Local enterprise must focus on green gains

March 26 has come to mark a very important event worldwide, namely "Earth Hour", whereby residents and businesses are encouraged to turn off their lights and unnecessary electrical appliances for an hour in a mark of solidarity for action against global warming.

It started in 2007 when 2 million people and more than 2,000 businesses switched off their lights for one hour in Sydney. Four years later, this has become a movement with hundreds of millions of people in over 130 countries participating.

The impact of this one hour of action is huge, with estimates showing a saving in the UAE of almost half a million kilowatts of electricity and carbon emission reduction by 300,000 kilograms.

The interesting aspect was the fact that ordinary citizens and the business sector worked together to fight for the environment. With small and medium enterprises (SMEs) contributing to 98.5 per cent of the business sector in the UAE, it is important that any long-term action of Earth Hour actively involves them.

It is reasonable to assume that such a large contribution of the SME sector in the economy will also have a corresponding impact on the environment. Although individually, the SME firm may have little impact due to its small size, on a cumulative basis, the impact can be quite considerable and should not be ignored.

In fact, certain industries with potential for environmental damage in the form of harmful smoke, dust, etc., are prominent within the SME sector. Typical examples of such industries include electroplating, metal working, printing, wood processing, food processing, etc.

The inherent nature implies that per unit of output, SMEs tend to pollute the environment far more than larger firms. With their limited resource cap-acity, they tend not to use state-of-the-art equipment and control mechanisms.

Greater energy level

This implies SMEs tend to use greater levels of energy and water per unit of output than larger firms in the same industry. Also, the absence of high efficiencies of production process also leads to greater levels of emission into the environment.

More importantly, the lack of finance implies that they are often unable to invest in technologies or equipment that can limit their environmental impact. Academic studies which have examined the environmental impact of SMEs have found the plant or factory size tends to be inversely correlated with the level of environmental impact.

The threat to the environment by SMEs is obvious and requires immediate action for a remedy. However, any action needs to take into account the real and practical limitations of the SME sector, namely financial constraints, limited manpower, and lack of awareness on areas of sustainable production.

One manner in which this can be carried out is through filling the information gap. In reality the SME sector is simply not aware of the impact of their activities and, more importantly, how to deal with it in a cost-effective manner.

By and large, the sector is more concerned about complying with legislation and feels that is sufficient to improve environmental performance. Then there is the psychological factor inducing the belief that their smallness limits environmental impact.

Perception

Again, this perception is linked to the lack of information. If this information-based psychological barrier is removed, then the SME sector will stop operating in the current manner and improve their environmental performance.

Voluntary systems such as the Environmental Management Systems (EMS) is one manner in which SMEs can improve their environmental performance as it encourages resource efficiency in production.

This in turn leads to lower levels of waste and pollution, thereby helping to conserve resources. However, this is not sufficient and there needs to be increased research and development aimed specifically at the SME sector.

In this regard, the universities in the region can play an important role in developing regionally relevant solutions that meet the specific needs of SMEs and help them arrive at sustainable means of production.

An important motivator of change is profit and in this regard SMEs should be supported to explore the potential of using the by-products of one firm as raw material for another. Not only does this reduce raw material costs, but also leads to simultaneous positive impact on the environment.

There have been successful examples of this in the UAE and more SMEs need to consider the practice.

It is clear that the SME sector is important in any long-term, sustainable improvements in environmental performance. Therefore, the SME sector needs to be supported with adequate information and knowledge of best practices.

Regionally, relevant research and technological support will certainly make a substantial difference to the SME sector.

The writer is the head of export market intelligence at Dubai Exports, an agency of the Dubai Economic Department.