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How can SMEs Implement a successful ESG strategy

To improve accountability for non-listed companies, the newly established Sustainability Reporting Advisory Committee set up by ACRA and SGX in June 2022 seeks to develop a roadmap for sustainability reporting for such enterprises.

A Step-by-Step Guide for SMEs:

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Being sustainable is good for business. As SMEs embark on sustainability plans, they are also creating their own competitive advantage against industry peers. Numerous studies have shown that “green companies” have inherently higher valuations, are able to attract talent (especially the younger generation), and having a green agenda improves brand reputation and marketability.

The Greenhouse Gas (GHG) Protocol has established a GHG emissions classification system that allows for businesses to track direct and indirect GHG emissions. SMEs today can deep-dive into their operations, examine the business from a sustainability angle and identify areas where improvements or outright changes can be made. For example, they can modify the way customers are served, or reassess the viability of continuing certain lines of business.

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Today, the clean energy movement has driven companies to accelerate sustainability plans, including traditional energy providers such as natural gas suppliers. Locally, a number of alternative energy providers have adopted practices like installing solar panels to provide clean energy and reduce reliance on non-renewables. These efforts go some distance in enabling the company to save costs, reduce pollution and increase efficiency.

Leaders must be prepared to make green decisions. Middle market players need to prepare themselves for a mindset change and constant evolution to navigate the business transition into a more green state. The change starts from the top. Leaders need to start with a green strategy, build the components of the business around achieving this strategy and contributing to business performance in the longer run. To encourage the right type of behaviours, leaders can consider:


Setting up a sustainability task force - This ensures that there are nuanced discussions around ESG and a roadmap can then be formulated to reach certain ESG milestones or targets within realistic time frames. Recognising and rewarding employee actions which align with ESG goals - This ensures that the business is transforming in the right direction. Changing attitudes, mindsets and behaviours when it comes to sustainability transforming is the secret to winning the war.

Build Capability


A business’s sustainability practices goes hand in hand with digital movements. Going digital creates a wider impact to the economy, reaching a broader user base. Going digital also reduces the amount of greenhouse gas emissions associated with traditionally cumbersome and manual processes. To aid this transformation, Infocomm Media Development Agency introduced a Playbook to raise awareness on sustainability. This allows SMEs to leverage on the Internet of Things, data science and digitalisation initiatives. These will allow better tracking and optimisation of energy resources.

Locally, there have been success stories with companies in the cleaning and maintenance sector adopting automation to achieve better sustainability in operations. The application of robotics that possess energy conserving systems contribute to a more eco-friendly service approach.

Accreditations and certifications are not just badges of honour. The entire process usually involves a critical appraisal by professional bodies. This allows SMEs to compare themselves against green standards adopted by other industry players. Associations such as the Singapore Environmental Council provides assessment processes that aids applicants in implementing effective environmental friendly practices. Other international environmental standards such as ISO14001 Environmental Management Systems, can provide some form of benchmarking in terms of processes and practices.

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Build Capability

Take Action


Involve the value chain. It is important for businesses to realise that their decisions on going green will affect the wider supply chain. According to the GHG protocol, emissions indirectly emitted via the company’s value chain accounts for more than 70 per cent of the total business emissions (both up and down stream). Some examples of this include buying from sustainable sources, working with partners that deploy sustainable logistics and distribution measures, and treating and reducing the impact of waste and by product emissions. With the spotlight now placed on sustainable food sources, there are poultry producers who repurpose waste by products for different applications (e.g. packaging, re-using products for other industry applications). These measures reduce the resource gap and contribute by lessening GHG emissions caused by the SME’s value chain.

Developing deep skills - It is important for SMEs to bring along their employees on this sustainability journey. SMEs should consider enrolling their existing employees for sustainability themed courses, help with job redesign and redeployment of the workforce. For instance, the SG United Career Conversion Programme will give companies access to relevant technical training that aids in job transformation for the sustainability movement. Other government agencies and business associations are also contributing to the support for industrial transformation.


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