ESG is not a new fad, it’s here to stay, it’s a worldwide movement, and SME’s can benefit from engaging with it.

 ESG considers the impact a company has on its employees, customers, and the communities where it operates. At its core is sustainability.

What are the benefits of ESG for SME’s

Integrating ESG into a company’s business model is a smart move from a business, environment, social and human resources perspective. ESG measures have also been shown to increase efficiencies, reduce costs, and increase employee productivity. Furthermore, companies with strong sustainability policies are more likely to have a strong reputation and greater trust among partners and customers.

• Environment – once you start measuring your environmental data, this will get you to start thinking of ways to cut energy, water and waste usage. So you are now on a cost saving exercise.   
• Social – this will certainly help you in today’s search for skills and talent.  Having an attractive business culture will help you to maintain low staff turnover and will also attract more easily the bright talent you need to secure growth. So you are still firmly on that cost saving exercise.  
• Governance – focusing in on the governance of your business – good risk management practices will also bring appeal to your employees, customers and your supply chain.

But, while the case for SMEs to look at their ESG is strong, it is not without its challenges, particularly time and resource.

Overcoming these challenges is not impossible, of course. Any business wanting to unlock the competitive advantage of ESG reporting should look to take the following five steps:

• Identify the sustainability issues that affect your business
• Gather the data you need
• Report against your data
• Repeat

If you’re an SME, you might be thinking that any steps you take won’t make any difference. But that’s simply not the case. SMEs are the lifeblood of our economy. The UK’s six million small businesses make up 99% of the UK’s population, employ 61% of the workforce and generate £2.2 trillion of revenue to the economy. The Organization for Economic Co-operation declares such businesses to be fundamental to the “green transformation”. In these terms it’s paramount that businesses of all sizes come together to tackle climate change and operate in a greener and more sustainable way. In some ways, SMEs are ideally placed to become the leaders of sustainable business. Without the scale or complexity of large corporations, they can arguably pivot quicker and implement sustainable practices more easily. Sustainability and profitability can – and should – go hand in hand.

There are some simple, straightforward ways to begin the journey towards a sustainable ESG compliant business, set out a feasibility plan for what you can afford and properly resource. Measure and record your actions and outcomes.

Don’t try to implement them all at once!

• Insulate your buildings
• Switch to LED bulbs
• Install your own renewable electricity or heating
• Install an energy monitor
• Electrify your vehicle fleet
• Talk to your supply chain
• Introduce a cycle to work scheme
• Minimise the waste from your products and packaging
• Offset the carbon you can’t reduce