Guiding SMEs toward sustainability: The crucial role of accountants
In today's dynamic business environment, small and medium-sized enterprises (SMEs) stand at a vital crossroads of sustainability. The International Federation of Accountants (IFAC) has created the "Small Business Sustainability Checklist," a pivotal resource that highlights integrating sustainability into the heart of business strategies and operations. As societal expectations for environmental stewardship, economic inclusivity, and social fairness grow, SMEs are encouraged to comply and strategically embrace sustainability to safeguard their future and gain a competitive advantage.
Accountants play a key role in this transformational journey. With their unique blend of financial acumen and strategic insight, they are perfectly positioned to guide SMEs through the intricacies of adopting sustainable practices. This piece explores how accountants can utilise the "Small Business Sustainability Checklist" insights to lead their clients to a greener and more prosperous future.
Agents of change
Accountants serve as the linchpins for instilling sustainability into SMEs. Their comprehensive understanding of the business terrain and proactive stance on financial and broader risks render them indispensable consultants. The checklist highlights several crucial areas where accountants can significantly influence:
Strategic integration
Accountants aid SMEs in embedding sustainability into their strategic plans, ensuring it's a core component rather than an afterthought. They identify potential sustainability risks and opportunities, advising businesses on adapting to withstand future challenges.
Operational improvement
Accountants use the checklist to evaluate operations, identifying where sustainable practices can boost efficiency, minimise waste, and enhance resource utilisation. Their skill in systems and control is vital for implementing effective, sustainable processes.
Regulatory compliance and reporting
As sustainability reporting standards evolve, accountants guide SMEs through compliance and future-proofing against upcoming regulations. They help establish comprehensive reporting frameworks aligned with the checklist.
Engaging stakeholders
Accountants help SMEs communicate their sustainability efforts transparently to stakeholders, building trust and fostering long-term connections.
Fostering continuous improvement
Sustainability is an ongoing commitment. Accountants equipped with the checklist support SMEs in setting and reaching sustainability goals, promoting a culture of ongoing enhancement and adaptation to changing standards.
Beyond financials
Accountants' role transcends traditional financial management, positioning them as strategists, educators, and transformative agents. They play an extensive role in demystifying sustainability for SMEs.
In advising clients, accountants should customise their approach to meet each SME's unique needs and challenges. Whether through improving environmental policies, enhancing social responsibility, or strengthening governance, accountants steer businesses toward sustainable practices.
CIBA has been at the forefront of bringing proactive solutions for sustainability reporting. Through its strategic partnership with leading accounting software developer Draftworx, CIBA won the UNCTAD award for innovation in SDG reporting in 2022, presenting a solution enabling Small and Medium Entities to include reports on the core SDG indicators in the annual financial statements. Refer to our Sustainability Checklist below and learn about our exiting new ESG Reporting License.
Watch the award winning video here:
Conclusion
As SMEs navigate the forever-changing business landscape, accountants should assist in turning the concept of sustainability into actionable strategies. By drawing on their expertise, accountants ensure SMEs survive and flourish in this new era, contributing to their client's success and the broader welfare of our global community and environment.
YOUR SUSTAINABILITY REPORTING CONSIDERATIONS CHECKLIST
Based on the IFAC "Small Business Sustainability Checklist", below is a handy tool to guide SME clients in integrating sustainability into their business strategy and operations. The checklist below outlines key areas where support and insight can be provided to clients, ensuring that they comply with current sustainability standards and are positioned for long-term success and resilience.
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This pillar looks at how well a company takes care of the environment. It checks whether clients make use of or produce nonrenewable products and whether any harmful stuff is let out into the air, land, or water.
Has the business assessed the environmental risks to identify those that could impact business operations?
Has the business developed an environmental policy?
Does the policy link/incorporate into the business strategy?
Has the business established specific environmental objectives and targets for your business aligned with your environmental policy?
Are there adequate resources, including budgets and personnel, to meet the set environmental objectives and targets?
How do business activities impact air, water, and soil quality, and what measures are in place to mitigate or reduce pollution?
Has an evaluation been conducted to assess the resource and energy consumption patterns of the business and were strategies implemented to reduce waste and consumption?
Is the business aware of and compliant with local, regional, and national environmental regulations applicable to your business?
Were available government grants or subsidies that support sustainability initiatives explored, and taken advantage of as it applies to the business?
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This pillar checks how a company handles its relationships with employees, suppliers, customers, and the communities it works in. It looks at social concerns like treating people right, keeping them safe, and doing fair business, such as selling products and keeping information private. Meeting these expectations and environmental concerns is what's known as having a 'social license to operate.
What steps has your business taken to promote diversity, equity, and inclusion among your workforce and leadership?
What steps has your business taken to promote diversity, equity, and inclusion among your workforce and leadership?
Have you reviewed your compensation structure to identify and address gender pay gaps within your organisation?
Do you have clear policies and practices in place to prevent discrimination and promote a fair and inclusive workplace?
Have you reviewed and enhanced your recruitment and hiring processes to ensure fairness and equal opportunities for all candidates?
Have your employees received training to recognise and address biases in the workplace, including gender and ethnicity biases?
Is your internal and external communication inclusive, gender-neutral, and bias-free?
Have you assessed the accessibility of your premises and policies for differently-abled employees?
Who are your key stakeholders, and how do you prioritise and engage with them to address their concerns and expectations?
What measures have you taken to ensure that your supply chain is free from modern slavery and child labor?
How does your business contribute to the local community through volunteering and charitable donations?
Are your product or service offerings accurate, complete, and compliant with data protection and privacy regulations?
Are you meeting payment terms and actively seeking customer feedback to improve your products or services?
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This pillar focuses on how a company is led and managed well. It's not just about making plans work and handling risks but also about keeping the trust and support of the community. Specific things looked at are how leaders are paid, following rules, giving rights to shareholders, and checking how things are done inside and outside the company.
Has the business recently reviewed and updated its business governance practices to align with current best practices?
How diverse is the board of directors regarding gender, expertise, and external representation?
Does the business have robust internal controls and clear procedures in place to prevent conflicts of interest and unethical conduct?
Does the business have a documented code of conduct and a whistleblower policy to address conflicts of interest and unethical behaviour?
Have employees been trained on anti-corruption, bribery, and fraud prevention measures?
Have employees been made aware of and trained on sustainability policies?
Have sustainability factors been considered in the procurement processes of the business?
Has the business acted to enhancing data privacy and ensuring compliance with relevant data protection regulations?
Is senior management remuneration tied to sustainability-related performance metrics and achievements?
Has there been collaboration with suppliers and clients to plan sustainability objectives that align with your business goals?
How would you describe the organisation's internal sustainability culture, and what actions are taken to cultivate it?
Is there a structured risk management system in place to identify, assess, treat, and monitor various risks, including sustainability-related risks?
Does the business ensure that IT systems are up-to-date and compliant with data privacy regulations?
Has the business developed a succession plan to ensure a smooth leadership transition within your organisation?
Has the business strategy been updated to prioritise sustainability as a core element of your operations?
Has the relevant sustainability information been broken down into silos and integrated into the decision-making processes for improved quality and relevance?tion text goes here
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