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Sustainable business at small and medium sized

The Sustainability Imperative for Small Business by Paul ThompsonDirector, European Federation of Accountants and Auditors for SMEs August 22, 2014 Small- and medium-sized entities SMEs might think that sustainability is only relevant to large companies—that for a small business, the administrative and financial costs outweigh the benefits.

Moreover their accountants, both those employed by the business accountants in business and those providing services to the business accountants in practicewill tell you it is a hard sell getting SMEs to embrace sustainability. However, SMEs that integrate sustainability into their core business strategy can benefit from lower costs, reduced risk, and new opportunities. And their accountants, typically operating in small- and medium-sized practices SMPscan play a key role in their journey.

Meanwhile, there is immense pressure on the natural environment and a recognition that finite resources are fast depleting. Today, SMEs are increasingly being faced with pressure to measure and manage their impact on the environment.

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They are an integral part of the supply chain where there is a growing demand for sustainability management both from customers and suppliers, especially for those SMEs seeking to secure contracts with governments or larger companies. SMEs also need to ensure they have access to the resources they need to be able to continue to offer their products and services in the future. SMEs of all shapes and sizes—for profits and not-for-profits, public or private, across all industrial sectors—stand to yield significant benefits from adopting sustainable business practices.

The initial cost of integrating sustainability into the core business strategy, and reporting on it, can be more than offset by cost savings, reduced risk, positive brand association, and the ability to meet consumer, investor, and supplier demand for environmentally conscientious products and services.

In this way, the initial cost is more an investment. One Mid-Year 2013 edition see pages 10—11 found that many SMPs nearly half of those polled currently offer sustainability services, mostly in the form of advice or reporting; an additional one quarter have plans to offer services in this area in the future.

However, many SMEs lack the capability to do this without outside help. They will likely seek the help of someone they trust—their accountant, potentially generating new revenue opportunities for SMPs.

But first SMEs need to know that they can expect assistance of this nature from their accountants. Given that SMEs are keen to realize the financial benefits of adopting more sustainable practices, a starting point for SMPs might be to offer to help their clients implement the plan-do-check-act method sustainable business at small and medium sized the control and continuous improvement of processes and products. This advisory service could include improving business opportunities and creating efficiencies, identifying the risks to cash flow that social, economic, and environmental change will present, and ensuring that clients or employers take advantage of the cost reductions, minimize any cost increases, and maximize the potential revenue by adopting business strategies that identify and address those sustainability issues that are most relevant to their particular business circumstances.

Some SMPs are already helping their clients to develop metrics and the systems needed to capture and report on the metrics.

Build partnerships—SMPs should establish collaboration with local environmental sustainability experts in order to gain local access to credible knowledge. Practitioners should review the environmental sustainability of their own business and then use that valuable experience to have rounded, relevant conversations, based on genuine experience, with their clients.

The Sustainability Imperative for Small Business

Seek information—Practitioners should familiarize themselves with information sources that they could recommend to others or use to broaden their own knowledge. Formalize commitment—Where appropriate, practitioners should formalize their commitment to offering environmental sustainability advice through marketing and awareness raising in newsletters, their documentation, and website.

Applying the same principles to the practice itself can help accountants improve the way they run their own businesses as well. Does your practice offer a sustainability service? Please describe your experience and any advice you would give. Paul Thompson is EFAA Director and a consultant dedicated to thought leadership and development of the global accountancy profession. From 2004 to 2016 Mr. He advises developing professional accountancy organisations in Europe and Asia.

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He has a number of publications in academic journals and the professional press in the areas of ethical finance, corporate reporting, corporate governance, integrated reporting, practice management and the future of the profession.

Thompson graduated from the University of Warwick with a bachelor of science in accounting and financial analysis and is a fellow of the Institute of Chartered Accountants in England and Wales. Thompson is an internationally ranked masters distance runner.

Like what you see here? Subscribe to The Latestour customizable update sent every two weeks. Do you have a perspective you'd like to share with the global profession? Research Insights—Integrated Report Quality: BarthJoan E. Horngren Professor of Accounting, Stanford University, Graduate School of Business and Steven CahanProfessor of Financial Accounting, University of Auckland Business School March 18, 2018 Higher-quality information for internal and external stakeholders is associated with improved decision making; given that, how is integrated report quality related to firm value?