How do SMEs fit into the ESG world?

In this era, climate change is the burning topic for sustainability. Temperature increases, Sea Level rises, and GHG emissions increase constitute global efforts to address climate change’s impact, e.g. 2015 Paris Agreement and 2021 UN Climate Change Conference COP26. While in Hong Kong, The 2020 Policy Address proclaimed that Hong Kong would aspire to commit to carbon neutrality before 2050. This lies down the real market opportunity for businesses.

ESG (Environmental, Social, and Governance) is a broad topic applying to different industries. Each industry has its ESG issues, regardless of listed companies or small-to-medium enterprises. Companies’ ESG practices reflect the high level of the company values. Therefore, each company in Hong Kong is expected to have at least an understanding of ESG when running the business. People would say, presently, it is more of the listed companies’ responsibility as it is required to be reported by HKEX. But when you learn more, the supply chain is one of the ESG elements needed for reporting. Small and medium-sized enterprises (SMEs) should be aware of it as SMEs could be part of the supply chain of the listed companies.

As a matter of fact, SMEs contribute significantly to the world’s economies. They account for about 99 per cent of firms and 70 per cent of all jobs in OECD countries. Over 50 per cent of GDP is contributed by SMEs in high-income countries worldwide.

Where should SMEs start to incorporate ESG into their business operations?

  • Understand the needs of your customers on ESG disclosure, including for the sake of improving SMEs supply chain visibility;
  • Take stock of what data SMEs have in hand, and carry out a gap analysis on the information SMEs have with that as required by SMEs’ customers;
  • Set up a mechanism or adopt a digital platform to collect the customer’s required data. A digital data platform, such as ESG Dashboard, can be used with IoT sensors. For example, it can connect with air quality sensors to ensure workspace with clean air and staff’s well-being;
  • Know your competitors! To stay competitive, SMEs need better ESG performance than their competitors. Try to research your competitors’ performance and see how to improve. There are platforms out there in the market that can do benchmarking;
  • Dedicated to a cross-functional team. Provide the staff with a training. There are many courses out there. Introductory course is good for a start. There are also technical lectures on the online academy platform (
Photo above: A digital data platform, such as ESG Dashboard, can be used with IoT sensors.
Photo above: Introductory course is good for a start. There are also technical lectures on the online academy platform.

Integrating ESG factors in the business flows give the owners and management an excellent framework to rethink where the markets are heading and how their product and services can be changed to meet the needs. ESG segment is extensive, from the education, technical skills, analytical capability, materiality mapping and execution. In these inflation and unstable times, it is advantageous to use an ESG lens to improve operational efficiency, provide clear resolution to ESG risks and use that perspective to develop environmental and social initiatives to fulfil future scenarios successfully.

By: ANewR Consulting Limited, a digital environmental consultant headquartered in Hong Kong since 2008. Our expertise has grown into the context of air and water qualities, noise, green building, waste management, and remediation. With extensive know-how in environmental planning and assessment, feasibility study and policy review, ecological design, monitoring, and audit (EM&A), ANewR has matured to be a leading management consultancy. Standing in the digital transformation reign, ANewR has participated in various environmental digital projects – interactive 3D visualisation, immersive automation virtual environment, Virtual reality, automation system, and monitoring platforms.
(Website:, LinkedIn: ANewR Consulting Group, Twitter: ANewR – Everyday Newer,YouTube: