Sustainability reporting isn’t just for large organisations anymore. Growing stakeholder expectations, regulatory developments, and competitive pressures have made it increasingly relevant for SMEs to communicate their environmental, social, and governance (ESG) performance too.
While sustainability reporting comes with its financial benefits, it also comes with its challenges for SMEs who have budget and resource pressures to contend with. The trick is to understand and manage both the initial and ongoing costs of the process. Here’s how you can make it work to your advantage.
Financial benefits
Having solid environmental management and ESG frameworks comes with a variety of financial benefits, and sustainability reporting only accelerates those.
1. Improved access to capital
More and more investors are making eco-conscious decisions about where to commit their money. Likewise, lenders are also increasingly integrating ESG criteria. Sustainability reporting can enhance creditworthiness and attract the necessary capital for growth and scaling.
2. Operational cost savings
Preparing for sustainability reporting helps keep you accountable and adherent to environmental practices. A key part of this involves identifying inefficiencies such as energy waste. Eco-efficiency often leads to reduced bills and waste management costs.
3. Competitive advantage
Customers are making increasingly conscious buying decisions. Negative environmental reports, or the lack of one entirely, may steer them away from your business and towards others who demonstrate better practices. Consistent sustainability reporting therefore enhances brand image and customer loyalty.
4. Regulatory readiness
As the world adapts to global warming, regulatory requirements are constantly evolving and emerging. Sustainability reporting will support you in preparing for any that may be relevant to your business, helping you avoid future penalties or loss of market access.
Costs to consider
The initial costs of a sustainability report may include consultant and advisory fees, as many SMEs will require external help to set up reporting systems or frameworks. Investment in software that can track ESG data vital to the report can also come at a cost. In addition, you may need to consider the time and money involved to upskill staff.
Looking ahead, sustainability reporting requires an ongoing commitment to gather data, write reports, and engage stakeholders. It’s also important to seek independent certification, such as ISO 14001, to boost credibility and verify your reporting efforts – but this can start from around £1,000 plus audit fees.
Find a cost-effective approach with Nabarro Poole
Sustainability reporting for SMEs isn’t just a growing requirement – it’s a long-term financial opportunity that can set you up for growth in a constantly changing business world. To realise that opportunity, it’s vital to recognise and manage the costs involved, and Nabarro Poole can help you do just that.
For tailored financial advice and targeted assistance to help you integrate ESG metrics into your growth strategy, get in touch today.
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