Sustainability Standards for SMEs

Just as the UN SDGs provide a common language that is globally understood, sustainability standards for public companies based on common principles are increasingly accepted throughout the world. In some jurisdictions, sustainability compliance is mandatory for public companies.

Global, regional and national standards

Global standard-setting efforts include the GRI Standards and the recommendations made by the Task Force on Climate-related Disclosures (TCFD) which have now been fully incorporated by the International Sustainability Standards Board (ISSB) into IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.

Examples of regional and national standards include the EU's Sustainable Finance Disclosure Regulation (SFDR) and the UK's Sustainability Disclosure Regulations (SDR).

Voluntary reporting for SMEs

Micro-businesses or small-and-medium-sized enterprises (SMEs) are not subject to global, regional or national sustainability regulations. However, investors in private markets are increasingly seeking information from private companies on their environmental, social and governance risks and opportunities. Many SMEs have begun to voluntarily monitor, report and disclose sustainability-related information.

Perfection is not required at this stage but rather an awareness of sustainability reporting guidelines and first steps towards building a strategy aligned with nationally or regionally recognised frameworks such as EFRAG’s Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME) or B Lab’s new standards. In addition, SMEs can now benefit from many simplified sustainability reporting tools.