The current chapter is addressing the definitions of the factors to consider when selecting suggestions and guidelines to reduce the energy footprint of targeted SMEs. Next, the main factors to consider when selecting measures to improve the energy footprint in SMEs are discussed.
5.1. Owner/Manager Influence
According to , commitment from senior managers to environmental management is a prerequisite for providing an organisation with a clear direction in this area. Specifically, in large companies, the decision-making power is usually evenly distributed amongst managers in different departments,
therefore several people are involved in decision-making processes. This means there is a greater possibility that environmental issues for consideration will be raised by at least one person. Regarding SMEs, on the other hand, one owner/manager usually controls the most strategic decisions; therefore, the background, values, and education of just this one person will have a significant impact on the strategic direction of the organisation. The owner/manager of an SME thus has a significant influence on the adoption of environmental management in the organisation. Some owners/managers perceive environmental issues and actions as a threat and associate them with increased financial costs and other negative consequences. They may also have a lack of knowledge of environmental issues and the advantages associated with the implementation of environmental management. Also, often managers hesitate to invest in environmental practices that may have a longer payback period. For this reason, SMEs may not consider complex environmental management practices, such as Lice Cycle Management (LCM). On the other hand, given the influence of the owner/manager in SMEs, a positive attitude towards green and sustainable practices could result in the strategic decision to implement and integrate such approaches into the organisation. It has been argued that mainly due to the hierarchy and decision-making characteristics of SMEs, these companies may be in a better position than larger organisations to apply innovative, green, and sustainable practices.
5.2. Environmental Culture
If the culture of a company is not based on beliefs, values, norms and perceptions that support environmental initiatives, then this will hinder the uptake of environmental management practices. This is closely related to the characteristic “knowledge of environmental issues” since people in organisations, corporates, supply chains and relevant stakeholders need to be aware of the relevance of environmental topics in order to foster a culture that supports the uptake of environmental and sustainable practices. Additionally, it is related to the “owner/manager influence” characteristic as the support of senior managers could significantly encourage the development of environmental culture in the organisation.
5.3. Resource Availability
SMEs often have limited access to financial, technical and human resources. The most critical barrier to any new action or practice for an SME is the relevant costs . However, it is highlighted that cost reductions might be realised by environmental initiatives focused on improved resource efficiency, reduced need for pollution control equipment, and/or reduced hazardous waste disposal. Nowadays, reduced energy and resource consumption is strongly associated with an improved brand reputation . This could lead to a sales increase and higher profits for the companies. However, there may be a perception that the costs related to the application of environmental practices, environmental management training, and the purchase of relevant software, tools and services, cannot be outweighed by the resulting benefits. Consequently, investments with significant short-term financial benefits for SMEs are most likely to be considered. Regarding environmental management, the cost barrier is also closely related to the availability of technical resources that are necessary in order to achieve energy footprint improvements.
5.4. Payback period of energy footprint improvements
As mentioned above, strategic investments for energy footprint management with long-term payback periods are usually not considered by SMEs. This is closely related to the fact that SMEs usually pursue short-term rather than long-term goals due to the special characteristics and liquidity difficulties that they face. However, large enterprises implement medium- and long-term strategic plans, considering the potential trends and future changes in their decision processes. As a result, they can address energy footprint management earlier than SMEs. It is highlighted that SMEs might be less proactive in the adoption of voluntary programmes for improving their environmental performance due to their organisational habits that are hard to break. In this context, support schemes for SMEs were established, including, if they have entered into voluntary agreements, to cover the costs of an energy audit and the implementation of cost-effective recommendations made in the following energy audits .
5.5. Knowledge about environmental issues
Regarding SMEs, the limited awareness/knowledge of environmental issues/problems might lead to a limited commitment to the implementation of environmental management practices. One of the main barriers to SMEs in the adaption of energy footprint reduction practices are the scarcity of information and the lack of understanding about environmental problems and the relevant legislation . Additionally, the insufficient information regarding the real costs and the potential benefits of environmental practices are a key barrier to the energy footprint improvement of enterprises. It is often believed, especially by SME owners/managers, that national and/or local governments and larger companies should take a lead on the mitigation of environmental problems. They also think that the environmental impacts of their own business are negligible compared to the impacts of large companies, though SMEs are smaller than large companies, Consequently, the decision-makers in SMEs tend to ignore the environmental impacts associated with their companies’ activities and they do not consider that they have to act to control and reduce their environmental impacts, too.
5.6. Market Requirements
The market requirements differ significantly between economic sectors, countries, and regions. Specifically, in some markets, the companies are exposed to less market and regulatory pressures towards adopting green and sustainable approaches than others. Market pressures may arise from several stakeholders, such as political movements, environmental groups, local society, supply chain partners and customers. If the organisations providing the product/service do not align with the stakeholders’ values and expectations regarding sustainability and environmental practices, their stakeholders would have a more negative and/or skeptical attitude toward them. Regarding regulatory pressures, for instance, the European Union has established several policies related to energy efficiency, green practices and sustainability, which may range from regulations and directives to recommendations and concerted actions . Since these legislative and policy frameworks have come into force, there has been a significant increase in the adoption of environmental practices and energy footprint reduction measures in Europe. Regarding SMEs, environmental legislation is one of the most important reasons why they invest in environmental management practices.
5.7. Geographical Separation of Production and Consumption
In the past, SMEs used to operate within a specific region, contracting with suppliers and targeting consumers based relatively close to their facilities. Although, things dramatically changed due to globalization. Specifically, not only large companies but also SMEs have partners, suppliers, distributors and customers located all over the world. This leads to a diffused responsibility for the environmental impacts of products. This leads to the diffusion of responsibility for the mitigation of the environmental impacts of the products/services throughout the supply chain. Although, it is more likely that each individual company in the supply chain will primarily work to improve its own environmental performance rather than communicating and collaborating with supply chain parties around the world on the overall improvement of the environmental footprint of the supply chain.
5.8. Supply Chain Management
Supply chain operation can be a competitive advantage for organizations and businesses, provided that cooperation between supply chain entities is done in such a way that the parties do not simply focus on their individual improvements and opportunities, but think outside their own boundaries, approaching opportunities for improvement more holistically both across the supply chain and between different but cooperating supply chains.