KUALA LUMPUR (June 9): A majority of small and medium enterprises (SMEs) are looking for subject experts and resources on environmental, social and governance (ESG) to adopt the principles.
Speaking at the Malaysian Institute of Accountants (MIA) International Accountants Conference 2022 on Thursday (June 9), Mohamad Faisal Abdul Malik, managing partner of financial services company Faisal Malik & Co, said that SMEs view ESG adoption as an additional burden compared to listed entities, especially when there is a lack of the "G" factor in ESG.
He said that the most common issue raised by SMEs, during the regulators' roundtable and awareness sessions revolving on ESG, was on getting talents and resources.
"SMEs already have to comply with any loss or regulation that might affect the company such as the labour law and safety law. They have already adhered to that but when it comes to the 'G' factor, practically and in overall, the majority are looking for resources.
"Where to get the framework and where to source for a talent such as a consultant or a subject expert, these are the key challenges they face in the Malaysia context," Faisal said as one of the speakers of the virtual session titled "Understanding the 'G' in ESG for Sustainability".
He added that SMEs are open to ESG adoption though they are also struggling to see its value.
"It is an emerging demand... on the other side, SMEs are looking at it as an additional burden and they don't really see the value although the bigger players — public listed entities out there — know it can increase shareholders' value, get benefits for people and the community at large.
"But for SMEs, they look at the challenges and at the end of the day, it is about resources. How much money or capital that they need to put into this kind of agenda, but regulators, governors, the whole ecosystem have to come in to play a role on the importance of adopting this ESG," he said.
Faisal is a council member of MIA, serving as a member of the Discipline Appeal Board to MIA, a member of the Discipline Committee Panel to the Malaysian Bar, director of Institute Shariah Audit Malaysia, and a member of the Nexus Governing Committee for Professional Services Productivity Nexus of Malaysia Productivity Corp.
He highlighted that more companies are adopting ESG and some SMEs have also reaped benefits, for example getting accreditation and getting contracts, when they show best practices and integrated reporting.
"Focus has been driven by 'E'- and 'S'-related, relating to employee benefits, and 'G' not much at the moment to be honest, although there are organisations that push that forward to board level, shareholders and community at large," he said.
Source: https://www.theedgemarkets.com/article/talents-and-resources-said-be-main-challenges-smes-adopt-esg-malaysia