Green Action plan for SMEs
It is time for SMEs to turn sustainability challenges into opportunities. Accountants can make both the short and the long-term case for sustainability, says global accountancy body.
Despite the importance of small and medium-sized enterprises (SMEs) to the world economy and their impact on social and environmental issues, they have until now been marginalised in the debate on sustainability and corporate social responsibility.
This is why ACCA (the Association of Chartered Certified Accountants) has welcomed the publication of the Green Action Plan for SMEs by the European Commission, which highlights the potential benefits of them embracing sustainable business practice.
The global accountancy body hopes that this will lead to the adoption of concrete SME-specific measures and approaches within sustainability.
Emmanouil Schizas, senior economic analyst at ACCA, says: ‘Developing an SME approach to sustainability in business practice, business support or public policy will rely on understanding the dynamics of such a diverse sector. SMEs are indeed not scaled-down versions of large organisations and their needs are extremely varied, even within the sector itself. Any initiatives that would focus on engaging the SME sector should not only take into account the differences between large companies and SMEs, but also the differences between micro, small and medium-sized enterprises in this respect.’
‘A crucial factor in engaging SMEs in the sustainability debate and practice will also be the role of the owner-manager, given that most small businesses are both owned and managed by the same individual. Compared with the bigger listed companies increasingly under pressure by various stakeholders to report on their sustainability practices, the SME owner-manager does not have to answer to shareholders and a board and thereby has more freedom and power to implement sustainability practices – or to ignore them’ Emmanouil Schizas adds.
ACCA believes that because SMEs’ use of inputs – especially energy – is rarely optimal, accountants – as among the most trusted business advisers – can play an important role in helping them, to be more efficient.
Emmanouil Schizas however warns that: ‘While the potential for savings can help trigger an owner-manager’s interest, it will not always be large enough to make the case for long-term investment or innovation. In fact, savings may accrue entirely to the business’ more powerful customers. The simplest types of efficiency savings may convey no advantage at all if they are easy to replicate. Rather, the potential of sustainable practices to overcome barriers to entry into large supply chains – including those of the government itself – to trigger innovation and to help further engage the workforce, will matter more to forward-looking owner-managers. This means that only the most well-rounded finance professionals can make the full business case in a way that SMEs can relate to.’
Although SMEs are showing more and more willingness to understand their sustainability impacts and how to make their business operations more sustainable, for some, the mere thought of implementing a sustainability strategy too often equals unwelcome additional costs. For ACCA, the Green Action Plan for SMEs, with its series of proposals to help businesses exploiting the opportunities offered by the transition to the green economy, is a step in the right direction.
‘We especially commend the proposals on improving resource efficiency, on facilitating access to finance for resource-related improvements in SMEs – namely through the Natural Capital Financing Facility – on exploiting the opportunities of greener value chains, on promoting green entrepreneurship – including in education and training – as well as facilitating market access for green SMEs. The challenge will now be, as always, their implementation’ Emmanouil Schizas concludes.
Source: acca
