Specialist Pollution Insurance & Legal Liability
for Small and Medium Businesses
provided by and in partnership with EDIA Limited
Environmental, Social & Governance
A vital component of ESG is environmental management. SMEs that participate in SPILL and undertake the pollution prevention survey will demonstrate stronger ESG credentials by protecting the environment, your business and the local community.
What is it?
ESG covers issues such as environmental management, greenhouse gas emissions, raw material use, diversity, pay equality, racial justice, employee engagement, community relations, supply chain management, anti-bribery, reporting practices and business ethics.
Companies often evaluate their impact in these areas through an ESG rating which takes into consideration each of these factors. ESG is becoming a huge principle that must be acknowledged by any company hoping to thrive in modern business.
Why is ESG important for SMEs?
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A study[1] published by Morningstar showed that a majority of sustainable businesses have outperformed non-ESG equivalents both in the short and long run in the period they studied. This study demonstrates ESGs importance in helping the longevity of businesses.
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If SMEs can demonstrate their ESG credentials, they will immediately have a business advantage[2] over their competitors. They will also gain greater access to capital and will be able to manage risk more effectively, minimising regulatory interventions that may slow down growth.
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Jumping on the wave of improving ESG within a business will play to SMEs advantage as ESG will be an inevitable principle all business will soon have to follow. Countries all over the world are making ESG reporting mandatory.
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Germany recently announced that ESG reporting would become mandatory for all sectors as part of its new sustainable finance strategy (SFS). The UK is following suit becoming the first country in the world to make the mandatory, as well as announcing plans to introduce its own ESG framework, largely in line with the European Union’s.[3]
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ESG measures that were implemented in SMEs have also been shown to increase efficiencies, reduce costs, and increase employee productivity. Furthermore, companies with strong sustainability policies are more likely to have a strong reputation and greater trust among partners and customers.[4]
[1] https://www.morningstar.co.uk/uk/news/203214/do-sustainable-funds-beat-their-rivals.aspx
[2] https://www.maddyness.com/uk/2021/10/22/the-challenge-and-opportunity-of-esg-reporting-for-smes/
[4] https://www.maddyness.com/uk/2021/10/22/the-challenge-and-opportunity-of-esg-reporting-for-smes/
