Research shows that across Europe, more and more SMEs are reporting their CSR and sustainability performance. But take-up overall remains low.
When it comes to reporting on their Corporate Social Responsibility (CSR) and sustainability performance, SMEs lag behind their larger counterparts.
Research conducted by KPMG, in which the top 100 companies in 41 countries were assessed, found that CSR and sustainability reporting is now mainstream amongst big companies, with nearly three quarters (71%) publishing annual reports.
But separate research looking specifically at Europe finds that only 2,000 SMEs regularly undertake any form of CSR and sustainability reporting. To put that into context, there are thought to be around 23 million SMEs in Europe, so only 0.008% are producing CSR and sustainability reports.
The State of Play in Sustainability Reporting in the European Union ascribes this to the fact that SMEs do not expect much benefit from reporting and are concerned about the costs of doing so. It also finds that SMEs don’t always know what to include in their CSR and sustainability reporting.
What are the benefits for SMEs?
There are multiple reasons why SMEs should be reporting on CSR and sustainability, but the two most obvious are:
Gain competitive advantage
Whether you’re selling to other businesses or consumers, being recognised for your CSR and sustainability achievements will help to set you apart from your rivals in a world where people increasingly want to buy from socially and environmentally responsible companies that trade ethically. Producing and publishing an annual report is another way to bring the things that make you different to the attention of your potential customers.
Attract new talent
According to the Deloitte fourth annual Millenials Survey, “Todayâ€™s workers (especially Millennials) want to be part of something bigger than profit making. Millennials want to work for organizations with purpose. For six in 10 Millennials, a â€œsense of purposeâ€ is part of the reason they chose to work for their current employers”. Although we tend to think that we’re in the driving seat when it comes to recruiting, in reality, people are consciously choosing only to work for companies that uphold high standards and share their values. Showing how that’s you is a sure way to accessing that talent pool.
Where to start
Firstly, you need to decide what to report on.
There are numerous guides out there that you can follow, but they’re often developed with larger companies in mind and can therefore be overly burdensome for SMEs that are just starting out.
And like anything, if it’s made too difficult, people won’t do it.
You could consider reporting on:
People and places
Governance (eg.Â compliance)
Energy and climate
Waste and resources
These are all things that are within your direct control, and easy to measure – in fact, these are all areas where you’ll be keeping track of your performance in most cases anyway because they can impact the proper functioning of your business.
So, for instance, in people and places you could report on moves to achieve Investors In People status, or work with a local community group. Under Waste and Resources, you could report on your efforts to reduce waste and recycle more.
Then you need to think about targets for the following year, so that next time you report, it’s easy to see how far you’ve come.
How to communicate
As we’ve already pointed out, there are good reasons why SMEs should embrace CSR and sustainability reporting, but it’s no good doing so if nobody sees the efforts you’re making.
It’s important to consider the needs of particular stakeholder groups and how they might want you to communicate with them, but there is also room for some cross-cutting communication.
At the very least, you should include a short summary of your CSR and sustainability performance in your annual accounts, usually in the Director’s Report. Even if you take advantage of the Small Companies provisions that mean you only need submit consolidated accounts to Companies House, there’s still an advantage to using the full accounts as a place to build your CSR and sustainability narrative.
Then, you could create a well presented report and publish it on your website, perhaps even creating a page dedicated to it. This will mean it’s accessible to everyone.
You could even issue a press release to your local media and any relevant trade press, signposting them to your website so they can download the report there.
And whatever you do, don’t forget to share it with your colleagues – make sure they see the big picture and how their individual efforts add up to make a difference.
Beyond that, you’ll benefit from creating content for specific audiences, but will need to think carefully about the channels you use.
Whatever you choose to do when it comes to CSR and sustainability reporting, it must be relevant, meaningful, useful, honest and transparent. ‘Greenwashing’ isn’t an option.
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