Vital for SMEs to be ESG ready to remain relevant in global market — Experts
10 Jan 2024
The lack of awareness and preparedness in environmental, social, and corporate governance (ESG) adoption among small and medium-sized enterprises (SMEs) may lead to missed business opportunities, particularly for those involved in global supply chains, said Thoughts In Gear, a sustainability and social impact consulting firm.
Its chief executive officer (CEO), Margie Ong said SMEs are at risk of becoming irrelevant due to their low level of awareness about ESG.
“I am concerned about their (SMEs) awareness and adoption, which will be extremely important for the economy. I believe that ESG adoption will translate into profitability and have a short-term impact on efficiencies such as power and water, which are both good for the environment and good for the bottom line.
“I believe this is a real risk factor that businesses must carefully consider. We have worked on real-world examples when contracts were cancelled because of ESG,” she said today.
In response to a question about ESG as a trade barrier, Ong stated that despite the heated debate, particularly among palm oil-producing countries, the objective would lead to a positive outcome.
“For example, the European Union Carbon Border Adjustment Mechanism or CBAM will put domestic and important providers in Europe almost at a competitive level in terms of prices, when input goods or import raw materials have always had a price benefit to local companies.
“Does that constitute a trade barrier? Is that really for the planet? Or is it attempting to reduce carbon emissions? I believe the intention behind the mechanism is going to result in a good intrusion.”
Ong cautioned that the CBAM will have a variety of consequences if organisations and businesses do not adopt the appropriate stance and make the necessary efforts.
Meanwhile, Grant Thornton Malaysia country chief executive officer Kishan Jasani, who was also a guest on the programme, said Asean’s varied economy needs a concerted regional effort to advance ESG adoption among corporates.
“Perhaps we could begin with palm oil, on which many of us and Asean countries rely on. We could suggest standardised methods for palm oil farmers as the palm oil issue attracts worldwide attention, it is a huge issue and it affects us,” he said.