Ethical, sustainable, and climate-friendly entrepreneurship in present day Sri Lanka

February 3, 2023

Sri Lanka’s current situation is impacting many sectors of society and economy, especially micro-, small-, and medium-sized enterprises (MSMEs). Many of these MSMEs have strived for years to build their entity and are now facing uncertainty related to the future of their establishments. Amongst these are those who work based on a vision to conduct their enterprises through ethical, sustainable, and climate-friendly practices. In a world where entrepreneurship is moving towards sustainability and climate resilience, it is important to understand how ethical, sustainable, and climate-friendly entrepreneurship could be supported to overcome the challenges faced due to the present crisis.

Inspiration to create change

Many entrepreneurs motivated to establish ethical, sustainable, and climate-friendly enterprises are driven by a vision to give back to society as well as not to exploit the people and resources that contribute to the business and its production cycle. Their aim is to overall provide an output which is positive in the holistic approach of looking at the utilisation of available planetary resources. 

This could include setting up the enterprises to create positive change in society, including social change that benefits vulnerable groups and communities, contributions to environmental conservation, and sustainable resource use resulting in small ecological footprints.

Some of the entrepreneurs in Sri Lanka who have focused on building ethical and sustainable businesses shared as their motivation the need to create a brand identity which is positive for the planet, limits waste and pollution, creates income and livelihoods for vulnerable communities, and prevents exploitative practices of entrepreneurship harmful to people and planet.

Examples of this kind of entrepreneurship include converting waste material into fashion while engaging a workforce which benefits from flexible work hours without exploitative practices; focusing on directly sourcing materials from farmers to ensure that farmers get a higher price for their produce; or using organic materials in production processes and cycles, such as for food, fashion, and lifestyle products. 

Additionally, there is also an increased consciousness amongst entrepreneurs in Sri Lanka of the need to move towards climate-friendly and -resilient business practices. From introducing organic and vegan food products to guidelines and processes applied to reduce greenhouse gas emissions in the production cycle, there is a shift in entrepreneurship to move towards promoting production and consumption patterns that drive climate action and enhance sustainability and ethical practices within enterprises.

Challenges to entrepreneurship

While some production processes are more impacted than others, almost all entrepreneurs are facing difficulties due to the lack of fuel and restrictions in mobility. They express difficulties in sourcing materials, reaching out to customers who would be able to purchase their good and services due to limited mobility, and the limited buying capacity of potential consumers. Additionally, many also indicate that stress and uncertainty are affecting the progress of their business activities, which is hindering the workforce from focusing on the activities to be conducted.

Another challenge expressed by entrepreneurs is that while there is a demand for products, a high amount is allocated to intermediaries, resulting in higher pricing and limited affordability of products for many consumers. The low visitor numbers in the tourism sector also pose a challenge for many brands focusing on ethical and sustainable products, which often find a market among tourists. However, with the number of tourists to Sri Lanka being lesser, gaps have emerged in the customer base for many entrepreneurs.

In addition to these challenges, entrepreneurs also stated difficulties in finding ingredients with proper certification and quality assurance. They expressed a need to enhance the credibility of certain certification processes to ensure higher sustainability and provide better access to export markets.

To overcome the lack of ingredients, many entrepreneurs are making efforts to identify and source the closest best alternatives to ingredients which are not readily available while avoiding negative impacts to the original quality of their product and brand identity. If successful, such substitutions can allow businesses to adapt and continue the activities of their venture in a sustainable manner.

Overcoming barriers

While present day scenarios are not the most positive, many entrepreneurs remain motivated. Some see the situation as a challenge which could be overcome and potentially even foster innovation in Sri Lanka. Others are shifting from their general production patterns to different business models which help them sustain their business without compromising on the vision of ethical, sustainable, and climate-friendly entrepreneurship.

While focusing on the resilience of the entity from different risks, it is also important to focus on the resilience of the entrepreneurs themselves. Some entrepreneurs consider that in the face of daily challenges, a good entrepreneur is one who is able to face these challenges and find positives in a dark situation, leading to adaptation, innovation, and transformation.

Additionally, there are also collaborations and networks of entrepreneurs as well as start-up ecosystems, which can function as support mechanisms and accelerate progress. Different entities can direct customers with specific needs to businesses who are able to fulfill these requirements. Networks and forums can also contribute to partnered production efforts and share processes that allow multiple entities to work together with a common vision while sustaining their own entrepreneurship in times of difficulty.

Moving forward 

To ensure that micro-, small-, and medium-sized enterprises are supported, it is important to identify opportunities that would allow for the market to grow and supply chains to expand or diversify. For example, this could be through production for a different market, enhanced certification processes, or the establishment of ethical, sustainable, and climate-friendly production cycles.

Furthermore, it would be important to identify opportunities to adapt existing businesses and contribute to building resilience of communities and entities which will support the country’s people and economy to overcome the present crisis. This could include seeking partnerships to enhance the quality of production and create an export market for the products of enterprises, identifying possible support schemes, loans, and risk management options which could diversify the business structures enhancing their resilience to face challenges.

To achieve this, it would also be important to build the skills and capacities of entrepreneurs to adapt their business models and have the ability to face different economic situations and risks. This includes different threats faced due to financial risks as well as resilience to climate risks which could impact one’s enterprise. Holistic risk management, diversification of economic dependency of different supply chains, as well as diversification and alteration ability assessment of different products’ supply chains is vital to better understand the ability of different entities to face the financial crisis.

There is a clear need to create collective processes that facilitate entrepreneurs to have an enabling environment in Sri Lanka and inspire change, create innovation, and develop brands that are ethical, sustainable, and climate-friendly with the potential of generating foreign revenue for the country. This includes banking facilities and financial systems, fast-tracked processing of approvals, avenues for skill development, and scaling up ventures with a support system that can inspire more entrepreneurship to generate growth and economy recovery in the country.

Note: This article has been published on The Morning as part of the author’s weekly column. 

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About the Author
Vositha Wijenayake

Vositha is an attorney-at-law specialising in public international law, with a focus on international environmental law, UN human rights law, refugee law and EU law. She has over a decade of experience in working on climate change, at national and international level. Vositha is a member of the national expert committee on climate change adaptation of the Ministry of Mahaweli Development and Environment, national expert on vulnerability and adaptation measures for the Third National Communication of Sri Lanka to the UNFCCC for the Ministry of Mahaweli Development and Environment, and is a delegate focusing on compliance, adaptation, loss and damage, and gender for the Sri Lankan delegation to the UNFCCC since 2016. She is also a consultant to the UNFCCC national adaptation plans and policy unit, and worked as a country support consultant to the UNDP NAP Global Support Programme. Vositha has an LLM in public international law from University College London, and an LLB from University of London. ‍