ESG Reporting for SMEs: When the Customer Demands New Metrics

Customer enquiries are part of everyday business. Increasingly, however, these enquiries contain new demands. Customers are requesting metrics on environmental, social and governance topics, often under the acronym 'ESG'. This development is new for many Swiss SMEs. The requests are no coincidence. They are the result of a global trend that is increasingly affecting the supply chain. ESG reporting for SME in Switzerland is shifting from a voluntary exercise to a prerequisite for retaining key customers.

Global Standards are Aligning

The growing importance of environmental, social and governance information has led to the introduction of various reporting frameworks (Delgado Sanchez 2027). For large corporations, ESG reporting has been a central topic for years. They report according to established standards and have their figures audited. For a long time, many different standards existed side by side. This made comparisons between companies and regions difficult.

This situation is changing. A recent study that analysed 22 jurisdictions between 2019 and 2024 shows a clear convergence in global ESG disclosure (Delgado Sanchez 2027). The average disclosure rate rose from 89.2% to 97.1% during this period. This indicates saturation. At the same time, the standard deviation of disclosure between the countries studied fell from 14.4 to 6.19 percentage points. The frameworks are thus being applied more similarly.

The analysis demonstrates a strong 'catch-up effect' in overall ESG disclosure. This also applies to the use of the widespread GRI and SDG frameworks (Delgado Sanchez 2027). For internationally active corporations, this convergence can mean simplification. They can send standardised data requests to their suppliers worldwide. The comparability of the data increases. The administrative effort for consolidation decreases.

The Pressure Flows Down the Supply Chain

A Swiss SME is often part of a long value chain. At the end of this chain is frequently a stock-exchange-listed corporation. This corporation is subject to regulatory obligations for sustainability reporting. A significant part of these obligations concerns the supply chain, the so-called 'Scope 3' emissions. To be able to report on its own supply chain, the corporation must collect data from its suppliers.

The request for ESG data is therefore often a necessity for the customer. They must fulfil their own reporting obligations. If a supplier refuses or is unable to provide the required data, this poses a problem for the customer. They cannot complete their own reporting. In the long term, they will favour suppliers who can provide them with reliable and auditable ESG data. For the SME, the ability to conduct ESG reporting thus becomes a factor of competitiveness.

What Data is Specifically Requested?

The acronym ESG can seem abstract. In practice, it concerns concrete, measurable quantities that are already recorded in many companies — just not systematically. The challenge lies in collecting, processing and providing this data in a required format.

In the Environment category, it is often about consumption data. Examples include electricity and water consumption, the amount of waste generated or the fuel consumption of the vehicle fleet. These figures can be found on invoices from energy suppliers or in accounting documents. The task is to extract and consolidate them from various sources.

The Social category includes personnel metrics. These include the employee turnover rate, the number of training hours per employee, the accident rate at the workplace or metrics on gender distribution at different hierarchical levels. This data is typically available in the human resources department, but often not prepared as a time series for reporting.

Governance concerns internal rules and processes. Examples include the existence of an anti-corruption policy, data protection measures or a documented risk management process. This is less about quantitative figures and more about proving that corresponding structures and policies exist and are actively implemented.

Data Quality as the Foundation of Reporting

The mere existence of the data is not enough. The quality and reliability of the information are crucial. A manual collection of figures from various Excel spreadsheets and PDF invoices is error-prone and time-consuming. If a customer or an auditor has follow-up questions, the origin of the figures must be traceable. The chain from the ERP export to the final metric should be coherent.

Digitalisation plays a central role here. A study shows that digital transformation improves the quality of accounting information by increasing transparency and reducing information asymmetries (Accounting, Finance and Computational Intelligence 2024). What applies to financial data also applies to ESG data. A structured, digital process for data collection and processing is an important basis for credible reporting. The study also found evidence that digitalisation is particularly important under uncertain business conditions to maintain data quality (Accounting, Finance and Computational Intelligence 2024).

First Steps for Your Finance Team

Preparing for ESG requests does not have to be complicated. You can start with internal clarifications today to be prepared for future requirements. The responsibility for coordination often lies with the finance department, as it has experience in collecting, validating and reporting data.

• Conduct an inventory. Identify your most important customers. Check whether they are subject to reporting obligations themselves. Review existing contracts and delivery conditions for clauses on sustainability or data exchange.
• Create a data inventory. Clarify which of the typical ESG data (e.g. energy consumption, employee turnover) are already recorded in the company. Find out where this data is located, in what format and who is responsible for it.
• Establish central responsibility. Appoint a person or a small working group to be responsible for ESG reporting. This function will gather knowledge and serve as a point of contact for internal and external enquiries.
• Analyse the gaps. Compare the existing data with the requirements of a simple framework. This will help you identify what information is still missing and which data collection processes need to be established.

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