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Consumers have their own part to play in effecting change for a more sustainable future. Multinationals like Unilever believe around 70% of its carbon emissions are down to consumer decisions — the products they purchase and how they dispose of them. But it’s the businesses that can really make the difference — and consumers are starting to realise that.
An incredible 85% of consumers have become greener in their purchasing behaviours, and younger consumers in particular are taking active steps to only patronise sustainable businesses. But perhaps more important is the swathe of large corporates and government entities that are adopting ESG targets that will require them to only do businesses with SMEs that hold sustainability credentials. Here’s why that matters right now.
How SMEs are taking action to meet ESG requirements
Most SMEs are short on time and rarely have the capital to invest in new ventures unless they are a near-certainty to return a profit. So with all the hoops SMEs have to jump through to work with large corporates and government departments — from quoting to tendering to onboarding as a supplier — it’s unsurprising that little time and even less budget remains for adopting sustainability credentials.
The problem is that the effectiveness of ESG certifications, accreditations, commitments and more can be the difference between winning or missing out on a tender. And with no guarantees that investing in sustainability measures will lead to being chosen as a supplier, it may be seen as an unnecessary investment — until now.
The birth of sustainable finance
“We both saw this coming,” says Frances Atkins, CEO at givvable. The “we” she is referring to is for the partnership between givvable and Fifo Capital.
“We recognised that sustainable finance has largely been inaccessible by SMEs, yet the allocation of capital was rapidly accumulating. To date, it’s been the large end of town that has benefited from this type of finance — yet 90% of the world’s companies are SMEs. For many SMEs, financial services will be key to getting started, and delivering on their sustainability agenda.”
Givvable helps businesses identify the sustainability attributes of suppliers and how they align to their targets. It can screen thousands of suppliers in seconds, which gives businesses confidence in supplier claims. It also supports suppliers/SMEs to better understand customer requirements, overcoming one of their biggest roadblocks to taking action: not knowing what to do.
So for Fifo Capital CEO Wayne Morris, teaming up with such a sustainability-focused business as givvable just made sense for Fifopay. Fifo Capital’s mission is to make it easier for Australian businesses to do more with what they have — they help SMEs achieve this by providing access to better finance options and using robust tech solutions that make it easier for owners to protect and run their business.
“When we first teamed up with givvable, we saw that a lot of the corporates were going down the ESG route, which could have an impact on SMEs,” Morris says. “We tend to find that with most SMEs, the owners are steering the wheel of the business but that doesn’t necessarily mean they have the drive when it comes to sustainability. Trying to do all of these additional things that come with ESG can be taxing for businesses, especially when they’re not rewarded for it.
“We thought that one of the best ways to help overcome these issues was to offer a different type of support — something that positively impacted SMEs that are going out of their way to acquire these credentials. We felt they should be rewarded. And the way we can reward them is to offer them better ways to manage their finances.’
Next level finance opens up big opportunities for SME and ESG businesses
Fifopay is a first-of-its-kind finance platform that offers unrivalled capability for SMEs. Using leading AI technology, the platform surfaces actionable insights, making it simple for business owners to make smarter decisions in how they manage their day-to-day finances. .
Morris said: “We worked closely with givvable to develop a model that would enable the Fifopay platform to easily handle and integrate with givvable to report on ESG credentials. Making it less onerous and more achievable for SMEs to take advantage of this emerging competitive niche.”
“For any business, knowledge is power. Especially when it comes to your suppliers and how you compare to the wider market. Our aim is to provide the intel, so not only can you see which suppliers have ESG credentials, but in a couple of clicks you can easily gain insight into the health and strength of your suppliers and supply chain. Knowing the circumstances of your suppliers and customers can inform which business you pay when, the payment terms you offer, and so on. For example, struggling suppliers that are critical to your business can be identified giving you the ability to address the potential impact on your business before something critical may occur.”
“The Fifopay platform capabilities are such that it can benchmark your networks against national averages. That means you can see your suppliers graded against other suppliers of a similar type. Businesses can access all of that with or without taking finance from Fifo Capital.”
“In a nutshell, Fifopay gives all businesses – including SMEs – access to powerful enterprise-grade insights and finance. And we’re making this freely available to all businesses. So, to what extent you take advantage of that, is up to you.”
“For businesses that want to access our working capital solutions – you can use the same intel to create mutually beneficial arrangements with your suppliers, take advantage of better terms, early payment discounts and access different finance options that best fit the needs of your business.”
If not now, then when?
Atkins believes it’s a no-brainer for all SMEs to start investigating the value of — and ultimately investing in — sustainability and ESG credentials. Why? Because it’s a way to future-proof your business against the inevitable shifting tides of change.
“The first and second reasons for embracing these credentials are to retain existing business and win new business,” she says. “For many companies, it is now a decisive factor in procuring goods and services. We’re seeing preferential sourcing from businesses that hold relevant ESG credentials or are taking action to align with their customer’s sustainability targets.
“Whether it be sourcing responsibly or meeting certain environmental thresholds, there is pressure along the entire value chain, oftentimes coming from an SME customer’s customer. ‘Proof’ is needed — no one wants to run afoul and risk being accused of greenwashing.
“But of course, it’s also just good business.”
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Fifo Capital offers finance solutions, built specifically for your business. Our mission is to make it easier for businesses to do more business. Since launching in Australia in 2007, we’ve supported thousands of businesses with more than $2bn. Fifo Capital was recognised as a 2022 finalist for Lending Innovator of the Year at the Fintech Awards, and in 2020 was named Best Working Capital Solution Provider – Australia at the APAC Business Awards.
