90% of the world’s businesses are SMEs, and 50% of the world’s employees work for SMEs. As we all know, SMEs are crucial to the Welsh economy, and therefore to achieving a greener and fairer Wales.
As I speak to businesspeople, I can see that more and more smaller businesses are keen to do their bit to build a sustainable economy and a better society for everybody.
Yes, they are in business to make money. But they are also concerned and responsible citizens, and they see the headlines about the effect of climate change and the other issues around sustainability.
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As we have seen with the rapidly rising energy costs, the two are no longer mutually exclusive – taking action to improving energy efficiency and self-generating renewable energy can also have a positive impact on a business’ bottom line. However, they do not always know where to turn in order to gain expert advice on, for instance, carbon reduction and reporting.
Smaller businesses face barriers as they often have limited resources, time and the specialist skills to dedicate to taking action and to measuring and reporting. One concern is that smaller businesses who are part of a larger supply chain might spend a large amount of time in complying with larger businesses’ reporting requirements and have less time to work on their own sustainability journey and informing people of this.
In 2021, ACCA, alongside our partners Sage and the International Chambers of Commerce, called for policymakers and bigger businesses to ‘think small first’ by supporting smaller businesses to understand, measure, disclose and reduce their carbon emissions, including consistent reporting standards and frameworks that are appropriate for smaller businesses.
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It’s also why I was proud when ACCA launched the latest version of its Sustainability Playbook, which accountants who work in SMEs or with SME clients can use to develop more sustainable ways of doing business.
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The playbook sets out options which don’t cost any or much money, and instead promotes a mindset where long-term consequences are included in investment and operational decisions.
These are summarised in six calls to action which could make all the difference, including:
Considering sustainability in every decision you make
Measuring non-financial performance and encouraging clients to do so
Sharing your insights and experience widely and often
Above all, it encourages SMEs to take really practical steps, with guidance on how to save water and other natural resources; how to cut carbon emissions; how to set goals and stick to them; the benefits of external accreditation such as BCorp.
Through working as part of the NatWest Wales SME Taskforce on Net Zero, alongside FSB, BITC, Cynnal Cymru and Business Wales, I have seen fantastic examples of the work being done by SMEs in Wales to reduce their carbon footprint, and also the range of support and guidance that is available to businesses in Wales who are seeking to take action, but also saving money or generating new business opportunities.
Accountants can play a crucial role in supporting businesses - through advising on business cases or on reporting frameworks, or by connecting SMEs to experts to solve a business’ problems.
It’s increasingly true that sustainability isn’t just a nice-to-have bonus for businesses which want to burnish their eco credentials.
In a few years it’s become mainstream orthodoxy, and a priority for businesses, governments and citizens everywhere.
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Governments, having adopted ambitious sustainable development goals for the end of this decade, are ramping up regulation to encourage and even enforce it.
Consumers increasingly want to trade with firms they respect; employees prefer to work with businesses whose values match their own; suppliers will require and investors will increasingly only back companies which can prove they are committed to sustainability for the long haul, and can offer a return on capital that is future-proofed against the growing clamour for corporate responsibility.
Many SMEs have found that by adopting sustainability initiatives, they can reduce costs and create new opportunities for growth and profitability. They also recognise this better prepares them for the future. More than ever, a dedication to sustainable business is an essential license to operate – as essential as fire safety certificates, employment law compliance and paying your taxes.
It all adds up to the fact that sustainability is a business question as much as it is a moral and an ethical question. And I know from my experience with Wales’ SMEs that they are increasingly more than ready to roll up their sleeves and put their shoulders against the sustainability wheel, supported by the wide range of expert advice that exists within our business ecosystem.
Lloyd Powell is Head of ACCA Cymru