In Vietnam, small and medium-sized enterprises (SMEs) play a crucial role, accounting for a large proportion of the national economy. However, when it comes to adopting international standards such as GRI or Sustainable Development Reporting, many businesses remain hesitant due to resource constraints. The common perception is that implementing global reporting standards requires significant investment and highly specialized personnel, often only suitable for multinational corporations.
However, the current market landscape is posing new demands. The shift in global supply chains and the stringent criteria from green finance institutions are making ESG transparency a crucial competitive advantage. So how can SMEs effectively apply GRI standards, ensuring compliance while optimizing operating costs? Let's analyze the most suitable solutions and implementation roadmap for SMEs in the article below!
Why should SMEs care about GRI reports in the current period?
Previously, sustainable development reporting was often considered an obligation of public companies. However, in the context of deep integration, small and medium-sized enterprises (SMEs) are realizing clear strategic benefits from adopting GRI standards:
- Meeting the requirements of the global supply chain: This is the strongest driving force. Multinational corporations (such as Nike, Samsung, Adidas, etc.) are now required to report Scope 3 emissions – indirect emissions from the value chain. Therefore, they require suppliers (often SMEs) to be transparent about environmental and labor data. Having GRI-compliant reports helps SMEs demonstrate their compliance capabilities and increase their chances of winning international tenders.
- Accessing green capital: Financial institutions and banks in Vietnam are promoting green credit packages with preferential interest rates. Transparent ESG information profiles according to international standards are a major advantage, helping businesses easily pass the assessment process to access this capital.
- Optimizing operational efficiency: The data collection and reporting process helps business owners accurately measure energy, water, and material consumption. This allows businesses to identify areas of waste, implement cost-saving solutions, and better manage risks.
Flexible approach: "Reference" report
One of the biggest barriers that makes SMEs hesitant about GRI is the perception that they have to produce comprehensive and complex reports like large corporations. However, the GRI Standards 2021 have provided a very flexible mechanism, allowing businesses to choose the level of application that suits their resources.
Instead of striving to achieve the highest level of "GRI Standard Compliance," SMEs can simply start with a "GRI Standard Reference" approach.
Characteristics of this method:
- Selectivity: Businesses are not required to comply with all nine stringent requirements of GRI 1 or report on all metrics. You can choose to report on specific topics where your business is performing well or where you have available data.
- Reduced resource pressure: This method does not require businesses to explain the reasons for missing information in as much detail as the "Compliance" method.
- A solid stepping stone: This is a manageable solution that helps SMEs become familiar with ESG data management thinking before moving on to higher levels of reporting in the future.
Core GRI topics that SMEs should prioritize
Instead of spreading resources thin to report on all aspects, SMEs should adopt a "focused approach." Based on GREEN IN's practical consulting experience, here is the most practical "Starter Indicator Set," ensuring compliance with Vietnamese law while also addressing the concerns of most international partners:
- GRI 302: Energy: This is the most accessible and quantifiable data, obtained through monthly electricity bills and fuel (gasoline, diesel) purchase receipts. Reporting this indicator not only clarifies energy consumption but also forms the basis for calculating greenhouse gas emissions (Scope 1 & 2).
- GRI 403: Occupational Safety and Health: For manufacturing businesses, this is a top priority. Data such as working hours, workplace accident rates, and safety risk assessment procedures are often already available in compliance records under the Occupational Safety and Health Act.
- GRI 401: Employment: Indicators of employee turnover (new hires, departures) and benefits reflect a company's commitment to its employees – a key factor in assessing the social responsibility of the supply chain.
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A 4-step roadmap for cost-effective GRI implementation.
To overcome budget and human resource constraints, SMEs can apply the following four-step streamlined process to build a scientifically sound report:
Optimizing internal human resources.
Businesses don't necessarily need to establish a separate ESG department or hire full-time specialists from the outset. Instead, management can create a semi-dedicated task force comprising representatives from key departments: Accounting (handling invoice data), Human Resources (handling labor data), and Engineering/Production (handling operational data). This dual-role model significantly reduces personnel costs.
Establish a process for collecting data periodically.
A common mistake that increases costs and pressure is "holding" data until the end of the year to compile it. SMEs need to establish a regular data entry process (monthly or quarterly) using simple, standardized digital tools like Excel or Google Sheets from the outset. This ensures accuracy and minimizes the risk of lost documents.
Choose an integrated publication format.
Instead of printing a separate, hundreds-page Sustainable Development Report – which incurs significant design and printing costs – SMEs can opt for an integrated reporting solution. Businesses can dedicate a specific section (approximately 10-15 pages) to Sustainable Development within their annual report or company profile. This approach saves costs while providing partners with a comprehensive overview of both the financial and non-financial capabilities of the business.
Utilize standard tools and guidelines.
SMEs should make the most of the resources available from the Global Reporting Initiative. In particular, industry standards help businesses quickly identify key issues in their industry without incurring significant initial consulting and evaluation costs.
This article has helped you understand the solutions for applying GRI standards to small and medium-sized enterprises (SMEs), as well as the most cost-effective and resource-efficient implementation roadmap. We hope this information will be helpful in guiding your sustainable development strategy. Don't forget to follow GREEN IN's next articles for more updated information!