2024.09.12 / View Point

How Non-listed SMEs Can Create ESG Reports

Under the global trend of sustainable development, ESG (Environmental, Social, and Governance) disclosures have become an essential part of business operations. With the release of new ESG reporting regulations by the three major stock exchanges in China, ESG issues are increasingly becoming a focus for Chinese companies, and building a robust ESG ecosystem should now be a priority for businesses.

Although ESG disclosure standards for large and mid-sized listed companies are becoming increasingly strict, there is still a lack of clear guidelines for non-listed SMEs within the supply chain on how to prepare ESG reports. Currently, many industries and large corporations—including those in energy, automotive, and telecommunications, as well as companies like Apple, Huawei, TCL, and HP—have set ESG requirements for their supply chains. Suppliers that fail to meet these standards risk being excluded from vendor lists. Therefore, non-listed SMEs should prioritize building a solid ESG ecosystem. While this presents challenges for SMEs, it is also an opportunity to demonstrate their commitment to social responsibility.

Flexibly adjust ESG disclosure content based on company characteristics.

In China and other regions, there are no specific ESG disclosure standards for small and medium-sized enterprises (SMEs). SMEs can refer to the ESG disclosure guidelines for listed companies and adapt them based on their own business characteristics. For example, they may selectively adopt parts of the ESG disclosure guidelines used by A-share listed companies, removing irrelevant sections and adding suitable content as needed. This approach helps SMEs balance disclosure costs with quality while meeting the basic requirements of the supply chain and investors. The most commonly used international standard is GRI, with CSDDD in Europe and CASS6.0 in China.

Practical Tips for Implementing an ESG Report

Simplified Steps for SMEs to Compile an ESG Report:

01 Choose an Appropriate Disclosure Framework

Based on the company's size and industry characteristics, select a suitable ESG disclosure framework, such as GRI (Global Reporting Initiative) or SASB (Sustainability Accounting Standards Board). Consider market requirements and supply chain expectations as well.

02 Identify Key Issues

Analyze the company's business model and value chain to determine the most important ESG issues. Focus on topics that align with strategic objectives and significantly impact stakeholders.

03 Data Collection and Management

Establish a systematic data collection and management mechanism to ensure accuracy and traceability of ESG-related data. Many companies adopt ISO 27001 Information Security Management System to safeguard data security and prevent risks from data breaches.

04 Writing and Designing the ESG Report

Based on collected data and analysis results, write a clear and transparent ESG report. AI tools can assist in text composition to reduce costs and enhance the report’s professionalism and consistency.

05 Third-Party Certification and Verification

When possible, consider independent third-party certification or verification of the ESG report to increase its credibility and demonstrate the company’s commitment and achievements in ESG.

As the trend toward global sustainability grows, ESG principles will become more widespread among SMEs. SMEs should take a long-term perspective, gradually building a comprehensive ESG management system and continuously improving the quality of ESG reports. When compiling ESG reports, companies should select disclosure standards flexibly according to actual needs, balancing disclosure costs and quality. Continuous practice and improvement not only enhance the company's social image but also strengthen its market competitiveness, contributing positively to sustainable development.

A high-quality ESG report should be based on a well-established ESG ecosystem within the company. Core content typically includes: ESG strategic planning and implementation paths, ESG governance structure and mechanisms, ESG material issues screened according to industry characteristics and evaluation standards, and specific performance on these issues. It should also cover ESG-related policies, performance evaluation standards, and stakeholder engagement. Since each industry and company has different needs, adjustments should be made accordingly, and professional assistance can be considered.

taasdesign

Taasdesign specializes in providing end-to-end ESG report preparation and design services for SMEs. We help clients select suitable ESG disclosure frameworks, identify key issues, collect and manage data, write and design reports to ensure compliance, and provide support for third-party certification. Our goal is to help companies achieve sustainable brand development in an ever-changing market, enhancing social image and market competitiveness. For professional ESG support, please contact us—we’re here to offer expert consulting services and comprehensive ESG solutions.

Taasdesign holds the ESG (Environmental, Social, and Governance) Investment Certificate issued by the CFA Institute, representing our professional expertise in the ESG field and enabling us to provide enhanced ESG management consulting services to our clients.