Dr Albana Rasha

Purpose: The paper’s main objective is to structure the knowledge of the existing regulatory frameworks, projects and actions that support sustainable performance management (SPM) in small and medium-sized enterprises (SMEs) against the backdrop of the growing significance of the circular economy. The paper will also evidence how strategic management accounting (SMA) assists this process, what individual metrics, dashboards or scorecard concepts have been proposed and how their use may be assessed. Methodology/approach: The research methods include (1) a descriptive systematic analysis of the policies established by the policymakers and regulators in the EU, (2) a comparative analysis of various organisations’ initiatives, actions, delivered toolkits and their outputs, and (3) a literature review of the essential works and research studies on sustainable business models (SBMs), circular business models (CBMs) and SPM in the context of SMEs. Findings: The policies established in the EU support SPM by encouraging SMEs to be involved in sustainable business practices and indicating how to embark on a green transition. Recently, multiple initiatives have been aimed at indicating the opportunities the closed-loop economy system offers SMEs. Many toolkits have also been developed to help SMEs measure their sustainable performance. Although this measurement is vital for SMEs, the business practice falls behind the regulatory framework. Therefore, internal initiatives from the SME sector are needed to popularise the sustainability concept. Research limitations/implications: SMEs show lower levels of compliance with environmental requirements and are unaware of how their activities affect the environment. A limitation of the research is that, in many cases, SMEs are not ready to respond properly to the ESG requirements imposed by regulators. The reason may be a lack of knowledge, experience and limited funds. Therefore, future research should focus on recognizing the gaps in this area and identifying what may be impeding the development of sustainability performance management in SMEs. Originality/value: The work presents the evolution path from the traditional business models (TBMs) through the SBMs to innovative CBMs and addresses their distinctive features. It contributes to the existing knowledge about SMA in SMEs by analysing its links with SPM.

Purpose This paper elaborates on the potential of integrating thinking and the challenges of Integrated Reporting (IR) in SMEs. Based on the piloting-phase results of the INTEREST project, we present the lessons learned from participants' experiences. Design/methodology/approach The primary data for the research study was collected using a questionnaire. We use single-country evidence and apply the dialectical constructivist approach. Findings Integrated thinking is still in its infancy in SMEs; thus, IR is not a common reporting practice. Our evidence suggests that data collection and materiality assessment were the most challenging tasks in developing integrated reports. The data obtained in SMEs contains gaps due to simplified record-keeping and reporting, causing problems in accessing relevant information, especially that of a non-financial nature, needed in integrated reporting. Practical implications IR implementation often requires changes in ways of thinking around business. Dialectical constructivism highlights the contextual nature of knowledge construction and prepares the participants of the IR process to adjust their newly-acquired knowledge to fit the conditions of specific SMEs. Social implications Critical thinking and reflection led the project participants to question the underlying assumptions of IR materials and encouraged them to express their opinions about the piloting process. Addressing sustainability challenges through the adoption of IR by SMEs thus delivers shared value on both societal and environmental levels. Originality/value The study provides real-world, practice-based insights into the process of creating integrated reports in SMEs. We used the original educational materials, methods, and tools developed within the INTEREST project to train the participants.

Small Medium Enterprises (SMEs) are integral to a successful, competitive, and dynamic market-based economy. The UK government encourages SMEs as they add value, create employment, help promote a more diverse business base that strengthens local economy resilience to external shocks. Integrated Reporting (IR) has been something that large businesses have engaged with, and it is something that SMEs will need to address to ensure their future success. IR, with its focus on sustainable development in the guise of meeting the needs of the economy, environment, and society, can help businesses with the recruitment and retention of employees, investors, and customers. Corporate reporting regulations are reviewed to inform an understanding of how SMEs might work with IR. One conclusion drawn is that for SMEs IR should be voluntary so as not to add to the burden on business and to encourage the principle and ideals of “Think Small First.” Preceded by a discussion of macro-environmental factors, the chapter moves on to consider IR guiding principles that are used to report on evidence from large UK companies. With regards to IR, it can be said with a degree of certainty that SMEs in the UK are at the start of a journey. To encourage engagement, a simplified form of IR guidance with accompanying practice-based examples of what can be achieved is needed. Once SMEs begin to engage with IR and to appreciate the benefits it offers, then uptake can be expected to increase and the benefits of “value creation” and “Integrated Thinking” better realised.

This book examines on an international basis how small and medium-sized enterprises (SMEs) cope with the changing economic and social challenges, which are also reflected in financial and non-financial reporting.