The rising importance of environmental, social, and governance aspects for small businesses now means that having a sustainability expert on its board of directors is no longer a ‘nice to have’, but rather a ‘must have’.
A survey of over 1,000 small business leaders (nationally representative and multisector) by Novuna Business Finance asked respondents about what they regarded as essential roles on the board of directors to guide the strategy of the business. The results showed that two in five (40%) business leaders regarded having a sustainability expert as essential, second only to a board director with financial expertise (42%).
Small business leaders were more likely to value sustainability expertise then they were other areas including marketing (38%), digital or IT (38%), operations (33%), product development (27%), or legal (26%).
The results showed that there were a number of sectors where business leaders required sustainability expertise above anything else. These included the hospitality and leisure sector (48%), real estate (50%), and manufacturing sectors (41%). Such expertise was also particularly highly valued among larger small businesses (11-50 employees – 46%, 51-100 45%), and businesses that have been established for more than 10 years (46%).
Sustainability a key part of business strategy
From a strategic point of view, the results suggested that leaders saw sustainability as a core part of their business’s future. The research found that 92% of small business leaders could point to tangible business benefits from prioritising sustainability.
One in five (22%) business leaders said prioritising sustainability prompted them to think longer term about the business and the introduction of more innovative ways of working (18%), whilst a similar proportion (21%) reported a reduction in business costs. Around one in six (17%) said prioritising sustainability had made them more attractive to external investors.
Among the key benefits was a significant reduction in waste, cited by 37% of business leaders, as well as overall public perception and being seen to do the right thing (34%).
Joanna Morris, Head of Marketing and Insight at Novuna Business Finance commented: “A decade ago, a small business focusing on sustainability would have a competitive marketing edge. Today, it has become more than that. It has become paramount for all companies to integrate ESG into the core of everything they do. With the rising importance of sustainability, and the sharp increase in demand from investors, consumers, supply chain partners, government regulators, and employees, it makes sense to have sustainability experts sitting on the board of directors of a company.
“For sustainability strategy and policies to be effective, a seat at the table is only the start. In order for net zero targets to be met, and for meaningful action to take place, sustainability must be embedded into all parts of an organisation, with long-term investments and strategic partnerships. Novuna Business Finance supports organisations who are serious about sustainability, helping drive growth that is good for both the business and planet.”