SMEs and the Road to Sustainability with McGill’s SGI | McGill Desautels Faculty of Management

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Businesses across Canada are searching for ways to adapt to the challenges presented by climate change. While the road to sustainability must be met with urgency, progress can seem slow and costly for small- and medium-sized enterprises (SMEs). At the Inaugural SME Round Table hosted by McGill University’s Sustainable Growth Initiative (SGI), a variety of scholars and community members addressed this central question: How can SMEs address the challenges they encounter on their journey to sustainable growth?

Javad Nasiry SME 2023Javad Nasiry, Director of the SGI, opened the round table with the presentation of the SGI’s interfaculty framework that focuses on collaborative efforts to address problems facing businesses today. “The goal of the SGI is to mobilize talent and expertise within McGill to help businesses move towards more socially and environmentally sustainable business models,” says Nasiry. Community engagement and information sharing between academics, students, industry, and policy leaders will play a key role in shaping the future of Canada’s businesses.

Why are SMEs central to the future of Canada’s economy?

“SMEs form the backbone of the Canadian economy in terms of numbers and contribution,” says Hamid Etemad, Professor of International Business and Marketing at McGill University’s Desautels Faculty of Management. Focused on the environmental, social, and governance (ESG) challenges that Canadian SMEs face in the national market, Etemad emphasized their role in our current context. SMEs are crucial to the Canadian economy, contributing 50.4% of the GDP. The majority of the total private labour force, a total of 88%, are employed by SMEs, and they constitute 99.8% of all businesses in Canada.

Quebec Net Positif With such an extensive influence on the Canadian economy, SMEs must be factored into plans for a more sustainable future. Keynote speaker Anne-Josée Laquerre, co-founder of Québec Net Positif, has been exploring the progress and setbacks of Québec SMEs as they navigate the path towards a low-carbon economy. “Transition pathways are critical for SMEs,” says Laquerre. The path these businesses will take may be different from one another, but the move to reduce greenhouse gases (GHGs) and diversify from unsustainable models of the past is necessary. They may have to do more than adjust existing business models: “The future is much more complex than that. Some companies will have to regenerate some of the resources used, and the core of the economy will not be able to sustain long supply chains,” explains Laquerre.

Since 2016, Québec Net Positif has researched, mobilized, and equipped SMEs across the province with knowledge and initiatives aimed at mitigating the negative effects of disrupted supply chains and helping SMEs launch environmentally-friendly initiatives. The independent not for profit think tank’s newly published Businesses Transition Barometer provides strategic data on businesses’ climate action throughout 2022-2023.

What motivates SMEs to transition towards a sustainable future?

Citizen pressure overwhelmingly accounts for the push towards a sustainable future with 40% of those surveyed by Québec Net Positif reporting concern for the climate crisis as a motivational trigger. Employees working in SMEs tend to apply the most pressure to transition towards sustainability. While the roadblocks include a lack of climate literacy and increased cost, the good news, Laquerre reported, is that the Québec government seems ready to step in. “Québec leaders are eager to act. Eighty-six per cent are motivated to do things differently,” says Laquerre.

With employees at the heart of the climate movement as it pertains to SME structures, a people-first perspective must be emphasized. Dr. Laurette Dubé, McGill Desautels Professor and Scientific Director of the McGill Centre for the Convergence of Health and Economics (MCCHE), remains similarly invested in the human aspect of systemic change. As climate literacy grows and more individuals advocate for change, business ventures are increasingly placing employees and their employers at the center. Dr. Dubé states, “We need to place the human being in the middle and keep them at the center of the systems we design.”

How can SMEs move forward?

Many SMEs are already accustomed to having to adapt quickly to an evolving reality and to relying on a collaborative community to instill change.

The consensus among panelists was that, while technology poses a major challenge in the transition towards sustainable models, it is also a source for potential solutions. Mehmet Gumus, Academic Director of McGill Desautels’ Master of Management in Analytics (MMA) program and Co-founder of Analytica, specializing in advanced planning and scheduling software solutions, noted the importance of sharing resources among SMEs to help them in their drive to sustainability.

Analytica works to achieve that goal while also centralizing Canada’s food sector across provinces. The PIVOT research project, founded by Dror Etzion, Professor of Management and Sustainability at the University of Vermont, similarly connects small business owners to share their climate goals, roadblocks, and accomplishments. Partnered with Québec Net Positif and managed by SGI, PIVOT leverages social media sites to investigate the kind of storytelling that motivates SMEs and brings entrepreneurs together in their journey towards sustainable action.

Jonathan L. Bélanger, Founder of online grocer Maturin, spoke to the difficulties faced by online groceries and agricultural economies. He says, “Everything is a challenge. You need to ensure freshness, timely delivery, accessible interfaces, and more. Technology is always changing, always updating.”

Veronique BeaulieuVéronique Beaulieu-Fowler, Director of Philanthropic Development at Food Banks of Québec (FBQ), spoke to yet another challenge –– one solely focused on sustainable innovations to fight food insecurity. “We at Food Banks are constantly innovating and rebuilding models to be able to reduce food waste,” notes Beaulieu-Fowler. With 19 banks across Québec, and 1,300 affiliated organizations, FBQ serves as a unified network bringing food donations to 1 in 10 Québecers every month. While addressing food insecurity, their supermarket recovery program and other initiatives have resulted in the recuperation of 6.6 million kilograms of food yearly.

The concept of sustainability within the context of the global food market challenges corporations and consumers to consider the true cost of international trade. Local importer Equifruit Inc. has harnessed their brand as a way to combat the rampant low wages and poor working conditions in the banana-selling industry. Jennie Coleman, President of Equifruit, criticized the global lack of bananas sold in fair trade terms. According to Coleman, to rectify the problem, the price of bananas simply has to increase. “Bananas shouldn’t be so cheap,” says Coleman, “it would take less than $10 a year [per consumer] to achieve a clean supply chain.”

SME Photo 2023Francesca Bonetti, Assistant Professor of Marketing at HEC Montréal, brought another international element into the collaborative mindset of the SME panel. Investigating the impacts of Brexit, COVID-19, and climate change on the U.K. fashion industry, Bonetti asked how the British government’s responses differ from that of Canada and the United States. The challenges faced by SMEs in the fashion industry are numerous. “We need new ways to reduce product transportation. Skill development schemes are also important –– with Brexit, it became really difficult to bring talent to the country,” summarizes Bonetti.

What comes next?

As Canada forges ahead with its 2030 Emission Reduction Plan, it has become clear that the transition to a sustainable economy will depend on collaborative efforts from large corporations and SMEs alike. Felipe Almeida, Senior Researcher at Microsoft Education and Microsoft Green Design Lab Co-Lead, noted that widespread attitudes conflating SMEs with large corporations, and assumptions that current models can stay in place, work against sustainable goals. “There’s a narrative of infinite growth which is something we need to stop. Our planet cannot handle that [mindset] anymore,” he comments. “There’s a shift that needs to happen, working as the big corporations work is a trap.” As businesses restructure and reinforce sustainable models on a global scale, SMEs have to address their unique roles and needs. Discussion forums and knowledge-sharing platforms, whether online or in-person, will determine the rate and success with which businesses move into the sustainable economy.

Daphne FergusonThe City of Montreal’s commitment to invest $ 245,000 to the Lachine Canal 4.0 project exemplifies the city’s dedication to creative and sustainable initiatives. Daphne Ferguson, Director of Industrial and Sustainable Development at PME MTL, highlighted the challenges and measures proposed to support SMEs in their ecological transition. Her future-focused presentation detailed the economic and environmental benefits that the revitalization of industrial centres can bring to the Sud-Ouest community.

In terms of provincial contributions to national sustainability goals, Laquerre is heartened by Québec’s access to renewable energy and an agile business ecosystem. Some jurisdictions can provide more services for the planet than its residents need, accelerating the entire economy towards a low-carbon reality. “If the whole world is going to become low carbon by 2030, there will have to be people who take on more than their share.”.

This article was written by Ariella Kharasch



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