Presenter Dr. Aqueel Wahga Overcoming barriers to environmental improvement in SMEs: Pragmatic policy options for Pakistan’s leatherworking industry Presenter Dr. Aqueel Wahga Co-Authors Prof. Richard Blundel Dr. Anja Schaefer

Rationale for research SMEs make a considerable contribution to economic growth. Their environmental impacts are also noted to be significant (Wahga et al., 2018; Blundel et al., 2013; Parker et al., 2009). For achieving Sustainable Development Goals (SDGs) various stakeholders are driving SMEs to reduce their environmental footprints (Vogt and Hassan, 2011; Gold, et al., 2010; Lund-Thomsen, 2009). SMEs have started to take some environmental initiatives, but they face a number of barriers (Wahga et al., 2018; Murillo-Luna et al., 2011)

Rationale for research Prior research has examined environmental barriers in both developed and developing economies There is still merit in investigating these barriers in the context of developing economies. Local and regional peculiarities leading to a different set of internal barriers. Distinct institutional structures Previously identified environmental barriers in SMEs cannot be accepted universally

Aim of this research Investigate the barriers to environmental improvement in leatherworking SMEs of Pakistan, a developing economy context. Offer pragmatic policy recommendations to overcome such barriers.

Leatherworking industry in Pakistan Size-wise More than 90% leatherworking units are SMEs (PTA, 2018) Products of leather industry Finished leather, leather apparel and clothing, leather gloves, leather footwear and some other leather products such as hand bags and belts. Economic contribution Third largest export earning sector (4.5%), after textile and rice [Economic Survey of Pakistan, 2017-18].

Environmental issues and practices of leatherworking SMEs

Theoretical Framework A hybrid theoretical framework help examine simultaneously both the internal and external factors limiting the environmental engagement of sample firms. Resource-based view (Eisenhardt and Martin, 2000; Barney, 1991; Wernerfelt,1984; Penrose,1959) Can lend support to identify the absence of resources at the internal level that constrain environmental improvement in leatherworking SMEs Institutional theory (Scott, 2010; Oliver, 1991; DiMaggio and Powell, 1983) To examine the institutional-level factors operating externally in the organisational field of leatherworking SMEs, and limiting their better environmental engagement.

Methodology Multiple case study design Purposive and snowball sampling strategies Semi-structured, in-depth, face to face interviews 35 interviews with different owners and managers from 22 SMEs A number of other industry stakeholders were also interviewed, including cleaner production centres, industry associations and input suppliers Grounded analysis using NVIVO, operationalised Gioia methodology (Gioia et al., 2013)

Internal environmental barriers in leatherworking SMEs

External environmental barriers in leatherworking SMEs

Environmental barriers faced by leatherworking SMEs in Pakistan Internal barriers Financial constraints Labour related barriers Area shortage External barriers Policy barriers Infrastructural barriers Societal barriers Inconsistent support from some environmental institutions

Policy Recommendations Addressing institutional gaps through effective enforcement of environmental regulations capacity building of environmental inspectors, while also increasing their salaries Better governance of tannery clusters Opportunity for collaboration between the management of effluent treatment plants and district governments for strict surveillance of environmentally non-compliant SMEs Institutionalising cleaner production alongside adopting end-of-pipe treatment technologies Raising eco-literacy skills amongst owner-managers and employees Motivational push and informational support

Policy Recommendations Raising the level of social accountability for SMEs raising environmental awareness amongst general public, for example, through media campaigns mobilise local communities to play an active role in promoting environmentally responsible businesses in the country – role of educational institutions Consistent support needed from intermediary organisations, such as cleaner production centres and industry associations Improvement in infrastructure Constructing drains, roads etc. Developing local chemical industry

Policy Recommendations Access to finance Opportunity for Islamic Banks Central Bank’s role in directing commercial banks to offer environment-specific loans on relatively less strict terms

To conclude If the proposed recommendations are operationalised successfully, it can help leatherworking SMEs Survive in international supply chains Achieve economic, environmental and social benefits simultaneously Make a reasonable contribution towards achieving sustainable development goals

Thank you!