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Policy-makers, regulators and finance professionals must help small businesses adopt sustainable business practices – since their huge environmental impact is currently being overlooked, claims the Association of Chartered Certified Accountants (ACCA).
Despite representing more than 90 per cent of global businesses and accounting, for 50 per cent of gross domestic product and 63 per cent of employment with a significant impact on industrial pollution, small- and medium-sized enterprises (SMEs) have been marginalised in the debate about sustainable business practices and have been slow to adopt environment-related improvements.
For instance in the EU, only 29 per cent of SMEs have introduced measures to save energy or raw materials compared with 46 per cent of large enterprises and only 4 per cent have a comprehensive energy efficiency system.
In its new policy paper Embedding Sustainability in SMEs, ACCA’s Global Forum for SMEs has called on a number of groups to take action to help smaller businesses to enable them to become more efficient and environmentally friendly.
A series of SME-specific measures and approaches will need to be adopted, if these efforts are to gain any significant momentum, with policy makers taking into account not only the differences between large companies and SMEs, but also the differences between micro, small and medium-sized enterprises, claims the report.
As many SMEs are run by owner-managers – with no shareholders or boards to answer to – they have more freedom to implement sustainability practices – or to ignore them. This is why it is important that governments and business-support professionals ensure that SMEs are aware of the quick gains they can make through increased efficiency and of the grants, financial assistance and incentives that may be available for those which commit to cutting emissions or which reduce waste.
This includes conditions that are set so that only businesses with sustainable practices have access to large and potentially lucrative public sector supply chains. While small business owners need to become more proactive and strategic when it comes to adopting sustainable business practices, regulators also need to ensure that they ‘think small first’ when it comes to developing regulations which are aimed at encouraging such practices, such as sustainability reporting.
The paper sets out a number of challenges for groups involved.
SMEs need to follow five steps to sustainability reporting. These are committing the business publicly to taking action, assessing the business’ impact, setting targets for reducing impact, acting to reduce impact and publishing the business’ policies and actions.
Accountants are urged to work with local environmental-sustainability experts in order to gain local access to credible knowledge, to review the environmental sustainability of their own business, then use that valuable experience to have rounded, relevant conversations, based on genuine experience, with their clients.
The paper said that accountancy bodies are urged to become more proactive in the SME sustainability debate, providing members with the right tools and resources to help them develop in this direction.
Mark Gold, chairman of ACCA’s Global Forum for SMEs, said: “All too often, small business is overlooked when it comes to environmental and sustainability issues. But in terms of economic activity, employment and waste, small businesses make a huge impact and it is critical that they and those who advise and regulate them, recognise this and begin to take steps to tackle waste, promote efficiency and ensure that sustainability is at the forefront of their thinking.”