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South Africa is one of only a few emerging-market economies showing a significant increase in sustainability reporting, and the only one in Africa.
However, a major concern at the moment is that the focus of the sustainability consulting industry in South Africa has been primarily on large corporates, which has created a gap with owner managed and small and medium enterprises (SME).

It is mandatory for companies listed on the JSE to produce an Integrated Annual Report which Sustainability Reporting forms part of, SMEs often neglect this important aspect. SMEs can no longer afford to ignore sustainability as a best practice strategy, and we can expect to see greater integration of sustainability functions into all facets of business going forward.

Sustainability has moved from merely being part of corporate social responsibility, to being an opportunity for growth in all facets of business. There is increasing pressure on natural resources and the increased costs of certain raw materials, which has already affected many businesses in South Africa. International businesses are also preferring to work with businesses that can demonstrate that they are sustainable.

The demand for business sustainability is also growing at a rapid rate. It is no longer business as usual. Political and social instability, climate change and the power of social media has forced businesses to be more transparent, accountable and better engaged with stakeholders.

The advantages of implementing a business sustainability strategy however goes far beyond that. In addition to building trust with stakeholders, more sustainable business practices give a company a competitive edge and assisting to differentiate itself from its competitors. It can also reduce future compliance costs, such as carbon tax, and improves a company’s access to capital and international markets.

SMEs have the most to gain from implementing sustainability measures into every aspect of their business. Once a sustainable strategy has been devised and implemented into a small business, the company can continue to incorporate it into their operations as the business grows. It is in effect a long-term strategy

The challenge is that sustainability is an all-encompassing business strategy, and owner managed and SME businesses are often so engrossed with day to day operations that they do not have the time to think outside the box. These companies need expert assistance to facilitate the process.

As the marketplace changes and sustainability becomes increasingly important in the daily operations of every business, the gap between best practice companies and their competition is very likely to become bigger and bigger. Building a business on the principles of sustainability is imperative for SMEs that want to grow to become industry leaders.

William Hughes is the Business Sustainability Consultant at Mazars.

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