Response to the IFRS Foundation Consultation Paper on Sustainability Reporting

EFAA for SMEs stresses the importance of having internationally recognised sustainability reporting standards designed using the “think small first” principle

29 December 2020 – SMEs collectively account for a majority of private sector economic, social, and environmental impact. Hence, SMEs are crucial to the achievement of the Sustainable Development Goals (SDGs) such as the goal of net zero carbon footprint. Accordingly, it is vital that SMEs report on and made accountable for their ESG impact. This will be greatly facilitated by having internationally recognised sustainability reporting standards. SMEs, however, are severely constrained by access to technical resources and disproportionately impacted by the burden of regulation. It is, therefore, critical that these standards are designed from the bottom up, using the ‘think small first’ principle, such that they are simple and straightforward as well as scalable to suit larger entities. To do this effectively one needs to ensure that SMEs, and the SMPs that typically prepare their financial and non-financial reports, are well represented in the structures established to develop and maintain sustainability reporting standards.