEs surveyed said that sustainable business practices are important to them, but time and cost were often the greatest barriers to their commitment. A quarter wanted to make a greater commitment but didn’t know where to start, lacked time and/or information, or thought their business needed to be bigger and more profitable to invest in sustainable business practices.

New Zealand Sustainable Business Network. www.sustainable.org.nz

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Meet New Zealand SMEs The 401 New Zealand SMEs surveyed were categorised into five segments, which demonstrate their level of commitment to sustainable business practices. These are demonstrated below:

Level of commitment to sustainable practices

MAX

MIN

14% Unconvinced

25% Triers

50% Starters

6%

5%

S.C E.W

Categories demonstrating commitment to sustainable business practices

Eco-Warriors (5 percent) Eco-Warriors have incorporated sustainable business practices into their everyday operations, with 70 percent of them planning and 11 percent measuring their commitment in their strategic and business plans. Eco-Warriors go above and beyond in their sustainable business practices and; • Always or often practice six or the maximum seven of the environmental options surveyed, • Achieve ‘harder’ environmental options such as offsetting carbon emissions, • Are far more likely to provide flexibility in the workplace, and • Are incredibly charitable, practicing at least three of the seven charitable practices, including reporting social sustainability practices. Sustainably Committed (6 percent) Sustainably Committed SMEs rate sustainable business practices as important (70 percent) and achieve many goals but see time and cost as barriers to doing more.

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Meet New Zealand SMEs (continued) This segment feels that while they are committed to making a difference and are actively looking for opportunities to operate sustainably, they can’t do everything. Over half of Sustainably Committed SMEs (60 percent) offer at least three of the flexible working practices surveyed, and all achieve more than recycling and power saving to minimise their environmental impact. Starters (50 percent) Starters agree that sustainable business practices are important, but cost and time are barriers. And their lack of knowledge about where to start in terms of creating a sustainable business model hinders them from achieving more. Although 85 percent of Starters are practicing between two and four of the environmentally friendly practices surveyed (including one ‘harder’ sustainable practice such as sorting waste) the majority of their activities are ones that also save the business money e.g. turning off lights. 50 percent of this segment offer some flexibility for their staff at work, contribute to their community or give to charity. Triers (25 percent) Triers don’t view sustainable business practices as particularly important to their business and while some do have a desire to do more, they are unclear about where to start. Of the three sustainability components covered in this report (environmental, community and workplace), environmental responsibility was easiest for this group to achieve, with 85 percent completing between one and three of the lower-level environmental practices such as energy and water savings. 60 percent offer some flexibility in their workplace and 70 percent give in some capacity to their community. Unconvinced (14 percent) Unconvinced see sustainable business practices as soft and waffly, and irrelevant to their own business success and growth. If they are undertaking sustainable business practices then it is for reasons other than sustainability. 73 percent of this group offer flexible working arrangements and give to charity, which suggests that supporting their people and communities is important to them regardless of whether it aligns with sustainable business practice. Environmentally, half of this group make a minimum effort in helping the planet, and half do little to nothing.

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Growing businesses good for environment, employment and society

Sustainable Business Practices surveyed Employment + + + + +

Job share between two part-timers Reduce hours e.g. school holidays Work from home Change from full-time to part-time Work a 40-hours week in four days + Paid financial advice + Health and fitness benefits

Social/charitable + + + +

Donate to charity(s) Pro bono goods or services Volunteer leave for staff Established a foundation/trust for community projects + Taking on interns + Sponsorships + Measurement

Environmental + + + + +

Conserve paper Turn off lights Turn off computers and electronics Sort waste Suppliers chosen for eco-reasons + Offset carbon emissions + Measurement

The number of people a business employs and the size of its turnover has a direct relationship with their likelihood of operating sustainably. Therefore, businesses employing more staff are good for the environment, the communities they are part of, and their staff. As businesses grow, so do their resources, which allow them to offer benefits such as flexible working. Further, they have staff to drive the initiatives and are less reliant on a single leader/ decision maker.

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Sustainability: a long-term investment While SMEs regard survival as the most immediate challenge they face, sustainable business practices were regarded by most as important and something they will be working at over the coming years.

16% Irrelevant to our business

59%

25%

Important/very important

Part of our business plan

Very small firms of five staff or less rated sustainable business practices as less important; 60 percent rating sustainable business practices as not important at all. However, this might purely be about the practicalities of operating a micro-business, where options such as working at home, reduced hours or making a financial commitment to the community are not realistic possibilities. Still, of businesses employing 21 to 50 staff, 31 percent rated sustainable business practices as ‘not greatly important.’

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Measurement key to gaining from sustainable business practices Measuring and reporting on sustainable business practices is key if sustainability is going to generate business growth. Because many SMEs do not measure or benchmark their true costs, they are unable to identify the benefits of many of these initiatives. While around a quarter of SMEs (metropolitan and non-metropolitan) have a formal commitment to operating sustainably, reporting on those commitments is much lower. 10 percent of SMEs report environmental indicators and 11 percent report social sustainability indicators. The most likely groups to be reporting are Eco-Warriors and Sustainably Committed businesses who are also the businesses who truly understand how to use their sustainable business practices to further their long-term business success.

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Small businesses prove their flexibility

At least half of SMEs offered their staff at least one option for working flexibly. Businesses offered: • Changing from full-time to part-time work (54 percent), • Working from home (50 percent), • Temporary reduction of hours (e.g. during school holidays) 46 percent, • Job sharing (36 percent), and • Work 40 hours in four days (19 percent). The Families Commission states that flexible work arrangements can give employers a competitive edge. Benefits to employers can include: • Attracting staff and keeping them, • Reducing staff absence and sick leave, • Cutting staff stress and boosting satisfaction, and • Improving productivity. The survey found that businesses in metropolitan areas are far more likely to allow staff to work from home (60 percent vs. 35 percent) but less likely than their regional counterparts to allow staff to job share (27 percent vs. 36 percent). Around 35 percent of businesses also offered staff other wellness benefits such as independent financial advice or health/fitness benefits such as options for counselling.

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Low awareness of tax changes for donations

New Zealand businesses contribute around seven percent of total giving in New Zealand, with trusts and foundations giving about 58 percent of the total amount. On 1 April 2008 legislative changes came into effect, changing the way charitable donations are taxed, removing the tax rebate cap for individuals, companies and Maori authorities. However, despite 87 percent of SMEs saying they donate to charity, and 14 percent having established a foundation or trust that funds community projects, there was lower than expected awareness of the recent tax changes around donations. Of those who were aware of the tax law change, only 16 percent said it had influenced their donations. In metropolitan areas awareness, and changes to donation practices, were slightly higher. Philanthropy New Zealand’s study Giving New Zealand obsolete found that New Zealand is at the low mid-point of giving compared to other countries. We give more than Canadians and Australians but not as much as people in the United Kingdom or United States.

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Giving New Zealand, commissioned by Philanthropy New Zealand, March 2007.

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About Ideas Shop

Ideas Shop is a creative Public Relations company that ensures their clients’ messages are heard and understood. Their clients include the full range of the segments, together with those trying to encourage kiwis - both business and individuals - to operate sustainably. As a next generation professional services firm, Ideas Shop includes sustainable business practices in its strategic and business plans and has created a workplace culture where sustainable environmental, employment and social practices are a way of life. Sustainability for Ideas Shop is about living and working smarter and giving back to the communities in which we live, work and play. Ideas Shop undertook this research in collaboration with Chartered Accounting Firm BDO Spicers. Find Ideas Shop online at www.ideasshop.co.nz

www.ideasshop.co.nz

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