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The SME ESG Jumpstart Guide

Embracing sustainability is not only ethically responsible but also makes good business sense for SMEs. It can lead to improved financial performance, enhanced reputation, and a positive impact on the planet and society

As the backbone of the economy, SMEs' adoption of sustainable and low carbon practices is critical

Small and medium enterprises (“SMEs”) form the backbone of Malaysia’s economy, accounting for 97.2% of total business establishments, generating 38.2% of GDP and providing employment for 7.3 million people (OECD, 2022). With climate change making a profound impact to the planet, people and profit, more businesses, including SMEs are now being subjected to ESG requirements imposed by customers, lenders, investors, local communities and regulators alike.

As such, SMEs who transition towards sustainable practices can better mitigate risks, potentially improve their competitiveness (e.g. by attracting larger/multi-national companies who are increasingly prioritizing ESG in their supply chains or expanding to new/wider export markets) and achieve operational efficiency (e.g. by lowering operational cost from energy efficiency and adopting circular economy models). Ultimately, SMEs who are most adept at re-inventing themselves, balancing long-term growth with environmental & social responsibility can emerge as winners in the new economy.

To encourage more SMEs to take the first steps along the ESG journey, the JC3 SME Focus Group (“SFG”) has developed a ESG JumpStart Guide (“the Guide”), a simple and practical reference guide for SMEs. It contains suggested actions that SMEs could take to:

  • Build up basic ESG knowledge & capability

  • Identify and respond to key ESG issues, risks & opportunities.

 

The Guide also acts as the starting point for the JC3 ESG Jumpstart portal for SMEs.

The Guide

Step 1: Understand

To jump-start your company’s sustainability journey, it is essential to first acquire some basic ESG knowledge as well as develop awareness of the latest ESG trends & best practices. Thereafter, you can identify its key ESG-related issues, risks & opportunities.

Jumpstart Action Checklist

Attend relevant capacity building programmes to acquire basic ESG knowledge (including basic ESG concepts and best practices).

Find out ESG-related requirements or expectations of key stakeholders (e.g. ESG practices imposed by MNC or PLC clients, ESG criteria set by lenders and investors).

Consider significant ESG-related impacts arising from company’s operations (e.g. activities that produce significant amounts of GHG emissions).

Please note: The various ESG issues, risks and opportunities that you face are often classified according to common sustainability themes/labels such as Climate Change, Emissions Management, Energy Consumption, Water Consumption, Waste Management, etc.

Develop awareness of key ESG-related regulatory developments, standards and best practices in the market or industry (e.g. upcoming energy efficiency regulations, recommended ESG disclosures for Malaysian SMEs).

Recommended Resources

Capacity Building - Foundational Programmes (General)

Resources and Tools

Acknowledgements

The SME ESG Jumpstart Portal and Guide were jointly-developed by the JC3 SME Focus Group

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