INSIGHTS
(Based off Interviews and Surveys)
50%
of respondents do the minimum in complying with ESG standards
Impact vs Compliance
ESG Compliance
Companies are increasingly seeing ESG as a compliance exercise rather than wanting to contribute something to society.
Due to lack of standardized reporting standards and data SMEs find it difficult to comply with ESG principles.
Impact
The main opportunities from creating a sustainable future comes from creating an impact. This is where companies dive deeper and focus on a particular area of interest to drive deep and real impact.
The S&P shows allocators moving from divestment to engagement, using investment influence for change, engaging with companies to be ESG positivity like climate change transition
1 in 7
SMEs interviewed is focusing on impact of sustainability
Ideally, we want companies to focus on impact rather than compliance, but it is harder said than done.
Lack of standardization
Challenges that SMEs face
Lack of motivation
Technical know-how
There are a lot of different frameworks and methodology, especially in different countries making it difficult for SMEs to follow.
There is very little incentives for SMEs to take up ESG principles and many of them are facing trouble linking profitability to ESG.
SMEs do not know where to start on becoming more ESG friendly. Including the use of data.
From our Interviews, we see that SMEs are more Reactive rather than Proactive
Government pressure is a major motivator for SMEs to adopt ESG policies. SMEs are reactive to what the government says and not taking active steps to solve their problems.
But they do unconsciously implement some ESG-friendly policies
of SMEs interviewed names Government regulation as the sole motivator in adopting ESG
of SMEs do not know what ESG is
of SMEs have some form of ESG policy
73%
71%
60%
100%
of SMEs either never audit or audit their suppliers infrequently.
SUMMARY OF RESULTS
(from Survey)
Most Common Annual Turnover
10m - 50m
Most Common Range of Employee
50 - 100
Common Business Type
B2B & B2C
Average ESG Knowledge
5.7
Average Satisfaction with ESG efforts
5.61
Most important ESG element
Food Services
IT Services
Education
Brokerage
Businesses
Aviation
Wholesale Trade
The question is: how do we achieve resilience in a new global environment as well as growth - how do we avoid a sharp trade-off between resilience and growth?
Tharman Shanmugaratnam | Senior Minister in Prime Minister's Office, Singapore
How can SMEs successfully implement ESG?
1. Value-add
Businesses need to come up with more value-add on top of creating a sustainable product to attract customer demand.
All businesses exists to make a profit, everything else is secondary. Managers need to have a clear idea on how their sustainability efforts links to profitability
2. Link to Profit
2. Link to Profit
Businesses need to balance growth, survival and ESG. It takes time to change norms and expectations. Thus the key is to keep the vision alive.
3. Balancing Act
3. Balancing Act
Other motivations of SMEs
#1 Gain Market Share
SMEs are mainly motivated by profits and other factors leading to profits such as building a loyal customer base and gaining market share.
#2 It is Politically Correct
Despite SMEs stating they are interested in ESG, they do not know what it is and their actions do not back this up. Hence we conclude that is it politically correct to jump on board the ESG bandwagon.
60%
of SMEs surveryed do not know what ESG is
UOB SME Outlook Study March 2022 states that...
56%
of SMEs surveyed stated that their top driver to become sustainable is the ease of working with MNCs who care about sustainability goals
43%
of SMEs surveyed are on the lookout for collaboration opportunities with industry bodies, government-linked companies or large businesses
33%
of SMEs surveyed feel that there is inadequate non-financial support such as sustainability training
39%
of SMEs surveyed want connections to industry peers and ecosystem partners
43%
of SMEs surveyed face challenges such as insufficient knowledge to identify and to execute relevant initiatives for the organisation
54%
of SMEs surveyed said that having sustainability core to the business will help to improve the company’s reputation
