Sustainable enterprise?

Managerial folklore has it that, ‘if you can’t measure it, you can’t manage it’. As everyone knows, almost all businesses are small. However, one of the most striking things about the environmental impact of smaller organisations, is that there aren’t really any consistent and reliable measures. This glaring gap in our knowledge is evident in recent a European research study. It grapples heroically with the issue, generating a striking claim – that SMEs contribute roughly 64% to the industrial pollution in Europe – but the report also leaves many questions unanswered. Research conducted as part of our own Quarterly Survey of Small Business in Britain found less than one in three small businesses reporting any spending on their environmental impact over the last year, with 12% of small firms measuring their carbon footprint (a proportion that increased to 22% for those with 20 or more employees). But again, these are no more than isolated snapshots, which leave the inherent complexity and dynamism of the situation largely unexplored.

There are many good reasons for the lack of data, including the sheer heterogeneity of small firm population, differences in reporting requirements, and the fact that many smaller firms have far more limited resources than their larger counterparts – not to mention their day-to-day struggle to survive these recessionary times. However, the end result is that we are left with a yawning gap in our understanding. And it’s one that really does need to be filled. Without better information, it is hard to see how countries like the UK stand a realistic chance of delivering on their sustainability targets, not least of these being carbon reduction.

As little as forty years ago, policy makers in the UK woke up to the economic importance of small firms, having got into something of a fluster about an apparent decline in numbers, and started taking them more seriously (The Bolton Committee Report, 1971). In the wake of Bolton, there was a major expansion in small firms and entrepreneurship research. And as a result of all this effort, we now have much more reliable datasets on small business. These cover a variety of economic variables: business start-ups and closures, sectoral and regional trends in sales, profitability and investment, and much more besides. It’s a picture that contrasts sharply with our current state of knowledge about the environmental impact and performance of smaller firms. Of course, there’s plenty of public, private and voluntary sector activity in this arena, with each week bringing new initiatives that range from waste recycling and carbon foot printing. But how do we know if it’s actually working? There are many open questions. For example, are we better off encouraging smaller (and more local) models of enterprise, or are there some occasions when large is more beautiful – at least in environmental terms? It is difficult to see how governments, entrepreneurs and communities can make informed judgements about questions of this kind, unless we engage in a more concerted effort to measure the environmental impacts of SMEs, and to track longer-term outcomes. So are we – in some senses – back in 1971? Should our politicians be commissioning a 21st century equivalent of the Bolton Committee, but equipped this time with a more wide-ranging environmental brief?

This is one of the questions we’ll be considering at a workshop to be held at the Open University in a couple of weeks’ time. Of course, attempting to tackle a field as large as ‘environmentally sustainable enterprise’ is always going to be something of a challenge. I have been airing some thoughts on one small small corner of that field – how should we measure the environmental impact of smaller businesses? – and would welcome your comments.

Entrepreneurship has always had a strong ethical dimension. From the earliest times, there was a recognition that the responsibilities of farmers and business owners extend beyond that of securing immediate benefits for themselves and their families. Over the centuries, a variety of rules, norms and practices were developed that sought to reduce the harmful effects of entrepreneurial activity, and to promote positive outcomes. However, it seems to have been only in the last few decades that ethics and responsibility have become integrated into the mainstream entrepreneurship research agenda. In doing so, the agenda has broadened, raising some important new questions. From an ethical perspective, as George Brenkert (2002: 33) points out, ‘entrepreneurship is not simply about how one creates a business or the workings of the economy. It is far more about how we organise today’s society.’

I thought I’d begin my blog by telling you about the ISBE SEE conference track (www.isbe.org.uk). It is one small attempt to respond to this broader agenda and to connect it with mainstream entrepreneurship research, policy and practice. We received a record number of quality papers for last year’s conference and our 2011 submissions are looking to build on that. The SEE track is divided into three main sub-themes:

• Social and community enterprise and entrepreneurship
• Sustainable entrepreneurship and environmental impacts of enterprise
• Ethics, enterprise and social responsibility

Many of the issues addressed under these sub-themes are attracting increasing attention from policy-makers, practitioners and the wider population. For example, we are particularly interested in the ways that entrepreneurial activity contributes to current social and environmental problems, and how such energies might be redirected towards more socially and environmentally benign purposes. This has direct implications for public policies on climate change mitigation, including efforts to promote a ‘low carbon’ economy. The ‘environmental’ sub-theme is concerned with the pursuit of environmentally-responsible opportunities by mainstream enterprises, the creation of self-consciously ‘eco-preneurial’ ventures, and more radical models that challenge prevailing assumptions about enterprise and growth. Our ‘social’ sub-theme addresses contemporary issues in social and community enterprise, including the tension between maintaining core social aims and continuing to prosper in a highly competitive and turbulent marketplace. Ethics is another important sub-theme. Current topics in this area include the growth of ethical markets and the opportunities these can create in terms of providing services for disadvantaged groups or in facilitating markets in fairly-traded goods and services.

Micro enterprise manufacturing fuel-efficient ‘Gyapa’ stoves in Ashaiman, Ghana

So what is the future for the SEE track? Having reviewed our sub-themes, it might be reasonable to ask whether we are simply replicating the work of the business ethics and Corporate Social Responsibility (CSR) tracks that are found at most management conferences and in those of functional specialisms such as marketing and accounting. However, while there are some obvious overlaps, the distinctive feature of this track is its focus on the entrepreneurial dimensions of responsibility. In other words, we are much more interested in how organisations seek to pursue new ‘social’ and ‘environmental’ opportunities, rather than in how they manage existing operations. One of the major challenges for the track, and for the emerging field that it represents, is in developing a more coherent and integrated perspective on the complex and often contentious issues that it addresses. We also need more empirical work, including more reliable indicators of social and environmental performance and more in-depth case studies to explore the underlying mechanisms. I hope you may be able to join us, either by attending the track in Sheffield this autumn or by getting in touch directly as we seek to build a stronger research community.

You might also be interested in an event that we are running at the Open University on 20th September, What next for sustainable enterprise?: policy and research perspectives. Full details can be found here: