Achieving Sustainability on a Budget: A 5-Step Guide for SMEs

Countries around the world are enforcing mandatory sustainability reporting regulations. Far from being a niche investment consideration, Environmental, Social, and Governance (ESG) disclosure is now a key determinant of business performance and profitability.?

Yet, many question the relevance of sustainability reporting for small and medium-sized enterprises (SMEs). This question comes as no surprise since current requirements only apply to financial institutions and listed or large companies.?

The truth is businesses, no matter their size, are connected in wider supply chain networks and the global sustainability context. Instead of mandatory reporting requirements, a whole suite of key stakeholders—investors, banks, supply chain partners, and customers—are expecting and asking for sustainability disclosure. Yes, it may seem “optional.” That is if you consider undercutting one’s competitiveness a sound business choice.?

According to a global study by Deloitte and Tufts University, 83% of the investors surveyed incorporated sustainability information into fundamental analyses. 79% of investors reported having sustainable investment policies, a 20% increase from 5 years ago.?

If you are trying to decide if sustainability reporting is right for your organization, this article is for you. It will cover everything you need to know: key reporting challenges, business opportunities, and strategies.?

The choice is yours to make.

Setting the Stage: Understanding the Sustainability-Led Market?

Globally, SMEs make up around 90% of businesses and 50% of the world’s GDP. While the definition of SMEs varies across countries, SMEs are often characterized by their number of employees, assets, and revenue size below a certain threshold. For instance, the World Bank offers several definition categories based on employee size: Micro (1 to 9 employees), Small (10 to 49 employees), and Medium (50 to 249 employees).?

SMEs also contribute to at least 50% of greenhouse gas (GHG) emissions in the business sector. Especially for those who serve as key suppliers for larger corporations conducting sustainability reporting, ESG disclosure may already be knocking on the door. Instead of scrambling to meet stakeholders’ demands when “the time comes,” positioning your business is key to your competitive advantage.?

The business case for sustainability reporting can be summarized in one word: value. Communicating your sustainability profile is key to distinguishing your brand in the hyper-competitive marketplace of SMEs. In a sustainability-led market, are you communicating about your business’s readiness to address ESG impacts? Are you signaling reputation and trust to existing and prospective customers, partners, and investors? How do you attract new funding if you don’t speak the language of sustainability reporting?

Internally, integrating sustainability is a valuable process to uncover blindspots and opportunities for improving business efficiency, management systems, and cost-saving strategies. It also serves as your guiding compass as you align your business goals with the global sustainability market.?

The Challenge

So…what is stopping millions of SMEs from capitalizing on their sustainability potential? SMEs typically face several challenges, some of which may have already crossed your mind:

• Too much information—where do I even start? Information availability is one thing, making sense of it is another. While there is a wealth of information about ESG reporting, most are targeted at larger corporations and are ill-suited to the needs of SMEs.
• Competing business priorities. For many SMEs, time and resources are limited. Without a clear goal or a direction to integrate sustainability into their business timeline, it is easy to postpone ESG reporting for “someday.” The danger with the “someday” strategy is that it might arrive too late for SMEs to fully capitalize on the benefits as early adopters. Or worse, “someday” never arrives.?
• Lack of expertise and capacity. Setting up comprehensive data collection and reporting processes is expensive for SMEs. To begin with, is there quality data and information available for reporting? SMEs must also decide to either delegate the sustainability task to existing tight human resources or outsource to third-party specialists.??

How to get Started?

As with any worthwhile business opportunity, sustainability strategy and reporting take time and resources.?

Instead of being stuck with “sustainability is too costly for my business,” the solution is creating a feasible sustainability strategy that sets your organization up for reporting success over time. Take the first step and track your ESG performance over time. Even for large companies, ESG performance begins from the simple decision to start and improve.?

Depending on your organization’s size, needs, and priorities, below are five steps to get your ESG reporting started:

1. Figure out what “matters.” What does sustainability mean for your organization? What are your company’s most significant ESG impacts? Who are the key stakeholders involved? How does your organization plan to contribute to ESG issues? A helpful (and easy) starting point is the UN Sustainable Development Goals and GRI’s SME reporting guide.?
2. Build a sustainability strategy to achieve your goals. What human resources and tools do you need? What is a realistic timeline to achieve your milestones? Can you create an ESG reporting team or delegate a representative to oversee the process?
3. Prioritize a minimum set of sustainability metrics. With the key sustainability topics, identify ESG metric(s) to kickstart your reporting journey. While the list of metrics may seem daunting, remember that you can focus on a few metrics for now, with the goal of expanding.
4. Leverage technology solutions to simplify the ESG reporting process. Sustainability reporting can be difficult and tedious—but it doesn’t have to be. Setting up your organization for success means investing in solutions that make reporting simple and cost-effective. Connect with us to discuss how Asuene’s cloud platform can save you time and cost in ESG reporting.?
5. Access ESG reporting resources, funding, and support for SMEs. Many governments and ESG reporting standard settlers offer free resources and support for SMEs. Depending on your jurisdiction, you may be eligible for subsidized programs and other business opportunities!

Next Steps

Communicate your sustainability story to stand out from the crowd. Regulations are only a beginning. Look past the regulatory criteria and listen to the needs of investors, partners, and customers, who are demanding greater ESG transparency.?

Start now, progress over time.?

Get in touch with us to learn how Asuene’s AI-driven cloud platform and ESG team can set you up for ESG reporting success. Having supported over 6,000 clients in their sustainability journey, we offer spreadsheet-free, fully automated, and cost-effective ESG reporting solutions for businesses of all sizes.??

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Article by Asuene Compass | Asuene Compass, the global sustainability intelligence team at Asuene, acts as the guidepost through the evolving landscape of corporate sustainability. The Asuene Compass team identifies emerging trends and regulations in decarbonization, climate policy, and broader ESG matters. This knowledge is translated into actionable insights through white papers, articles, webinars, and regular updates on our website and social media.