By Ebenezer Chike Adjei NJOKU
Helen Brand, the Global CEO of the Association of Chartered Certified Accountants (ACCA), has urged stakeholders to prioritise small and medium enterprises (SMEs) in the broader sustainability agenda, citing the critical role SMEs play in driving economic growth, fostering innovation, and creating employment opportunities across the nation.
Speaking on the sidelines of a Sustainability Roundtable session organised by the ACCA, she further emphasised the interconnectedness between sustainability and SME development, arguing that sustainable practices not only bolster the resilience and competitiveness of SMEs, but also contribute to broader societal and environmental goals.
“At the most basic level, we all need the planet to prosper and one crucial thing is ensuring that SMEs take advantage of the opportunities that exist to drive different forms of business… and we must make sure, of course, that they do this without the complexities of the major corporations,” she added.
Current data shows that SMEs are far more likely to prioritise more immediate financial and expansion concerns than they are to develop a long-term ESG strategy even in markets with a deeper understanding of sustainability.
For instance, results of survey undertaken by ID Crypt Global in the UK and published in 2023 paint a bleak picture of the level of engagement in Environmental, Social and Governance (ESG) for small businesses. It found that only 19 percent of the 1,124 SMEs surveyed were even aware of what ESG entails.
Even among this minority, a mere 12 percent said they had integrated it into their strategies. This translates to a staggering 92 percent of UK SMEs currently having no plans to implement an ESG strategy and while comparable data is hard to come by locally, the assumption is that even fewer small businesses here are well-informed on sustainability issues.
Experts warn that this lack of engagement could negatively impact these businesses in the long run. They argue that SMEs that fall behind on ESG risk losing valuable opportunities with larger companies. And unless they can meet the ESG standards of their customers, they may face challenges securing vital partnerships, financing and even regulatory approval in the future.
While many SMEs acknowledge the importance of sustainability, they face significant obstacles. Lack of access to capital, limited awareness of available frameworks, and insufficient guidance on implementation strategies hinder their ability to prioritise ESG efforts, especially when immediate financial needs take centre-stage.
It is anticipated that the tide will turn as financial institutions and investors are increasingly prioritising ESG considerations when making decisions. Conversely, SMEs that can demonstrate a commitment to sustainability are more likely to secure access to financing, partnerships and lucrative market opportunities.
Breaking this cycle requires collaborative efforts, experts say. Governments, financial institutions and industry associations can play a crucial role by providing guidance, training and tailored financial incentives for SMEs. Additionally, facilitating knowledge exchange, technology adoption and resource sharing through joint initiatives can significantly ease the burden of ESG implementation for these smaller businesses.
But action can also come from within. SMEs can take initiative by forming partnerships with larger, sustainability-focused organisations to leverage their expertise and networks. Moreover, making small, achievable investments in employee green up-skilling programmes can foster a company culture of environmental and social responsibility. This represents a cost-effective yet crucial first step toward long-lasting change.
Expanding on the subject, the ACCA chief pointed out the role of accountants and financial professionals in driving sustainability within SMEs.
She highlighted the importance of integrating sustainability considerations into financial decision-making processes and encouraged accountants to champion sustainable practices within their organisations and client networks, adding that the ACCA is well-placed to aid businesses across the entire spectrum in this regard.
“Looking holistically at business development, companies have bodies like the ACCA to aid them. We have created substantial resources that are available digitally but also backed up by road shows and other events to help businesses develop in a sustainable fashion,” she noted.
