Can Environmental, Social and Governance Issues Be of Relevance to SMEs?

In this exploratory paper on Environmental, Social, and Governance (ESG) issues and small and medium sized enterprises (SMEs) we offer critical insights into the meaning, scope and application of ESG principles for SMEs. Referring to both academic and indus-try literature, the paper identifies the key ESG concepts, definitions, principles and prac-tices and how they drive the interests of business and policy makers. We examine how fa-cilitative regulation, social integration and innovative opportunities among SMEs can be generated by an adherence to ESG in practice. How do SMEs incorporate the ten key prin-ciples that emphasize the different aspects of sustainability, social responsibility, and corporate governance, that can guide good business practice through ESG-led innovation? Using both academic and professional literature, we assess what concepts, frameworks, policies and principles could apply to this community of SMEs. Our in-depth analysis of principles, policies and practice includes an illustrative case study of ESG adoption in practice. This leads us to work towards the development of a practical framework appli-cation by SMEs. Our framework is proposed against the backdrop of constraints that SMEs have to contend with when incorporating new ideas and turning them into reality. We conclude by anticipating the future of ESG.