A sustainability and eco-innovation framework for manufacturing SMEs

Abstract

Since the industrial revolution, manufacturing has been a major contributor to environmental damage, through pollution, the depletion of resources and the consumption of energy and the related burning of fossil fuels (IPCC, 2007). There is strong evidence that the situation will worsen, and there is a global call for urgent action to mitigate the accelerating damage (Füssel, et al., 2012; (IPCC, 2014). Sustainable economic development needs to consider the impact of Small and Medium Enterprises (SMEs), which make up 99% of businesses in Europe (European Commission, 2008; Audretsch, et al., 2009). SMEs cumulatively cause 64% of total industrial pollution in Europe, and contribute approximately 60-70% of the total industrial waste (Constantinos, et al., 2010). While large companies are showing improvements in environmental performance, the same is not true of SMEs. Only 24% of SMEs in Europe are currently acting to reduce their environmental impact (Constantinos, et al., 2010). SME owner-mangers do not have the time or resources to learn and apply sustainability principles, and are often not aware that their business operations have a negative impact. There are supports available, but many are not adequately designed for the majority of SMEs.

There is limited research in the area of SMEs and sustainability, and previous studies have not sufficiently considered the role of owner-managers. This research was carried out as part of a European FP7 project called FutureSME; involving a 26 partner consortium, 13 of which were manufacturing SMEs. This allowed access to SME owner-managers over four years. They contributed to the development, piloting and testing of SME-suitable tools and methodologies to improve sustainability maturity levels in manufacturing SMEs. In this study, ‘Sustainability Maturity’ is defined as ‘the capability of an SME owner-manager to manage the environmental sustainability of a business, including sustainability practices, knowledge of how the business impacts the environment, and awareness of how sustainability can be of business benefit’.

A Sustainability and Eco-Innovation Framework (SEco Framework) to support manufacturing SMEs was developed. It integrated existing methods, together with new ones, and aligned with an overall goal to guide and support SME owner-managers to incrementally improve the sustainability of their businesses. The Framework is a four-step process of (1) diagnosis, (2) identification of sustainability or eco-innovation opportunity projects, (3) selection and implementation of projects identified and (4) a review with the SME owner-manager. The process is supported by a comprehensive toolkit that can be easily applied in any small business. The study showed that the SEco Framework improved the sustainability maturity in SMEs, when it was tested in two small, Irish manufacturing companies. The findings of the research identified that an initial SEco Pilot Framework, which was an online selfled methodology, did not engage SMEs, despite being designed for and approved by end-users. It led to the conclusion that the majority of SMEs need the assistance of an external advisor to help them get started, and guide them through a step-by-step process. One particular tool, the Sustainability Report, played a key role in the company’s acceptance of the SEco Framework. The two key research contributions include new insights into SMEs and a novel Sustainability and Eco-Innovation Framework for SMEs to enable change and advancement in sustainability maturity in manufacturing SMEs.