Consumers Want to Know: How Sustainable are Their Local Small Businesses?

Rich GroganConsumers in the Monadnock region would use information about sustainability in their purchasing decisions if that information were easy to understand and to use, says Rich Grogan, core faculty member in the Department of Management at Antioch University New England. Those same consumers think of employees at local businesses as their neighbors, friends and family, and they expect a “sustainable” business to take care of those employees.

Those are just some of the attitudes that Grogan has unearthed so far in his study of sustainability reporting by small businesses. He presented some of his findings at SME’s [small and medium enterprises]: Moving Toward Business Sustainability, an international conference put on by the Network for Business Sustainability this fall in Montreal.

Working with the Monadnock Sustainability Network, Grogan used focus groups and in-depth interviews to survey consumers in the Keene area about their expectations, and business owners about their sustainability initiatives. He discovered that many consumers are aware of local business sustainability efforts, such as sourcing products locally, recycling, energy reduction efforts and taking care of their employees. But they would like more details and data about these initiatives, such as amounts recycled and specific employment practices.

Business owners say
Business owners, Grogan found out, are undertaking a range of social and environmental initiatives, especially when it comes to reductions in waste and energy use, and looking for local sources of products. They try to treat employees fairly, and some want to do more to include employees in decision making.

There are benefits to measuring and communicating about sustainability, such as market differentiation, the business owners told Grogan. But lack of time, money and knowledge, and restrictions by leases and landlords are barriers. More than one-quarter of them said that it would be easy to measure their initiatives, but so far there has been little reason to do so.

Small business left out
Making businesses accountable for their environmental and social practices, called corporate sustainability reporting, started to become common about a decade ago—at least for large companies, including many among the Fortune 500. These large businesses have been measuring and setting the standards for sustainability reporting ever since, Grogan said. “The problem with reporting is that small businesses were left out,” he said. “They don’t feel it’s relevant to them because it’s expensive, and they don’t have time and resources to compile and write the information.”

Similar circumstances in past case studies suggested that customers might end up punishing those small businesses that don’t follow the larger companies’ sustainability standards. But— at least in Grogan’s Monadnock region research— consumers give small businesses credit for striving for sustainability because they understand it is more difficult and expensive for small businesses than for larger companies.

Next, Grogan plans to work with community partners to create a mechanism, designed with small- and medium-sized businesses in mind, for communicating with consumers about sustainability efforts. That should give customers more information about how to shop wisely and more confidence in the strides businesses are taking. Such a system could provide benefits for the businesses themselves, including marketing and as support for making decisions about implementing sustainability initiatives in these challenging economic times.