Blog

14 June 2021

Sustainability risk management for SMEs: inaction is not an option by Johan Barros

We live in unprecedented times: globally integrated supply chains, climate change, and now the pandemic, have highlighted the need to change how we do business.

These issues touch on how the UN defines sustainable development: How to meet the needs of the present without compromising the ability of future generations to meet their own needs?

Small businesses are at the heart of our economies. Our publication SME risk management: sustainability explains how and why SMEs need to put sustainability at the forefront. It outlines how accountants can help SMEs become more sustainable organisations so they can deal with these new realities.

A checklist to kickstart SMEs’ sustainable transition

We have developed a 3-step sustainability assessment for SMEs checklist with the support of the European Association of Co-operative Banks (EACB). Directed at accountants, it aims to help their SME clients develop their businesses’ sustainability profile and enable a smooth transition to more durable business models.

Why does sustainability matter for SMEs?

The sustainable transition is having an evident impact on SMEs. For example, society increasingly expects businesses to do better. Our awareness of companies’ social, environment and governance (ESG) impacts is changing our consumption behaviours. SMEs need to become sustainable if they wish to stay viable long-term.

SMEs could face serious risks if they don’t effectively address sustainability issues:

  • outdated business models which could lead to fewer clients and partners
  • competitive disadvantage, especially for consumer facing businesses
  • upcoming regulatory requirements, for example on sustainability reporting, that are trickling down from larger companies to progressively smaller ones
  • requirements that supply chains and business partners set for SMEs to deal with, including on heavy internal controls and reporting

How can accountants help?

Thinking about sustainability can be daunting for SMEs that cope with everyday challenges and the pandemic’s impacts. But Covid-19 is also the latest call for more resilient and sustainable businesses. SMEs often rely on accountants as their primary advisors on business decisions. They can also help SME owners consider sustainability risks, mitigate them, and advise on sustainable transition opportunities. They can:

  • map supply chains and identify weak areas
  • assess sustainability impact and risks, setting KPIs and monitoring processes to reduce impact, publishing businesses’ policies and actions, and create Environmental Management Systems (EMS)
  • identify ESG opportunities and measures’ potential impact on cash flow
  • advise on access to funding and liquidity advantages for when SMEs become more sustainable
  • set up sustainability reporting and communication
  • provide assurance on the reported information when required by external parties

 

Subscribe to our SME update to receive the latest news on SME matters relevant for accountants. Let us know your thoughts by getting in touch with Johan Barros at [email protected].

Related content

EventAccountancy Europe and WBA joint expert meeting on sustainability reporting standards

21 October 2021

EventEarly Warning Europe Day

28 September 2021

NewsReporting Beyond the Financials: Sustainability on the Books

24 September 2021

Consultation responseEC’s proposal of an EU standard for green bonds

22 September 2021

UpdateSME Update

16 September 2021

UpdateSustainability

14 September 2021

Consultation responseEFRAG’s consultation paper – due process procedures for EU sustainability reporting standard-setting

14 September 2021

PublicationSMEs’ digital future

13 September 2021

Consultation responseEC’s consultation on fighting the use of shell entities and arrangements for tax purposes

31 August 2021

PublicationSustainable tax system: taxes and the environment

31 August 2021

Consultation responseIFRS Foundation’s Exposure Draft: Proposed targeted amendments to the IFRS Foundation constitution to accommodate an...

22 July 2021

NewsCall for dialogue: assessment of SMEs’ post-COVID financial health

19 July 2021

NewsA 360 view on Sustainable Corporate Governance

14 July 2021

Consultation responseIASB’s third agenda consultation, EFRAG’s draft comment letter and own proactive research agenda consultation

13 July 2021

PublicationA constructive two-way cooperation to sustainability reporting standard-setting

8 July 2021

NewsNew Roadmap enhances EU Sustainable Finance Strategy

7 July 2021

BlogEU green bond standard: Europe’s next move to help finance sustainable projects

6 July 2021

Consultation responseEC’s Corporate Sustainability Reporting Directive proposal – feedback statement

1 July 2021

EventSustainable financing 101 – State of play and next steps

24 June 2021

UpdateSustainability

22 June 2021

Sign up for our newsletter

* indicates required
Would you like to subscribe to our newsletter?
On which topics would you like to receive news?