Embracing The Role Of Finance In Sustainability For SMEs

Abstract

Businesses are being faced with increasing expectations to take an active role in meeting the world’s environmental, social and economic challenges. For this to be achieved, there is a need for a paradigm shift in the functional aspects of businesses. This study aimed at exploring the role of the finance department in promoting sustainable business practices for SMEs and the actions taken by finance to manage sustainability risks. The study adopted a quantitative approach where questionnaires were distributed to SME owners and managers in the Pietermaritzburg area of KwaZulu-Natal, South Africa. A total of 182 SMEs participated in this study. The results indicated that the finance department has a significant role to play in the development of metrics for measuring sustainable practices and that operational risk management was the main action taken by the finance function to manage sustainability related risks. SME finance professional bodies are urged to help SMEs develop their skills base beyond those normally associated with financial accounting. This is important in order to equip finance officials in SMEs with skills to make key decisions pertaining to sustainability practices.