Teaching business students how to prepare sustainability reports for SMEs

Small and medium-sized enterprises (SMEs) produce about 60 per cent of carbon dioxide emissions and about 70 per cent of all pollution. Sustainability reports can help these organisations to realise their negative impacts and spur them to act to reduce excess energy use and curb waste and pollution.

Research has shown, however, that SMEs often lack awareness, time, financial resources and expertise to produce sustainability reports. To encourage SMEs to start on this journey, they require training and help.

We believe that the University of Southampton is the first institution to harness the power of the international, independent Global Reporting Initiative (GRI) to create a framework to teach students how to report sustainability for SMEs. By using the GRI, we can help SMEs become more transparent and take responsibility for their impact on people, the economy and the planet. Not only will this sustainability reporting help to fight climate change, but it will contribute to alleviating poverty, too. The GRI sustainability standards help businesses, governments and other bodies to communicate their impacts on issues such as climate change, human rights and corruption.

• Bring the SDGs into the classroom through role play and gamification
• Making sustainability part of university DNA
• Universities must follow business and place ‘purpose’ front and centre

Consistent with Southampton’s Triple Helix strategy of fusing research, education, and knowledge exchange and enterprise, our model, Kickstarting Sustainability Reporting for SMEs (KSSRI), involves students, academic staff and SMEs working together to produce sustainability reports.

Before we could start, our department of accounting had to secure GRI-certified training partner status. Academic staff were trained in sustainability reporting; they then developed the relevant sustainability modules and supervised students to help SMEs produce sustainability reports.

Teaching students to produce sustainability reports

Our syllabus consisted of:

• definition of sustainability
• the role of sustainability reporting in reducing global warming
• GRI sustainability reporting standards (GRI 1, 2, 3 and topic standards) and preparation of a sustainability report
• Greenhouse Gas Protocol (GHG) regulatory framework and guidance
• sources and calculation of greenhouse gas emissions
• preparation of greenhouse gas emissions statement
• appraisal of sustainability performance based on a greenhouse gas emissions statement and a sustainability report.

Teaching can come in a variety of forms: lectures, case studies and presentations from guest speakers. Students can be encouraged to read publicly available sustainability reports to get ideas.

The benefits of teaching the module

Students gain valuable experiential learning to support their employability. We found that academic colleagues’ experience of working with SMEs enriches the lectures that they deliver to students.

Once a sustainability report is produced, an SME will experience pressure from stakeholders to reduce negative impacts such as greenhouse gas emissions. This helps to fight climate change.

Challenges of teaching within the GRI framework

The GRI framework, which is the basis of our syllabus, applies to all companies, big or small, public or private. The course requires the students to collect three types of information:

1. GRI 2: general disclosures 2021 information (the students capture information on: the organisation and its reporting practices; activities and workers; governance; strategy, policies and practices; and stakeholder engagement)
2. GRI 3: material topics
3. Topic standards.

Students may lack understanding of business management

The main challenge encountered is that some information required to prepare the sustainability report assumes a certain level of knowledge of business management structures and operations on the part of the students. Also, some information might not be applicable or the SMEs might not have it. For example, GRI 2-9 to GRI 2-21 require information regarding corporate governance, such as nomination and selection committees, delegation of responsibility for managing economic, environmental and social impacts, conflicts of interest and remuneration policies.

Students unfamiliar with corporate governance will struggle to understand the meaning of terminologies such as “nomination and selection” committees. Lack of understanding of corporate governance becomes problematic when the students ask for such information from SME owners/managers, who might also not understand the terminology or might not have such committees.

To overcome gaps in understanding of corporate governance and how businesses operate, we go through all the information required by GRI standards in preparing sustainability reports. We make sure that the students understand the nature of the information requested and that they can confidently explain it to an SME owner or manager.

We encourage students to have an initial meeting with the SMEs to find out more about their operations and management. Based on the meeting, the students will then eliminate questions from the GRI requirements that are not applicable to a particular SME. To make sure that the sustainability report complies with GRI requirements, students include reasons for any omissions.

Lack of textbooks on sustainability reporting

Sustainability reporting is an emerging area, so there are no textbooks that you can refer students to other than the GRI sustainability standards. The lecturers had to produce new material – such as videos and examples of published sustainability reports – so the students could better understand the module. The lecturers are now writing a textbook to address this shortage.

SMEs themselves don’t value sustainability reports

Awareness of the value of sustainability reports among SMEs is not universal. To address this, we invited SME owners/managers to a sustainability reporting awareness event at the University of Southampton that explained why sustainability reporting was important for their business.

SMEs tend to keep minimal records, but the first sustainability report does not have to have all the information required. What is important is to identify where the information gaps are and then take steps to get that information.

Students might lack reporting and design skills

Not only do students need to be fully conversant with GRI standards, but to complete the sustainability report, they will need to have adequate design skills to produce the brochure at the end.

To make sure that students can produce a professional-standard sustainability report, they are advised to learn publishing software such as Canva, Adobe InDesign, Microsoft Publishing or Visme. Students are given information that was used to produce sustainability reports and asked to use it to practise publishing a sustainability report professionally.

Impact of engaging with SMEs to boost sustainability awareness

The greatest benefit that this project will deliver is its contribution to fighting climate change. Given that what is measured and reported gets managed, working with SMEs to help them prepare sustainability reports will make them realise their negative impacts. Such realisation will spur them to act to reduce negative impacts such as energy use, waste and pollution. Thus, sustainability reports are critical in triggering action to fight climate change. But also, by producing a sustainability report, SMEs gain an advantage over competitors, reduce costs and attract new customers.

In our first year, we helped three SMEs to publish their first sustainability reports, and this year we added 15 more SMEs. We now have a model that can work internationally; and next year, we will start to work with universities in Africa and Asia to set them up so that they can adopt our model and make a difference.

Ven Tauringana is professor of accounting and sustainability at the University of Southampton Business School. This article was produced with editing support from Lesley Taunton, internal communications manager at the University of Southampton. Kickstarting Sustainability Reporting for SMEs Internationally was fully funded by Higher Education Innovation Funding.

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