Sustainable EU Economy
The European Green Deal is the EU’s plan to rapidly transition the EU economy to a sustainable one. The aim is to turn climate and environmental challenges – climate change and environmental degradation pose an existential threat to Europe and the world – into opportunities and make the transition just and inclusive for all.
Sustainability is not just about the environment. The UN Sustainable Development Goals (SDGs), which the EU is committed to, defines sustainability as “a commitment to eradicate poverty and achieve a sustainable world by 2030 and beyond, with human well-being and a healthy planet at its core.”
Small- and medium-sized enterprises (SMEs) collectively account for a significant, if not majority, share of environmental and social impacts by private sector business. Consequently SMEs, and the small- and medium-sized accountancy practices (SMPs) that provide professional services to them, stand to play a vital role in making the EU economy sustainable.
This call to action sets out EFAA’s views as to how SMPs, with support from their professional accountancy organizations (PAOs), can best contribute to and support the sustainability agenda. It also suggests how standard setters and regulators can facilitate and promote this role.
Role of SMPs in Sustainability
SMPs can support the creation of a sustainable EU economy in the following ways:
- Advise on Sustainable Business Practices – SMPs can encourage and advise their clients on how they can adopt sustainable business practices and improve their sustainability performance. This advice may include how to reduce carbon footprint and how to comply with health, safety, and environmental regulation. If they are to provide such advice to clients, then SMPs themselves need to ‘practice what they preach’ by adopting such practices themselves.
- Adopt Sustainable Business Practices – SMPs themselves have a responsibility to change their way of working so that they become more sustainable. Hence, they need to embrace sustainable business practices. Such practices include reducing their carbon footprint and providing a safe and inclusive place to work. Digital technologies can help, for example, remote working can reduce carbon emissions.
- Prepare Sustainability Reports – SMPs have traditionally prepared the financial information and reports, both for management and external reporting purposes, for clients that lack the in-house expertise or capacity to do so themselves. Going forward, SMPs can expect increasing numbers of clients to ask them to also prepare sustainability information and reports.
- Provide Assurance on Sustainability Information – SMPs sometimes provide audit and other forms of assurance on financial information and reports of clients. Going forward, SMPs can expect an increasing number of clients to seek assurance on their sustainability information and reports.