SMEs and the ESG and Sustainability Tipping Point
The sustainability reporting shift is here, SMEs, and it's pivotal.
The International Sustainability Standards Board’s (ISSB) new standards (IFRS S1 and S2) launched in June detail the requirements for general and climate-related sustainability disclosures in jurisdictions that have adopted the standards. These standards fully incorporate TCFD's forward-looking approach to assess cash flow implications, and, in some cases, allows for other reporting standards to also be applied.
Consider Coca Cola - over 90% of its GHG emissions originate from its supply chain. This fact should prompt a question for SMEs: What about suppliers feeding information to corporations for these comprehensive annual reports? Reporting periods for SMEs could multiply, especially for vendors supplying multiple corporations or those with their own mandatory reporting requirements.
Reacting with clarity and relevance to client's requests for your carbon reduction strategy or risk mitigation measures is essential. Data inaccuracies or outdated information could dull your competitive edge.
You can bet that your competitors are now setting ambitious sustainability targets to align with client objectives. Your differentiation should now extend beyond product and service delivery to include prompt and accurate reporting of risk minimization, opportunity maximization, and judicious resource use.
Here are seven tips for SMEs to prepare for these emerging sustainability requirements:
Identify Clients' Reporting Timelines: Understand their reporting periods to plan better.
Invest in Automation: Where possible, implement automated reporting systems for timely, comprehensive data.
Review Risks and Opportunities: Your reports should accurately reflect your company's position.
Integrate Efforts: Merge your ESG and Sustainability efforts with your business's financial aspects.
Upskill Your Team: Train employees in the new sustainability standards.
Stay Updated: Follow updates from authorities like ISSB.
Seek Professional Advice: Consider hiring sustainability consultants to navigate this complex landscape.
With escalating sophistication in sustainability strategies, only firms that adapt will thrive. The sustainability shift isn't coming - it's here. Let’s get ready!
