Issues of Scale: SMEs and Sustainability Report Assurance
Industry associations can play a pivotal role in driving the uptake of sustainability practices.
Our series profiling speakers at our upcoming Annual Conference continues with Amir Ghandar from CPA Australia sharing his insights on sustainability report assurance and his organisation’s recently developed guidelines for small to medium enterprises (SMEs).
While the impacts differ, the principles that underpin sustainable management, and sustainability reporting are equally applicable to organisations of all sizes. Whether you’re dealing with a medium sized business or a very large listed business, a degree of transparency around key sustainability measures is increasingly important for many stakeholders.
Independent assurance is an important facet in accomplishing impartial and objective sustainability reporting. Information that touches on a broader range of areas of expertise, with more room for subjectivity in many of the disclosures included, means that sustainability reports come with a raft of challenges for the assurance practitioner.
Precisely the same factors highlight the importance of assurance on sustainability reports. The judgment of an independent assurance professional, capable of bringing together a multi-disciplinary team, brings a level of integrity to sustainability reporting that is crucial in mitigating the risk of actual or perceived bias.
Assurance has so far been difficult for many small to medium enterprises (SMEs) to attain in their sustainability reporting, as a result of both the cost and lack of available practitioners. CPA Australia’s recently released Guide for Assurance on SME Sustainability Reports is intended to play a part in addressing this gap by putting plain and accessible guidance on sustainability report assurance into the hands of medium sized accounting firms that SMEs are likely to already deal with regularly.
There are increasing pressures posed by sustainability reporting for many SMEs. For example, customer and supply chain demand for sustainability disclosures, either as an ongoing requirement or as part of tendering processes. This is often driven by large organisations that need information on sustainability throughout their supply chain in order to report to their own stakeholders.
There are substantial opportunities for SMEs that can be realised through sustainability reporting, including internal advantages such as risk management and staff engagement; and external capabilities such as differentiation from competitors – a factor that has been used by many businesses to great effect. Take for example major organic and fair trade related brands which began life as SMEs, and grew primarily through differentiation based on their engagement in sustainable management.
For SMEs, sustainable management is often “business as usual”. For example, many operate as an integral part of their local community and environment, and minimise wastage as basic, sound business practice. Sustainability reporting provides a credible way for SMEs to tell this already positive story.
To support SMEs starting out on the journey of sustainability reporting, CPA Australia worked with the St. James Ethics Centre in developing the Good Business Register. This tool helps businesses to report on sustainability and responsible business practice in a free and easy to use, intuitive online platform. In addition to A Guide for Assurance on SME Sustainability Reports, CPA Australia is involved in developing training on sustainability for accountants from undergraduate to professional level.
Amir Ghandar is Policy Adviser, Audit and Assurance at CPA Australia. He will appear at a session on industry leading corporate responsibility at ACCSR’s upcoming Annual Conference in Melbourne.