Curious about the insights shared by our speakers during our recent SME event? Don't miss out - read the recap now!
Unveiling the LPR impact: find out how this regulation shapes businesses and SMEs!
Focusing on the sustainable transition challenges encountered by SMEs, Accountancy Europe and MEP Sirpa Pietikainen (EPP/Finland) co-organised a conference on 21 February in the European Parliament. The event brought together representatives from the banking, SME, and policy-maker communities to deliberate on supporting SMEs in measuring, enhancing, and reporting on their sustainability performance. The discussion was moderated by Accountancy Europe’s CEO, Olivier Boutellis-Taft.
Merete Clausen, Director of the European Commission’s (EC) Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW), presented the various initiatives undertaken by EC to support SMEs’ sustainable transition. Most notably, she called on stakeholders to provide their feedback to the ongoing public consultations on listed and voluntary SME sustainability standards.
Hilde Rutten, CEO of BergHOFF (a Belgian SME), confirmed that her business has been receiving sustainability data requests from both financial institutions and large supply chain partners. Her company has developed its own dashboard and carbon footprint calculation tool to be able to meet the demand for sustainability data.
Miriam Koreen, Senior Counsellor on SMEs at the OECD, presented OECD’s planned work on mapping sustainability support tools tailored for SMEs and to develop a standardised sustainability data request format for financial institutions to send to SMEs.
Ángel García, Member of the Sustainable Finance Committee of the European Savings and Retail Banking Group (ESBG), explained why financial institutions need sustainability data from SMEs. He also shared insights on what needs to change to improve the situation for both SMEs and their banks.
Markus Pieper was appointed on 31 January the EU SME Envoy. He will report directly to President Ursula von der Leyen. Mr Pieper will take office in the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) and he will also report to the Commissioner for Internal Market, Mr Thierry Breton, on all SME-related activities. The date of effect of his appointment will be determined later.
The SME Envoy’s role is to provide guidance and advice to the European Commission (EC) on SME issues and to advocate SME interests externally, ensuring that the ‘Think Small First’ principle is applied effectively. The EU SME Envoy will also chair the SME Envoy Network, thus maintaining close contact with the national SME Envoys, and work together with business associations to advocate for the special concerns and needs of SMEs within the EC. This includes, in particular, working towards bureaucratic burden reduction for companies, and filtering upcoming SME-related EU legislation and signalling to the E those that merit close attention from an SME perspective.
The report has the objective to help financial and non-financial actors transition to net zero. It has a dedicated section on SMEs, presenting interesting findings and market trends on SMEs’ sustainable transition practices. It indicates, for example, that a significant majority of the surveyed SMEs (58%) have already invested in sustainable projects, with variations across sectors: 69% of manufacturing companies, 51% of services firms and 54% of trading companies have done so, with investments increasing with the size of the SME. However, studies and surveys find that the majority of SMEs’ green finance practices are self-financed. Of the 1,232 surveyed SMEs that had made sustainability investments, only 35% say they have made use of external financing.
European Parliament’s (EP) IMCO Committee was supposed to vote on its position on the proposed Late Payment Regulation (LPR) on 22 February. However, on the morning of the vote, the MEPs leading on the file concluded that more time is needed to find compromises on the various provisions, and therefore decided to postpone the vote to 20 or 21 March.
For more details on the initiative, see the previous SME Update as well as Accountancy Europe’s new LPR factsheet (more on that below).
EU Member States tried – and failed – on 28 February to find agreement on the compromise agreement reach with EP in December 2023 on the Corporate Sustainability Due Diligence Directive (CSDDD). A minority of countries – led by Germany and reportedly including Italy, Estonia, Austria and Sweden – threatened to abstain and thus prevented reaching the needed qualified majority thresholds. Finland, initially opposed, was reportedly set to approve the agreement.
This situation is unusual because typically, once there’s an agreement between Member States in the Council and the EP, finalising the agreement into EU law is a straightforward process. However, the liberal party (FDP) in the German governing coalition raised reservations about the proposal, and more countries joined in.
There is still a theoretical window of about 2 weeks for the Council to adopt the agreement, which in parallel the EP also needs to adopt at the latest at its final Plenary meeting in April before the June EU elections. At the time of writing, however, no obvious way forward is visible.
Accountancy Europe has published a factsheet that provides a high-level summary of the main provisions of the European Commission’s proposed LPR and explores its impact on SMEs. The proposal will have a fundamental impact on businesses and affect many SMEs and small practitioner accountants, who should be aware of the proposed changes.
Accountants will play a key role in helping SMEs be prepared – and to prepare their own accountancy practice to the new provisions. The LPR proposal is still far away from being final law, but it is important for the profession to be aware of the potential key changes early on.
Society and businesses are making use of new technologies. In parallel, the accountancy profession, including auditors, must innovate as well to respond to the market’s needs, continue playing its public interest role and remain attractive.
Accountancy Europe has issued a new publication that aims to encourage information sharing, learning and collaboration within the profession. The paper focuses on how professional accountancy organisations (PAOs) can support the technological transformation of auditing, including in smaller audit firms.
The publication illustrates PAOs’ important role through concrete good practice examples of their initiatives from several European countries.
