Balancing ESG goals with growth targets a top challenge for SMEs: DBS survey

MORE than six in 10 small and medium-sized enterprises (SMEs) have cited the balancing of ESG (environmental, social and governance) goals with business growth targets as the top challenge in their transition to more sustainable business models, even as they acknowledged its importance.

That concern was expressed by 63 per cent of survey respondents, followed by cost pressures when deploying ESG investments (61 per cent) and a lack of access to technical know-how and ESG specialists (60 per cent).

The findings were reported in a survey of 800 SMEs conducted by DBS and Bloomberg Media Studios across six markets in Asia in August.

Eight in 10 of the SMEs surveyed in Singapore rated ESG as a high priority for their business, and acknowledged that more sustainable business models benchmarked against international standards would increase their competitive edge by enabling them to attract more business from larger companies.

85 per cent of respondents pointed to climate change leading to a depletion in natural resources as the top issue they wanted to address in the coming year. This was followed by waste reduction at 63 per cent and employee health and safety, as well as work-life balance, at 56 per cent.

DBS group head of SME banking Joyce Tee said SMEs are struggling to put their ESG transition plans in place, as “the post-pandemic economic environment has meant that business growth and survival is top of mind” for them.

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Respondents also cited the lack of standardised measurement in reporting standards as a hindrance to their efforts in this transition. 

Other challenges cited included the lack of technical know-how in the market on how to implement ESG frameworks solutions, as well as a lack of funding. 

“The lack of homogenous frameworks and standardised guidelines leads to wide discrepancies within and across industries, and markets, when measuring success and performance,” said Tee.