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ENVIRONMENTAL, social and governance (ESG) awareness among Malaysian small and medium enterprises (SMEs) has skyrocketed from just 14% to 80% over the past two years, underscoring a rapid shift in recognition of sustainability’s importance in today’s business environment. 

The surge in awareness reflects the growing acknowledgement among businesses of the need for sustainability in a competitive landscape. 

The impressive jump was revealed in Alliance Bank Malaysia Bhd’s second annual ESG survey report, titled “The Path to Sustainable Impact — Sectoral Insights of Malaysian SMEs” (ESG 2.0 Report), launched at the SME ESG START Sympo- sium 2025 at Monash University Malaysia. 

The 80% awareness figure marks a dramatic rise from the 14% recorded in 2023, demonstrating that SMEs are increasingly aligned with the ESG movement. 

The report was officially unveiled by Minister of Natural Resources and Environmental Sustainability Nik Nazmi Nik Ahmad who noted the importance of integrating ESG practices into Malaysia’s economy, stating: “As SMEs are the backbone of our economy, this effort plays a crucial role in strengthening Malaysia’s ESG ambitions, fostering resilience and preparing businesses for local and global opportunities.” 

Building on the success of last year’s inaugural ESG survey, the ESG 2.0 

Report was created with the collaboration of Monash University Malaysia, Zurich Malaysia and other partners like the UN Global Compact Network Malaysia & Brunei, SME Corp Malaysia and INCEIF University. The report provides vital insights into how prepared Malaysian SMEs are to meet evolving market and regulatory demands while uncovering new market opportunities. 

This year’s study used a three-step approach, including in-depth discussions, a survey of nearly 400 SMEs and secondary research. 

“As we continue to champion ESG adoption, we are committed to empowering Malaysian SMEs through our 3As approach — Advocacy, Advice and Answers — helping them integrate ESG practices as key drivers of long-term resilience and success,” Alliance Bank group CEO Kellee Kam stated. 

“The second edition of this annual ESG survey offers deeper insights into emerging trends and sector-specific challenges while identifying areas for growth and improvement.” 

The manufacturing sector (69%) and construction sector (60%) emerged as leaders in adopting ESG practices, underscoring the fact that certain sectors are advancing faster than others in the journey toward sustainability. 

“This underscores the importance of sector-specific policies and the need for tailored approaches by regulatory, financial and educational institutions,” commented Monash University Malaysia president Prof Emeritus Datuk Dr Adeeba Kamarulzaman. 

The findings also highlight that 60% of SMEs have now integrated ESG practices into their operations, a notable increase from just 28% in last year’s survey. 

This growing trend points to the recognition among SMEs of ESG’s long-term value, such as improved risk management, increased productivity and a boost in profitability. 

Notably, 38% of SMEs that adopted sustainability into their business reported increased revenue of more than 50%. 

The study also noted that 53% of ESG adopters cited cost savings and market demand as the primary motivations for adopting ESG practices. 

Additionally, innovation emerged as a significant driver, now listed among the top three reasons for ESG adoption. 

Some 24% of SMEs reported more than 51% cost savings, while 38% achieved a revenue increase of more than 51% from their sustainable practices. 

Looking ahead, 52% of non-ESG adopters plan to implement ESG practices within the next two years, with 13% of them aiming to do so in less than a year, presenting ample opportunities for various industry stakeholders to support their transition.

Source: https://themalaysianreserve.com/2025/02/05/esg-awareness-among-smes-surges/