Last updated: 01 Aug 2023 11:00 Posted in:
Some 85% of medium-sized and 75% of small companies in six Asian countries say ESG (environmental, social, and corporate governance) is a high priority for them, but 37% have a plan on how to achieve their goals.
That’s the findings of a new report from Bloomberg Media and DBS bank, called ‘Catalyst of Sustainability’, which is based on a survey conducted in August 2022 involving 800 SMEs in India, China, Hong Kong, Indonesia and Singapore.
On average, Asian companies that considered ESG a high priority allocated 18% of their budget to ESG projects. They expect this to reach 19.8% within the next three years, with most going towards environmental projects.
Although complying with regulations, attracting talent, boosting revenue, pleasing stakeholders and simply doing the right thing were the main motivators for SMEs to embrace ESG, the survey respondents say that unclear reporting standards and financial concerns are the common barriers to ESG adoption.
Over a third of SMEs pointed out challenges around return on investment, cost of deployment and meeting growth targets. The lack of clarity on ESG standards presented another challenge.
Most SMEs prioritised initiatives that might improve their bottom line and those that can be immediately actioned. Currently, they are focusing more on identifying sustainability issues that are affecting their businesses rather than formulating ESG frameworks and long-term strategies that would take years to fulfil.
Yulanda Chung, Head of Sustainability, Institutional Banking Group, DBS, said: “SMEs can start by identifying material ESG elements to focus on and then evaluate whether these elements could improve their bottom line.
“Analysing industry trends and best practices is another important step to take early on. SMEs can use the findings to conduct risk analysis and understand the accompanying consequences if they do not align to industry standards and government guidelines. These exercises can also help them identify opportunities and begin to plan a course of action. Over time, they can turn this into a timebound, actionable and quantifiable roadmap.”
Reporting requirements can hinder the ESG journey for SMEs, which generally do not have the same resources as large corporations to embark on ESG reporting. The lack of a homogenous framework or standardised guidelines also leads to wide inconsistencies in measuring success and performance.
“When it comes to SMEs, we understand the many challenges they face transitioning to more sustainable business models. But given that they are the lifeblood of economies, it is imperative that SMEs successfully make the transition,” said Piyush Gupta, CEO of DBS.
Researchers spoke to 937 decision-makers in industries including real estate, mobility, power, agriculture and hospitality.
AIA’s Sales and Marketing Director, Carl Jepson, said "AIA is dedicated to equipping its members with the necessary skills, knowledge, and tools to foster sustainable business practices. To support this commitment, AIA members can access valuable resources from our climate solutions partner, Net Zero Now, at a discounted member price. This partnership aims to empower AIA members to contribute actively to environmental sustainability and promote the adoption of eco-friendly practices within the accountancy community."
"AIA is dedicated to equipping its members with the necessary skills, knowledge, and tools to foster sustainable business practices. To support this commitment, AIA members can access valuable resources from our climate solutions partner, Net Zero Now, at a discounted member price."
Carl Jepson, AIA Director of Sales & Marketing