Small and medium-sized enterprises (SMEs) are facing an unavoidable reality: the rise of environment, social, and governance (ESG) principles is reshaping global business practices, and those that fail to adapt risk falling behind, warns Jorge Ramirez, senior program officer at the International Training Centre of the International Labour Organization (ITCILO).
Speaking at a recent event in Makati City, Ramirez said that while ESG regulations are often seen as targeting large corporations, SMEs are equally affected, especially as suppliers in global supply chains. “Aligning with ESG standards helps SMEs avoid fines and maintain market access,” he explained.
For SMEs, the benefits of adopting ESG are clear. In addition to ensuring compliance, ESG practices can unlock new financial opportunities, such as green loans and more favorable lending rates, as investors increasingly prioritize sustainability. Furthermore, integrating ESG principles can foster innovation, improve operational efficiency, and enhance risk management, leading to cost reductions and stronger financial stability.
Ramirez also pointed to the positive impact of ESG on brand reputation, attracting conscious consumers and building stronger relationships with local communities and governments. He cited a Malaysian spice and herb manufacturer as an example of an SME that successfully integrated ESG practices. By reducing waste, adopting sustainable farming techniques, and implementing IoT-based environmental monitoring, the company not only reduced costs but also expanded its international market access and boosted employee satisfaction.
Ramirez urged the Philippines and other countries to support SMEs in their transition to green and resilient business practices. By assisting SMEs in adopting sustainable operations and climate resilience strategies, governments and stakeholders can help SMEs contribute to global net-zero goals while fostering long-term economic growth.
