The trend of sustainability has now become a global standard in the investment world, especially in developed countries. Investors are required to invest responsibly, choosing only companies that adhere to environmental and social best practices. As a result, sustainability is no longer an option but a necessity for companies that want to remain competitive in the global market. Indonesian SMEs are no exception, especially if they aim to attract international investors or become part of the supply chain for large corporations that enforce sustainability standards. Therefore, SMEs must start preparing a Sustainability Report (SR) to demonstrate their commitment to sustainability transparently.
However, preparing an SR cannot be done haphazardly. To be recognized by global investors, the report must follow internationally acknowledged frameworks, such as the Global Reporting Initiative (GRI). This framework helps businesses structure their sustainability reports more systematically, measurably, and in line with global standards. Unfortunately, creating an SR based on an international framework is not an easy task. It requires a deep understanding of sustainability indicators, data management, and effective communication strategies. Additionally, the number of certified writers familiar with these standards is still limited, making the cost of preparing an SR relatively expensive and often unaffordable for many SMEs.
SMEs and GRI Standards: Are They Relevant?
GRI standards have long been associated with large corporations. However, global trends indicate that SMEs must also implement sustainability practices to enhance their competitiveness. Many SMEs that are part of large companies’ supply chains are now required to demonstrate their sustainability commitments.
By having a Sustainability Report based on GRI standards, SMEs can improve their credibility in the global market. A transparent report that adheres to international standards allows SMEs to meet sustainability requirements increasingly emphasized by investors and business partners. Additionally, SMEs have a greater opportunity to access international markets, collaborate with global companies seeking sustainable supply chains, and secure green financing designated for businesses that adopt sustainability practices.
Furthermore, consumers are becoming more environmentally and socially conscious, and SMEs that emphasize transparency in their business practices are more likely to gain trust in the market. A sustainability report based on GRI standards can also serve as an effective marketing tool, highlighting an SME’s commitment to responsible business practices. Thus, although SMEs are not legally required to prepare sustainability reports, adopting these standards provides them with significant advantages.
SMEs have strong reasons to develop a Sustainability Report based on GRI Standards as part of their long-term business strategy. These reports enhance reputation among customers and business partners, facilitate access to new markets, and improve operational efficiency by identifying ways to reduce waste and save costs. By understanding their environmental, social, and economic impact, SMEs can better manage risks and ensure compliance with regulatory requirements. Sustainability reports also foster employee engagement, business transparency, and innovation, enabling SMEs to develop more sustainable products and services.
A Simple Approach for SMEs to Create a GRI-Based Sustainability Report
Although preparing a Sustainability Report based on GRI standards may seem complex, SMEs can start with a simplified approach. One of the first steps is to identify materiality aspects, which are the sustainability issues most relevant to their business. SMEs do not need to report on all GRI indicators but can focus on those with the most significant impact on their operations.
Additionally, SMEs can leverage existing business data, such as energy consumption, waste management, and social impact. This information can be structured into a simple format that aligns with the GRI framework. By taking a step-by-step, systematic approach, SMEs can develop an effective Sustainability Report without overburdening their operations.
Ensuring proper data management aligned with sustainability reporting standards can make the SR preparation process more efficient and accurate. One of the biggest challenges in creating a sustainability report is the lack of structured data management within a company, making it difficult to track and document the necessary information. Without proper data management, businesses risk reporting inconsistencies, errors in impact analysis, and difficulty in meeting global standards such as GRI or ESG. By implementing an organized data management system, companies can easily collect, process, and present sustainability information transparently, increasing the credibility of their reports and accelerating the reporting process, which is becoming an essential requirement in today’s business world.
Who Uses GRI Standards?
The Global Reporting Initiative (GRI) standards have become the primary guideline for preparing Sustainability Reports (SR) across various organizations, including multinational companies, state-owned enterprises (SOEs), small and medium-sized enterprises (SMEs), government institutions, and non-profit organizations. Users of these standards come from diverse industries, including manufacturing, energy, banking, and services. The transparency provided by GRI allows businesses to present more credible sustainability reports that are globally comparable.
Beyond companies, investors and business partners are increasingly demanding clear and measurable sustainability standards. By adopting GRI standards, organizations can meet market expectations that are increasingly concerned with environmental and social impacts. Many large corporations use GRI to ensure their supply chains comply with sustainability principles. Consequently, businesses that implement these standards have a greater chance of attracting investors and strategic partners.
How GRI Enhances Transparency, Credibility, and Business Reputation
A Sustainability Report following GRI standards enables companies to communicate transparently about their economic, social, and environmental impacts. The structured GRI framework helps organizations identify, measure, and report on sustainability performance in a verifiable and consistent manner. This transparency not only builds stakeholder trust but also facilitates comparisons between companies within the same industry.
Beyond transparency, GRI standards enhance a company’s credibility through data-driven reporting, preventing greenwashing or false sustainability claims. Companies with Sustainability Reports based on GRI often achieve higher ESG ratings, strengthening their global market reputation.
Optimize Your GRI Report with AI
Technology plays a crucial role in simplifying sustainability reporting, including the adoption of GRI standards. With Artificial Intelligence (AI), companies can automate data collection, identify relevant indicators, and structure narratives that align with global sustainability standards. AI also helps analyze sustainability trends and provides insights into areas needing improvement.
The use of AI in sustainability reporting not only saves time but also enhances data accuracy and transparency. Automated systems reduce reporting errors and ensure that the data presented is verified and reliable. AI serves as an effective solution for both SMEs and large corporations looking to prepare sustainability reports efficiently.
Reporthink.AI Helps SMEs Create GRI-Based Sustainability Reports
Preparing a GRI-based Sustainability Report can be challenging for SMEs due to limited resources and a lack of expertise in sustainability reporting. To address this, Reporthink.AI provides an innovative solution to simplify sustainability reporting for SMEs. This platform utilizes AI technology to automate the reporting process, from data collection to report preparation, ensuring compliance with GRI standards.
With features such as automation and AI-based analysis, Reporthink.AI allows SMEs to generate sustainability reports effortlessly without requiring deep technical expertise. Additionally, Reporthink.AI offers a free demo and consultation, helping companies understand how to begin their sustainability reporting journey. This approach enables SMEs to adopt GRI standards more easily and enhance their competitiveness in the global market.