KOTA SAMARAHAN, Aug 7: Small and Medium Enterprises (SMEs) are seemingly facing difficulties in implementing Environmental, Social, and Governance (ESG) principles in their businesses.
According to the Head of Research Fellow (Energy & Sustainability Division) at the Institute of Sustainable and Renewable Energy, University Malaysia of Sarawak (UNIMAS), Dr Florianna Lendai Michael Mulok, many SMEs believe that it is not relevant for them to implement ESG in their current situation.
“For you to adopt ESG you may need to invest in technology, for example to measure your energy efficiency, and to replace certain ways of doing the things that could potentially produce more waste.
“It also associates yourself to the supplier, especially micro, so they probably have struggled to integrate this ESG possibility into their operations and many leave the business uncapitalised for the long-term benefit,” she explained in an exclusive interview with TVS at UNIMAS on Wednesday.
Despite receiving government support and guidance, which is crucial for implementing ESG practices in Sarawak, SMEs continue to face significant hardships due to various challenges.
In addition to facing a shortage of resources, such as funds for support and a workforce for improving ESG reporting, SMEs also struggle with the challenge of unit differentiation.
“We have sector-specific challenges, so different sectors in Sarawak face unit challenges in industry practices and, even if we are from the same sectors, we might face the same issue in terms of materiality. So to implement these ESG practices, you require tailored talent approaches again.
“Back to the expertise, who is going to help them, how many people are truly ESG experts? A lot of people say they are experts, but from my knowledge, you need an ESG team.
“You cannot have one person, as you need someone good in the environment, who is aware of Greenhouse Gas Emission (GHG) inventory work, somebody from the social side like looking at the community, employees, Human Resource Development (HRD) Social Science, governance and law,” she added.
She also stressed that coming together as a team requires resources, which is a significant challenge for everyone.
Meanwhile, Dr. Florianna highlighted that the long-term ESG landscape will undoubtedly lead to more stringent policies and regulations to enforce ESG principles.
She also said that businesses will face strategic pressures from shareholders and that the government will likely provide additional funds and grants to support these initiatives. – TVS
