The mistletoe may have come down, but one good intention that policy makers, governments and businesses alike should continue to embrace in 2025 is the “KISS principle” – Keep it simple, stupid.
The origins of the KISS principle go back to the U.S. Navy in the 1960s which made it a priority to design systems and solutions that were straightforward and easy to understand, avoiding unnecessary complexity.
Sustainability and ESG reporting and data compliance has been an area much in need of the KISS principle. With more than 2400 ESG regulations globally, companies must contend with an avalanche of red tape and the time and cost pressures this imposes. This has been particularly painful for smaller businesses who despite best intentions, have neither the time nor the resource to embrace these tasks.
Good intentions for SMEs
We saw some good intentions before Christmas from EFRAG, who, embracing the KISS principle, launched their Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME).
The VSME aims to standardize the diverse ESG data requests that SMEs receive from multiple stakeholders across their value chains, from banks and investors to larger corporate customers. This will provide SMEs with a simple reporting framework to start their sustainability journey and monitor their sustainability performance. The new framework will not only reduce the reporting burden on SMEs, but it should also enhance their access to sustainable financing opportunities.
Keep it simple for success
Whilst this is a welcome and timely move to streamline sustainability reporting and encourage much needed investment for growth, a key part of making this a success will be getting SMEs on board.
EFRAG has said it will roll out a number of support packages to smooth the uptake of the voluntary guidance. This will apparently include complementary materials such as support guides and educational material.
This all sounds great and a step in the right direction, so long as the KISS principle is maintained.
From our experience businesses are ready and willing to be more sustainable and adopt the necessary processes, so long as it doesn’t impede productivity and growth.
This is where technology comes in. In the context sustainability reporting, by using GenAI to automate the collection, reporting and sharing of data, we can remove the time and cost burdens on businesses so that they can focus on growth. This is exactly why we created Ripple
It’s reassuring to know that EFRAG is putting in place the right kind of framework to make sustainability reporting easier for smaller businesses. As SMEs are the engine of the economy, this will surely be a catalyst to more sustainable growth. That is a resolution worth sticking to.