This article first appeared in Forum, The Edge Malaysia Weekly on November 11, 2024 - November 17, 2024

The business challenge of the 21st century is finding sustainable, profitable solutions to existential threats — all while not causing harm to the environment.

Businesses are increasingly expected to integrate sustainability, marry profit and purpose, and strive to “do well by doing good”.

In today’s global economy, small and medium enterprises (SMEs) stand as the unsung heroes, comprising a staggering 90% of businesses worldwide. These enterprises not only drive economic growth but also play a pivotal role in supporting over two billion livelihoods and sustaining intricate global supply chains.

Despite their significant impact, many SMEs lag in adopting environmental, social and governance (ESG) practices due to resource constraints and uncertainty about where to begin.

This raises an important question: Does the size of an organisation impede its ability to embrace sustainability? The answer is a resounding no. Small start-ups can indeed make a significant impact.

Contrary to popular belief, being small can be advantageous.

Smaller companies and start-ups are inherently more agile and flexible than their larger counterparts, allowing them to adapt quickly to changing market demands and implement sustainable strategies more efficiently. This agility enables them to pivot swiftly in response to environmental and social challenges, turning potential obstacles into opportunities for innovation and growth.

Most importantly, small companies and start-ups are often hubs of innovation and creativity, unencumbered by the rigid structures and legacy systems that can stifle innovation in larger corporations. This innovative mindset enables small businesses to experiment with novel approaches to sustainability and develop unique solutions to environmental and social challenges.

In fact, many SMEs across industries and geographical locations make it to our annual initiative, Steward Leadership 25 (SL25), which stands as a recognition platform for stewardship and social impact excellence. Each year, our team highlights 25 exemplary projects that have made significant strides in advancing sustainability and social impact across various sectors.

We have also observed numerous cases where global companies started as small enterprises. By integrating sustainable practices from the outset, these companies laid a foundation for long-term success grounded in environmental responsibility. This strategic approach not only enhanced their reputation among environmentally conscious consumers but also positioned them as leaders in sustainability within their respective industries.

For example, Malaysia’s Farm Fresh Bhd (KL:FFB) is at today’s forefront of sustainable dairy farming in Malaysia, focusing on quality dairy production, community empowerment and environmental stewardship. The company’s farms are the first in Asia to be Certified Humane Raised and Handled®, ensuring humane treatment of animals and adherence to strict processing standards. Through initiatives like the home dealer programme, Farm Fresh supports local micro-entrepreneurs, predominantly women, generating sustainable income across Malaysia.

This is because from day one, Farm Fresh’s founder prioritised sustainability, a commitment that has been pivotal in its evolution into a major corporation today. This early focus distinguished Farm Fresh in the market, drawing environment-conscious consumers and nurturing enduring relationships founded on trust and shared values. By embedding a purpose-driven mindset into its business model from the start, Farm Fresh not only benefited the environment but also strategically positioned itself in an increasingly eco-conscious market.

Another inspiring story is homegrown Foreword Coffee Roasters, which has done well by doing good from day one. Founded in 2017, this social enterprise café promotes inclusivity by employing individuals with disabilities, special needs and mental health conditions. In 2021, they received the Enabling Mark (Platinum) Award for excellence in disability-inclusive employment. Their mission is to inspire the can-do spirit in everyone, and their vision is to create an equitable and sustainable value chain from farmers to consumers.

If the success or failure of an organisation’s sustainability strategy does not depend on company size, then what is the most important driver? As shown from the examples above, it is leadership.

Ensuring profitable and sustainable growth that is inclusive, environmentally friendly and equitable for all stakeholders requires a distinct purpose-driven leadership orientation.

To achieve the triple bottom line of people, planet and profit, the leaders mentioned above prioritised sustainability-first strategies that align profit with purpose. They exemplify steward leadership. The discerning factor here is the ethos and values of the company, and how it is translated by the leader’s vision. It would be impossible to achieve sustainability goals if firms failed to embed a values-based approach into the heart of their culture and strategy.

Therefore, size should not dictate a company’s capacity to embrace sustainability. Whether an enterprise is a fledgling start-up or a corporate behemoth, prioritising and committing to sustainability in its core values and operations can pave the way for enduring success.

While small companies may grapple with resource limitations, a steward leader would be able to leverage its agility and innovation as a force for good. Ultimately, enterprises of all sizes possess the potential to flourish when they harmonise profit with purpose, but the first step is to embrace steward leadership.

In Malaysia, where the entrepreneurial spirit is vibrant and the commitment to sustainable development is growing, small businesses have the potential to lead the way. By integrating stewardship and sustainability into their core values from the outset, Malaysian start-ups can not only survive but thrive, setting an example for the rest of the world.

Rajeev Peshawaria is CEO of Stewardship Asia Centre and the author of Sustainable Sustainability: Why ESG is Not Enough (Penguin SEA)

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