Five reasons small businesses should be reporting on sustainability

Communicating your vision and building trust

The sustainability reporting process is a key element to incorporating sustainability into your company’s wider strategy. Eventually, your sustainability reporting data can become part of an impact report and other communication pieces that reflect your company values. This is invaluable for SMEs in communicating their purpose and vision, and making their voice heard…

Making sure you accurately and clearly report your sustainability metrics, emissions and initiatives also helps to improve relationships between your small business and your stakeholders. We know from experience that we gain so much from our partnerships – as an SME it’s so important to collaborate with peers and build trust with long-standing clients or customers. We don’t exist in a bubble!

Investors are using ESG for screening

With a growing understanding of environmental and social impacts, investors are increasingly using Environmental, Social and Governance (ESG) criteria to assess start-ups and SMEs. ESG considers the impact of sustainability on investments, focusing on risk and opportunities while maintaining financial returns. Responsible investing, which emphasises moral values, is also gaining popularity. In fact, Responsible Investor is one of our favourite newsletters to read in the morning (P.S. Click here to sign up for our own newsletter Sustainit Spotlight for more sustainability reporting insights).

Generally, ESG practices have become the preferred choice.  Investors are increasingly seeking portfolios that are forces for good, yet they also know that sustainable investment practices positively impact risk management, talent access and investment valuations. ESG metrics allow for the comparison and analysis of investments based on financial, social, and environmental performance. By reporting your sustainability data and having a strategy from the get-go, you can make sure you pass screenings and attract beneficial investors who share the values of your business.

Attracting and retaining the right talent

Potential candidates are increasingly looking to work for companies that align with their values and have demonstrable sustainability initiatives. According to data from KPMG, approximately 20% of job seekers have explicitly turned down job offers at companies where ESG commitments didn’t align with their values. This is only increasing amongst younger generations joining and progressing in the workforce.

Moreover, engaging current employees in sustainability efforts helps to improve internal communication and motivation in your workforce. For example, our internal sustainability team spans across our departments! This helps to foster a feeling of togetherness and collaboration within our small team.

Data management systems

Managing sustainability data with software, or even a comprehensive spreadsheet, can allow SMEs to make sure their data is high quality and auditable. Being able to clearly analyse and check data allows you to easily identify areas on which to focus your sustainability efforts.  Finding an ESG software or data management system that works for your business, helps to increase the efficiency of collecting and reporting sustainability data, saving you time in the process. It can also reveal opportunities for extra benefits– such as improving operational efficiency and saving costs. Wherever you are in the sustainability reporting process, we can help you – from getting started with data collection to optimising your existing systems.

Incoming sustainability reporting regulations for SMEs

Many of the current regulations and legislations that require large corporations to report on their sustainability metrics, will soon be expanded to encompass small businesses. For example, the EU’s Corporate Sustainability Reporting Directive (CRSD) will apply to SMEs in 2026, with reports due in 2027. This will require transparent and comprehensive sustainability data disclosures that meet the European Sustainability Reporting Standards. More than 50,000 companies will be covered by the CSRD expansion, increasing significantly from the 11,700 companies previously included.

Even if your small business is not included in this, legislation and regulations are only going to become increasingly broad across the world. Aligning with global standards is the best way to go, especially if your work involves international trade and collaboration. By getting on top of your sustainability reporting, you can become leaders in your industry and ensure you don’t face a last-minute rush for compliance.