Small and Medium-Sized Enterprises (SMEs) are a significant contributor to both jobs and GDP, but their few resources compared to their larger counterparts make them less willing or able to discuss sustainability. Recent events such as the COVID-19 pandemic and the war in the Ukraine have placed an additional strain on these businesses, making them even more resistant to change that might incur a high cost. 

The “ASEAN SMEs: In the Driving Seat for Transformational Change towards Sustainable Development” faced this problem and offered creative solutions. The panel featured business leaders from across the ASEAN region who defined sustainability as an economic opportunity rather than an economic burden.

YBhg. Dato’ Suriani Binti Dato’ Ahmad, Secretary General, Ministry of Entrepreneur and Cooperatives Development identified four reasons for the lack of ESG practices among SMEs: a lack of awareness of the importance and benefits of sustainable practices, a lack of resources to implement them, a lack of information on how best to implement them, and a lack of alignment of sustainability and other business practices.

Resources are a key factor preventing SMEs from growing more sustainable, so the panelists offered several ways to work around this problem. 

Gabriel Tan, Chief Executive Officer, GUAVA Amenities, shared an example of a policy change that was both sustainable and profitable. “GUAVA actually decentralize our manufacturing. We bring manufacturing activities closer to where our clients are located,” said Tan. “That helps us not just to lower our logistical costs, but actually helps our customers to build a more resilient supply chain.”

There are organizations offering resources for SMEs to develop ESG practices as well. Admen Hassan, Head, SME Academy, CEDAR SME Bank, Malaysia, offers such resources, but he pointed out that awareness of the issue must come first. “It’s like you’ve been given a credit to buy an appliance but you don’t even know what it does,” he said.

Piyachart Isarabhakdee, Chief Executive Officer, BRANDi and Companies, noted that communication is necessary to fill gaps in awareness, resources, and actionable sustainability information. He suggested that SMEs work with larger businesses which are constrained by their size from changing their practices. They do, however, possess the resources and expertise necessary to help SMEs develop their own sustainability practices.

While these discussions offered insight into the “how” of promoting ESG among SMEs, the “why” still remained. Why should SMEs invest their limited resources into ESG practices during these uncertain times? The answers the panelists offered were not only of collective obligation, but of organizations’ survival.

“Each and every company needs to do its very best [regarding sustainable practices],” said Gabriel Tan, “and when you do the best, the market notices, your partners notice, your customers notice, and suddenly, you are being presented with so many opportunities.”

This idea is more than optimism. “We ask our suppliers, not only SMEs, to have… sustainable practices,” said Victoria (Vickie) A. Tan, Executive Director and Group Head, Enterprise Risk Management and Sustainability Unit, Ayala Corporation. This is just one example of the market noticing. 

While it may be difficult for SMEs to pursue sustainability, the resources and opportunities exist to do so.

“Embracing sustainability into your core business is not rocket science,” said Piyachart Isarabhakdee, “it is to make a decision.”

Speakers

• FAROZE NADAR, Executive Director, UN Global Compact Network Malaysia & Brunei
• PIYACHART ISARABHAKDEE, Chief Executive Officer, BRANDi and Companies;
• GABRIEL TAN, Chief Executive Officer, GUAVA Amenities;
• VICTORIA (VICKIE) A. TAN, Executive Director and Group Head, Enterprise Risk Management and Sustainability Unit, Ayala Corporation;
• ADMEN HASSAN, Head, SME Academy, CEDAR SME Bank, Malaysia;
• YBHG. DATO’ SURIANI BINTI DATO’ AHMAD, Secretary General, Ministry of Entrepreneur and Cooperatives Development

This article is part of a series covering the UN Global Compact Leaders Summit. The UN Global Compact (UNGC) Leaders Summit is an annual convening of global stakeholders from the UN, the public and private sectors, and civil society that takes stock of progress of the SDGs so far, and addresses the gaps in knowledge, resources, and funding. The 2022 Leaders Summit, like last year’s summit, will be a hybrid event of live and virtual speakers. Featured venues this year include an in-person event held in Bangkok, as well as virtual plenaries in Latin America, Australia, East Asia, the Middle East, and Africa, in addition to UN Headquarters in New York. This inclusive global event — which will run continuously for more than 24 hours — aims to empower business leaders at every level to take collective action and inspire future leaders to embed a sustainability mindset in their work. ESG News is the exclusive media partner of the event, and will cover all 26 panels.