Time to go green for Indian SMEs

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Writuparna Kakati | 03 May, 2011
The environment trend has been around and it is the best time for our SMEs (Small and Medium Businesses) to go green. As the problems of global warming gaining urgency, a massive number of companies, both small and large, from all over the world are showing interest to implement a green strategy into their business to address climate change.

In the last few years, we have seen a number of large multinational companies like Vestas, Suzlon, Philips and Simens, and even some small start-up businesses taking the 'green' issue seriously and willing to offer a helping hand to tackle climate change and ensure a healthy planet for ourselves.

But while a negligible number of Indian corporate biggies, and mainly the European businesses are showing their eagerness to go green, the the situation in India is far away from satisfactory as a whole; a few businesses are doing it willingly, others, particularly those that are energy-intensive, have the requirements to do so to some extent as a result of government legislations.

Overall, the green concept is not gaining enough popularity in the country - neither among the large businesses nor among the SME community - partly because of a lack of awareness and social responsibility, and partly because the businesses fail to understand fully the burning problem of climate change and global warming.

But sooner or later, Indian businesses will have to change their attitude and rectify their procedures - if not because the earth is going to melt down due to global warming or some new environmental legislations will make them to do so, then only because of growing awareness of their customers - especially the importers from the European countries and the US.

In fact, in the European countries, the number of a new group of customers classified as LOHAS (Lifestyles of Health and Sustainability) is growing at a rapid rate. This LOHAS group of customers takes their purchasing decision depending upon how a business operates itself. They have a profound sense of social responsibility and they are most likely to buy environmentally responsible products.

In India, we lack such customers till now but days are not far away when Indian businesses will have to deal with such consumer groups. And when it comes to the SMEs, engaged in export, particularly to the European countries, they are already in a race against time to turn green and tap into the wielders of a new economic power - the LOHAS.

What does the term 'green' exactly refer to? Let us first delve a little deeper; when energy from the sun heats the earth's surface, the earth radiates back a part of that energy again a part of which is trapped by clouds and by atmospheric gases (greenhouse gases or GHGs) to retain the heat like a greenhouse. As a result, the earth get warmer. Scientists are of the view that the layer of greenhouse gases has been increasing at a rapid pace for the last fifty years due to different forms of human activity and primarily as a result of rapid industrialization. Now the Mother Earth needs to be taken care of, and we can do it turning 'green' - a term that is used to refer to products, services, companies, systems and lifestyles which help to reduce negative environmental impacts compared to those using today's technologies.

What businesses are going to lose or gain implementing a 'green' strategy into their business? Let us take an example; it is estimated that a company with 1,000 employees and $100 million in revenue uses 30 million pages of paper a year. It equivalents to cutting down 1,369 trees and producing approximately 300,000 pounds of CO2 every year. If the company uses e-papers instead of papers, they can not only save a huge sum of money but also contribute keeping the environment cleaner.

So, going green is about saving the environment and saving money. India is a large country with thousands of SMEs (as compared to large companies and MNCs) catering to a population well over one billion. If these SMEs adopt a green strategy, it could help a lot in reducing negative environmental impacts or, at least, stop aiding in global warming.

So, where should SMEs start? They are free to experiment with 'going green' as there is no pressures of meeting compliance regulations. Instead of accepting the 'going green' concept as a lofty ideal not practical enough to be implemented into daily operations, businesses should start concentrating upon using raw materials efficiently, choosing renewable raw materials, reducing and recycling of waste, reducing energy use in production and transportation related operations, using alternative energy sources like solar power instead of electricity, and anything that prevents negative environmental impacts.

There is not a 'one size fits all' formula to going green, and small steps are enough SMEs can take to make a start. Green machinery such as wind turbines, solar panels; green fuels such as bio-diesel, biomass power; green production house such as low carbon factories; green transportation means such as electric vehicle; green office accessories such as papers, fabrics, building materials, packaging materials made of recycled materials; green housing accessories such as bamboo flooring, furniture made of bio-plastics; and many more nobody has even thought of yet - every product, every activity, every industry can have a shade of green.

So, small businesses can experiment with anything while taking their first 'green steps'. It will not only help them to reduce global warming emission and save input costs but also to earn immediate recognition from their customers, employees, shareholders and even the media.

Remember that green will soon go mainstream and it is the right time for Indian domestic businesses and exporters - small and big - to capitalize on the phenomenon. The SMEs can even find a lot of opportunities in the 'green' sector. For example, there are enough growth opportunity for SMEs in the organic product sector. Again, they can even consider new uses for a specific garbage item which could be a business in itself.

Concluding, the moral of the story is that 'going green' is not just merely about social responsibility or staying top of environmental legislation; neither we should treat the trend as something awkward or lofty. A green strategy helps cost savings through efficiency or productivity gains, offers unique opportunities, and the best thing about it - in this game, we all win.