U.S. small and medium enterprises (SMEs) are grappling to keep up
with the jargon and technical expertise of sustainability reporting
and standards, according to Sage, the leader in accounting,
financial, HR, and payroll technology for small and mid-sized
businesses. A global study of 16,423 SMEs launched today shows that
a promising number of businesses want to make progress on their
path to sustainability but are unable to measure and report on
their impact, preventing them from acting on their ambition, or
from realizing the business benefits of sustainability.
Path for Growth: Bridging the SME Sustainability Reporting
Gap, was led by Sage, the leader in accounting, financial,
HR and payroll technology for SMEs, in partnership with ICC, PwC
UK, and Strand Partners. With SMEs making up 99% of all U.S.
businesses, the report aimed to identify their motivators and
roadblocks to becoming more sustainable. U.S. businesses state they
are interested in adopting policies but lacking in execution and
capability, and desire more support through incentives like taxes
and financial grants along with technical software and
training.
Embracing ESG despite the complexities
The data reveals U.S. SMEs are interested in enhancing their
sustainable business practices but place other business priorities
first.
- 63% of U.S. businesses are feeling pressure to engage in and
report on sustainable practices by their customers, with only 1% by
investors and shareholders, 7% by the government and 14% by their
suppliers.
- Only 27% of U.S. SMEs surveyed stated that they will make
public claims about the environmental impact of products they make
with 44% saying they don’t plan to in the coming year.
- To ease with implementation of sustainability reporting, 45% of
U.S. businesses desire financial grants or government assistance
while 24% seek technical assistance in the form of software.
- The main barrier preventing small businesses from taking more
actions to accurately measure their environmental impact is the
high upfront costs associated with implementing sustainable
measures, said 43% of SMEs in the U.S.
Creating accessible reporting standards
American businesses are somewhat environmentally conscious but
are not among the global leaders in this space. Moreover, over half
(53%) think that sustainability reporting can enhance their
reputation. If reporting standards were simpler and more closely
tailored to their businesses, 59% believe that they would be more
inclined to engage in climate reporting. The potential ease that
digital tools could bring to this process is clear, with three out
of four (58%) of businesses considering such tools to be very
important in simplifying environmental reporting.
Considering these findings, Sage, ICC and PwC UK are issuing the
following recommendations for standard-setters, governments, and
industry leaders to consider in order to make the reporting
landscape more accessible for SMEs across the world.
Standard setters:
- Establish consistency in ESG terminology used so SMEs can
understand and respond to reporting asks easily.
- Work with governments to assess and increase the
interoperability of emerging SME standards with leading market
standards and make clear how the requirements of one standard meets
requirements of others.
- Provide user-friendly guides, templates and automated solutions
that ease the burden of reporting for SMEs.
- Consider if the reporting asks being made of SMEs are
proportional for a business with limited resources and prioritize
material issues to help them focus on the right areas.
Government:
- Build data infrastructure to support SMEs and move reporting
towards accuracy and transparency, such as developing shared tools
and data repositories.
- Showcase the importance and benefits of sustainability
reporting among SMEs, such as access to markets, funding, and cost
efficiencies.
- Promote the use of affordable and automated digital
technologies for sustainability reporting that lighten the burden
on SMEs.
- Encourage SMEs to invest in their sustainability reporting
considering financial incentives to mitigate upfront
costs.
- Businesses recognize the centrality of digital tools to
reporting on environmental impact, with 58% acknowledging their
role in easing the reporting process (Q53).
Elisa Moscolin, Executive Vice President of
Sustainability & Society at Sage, said: “Beyond the
figures, the report tells us one key thing: there is in an
indelible connection between sustainability reporting and action –
SMEs can’t fix what they can’t see. Tech is a huge part of that –
63% of SMEs told us the right digital tools will make it easier for
them to report, and we are committed to being part of the solution
there with tools like Sage Earth. But it will take an ecosystem to
get SMEs – and society at large – to embrace sustainability, and we
hope to partner closely with governing bodies and governments to
make the reporting landscape more accessible for SMEs across the
world.”
John W. H. Denton AO, Secretary-General of ICC,
said: “As the institutional representative of more than 45
million businesses worldwide, we see every day the potential of
SMEs to lead the way in creating a more sustainable
future. While it is clear that SMEs are increasingly taking
action, this report identifies what SMEs need to deliver fully on
the promise of a more sustainable and prosperous future.
Specifically, we must provide SMEs with the right policies and
incentives, effective tools and, most importantly, SMEs need a
collaborative effort to transform business practices. By
collectively focusing our attention on these key areas of action,
we can enable SMEs to tackle the obstacles in their way to better
understanding, managing and ultimately improving their
sustainability performance.”
Lynne Baber, Head of Sustainability at PwC UK,
said: “The critical contribution SMEs will make in how the
world meets sustainability goals must be grounded in clear and
reliable reporting, and the link between accurate reporting and
effective and meaningful action is clear. Just 8% of SMEs say
that they are reporting on sustainability issues, indicating the
need for support in navigating such a complex and resource
intensive process. This will require collaboration across
markets, industries and government leaders to develop tech-powered
solutions that will make sustainability reporting more efficient
and accessible.” For further reading, Path for
Growth: Bridging the SME Sustainability Reporting Gap can
be downloaded here.
Survey Methodology Strand Partners’ specialist
research team surveyed 16,423 SMEs in 16 markets between September
1 - 7, 2023, capturing all major business demographics (from size
to sector) as well as detailed information about geography.
SMEs were defined as those employing less than 250 people in the
U.K., U.S., Germany, France, Italy, Spain, Poland, Romania,
Netherlands, Belgium, Brazil, South Africa, Thailand, Canada,
Australia and Kenya. The U.S. sample size is 1,003.
About Sage Sage exists to
knock down barriers so everyone can thrive, starting with the
millions of Small and Mid-Sized Businesses served by us, our
partners and accountants. Customers trust our finance, HR and
payroll software to make work and money flow. By digitizing
business processes and relationships with customers, suppliers,
employees, banks and governments, our digital network connects
SMEs, removing friction and delivering insights. Knocking down
barriers also means we use our time, technology and experience to
tackle digital inequality, economic inequality and the climate
crisis.
About ICC ICC is the world business
organization, enabling business to secure peace, prosperity and
opportunity for all. We are the institutional representative of
more than 45 million companies in over 130 countries with a mission
to make business work for everyone, every day, everywhere. Through
a unique mix of advocacy, solutions and standard setting, we
promote international trade, responsible business conduct and a
global approach to regulation, in addition to providing
market-leading dispute resolution services. Our members include
many of the world’s leading companies, SMEs, business associations
and local chambers of commerce.
About PwC UK At PwC, our purpose is to
build trust in society and solve important problems. We’re a
network of firms in 151 countries with over 364,000 people who are
committed to delivering quality in assurance, advisory and tax
services. Find out more and tell us what matters to you by visiting
us at www.pwc.com. PwC refers to the PwC network and/or one or more
of its member firms, each of which is a separate legal entity.
Please see www.pwc.com/structure for further details.
About Strand
Partners Strand Partners is a global research and
policy consultancy firm. Strand ensures that all data collected
adheres to the highest standards of publishable quality, strictly
conforming to the guidelines set forth by the Market Research
Society.
Media contact: Mara Maddox US Public Relations,
Sage Mara.maddox@sage.com
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