Sustainability requirements will trickle down to even the smallest of businesses, says ACCA (the Association of Chartered Certified Accountants), in a new SME Committee policy paper called From green to black and white: embedding sustainability in Small and Medium Sized Enterprises (SMEs).
However, the paper says that the challenge for all stakeholders is to manage the administrative burden of sustainability reporting on SMEs throughout the supply chain in order to avoid wasteful duplication, heavy-handed regulation, or barriers to entry - whilst promoting and communicating best practice.
ACCA believes it is important that SMEs start promoting sustainability because they already have a significant footprint and impact. SMEs employ 60% of the private sector workforce; they are estimated to account for 45% of total energy use, 43% of serious industrial pollution incidents and 60% of all commercial waste; additionally 31% of their energy usage is believed to be due to waste.
Professor Francis Chittenden, chair of ACCA’s small business committee, says: “Sustainability is everyone’s business. Policymakers’ commitment to responsible and sustainable business practices in the UK and the rest of Europe is increasingly backed up by ambitious and specific commitments on carbon emissions and the use of energy. However, it is very difficult to imagine that such commitments can be monitored, let alone met, unless smaller businesses can also deliver savings and report on progress.”
Professor Chittenden is also adamant that any reporting standards need to ‘Think Small First’, adding: “Policymakers and practitioners alike have long approached sustainability from the point of view of large companies. However, standards developed by or for these will not necessarily work for smaller businesses. They need a different approach - SMEs require simpler methodologies, making use of financial data that they already produce for management purposes.”
The paper also offers five steps to promoting sustainability as follows – for large and small businesses:
1. Committing the business publicly to taking action
2. Assessing the business’ impact / footprint
3. Setting targets for reducing impact
4. Acting to reduce impact
5. Publishing the business’ policies and actions.
Cecilia Thorn, Senior Policy Adviser for ACCA and a member of ACCA’s SME Committee adds: “Footprinting and sustainability reporting are still relatively new disciplines for SMEs and their advisers. The priority now is to ensure a move towards common standards, built from the bottom up. It is not realistic for the accounting profession, entrepreneurs or policymakers to expect immediate results – these could take a decade or more to materialise. However, we say in this report that this is a first and solid step down the right path, and that accountants must step outside their own comfort zone to nurture sustainability practices and help their SME clients to integrate sustainability reporting with accounting and financial information.”
Professor Chittenden concludes: “The inevitability of this means that change will happen, and the finance profession has a massive part to play here because promoting effective sustainability practices can lead to competitive advantages for progressive firms. What can be measured can be monitored and communicated to employees, to customers and suppliers. SMEs can make big leaps in this area.”