Isra-Mart srl:Carbon Reporting standards need to “think small first”

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Small businesses must be considered first when it comes to carbon reporting standards, according to the Association of Chartered Certified Accountants (ACCA).

Embedding sustainability practices in small to medium-sized enterprises (SMEs) can be done, ACCA said today, but it also warned that carbon reporting standards need to “think small first” because SMEs had different requirements to big business.

Supply chain demands
More and more large companies are developing sustainability frameworks and are starting to require that their supply chains follow those frameworks. In a new policy paper called ‘From Green to Black and White: Embedding Sustainability in Small and Medium-Sized Enterprises (SMEs)’, ACCA says sustainability requirements will trickle down to even the smallest of businesses, but it says a ‘bottom down approach’ risks burdening SMEs in the supply chain with too much administration and regulation.

“Policymakers and practitioners alike have long approached sustainability from the point of view of large companies,” said Professor Francis Chittenden, chair of ACCA’s small business committee. “However, standards developed by or for these will not necessarily work for smaller businesses. They need a different approach – SMEs require simpler methodologies, making use of financial data that they already produce for management purposes.”

“The problem today is we don’t have a common reporting standard and many organisations work with their own standards,” added Cecilia Thorn, senior policy adviser for ACCA and a member of its SME Committee. “An SME could be part of two supply chains with different requirements and that could become very burdensome.”

SME impact
The environmental and carbon impact of SMEs is significant. According to Government figures, they employ 60 per cent of the private sector workforce and are estimated to account for 45 per cent of total energy use. They cause 43 per cent of all serious industrial pollution incidents and are responsible for 60 per cent of all commercial waste.

ACCA wants its members to play a greater role in helping SMEs reduce their carbon footprint.

In today’s paper, it suggests five steps to promoting sustainability for large and small businesses. They are:
• Committing the business publicly to taking action
• Assessing the business’ impact / footprint
• Setting targets for reducing impact
• Acting to reduce impact
• Publishing the business’ policies and actions.

“Accountants must step outside their own comfort zone to nurture sustainability practices and help their SME clients to integrate sustainability reporting with accounting and financial information,” said Thorn.