The Co-operative Bank has become the first British Bank to publish an Ecological Sustainability Audit*. This assesses the degree to which the Bank delivers value to its seven partners : shareholders; customers; staff and their families; suppliers; local community; national and international society; past and future generations, in an ecologically sustainable manner.

Meanwhile, the UK's Round Table on Sustainable Development has announced a guide on how companies can integrate nature conservation into everyday business activities. The guide**, published by the Earthwatch charity, is intended to be an `awakening call to companies who feel that this has nothing to do with them or maximising shareholder value', according to the charity's head, Herschel Post, who is also chief executive of Coutts Bank. Mr. Post attacked the short-term focus of some shareholders that had to be reminded that spending on the environment, research and training were vital to companies in the medium to long term.

Sadly, however, while environmental issues are one of the most important business considerations facing small and medium sized enterprises (SMEs) today - many managers remain unaware of the key areas of environmental legislation which affect their companies - notably the Duty of Care provisions of the Environmental Protection Act 1990. Few SMEs have made use of the various sources of environmental advice (Local Authority; Environment Agency; Department of Environment, Transport and the Regions; Health and Safety Executive; Chambers of Commerce; Trade Associations etc.). Most SMEs prefer environmental advice to be delivered face to face or through a telephone helpline backed up by written material.

Environmental support organisations and agencies do not appear to be getting their message across to such firms and must co-ordinate their efforts more effectively if smaller companies are to take advantage of the cost benefits that improved performance can bring. These latter set of conclusions are drawn from Small Firms and the Environment Report 1998*** prepared by Groundwork and based on new research by MORI. The failure to communicate the importance of environmental concerns to SMEs is exacerbated by the fact that SMEs employ over half the working population.

A follow up to its 1995 report, which raised awareness of the environmental impact of SMEs, this latest Groundwork research highlights the fact that environmental management is now one of the more important challenges which SMEs have to face - the survey ranked it higher than business investment, credit control or even exchange rates.

The intervening three years (1995-1998) have shown developments in the SMEs views on the environment. Key findings include:

Legislation:

Awareness of environmental legislation is still often lacking, with a quarter of the 1998 sample being unable to name any environmental legislation or regulations which directly affect their company;

While two in five respondents thought that greater green legislation would increase costs, some believe that more business will be created. Some 42% predicted an increase in the social acceptability of their products over the next five years.

The Economy:

Over 2.5 million of the 3.7 million businesses in the UK are made up of sole traders or partnerships with no employees (99.8% of UK firms have nine employees or fewer);

The 1998 Groundwork report shows that there has been a leap in perception of the contribution that SMEs made to the economy. In 1995, 64% considered their contributions to be high whereas by 1998 this figure had increased to 77%;

Benefits to Business:

45% of respondents considered that having an environmental policy brings (or would bring) commercial benefit but an almost similar proportion are uncertain as to whether there is a commercial benefit and 55% think that environmental initiatives are mainly aimed at larger companies. Estimates of the cost of meeting current environmental regulations varied from nothing(16%), to over £5,000 (14%) with only 6% of SMEs costing this at more than £10,000;

Key motivators for environmental improvement included cost savings, higher employee morale and competitive edge;

Financial savings as a result of improved environmental performance were reported by 12% of respondents.

Despite the surprisingly low level of awareness about environmental legislation 84% of SMEs were aware of the liability of Directors' for environmental pollution. Other encouraging signs emerging from the Groundwork survey were that 61% had addressed the environment either through an environmental policy or as part of the business plan and in 42% environmental matters were the responsibility of the managing director. Some 7% of SMEs had already gained ISO 14001 certification and a further 14% were planning to do so. The companies who first become aware of what may at the moment only constitute future concerns, to the benefit of their stakeholders, will probably be those who hear the sort of awakening call emanated by the likes of the Co-operative Bank and Herschel Post and act accordingly.

* Co-operative Bank Partnership Report. Co-operative Bank plc, Head Office, 1 Balloon Street, Manchester M60 4EP. Tel: Jon Lee, 0161 829 5661.

** Guide from Earthwatch is available from: 57 Woodstock Road, Oxford OX2 6HJ. Tel: 01865 311600; Fax: 01865 311383; E-Mail: info@uk.earthwatch.org.

*** The Groundwork Small Firms and the Environment Report 1998 is available from: Groundwork National Office, 85-87 Cornwall Street, Birmingham B3 3BY Tel: 0121 236 8565; Fax: 0121 236 7356.

This article first appeared in WASTE & ENVIRONMENT TODAY