Creating a sustainable future is a collective endeavor that demands involvement from all stakeholders. Achieving sustainability objectives relies on joint actions from players in the economic landscape.
While the focus of sustainability reporting regulations tends to be on large corporations, such as multinational companies and public interest entities, it’s crucial to also consider the role of micro, small, and medium-sized enterprises (MSMEs) in the economy. MSMEs often contribute to 60 to 80 percent of economic activities in many countries, serving as vital drivers of employment and growth.
It’s imperative for MSMEs to adopt sustainability reporting, integrating key concepts like materiality, proportionality, and connectivity into their practices. This approach enables them to create succinct, well-balanced sustainability reports that address crucial topics and align with cost-benefit analyses. There are several factors MSMEs should bear in mind:
- Increased Awareness: MSMEs should enhance their understanding of sustainability and ESG-related matters. This empowers them to grasp trends that might impact their businesses, including potential risks and opportunities arising from sustainability and ESG-driven economic shifts. Armed with accurate information, MSMEs can strategize effectively, minimize disruptions, and engage in discussions as new rules and regulations are formulated that could potentially affect them.
- Supply Chain Impact: Although regulatory compliance might not directly drive sustainability reporting for MSMEs, they often operate within the supply chains of large corporations obligated to report on emissions data. Consequently, many large corporations are actively seeking emissions data from their suppliers, many of whom are MSMEs. To prevent business interruptions, it’s essential for MSMEs to start measuring or at least tracking the information necessary for emissions measurement.
- Sustainable Finance Opportunities: The evolving landscape of sustainable finance presents an opportunity for MSMEs. To attract funding from these new sources, MSMEs need to report on their impact on communities and quality of life.
Embracing sustainability reporting not only benefits the environment but also enhances business resilience and competitiveness in an ever-changing economic landscape. By recognizing their role and aligning with sustainable practices, MSMEs contribute significantly to building a more sustainable future.