Jesús González Arellano
Advisory Partner of Corporate Government, Risk Management and Sustainability
KPMG
/
Insight

Sustainability at the Heart of SME Business Vision

Wed, 02/24/2016 - 09:39

Historically, large corporations have been viewed by the public as mammoths stomping their way to the top, consequentially leaving behind sizable ecological footprints. In recent years, corporations have begun to tread softly as they realize that their global, overarching supply chains have been made vulnerable to climate risks and resource constraints. As sustainability strategies are incorporated into corporate culture, sights are turned to the less conspicuous consumers: SMEs. Suppliers and customers are increasingly demanding incorporation of sustainability management across supply chains, and this is especially relevant for those SMEs that are looking to acquire contracts with large corporations. Sustainability is no longer a term that pertains exclusively to corporations, meaning that small and medium companies must disentangle themselves from the misconceptions that sustainability is an unnecessary burden. In fact, they must quickly realize that sustainability must be fully ingrained in their business vision.

Individually, small players might leave behind slight traces of an ecological footprint, but when measured as a whole, their true impact is revealed. “There are 5.1 million organizations in Mexico. Of these, 95.5% is comprised of micro and small organizations, 0.3% are medium-sized, and 0.2% are large enterprises,” Jesús González Arellano, Advisory Partner of Corporate Government, Risk Management and Sustainability at KPMG, calculates. These entities normally do not look at long-term issues like energy costs, emissions, resource availability, and regulatory compliance. González explains, “When speaking of sustainability we incorporate strategy, energy costs, regulations, waste management, raw material availability, and resources. If a company wishes to have a place in the markets of the future it must incorporate this concept in its business plan.” Sustainability does not only encompass risks, it also includes a plethora of opportunities. “The challenge now lies in the lack of education and knowledge. While sustainability incentives exist, the question lies in whether companies are aware of them.”

Within this scope it is important to benchmark Mexico against other developing countries. Countries like Brazil, India, and China made an impact in terms of carbon credit sales, while Mexico’s role was limited in comparison. “From 130 projects issued in Mexico that obtained the credits, 80 of them were farms. This figure is insignificant when we compare it to those 5.1 million enterprises in the other markets,” González laments. There are relevant challenges from a social, economic, and environmental perspective, but there are also opportunities to be seized. “It is believed that Mexico is one of the most susceptible countries to the consequences of climate change.” It is not a matter of only comparing Mexico with other countries, but of recognizing the significant risks and opportunities for citizens over the long term.