PREFACE

The UK Round Table on Sustainable Development ('the Round Table') was established in early 1995. It aims to encourage discussion on major sustainable development issues and to build consensus between people who have different perspectives and different responsibilities. Chaired by Professor Sir Richard Southwood until 31 March 1999, and now by Mr Derek Osborn, the Round Table includes people from a wide range of backgrounds.

The Deputy Prime Minister, the Rt. Hon John Prescott MP, is President of the Round Table and Ministers seek to take part in plenary discussions as appropriate. However, this does not imply Government endorsement of the Round Table's recommendations.

The time available at Round Table plenary meetings is limited. Much of the detailed work is therefore carried out in subgroups, which also provide the opportunity for people not represented on the Round Table itself to participate in discussions on particular topics. This report reflects the work of a subgroup established to look at the contribution which small and medium-sized enterprises can make to sustainable development.

Comments on this report, the full text of which is available from the Round Table secretariat, are welcome. They should be sent to the address below:

DEDICATION

This report is dedicated to the memory of Mr Roderick Paul, a member of the Round Table and Chairman of the subgroup which conducted the study until his death in September 1998.

SUMMARY AND RECOMMENDATIONS

In the debate on sustainable development, most attention has focused on large companies. However small and medium-sized enterprises (SMEs) have much to offer in this area, progressing the economic, social and environmental agendas. The Round Table was keen to explore what contribution such firms could make and how they might be encouraged to do so.

The study focused principally on small firms (less than 50 employees), identifying three key areas: education and awareness raising for people in general, communicating with small firms and incentives for action.

The principal conclusion was the need to raise the level of general awareness about sustainable development of the UK population as a whole. Small firms are, arguably, more heavily influenced by the personal values of those who manage and work in them than are larger companies. Once those in small firms understand and accept the principles of sustainable development and the opportunities it presents, they might start to look for more information. The process of working towards sustainable development would then become one of 'pull' from many small firms rather than 'push' from a few interested groups.

A large number of initiatives seek to encourage SMEs to improve their environmental performance. Most have met with limited success. Any initiative aimed at small firms will need to gain their attention by being developed and publicised from their perspective and targeted to meet their needs. Further such initiatives should be better co-ordinated; the Regional Development Agencies, along with the new Small Business Service agency, could play a valuable role in this.

There is scope for small firms to improve the efficiency with which they use energy and other resources. One way of encouraging this would be to provide a tax incentive, funded by revenue from the 'climate change levy' on business. Such a scheme should be considered as part of a range of measures which might include free audits and the development of new technology. Another way of encouraging greater action is through sustainable procurement policies which should be devised to apply to, and encourage the participation of, small firms.

Many small firms have difficulty in identifying and keeping up to date with the regulations relevant to them. Advice or incentives should be the preferred options for influencing small firms, with regulatory controls introduced only if really necessary. Where legislation is introduced, it should be developed with small firms in mind and be applied with effective but sensitive monitoring.

The stakeholder approach to business development can give rise to particular benefits for small firms, but the concept needs to be simplified if small firms are to engage in it.

The Round Table makes the following recommendations:

9. The Federation of Small Businesses, the Institute of Directors, Chambers of Commerce and other bodies representing small firms should encourage their members to adopt a stakeholder approach.