Sustainability Reporting - Responsible Business Practices For SMEs

Sustainability Reporting (SR) is the process of understanding, communicating and monitoring of your organisation’s most significant impacts on sustainability issues such as climate change, human rights, corruption and many others. It is echoed in the June 2016 announcement by the Singapore Exchange (SGX) to make it mandatory for all companies listed on SGX to issue a sustainability report by 2018. Here is a guide to help SMEs draft their sustainability report.

This article was first published in the Orient Magazine, 25th September 2017

 

By Chin Chee Choon, Director, Assurance and Advisory, Nexia TS &

David Lai, Manager, Governance, Risk Management and Internal Audit, Nexia TS

 

Importance of SR to SMEs

 
Small and medium-sized enterprises (SMEs) are important to national economies and the global supply chains of large companies. In Singapore, SMEs account for approximately 99% of the workforce and contribute mostly to the Gross Domestic Product of Singapore1
 
The SR process enables companies, including SMEs, to understand how sustainability may affect their businesses and helps to align strategic goals to help sustain businesses in the long run. 
 
In an article published by GRI and International Organisation of Employers (IOE)2, SR could assist SMEs to grow both internally and externally. Internally, it helps companies to develop its vision and strategy to promote sustainability in business operations, be it in its products or services. By developing a vision and strategy, it enhances the monitoring of progress which helps companies to not only identify its key strengths but also highlight areas for improvement to make the necessary changes. By preparing to report, it indicates that companies are also ready to discuss with the public, particularly employees, on how to tackle each issue and readily resolve them. 
 
Externally, developing vision and strategy would help align organisational objectives in the long term which would enhance reputation of the companies and hence, promote trust from stakeholders. Reputation would help companies stand out from one another, providing a competitive edge, which would attract funding vital to the longevity of a company. 
 

The Process of SR for SMEs

 
Given the restrictions for SMEs in terms of resources and capacity in coming up with a full-blown sustainability report, GRI has provided a guide to help SMEs draft their sustainability report. 
 
The GRI reporting process is divided into five phases:
 
1. Prepare
A company would first select the SR team that is familiar with the GRI Standards. Next, organise and conduct meetings with those directly involved in the reporting process to ensure that commitment is present within top management to report and act on sustainability issues identified that are relevant to the organisation and may impact business goals from environmental and social aspects. The plan should also include manpower resources, budget estimates and reporting milestones. 
 
2. Connect
Identify key stakeholders to collect feedback on sustainability issues identified previously. Decide on how the collection of information should be performed while observing the objective and format of the process. The information to be collected should comprise sustainability issues that are identified as being relevant and crucial for the company to attend to. These, together with recommendations, should be reviewed before presenting to senior management who will decide on the topics to present in the sustainability report.
 
3. Define
It is important to define what the reporting content of the company is. A company should assess the materiality aspects of the issues that would allow it to achieve its goals in a sustainable manner, respond to the information needs of key stakeholders and manage the impacts on the economy, environment and society.
 
For each sustainability issue identified as relevant, assess the impacts on where they may occur, that is, internally within the company or externally with a third party that the company has a relationship with. It is crucial to prioritise each sustainability topic identified by assessing the importance of the stakeholder’s assessment and decisions, and the company’s economic, environmental and social impacts. These should be supported, with reasons, about why they are perceived as “material”.
 
4. Monitor
The SR team members should begin to collect and analyse the information needed in order to build the context of the report. The SR team should establish monitoring systems to periodically check on the progress of both the sustainability performance of the material aspects and how effective the monitoring systems are.
 
5. Report
The last step is to complete the sustainability report, which is then publicly launched. The company should decide whether information compiled is necessary and needed to address the GRI Standards
Disclosures. Information presented should be clear, concise and give a complete picture.
 
In conclusion, SMEs have a very important part to play in building a sustainable future through responsible business practices and there is a clear business case for SMEs to be part of this great SR initiative.
 
Responsible business practices are about continuous improvement, and combined with SR, they reinforce each other, helping SMEs integrate sustainability thinking into the organisation and capture new value3.

 

[1] https://www.spring.gov.sg/Resources/Documents/Corp_Marketing_Brochure_Eng.pdf

[2]GRI “Small Business, Big Impact: SME sustainability reporting from vision to action”; https://www.

globalreporting.org/resourcelibrary/Small%20Business%20Big%20Impact%20Booklet%20Online.pdf 

[3] GRI “Ready to report? Introducing sustainability reporting for SMEs”; https://www.globalreporting.org/resourcelibrary/Ready-to-Report-SME-booklet-online.pdf

 


 

About The Authors

 

 

Chin Chee Choon has more than 16 years of collective experience in Risk Advisory, Internal Audit, External Audit and Sarbanes-Oxley areas with PricewaterhouseCoopers, Deloitte and Touche and two US Multinational Corporations (MNC) prior to joining Nexia TS.

 

Chee Choon heads the Corporate Governance, Risk Advisory and Internal Audit services and has been involved in the internal audit reviews of companies listed on the Singapore Stock Exchange, Government Agencies and also non-profit organisation. Other than internal audit, he was also involved in special projects such as Enterprise Risk Management, pre-IPO internal control reviews, fraud investigation and review of internal control manuals. Chee Choon is also the engagement director for the audit of companies from various industry and sizes including companies listed on the Singapore Stock Exchange. He was involved in IPO projects where the firm functions as reporting accountants.

 

 

David Lai is a Manager from Governance, Risk Management and Internal Audit division of Nexia TS, a member firm of Nexia International. He has 8 years of experience in internal and external auditing, sustainability reporting, pre-IPO internal control reviews, Sarbanes-Oxley reviews, compliance, enterprise risk management and consulting.

 

He has served clients in diverse industries including manufacturing, interior design & exhibition, oil & gas, food & beverage, property development & construction, architectural services, education, trading and retail. He was also involved in audit and assurance services of listed and non-listed organisations, with broad exposure in countries including China, Dubai, Hong Kong, Indonesia,  Malaysia, Myanmar, New Zealand, Philippines, Taiwan and Vietnam.

For more information, visit www.nexiats.com.sg.

COMMENT
VIEW COMMENT
 
BACK TO TOP