Challenges of implementing social and environmental sustainability in Small and Medium Enterprises

Abstract: The term sustainability is a topic that has been increasingly acknowledged in the modern business world. This has raised awareness and increased understanding of the different dimensions and how paying attention to sustainability can help to improve different aspects of the organization. The financial dimension is well established in most companies since it has a clear connection to the wellbeing of the organization. The Social and environmental dimensions are however more modern and are not present to such a wide extent. External forces such as governmental influence, organizational competitiveness, and customer expectations gradually push companies towards an increased presence of sustainable activities and many companies to struggle with sustainability implementation while failing to see the potential added value. These struggles are present to a wider degree within small and medium enterprises (SMEs) since they have access to less financial resources than that of established companies. For that reason, this paper is dedicated to investigating and highlight the present challenges that SMEs face in the implementation process of social and environmental sustainability. To answer the research question, five interviews were conducted with managers and employees of four SMEs that currently possess some level of social or environmental sustainability. Also, one interview was conducted with an expert in the field of sustainability implementation. Secondary data was collected in the literature review section that highlights and explains both the social and environmental dimensions as well as appropriate tools that exist to help with sustainability implementation into existing business models. The method section will investigate the different methods taken to fully answer the research question. The findings section will highlight the new insights about the present challenge separately by reviewing the firsthand data while using secondary data to fill existing information gaps. Seven challenges are identified in this study, successful supply chain management, lack of financial resources, insufficient practical sustainability implementation, lack of knowledge about sustainability, absence of social and green thinking attitude, simultaneous management in all dimensions of sustainability and governmental and municipalities influence. After identifying the challenges each of the challenges was categorized in the relevant stage of the implementation process which are exploration, installation, initial implementation, and full implementation. These challenges are however heavily dependent on a certain SME characteristic which creates a need for more tailored research towards a specific industry. This has led the researchers to take on a broader approach to create a general overview that lays the foundation for future in-depth studies more tailored to individual companies. Although treated as separate challenges, the correlation between existing challenges is highlighted and discussed in the findings section based on the collected data from the interviews. This will again be present in the conclusion part followed up by the current limitations and suggestions for further research.