PETALING JAYA: Experts are at odds over the adoption of environmental, social and governance (ESG) standards by small and medium enterprises (SMEs) post-pandemic.
A group of panellists at the Malaysian Economic Summit 2022 noted today that while well-established corporations and businesses had started adopting ESG standards in their business models and made zero carbon emission pledges, SMEs – which are still reeling from the effects of the Covid-19 pandemic – do not view ESG as a priority.
In addition, they said that many SMEs were still trying to grasp the benefits – and significance – of adopting ESG standards.
However, SME Association of Malaysia secretary-general Chin Chee Seong said there was a need for a mindset change among small businesses about the importance of ESG standards.
“ESG standards must be adopted as they will provide benefits in the long-term. The government could also come up with training packages to create awareness on ESG compliance,” he said.
In February, the Malaysia External Trade Development Corporation (Matrade) said SMEs needed to address ESG standards in their business models if they wanted to be relevant in international trade.
Matrade CEO Mustafa Abdul Aziz said that globally, governments were setting up ambitious targets to combat the ongoing climate crisis, with Malaysia also committed to achieving net-zero carbon emissions by 2050.
However, Sohail Ahmed, a senior lecturer at Universiti Teknologi Mara’s (UiTM) faculty of business management, told the panel today that many SMEs chose not to adopt ESG standards into their business models due to costs.
Sohail pointed out that the adoption of ESG standards would increase SMEs’ operational costs, and ultimately, they would have to pass this cost on to consumers in order to sustain their businesses.
Another panellist, Azlin Ahmad Shaharbi, who heads the National Federation of Women Entrepreneur Associations Malaysia, said SMEs still needed assistance from the government post-pandemic.
“The government should guide them towards viable business opportunities and models,” she said.
Source: https://www.freemalaysiatoday.com/category/nation/2022/06/14/struggling-to-cope-small-businesses-dont-see-need-for-esg-standards-say-experts/