What is the importance of sustainability reporting for SMEs?

May 13, 2024

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Why SMEs cannot afford to lag behind in sustainability reporting

Corporate Social Responsibility (CSR), ESG, and sustainability have become well-known within the business community. Moreover, an increasing number of companies are becoming aware that they will soon need to report on their ESG factors in the form of sustainability reporting. Additionally, there are also many SMEs that do not fall under the regulations of the Corporate Sustainability Reporting Directive (CSRD) but still want to report on their impact on people and the environment.

Below, you’ll find why reporting is also meaningful and important for your Belgian SME.

Nowadays, sustainability is a core theme, a goal, and a vision around which companies must and want to work. It’s not just in a company’s self-interest that businesses focus on sustainability. It is now also legally required to develop a sustainability policy. Due to their responsibility for the impact on the environment and society, the European Union has established comprehensive guidelines for companies. As a result, companies are now required to report not only their financial statements but also their impacts on people and the environment.

What does the legislation on sustainability reporting entail?”

The new directive regarding sustainability reporting, called the Corporate Sustainability Reporting Directive (CSRD), replaces the former Non-Financial Reporting Directive (NFRD) and significantly expands the obligations for ESG reporting. As of 2024, this obligation will come into force, requiring all large and listed companies to report ESG information, regardless of their sector or activity.

Clear reporting offers many benefits, not only for the company itself but also for society. By positively contributing to the engagement of all stakeholders, including employees, investors, and external parties. This leads to a situation where everyone benefits.

Here are some examples of Belgian sustainability pioneers:

By the end of 2023, four Belgian companies achieved the highest sustainability label from the United Nations: fruit supplier Fruit At Work, envelope and label manufacturer Elep, investment company LRM, and DNS Belgium, responsible for the management and registration of domain names. They are now the very first official ‘SDG ambassadors’ and must inspire their fellow entrepreneurs to also embrace sustainability. SDG Ambassador, in collaboration with CIFAL Flanders-UNITAR42, is the culmination of the Voka Charter for Sustainable Business

Read more about it in our trend report!

 

kmo

Who needs to report?

Approximately 50,000 companies in Europe are required to report according to the CSRD. The application fo the CSRD happens in three phases. The scale of your company determines in which phase your company needs to comply with the directive.
Verschillende soorten bedrijven hebben dus specifieke deadlines voor het indienen van hun rapportages.

As of 2024, listed companies and large companies are required to report on sustainability according to the European CSRD Directive. Dit kan indirect een aanzienlijke impact hebben op jouw bedrijf. Do you want to know when and if your company needs to report? Then fill out our short questionnaire.

Why SMEs should report?

As seen in the directive, the obligation to report starts only for listed SMEs from January 1, 2026. As a result, it appears that there is currently no immediate need for reporting for these SMEs. For SMEs that do not fall under the conditions of this directive at all, there seems to be absolutely no necessity for it. However, it is essential, if not crucial, for all SMEs to start preparing for this directive and reporting now.

Even though the directive may not directly apply to every SME, it will still impact their business processes and activities. For example, an SME may be a supplier to a larger company. That company may ask the SME to share ESG information to fulfill their own reporting obligations. Moreover, whether or not a company has a sustainability report plays a significant role in how investors and other stakeholders perceive the company.

How can B-Tonic support you in this process?

B-Tonic optimally supports organizations through the People Sustainability Scan.

The People Sustainability scan lists all of your company’s well-being efforts and links them to the 17 SDGs. The result is a clear overview, maybe even linked to advice to optimise, that functions perfectly as a reporting tool for the ESG reporting. In the ESG reporting, well-being is part of the S of Social, in addition to the other two pillars Environmental & Governance.

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maartje vanewijk

Annelies Theunissen
People Sustainability Expert

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