Gallagher urges brokers to guide SME clients towards sustainable practices

Gallagher is encouraging brokers to advise their small-to-medium enterprise (SME) clients in Australia to prioritise sustainability for their long-term success and growth.

The brokerage giant said SMEs risk losing contracts and customers if they do not adopt sustainable practices, as many large corporations now require environmentally responsible partners in their supply chains.

Incorporating sustainability

According to Gallagher, businesses are increasingly incorporating sustainability into their operations to comply with carbon emissions reduction targets and avoid accusations of “greenwashing.” This shift is driven by the demands of investors, stakeholders, business partners, employees, and consumers who prefer brands with strong sustainability practices.

A substantial number of Australia’s 2.5 million SMEs are embracing greener practices, with about 80% already implementing sustainability initiatives. These practices include evaluating suppliers based on their environmental impact, product origins, raw materials, manufacturing processes, and labour standards.

Steps to adopting sustainable practices

Gallagher highlighted the three ESG (Environmental, Social, Governance) pillars that provide a framework for businesses aiming to improve sustainability:

• Environmental sustainability: focuses on reducing carbon emissions, improving waste management, and finding energy-efficient solutions. It also involves responsible sourcing and establishing supply chain partnerships with organisations sharing similar sustainability values.
• Social sustainability: addresses human rights, labour standards, workplace safety, and equal opportunity employment. This includes diversity and non-discrimination based on ethnicity, religion, age, gender, or sexual orientation, as well as supporting social causes.
• Governance: involves creating accountability structures to promote ethical business practices, support ESG initiatives, and engage in community activities such as sponsorships and volunteering.

Benefits of adopting sustainable practices

The brokerage giant said implementing sustainable practices can help SMEs achieve cost savings and build stronger community relationships.

Key operational areas for sustainability improvements include:

• using low carbon energy sources
• enhancing water use efficiency
• adopting sustainable packaging
• upcycling waste
• using electric vehicles
• measuring and reducing carbon emissions in the supply chain

The Environmental Protection Agency (EPA) provides information on recycling materials and products in Australia. Partnering with organisations like the EPA can help businesses meet tangible carbon reduction goals.

Support resources

Australian SMEs have access to various resources and guidance from government and sustainability organisations, including:

• Federal Government Environment Management
• Business Victoria Sustainability
• Sustainability Victoria
• Energy Saver NSW
• Act Smart ACT
• Green Industries SA
• EcoBiz Queensland
• Ecologically Sustainable Development in the Northern Territory
• What is Sustainability? EPA Tasmania
• Western Australia’s ESG Industry Information Pack

Gallagher also recently delved into the Australian renewable energy sector where each source presents unique risks during different stages of development and implementation. It advised broker clients dealing with renewable energy sources to consider their exposure to legal, financial, regulatory, contractual, and physical risks and their social impact.