New Normal: The Pivot to Climate Sustainability for SMEs with Dror Etzion (Read Transcript)

Season 2 Episode 2 of The ‘New Normal’ hosted by Dave Kaufman: New Normal: The Pivot to Climate Sustainability for SMEs with Dror Etzion (Read Transcript)
Dave Kaufman – host: Climate change. It’s the largest and most pressing issue our society faces. And for so many of us who want to help, one of the biggest challenges is figuring out where to start. And once you do start, now you’re using energy-efficient light bulbs, composting, even driving an electric vehicle. Is what you’re doing making the slightest bit of difference? And what if there were others, who want to make a difference too?
Dave Kaufman – host: Let’s take a look at SMEs, or small and medium enterprises. They account for as much environmental impact as the entire Canadian transportation industry, including every plane in the sky and every transport truck that drives the thousands of kilometres across Canada. Emissions reduction seems like a no-brainer step for transportation, but more specifically, how would one begin to solve the climate impact of SMEs, which don’t have to adhere to the stringent national and international regulations, and aren’t as deeply embedded in policy change. If you knew that the small or medium enterprise up the road from you was doing everything in its power to make our world greener and more sustainable, would that inspire you to do more individually? Given that the very nature of SMEs doesn’t lean toward government intervention, change has to come from within the SME communities themselves. And what if I told you that SMEs are influenced by what their peers, competitors, and community are doing, bringing more heart and humanity to the table.
Dave Kaufman – host: Welcome to the second season of the New Normal, the podcast exploring management research brought to you by Delve, the official thought leadership publication of McGill university’s Desautels faculty of management. I’m your host, Dave Kaufman. On this episode of the New Normal, we will discuss small and medium enterprises, and the pivotal role they play in the fight for climate sustainability, among the issues today’s episode will explore- a previously untapped way to make change, that has a positive impact on the climate, the influence on SMEs, by SME peers, competitors, and community. The potential for change, if all Canadian SMEs were to pivot to a more sustainable model, how smart technologies are helping SMEs thrive and why a new project spearheaded at McGill called Pivot, gives us hope not just for the future, but shows that a difference is being made today.
Dave Kaufman – host: Joining me for this episode is Professor Dror Etzion, associate professor of strategy and organization at the Desautels faculty of management, and an associate member of the Bieler school of environment. His current research focuses on grand challenges and his work suggests that managing for sustainability through local, open, and emergent initiatives increases the recruit of diverse stakeholders, fosters creativity, and yields impactful outcomes.

In 2018, he founded the Pivot project, an online platform that highlights Canadian SMEs that are taking steps to address the climate crisis in their day-to-day operations. I began our conversation by asking professor Etzion, why he chose to focus his research on the sustainability issues pertaining to small and medium enterprises.

Dror Etzion: I’ve been studying this for almost 20 years now, from the perspective of strategy, basically trying to study and teach that business and sustainably are not diametrically opposite. Actually they can go hand in hand. Sustainability is often a source of innovation and good business ideas. And that’s the message that I want to get out in my research and in my teaching. And over the last two years, I’ve narrowed that down a bit to studying particularly small and medium enterprises, entrepreneurs, small businesses, mainly in Canada. But all around the world, we know that these are the backbone of many economies, pretty much any economy in the world in rich and poor countries, east and west everywhere. The small and medium businesses hire employee the large amount of workers in the labor force. They’re very numerous, they’re all around us. They’re also sometimes big to the social fabric of communities, both the big and small, rural, and urban. The SMEs are there always, we see them around us everywhere. It’s a big tapestry.
Dave Kaufman – host: Yet this is not the preconceived notion when we think of SMEs, at least it’s not my preconceived notion. For example, I don’t think of the SME as the business that’s willing to spend more on a product that’s more environmentally sound, when there’s a cheaper option available.
Dror Etzion: I think that issue is a mindset that many of us have for business in general, so that if you want to invest more into producing less polluting product, you want to invest more in friendlier packaging and shipping, that these are extra costs for business, and that consumers aren’t always willing to pay through those costs. So there’s this assumption that everything that you do to try to promote a healthier, safer environment for everybody just increases your cost of business. Of course, there’s some logic behind that. And some instances where that’s clearly true, but it is kind of a narrow perspective, and there’s all kinds of ways, which I teach in my 13-week strategy course, to circumvent that issue, to think of innovative ways to try to get around that kind of serious issue definitely.
Dave Kaufman – host: And that’s where the Pivot project can really be highlighted. I asked Professor Etzion to tell me a bit about it, as well as the impacts we have seen since the launch of the Pivot project.
Dror Etzion: Yes, the Pivot Project is a partnership with a National Film Board of Canada. This is the government agency responsible for showing us issues that involve Canadian society, deeper issues that aren’t necessarily always covered in the news, or profound long term questions and concerns that we have as a country. Of course, climate change, not only in Canada, but everywhere, is one of those topics that need a bit more reflection, need a bit more perspective. And so we’ve landed together with them since 2018 to develop this project, and specifically with a digital interactive studio of the national.
Dror Etzion: The idea is that we have a platform. You can find that platform online at And on that platform, we showcase entrepreneurs from coast to coast to coast in English and in French, different industries, different sectors, rural and urban. On the platform you’ll be able to find stories and inspiration for SMEs that are actually walking the talk, doing quite impressive things, even though they’re small, even though they might be isolated, even though the business cases might not always be entirely apparent and they’re doing quite influential things. The idea is for this to seed our larger conversation, to raise awareness, to increase motivation, to increase engagement in SMEs in other sectors in society to also take much more meaningful climate action.
Dave Kaufman – host: So, lets seed that larger conversation. When you think of how society can become more sustainable, do you think of the role that SMEs can play? Personally, that’s not where my brain goes. I’m thinking of the larger companies. And I’m thinking about what I can do personally. Professor Etzion explains that SMEs play a huge role in our economy, and therefore need to have a seat at the table in the sustainability decision making process.
Dror Etzion: But with the climate crisis, one metaphor that’s used: we often look for a silver bullet for solving problems. And with climate change, though, it’s increasingly clear that there is no silver bullet. There is no one magical solution, one thing that we need to do collectively as a society. But there needs to be many, many things. And these are policy things. These are changes in business approaches to these types of issues. These are things we do as individuals and as consumers and SMEs have just not been really, I think a big part of that conversation.
Dror Etzion: I think from a policy perspective, they haven’t been integrated as much as we could think in terms of the tools that we provide them and the information for them to take meaningful action. I think there’s a shortage of that. And since they are a big sector of the economy, they contribute as much climate emissions as the entire transportation sector of Canada on a yearly basis. So it’s a lot of emissions. As I said to solve the climate crisis, we need to do many, many things. And if we overlook a sector that’s meaningful, then we’re just missing an opportunity
Dave Kaufman – host: Leaving out SMEs, one of the largest sectors, not just in Canada, but globally, is a massively missed opportunity. After all, Professor Etzion believes that including the small and medium sized business owner in the climate sustainability conversation, would bring more heart and humanity to the table.
Dror Etzion: My guess would be that actually the majority of SMEs in Canada, the people who run them are aware. It’s hard to avoid that nowadays. I think it’s because becoming increasingly non-ideological. People are getting around to this, that this is a big deal and that they need to do something. Now that’s them as people. So it’s an interesting thing, when you’re a business person. You have several hats, you have your hat maybe as the founder and owner of a small and medium enterprise, but you also have a hat as a person in your family. And you have a hat maybe as a person in your community and in your religious institutions and so on and so forth. So the question I think is not whether people are aware and believe that this is an issue, but whether they’re comfortable in engaging with it wearing that hat of a business owner
Dave Kaufman – host: As a general rule, small and medium-sized businesses are not in favour of more government intervention. That being said, I was curious if that remained to be the case, when talking about an all hands on deck problem, like climate change. I asked Professor Etzion if SMEs that want to solve the climate crisis think that that requires more or less government intervention.
Dror Etzion: The answer to that question is that I think government intervention would be good, but I think that government intervention has several shortcomings. One is actually a lot of SMEs don’t like governments intervention, and maybe that’s a very blunt way of putting it. But a lot of these are people who kind of like to be left on their own. They believe in the free market. They believe in a lot of opportunities. They don’t like red tape. So sometimes just kind of getting government in the game is off putting. It might come with certain misconceptions. They might not appreciate government butting in if I were to put it that way. So there could be that mindset among SMEs. The other thing with government is that a lot of the policy is really economic policy. So we’re going to allocate $5 billion to this. We’re going to invest $3 million in that. And I don’t know that that percolates very well into the small and medium business community.
Dror Etzion: That’s good for big infrastructure projects. That’s good sometimes for big businesses, for the banking sector, these are very clear and effective ways to conduct a policy. But I think there is a hurdle in the way that policy is currently conducted, which is focusing on allocating buckets of money, different issues for that to be an effective stimulus or incentive for some small and medium enterprises to act. So that’s in a way, one of the motivations for our project is say, well, maybe we can inspire SMEs to act not by wielding the carrots and sticks of government policy, but rather by creating a social community, a place where they interact with each other, ask each other questions, motivate each other, discover inspiration and stories from each other, as opposed to having the government impose upon them what to do.
Dave Kaufman – host: And this is where the Pivot project comes into play. He believes that by sharing with other SMEs, what they are doing to tackle sustainability issues, it can really make a difference for the planet.
Dror Etzion: Yeah. So that’s exactly the point of the Pivot project, both as an outreach project and as a research project, that’s kind of our working hypothesis. There is actually some substantial research that shows that the people that SMEs and entrepreneurs listen to the most are their peers.
Dror Etzion: They don’t listen to academics, and I hope that they’re listening to this podcast, but a lot of them really are influenced the most by what their competitor is doing or by what the store down the street or the little factory in their industrial zone is also doing. And they’re very aware and very attuned, very interested in what their peers are doing. So our idea is that, well, if that’s the reality of the SME experience, then if we could kind of seed and start a conversation where we show, Hey, look, you might not have noticed it, but this guy just around the corner from you or this entrepreneur in the same sector as you, but in the town over, she’s already doing something in favour of the environment. She’s figured out some things that she can do to reduce her climate impact. And if they can do it, then you can probably do it too. And you won’t be alone. They’ll be part of an increasingly strong and vocal community of actors taking this issue seriously.
Dror Etzion: So that really is a very different approach. If you think about it from a government approach, this is kind of more of a grassroots community building. We call it a peer-to-peer inspiration model of change. And really the project is a test of whether our assumption about this mechanism of creating changes.
Dave Kaufman – host: I was curious to hear some examples of tangible ways that these SMEs are affecting change and making a more sustainable future achievable.
Dror Etzion: On there’s actually a few stories that are around technology. One of the ones that I kind found eye opening and particularly interesting, was a company in British Columbia, a contractor. They would have, and I think many businesses still run this way their project teams they’re building projects all around. I think it was Vancouver. The teams would come into the office at the beginning of the day, get organized, take the tools they need, and then head out to the site where they’re working. They said, Hey, actually, that’s kind of sometimes pretty big waste, not only of fuel and equipment, perhaps, but especially of time. You know, if people are driving half an hour, an hour to get to work, but then they have to go back the same way to get to their job site. They’re, they’re really wasting a lot of time. So they’ve discovered that they could do a lot of this online.
Dror Etzion: They could have their meetings or their discussions or their project planning happen in a virtual way, or they could coordinate much more effectively without having people come into the office and get a sheet of paper where to go. So they’ve embraced something. And again, this is not rocket science. This is very simple telecommunication technology, but really as an SME, you have to find the time to find a system like that and install it and encourage the employees to use it. But immediately you get enormous savings in terms of cost effectiveness, in terms of carbon emissions and so on and so forth. So we’ve had, that’s one example.
Dror Etzion: There’s another example of a factory in Ontario that just installed very smart sensors. They have big docking doors to load the trucks and those would stay open even after the trucks departed, just because people are busy and they’re not thinking about it. And you know, it’s a very cold day. You’re getting a lot of cold air entering the factory. So they just installed some sensors that as soon as the truck backs off, the door closes automatically. The payback for that was incredible – four months paid back for the cost of installing that system and ever since then its pure profit.
Dave Kaufman – host: If Professor Etzion’s research tells us that sharing information between peers can lead to productive change, then is there anything that SMEs and large corporations can learn from each other about how to achieve environmental sustainability?
Dror Etzion: I think in an ideal world, yes. I think a kind of a common dynamic is that large enterprises have a lot of influence over SMEs through their supply chain. So if you’re a big company, for example, here in Quebec, in the aeronautics sector, there’s thousands of companies here in the aerospace industry in Quebec. And a lot of them or almost all of them are small and medium enterprises. And the way they think about their interaction with the big airplane companies – Bombardier or Boeing, or what have you, is that it’s not symbiotic as they would like. The large corporations are quite constraining and demanding in terms of their expectations from SMEs, in terms of the quality and the cost of the products that they attain from them. Increasingly they’re integrating social and environmental concerns into those contracts.
Dror Etzion: We’re hearing now a lot about ESG metrics in business. What are the risk factors or how are you conducting yourselves in terms of environmental, social and governance issues? And I think the large companies are asking the small and medium enterprises in their supply chains to be cognizant and aware and moving forward on these types of metrics. And they’re doing this mainly to reduce their own risk because if their suppliers are resilient, then they themselves will be resilient. Now, the SMEs, I think at the grand scheme of things, appreciate this and recognize that it’s important and understand that it’s a good thing to do. But I think on the other hand, sometimes they’re a bit peeved or a bit annoyed because they feel that these demands are just being rolled over to them, putting a bigger onus on them without corresponding reward. So I think there is definitely a way for them to cooperate and to act collectively. But sometimes if you talk to an SME, they’ll feel that maybe they’re bearing a bit too much of the burden themselves.
Dave Kaufman – host: It’s very easy to adopt a fatalistic attitude regarding the environment. And it’s normal to be discouraged by the onslaught of bad news that you see when you turn on the TV. Yet, Professor Etzion believes that hope exists, and we have the potential to win this fight together.
Dror Etzion: I think hopeful is the only way to be, I mean, to just curl up and say, this is horrible and just need to get used to it, is not the way that I would want to spend the time. I’m motivating myself, and I think encouraging myself that if I’m able to help move these things along a bit, then I’m contributing something. And also for my own personal wellbeing, it’s kind of satisfying and encouraging to myself to say, Hey, I’m part of a movement to make things better for the future, for my kids, for future generation. So I think hope is almost like a necessity, it’s better than the alternative for sure.
Dror Etzion: And I also take a lot of hope, I think this is one of the joys of being a professor from the kids who join McGill. They come with so much positive energy, so much desire, so much awareness now of these things that you’ve mentioned. They know that the world needs repair and they’re ready to roll up their sleeves. And so I’m also strengthened a lot by that. So I have places I’m fortunate enough to have places and opportunity is to get hope, hopefully contribute hope to others as well. And I think it’s a good place to be mentally and encourage everybody to be hopeful and then to act on that hope and to do something. And then you can get into a positive cycle that hope leads to action and action leads to more hope.
Dave Kaufman – host: As we concluded our conversation. I wanted to know if there’s something that we can do as individuals. A small step that could make it difference on the path towards sustainability. His answer is a reminder that now is the time for us to think bigger, not smaller.
Dror Etzion: This is the question that’s hardest for me to answer, and I’m glad you brought it up and, and, and I’ll try to address it as honestly, and, and forthcoming way as possible. I think if there were small things that we could do to solve the climate crisis, we would’ve done them already. I think the fact that we’re still where we are today and it’s getting worse, as you said, it’s really not improving as quickly as we would like. I think it just goes to show that there are no small, easy steps that we could take to improve it, because why would we have not done them if they existed? So I don’t want to discourage people, but I do want to say that the solutions, the meaningful stuff that you can do actually requires a little bit more thinking.
Dror Etzion: It requires a little bit more deliberation. And it requires actually an understanding of who you are, what you’re able to do, which sector you’re in, which clients you engage with, what technologies you have available. So some things that we’ve been talking about through this podcast, and that’s really the challenge. That’s why it’s hard because it might mean to press pause for a moment, to take a few hours off, to do some kind of retreat, to consult with somebody, to hear other stories to contemplate. I don’t know, there could be many ways, but the real important things, the things that will make a dent that will make an impact that will be meaningful, aren’t simply easy and off the shelf and cookie cutter solutions that I could give you a list of the top three things that you should do right now and we’ll all be good. I think we know that it’s not about printing on both sides of the paper and replacing your light bulbs. That’s not going to cut it. If you haven’t done that, then of course do that, but you can’t stop there. That’s really not close to it.
Dave Kaufman – host: By highlighting the success stories and challenges of their peers, the Pivot platform is inspiring further action, and leading to tangible results in the fight against climate change. It’s also showing SME owners that there is profitability in the climate fight. Professor Etzion’s project shows that sustainability is a source of innovation. And now we can see that SME engagement in climate sustainability could be a litmus test to show why business engagement on climate is changing.
Dave Kaufman – host: Are SME business owners, comfortable in engaging with sustainability as business and business owners, rather than as individuals? We know that they’re open to creativity and innovation, and to using smart new technologies. And we know that via projects like Pivot, that SME owners are open to the conversation and relish being part of a growing and strong community of actors taking sustainability seriously, and offering hope for the future.
Dave Kaufman – host: I do hope that you’ll join us as we navigate this New Normal together. The New Normal is brought to you by Delve the official thought leadership publication of McGill University’s Desaultels faculty of management. I’m your host, Dave Kaufman. Producers of today’s episode: Dave Kaufman, Robyn Fadden and David Rawalia. The technical producer of the New Normal is David Rawalia.