ESG stands for Environment, Social and Governance. ESG is a tool that companies can use to report on the three aspects and thus give a more nuanced picture of your company on other bottom lines than the financial one. 

Until now, there has been considerable flexibility in legislation regarding CSR and ESG reporting. However, the field is rapidly evolving, already requiring larger companies to comply with different and comprehensive EU standards for ESG data. 

This circle of companies is growing over the coming years and will eventually have an impact on small and medium-sized businesses. At the same time, new universal regulations on product sustainability and durability, deforestation-free products, waste management and increased circularity, to name a few.

To a greater or lesser extent, these reporting and documentation requirements will affect businesses of all sizes. 

About Norions consultancy 

Norion has extensive experience with companies of all sizes, including smaller, often owner-managed SMEs. Consultancy often includes strategy development and training in the ESG/CSR area, including reporting and development of responsible value chains, through training and 1:1 consultancy. 

 Our experience shows that the SME target group has very different prerequisites, experiences and goals when it comes to working with sustainability and its documentation. However, what they have in common is a hectic workday, scarce resources and the need to adapt to new and sometimes crisis-related challenges. This is the context in which to view the new direct and indirect requirements on ESG-related topics, whether they are perceived directly from regulation or as part of a general market development and new customer requirements.

Norion's consultancy equips companies with basic ESG competences and can clarify the role of different companies in bringing data and evidence to the market and how it can be actively used in company strategy.

The value of ESG for SMEs  

While legislation on mandatory ESG reporting may not be in place for SMEs, that doesn't mean they should wait for regulation. By being proactive, SMEs can prepare for future requirements, strengthen their competitiveness and avoid any surprises. In addition, there are also the following tangible benefits of SMEs taking the initiative to integrate ESG into their business model:

Improved reputation and credibility: Reputation is crucial for SMEs in attracting customers, partners, investors and talent. By demonstrating commitment to ESG values, SMEs signal their responsibility and sustainability, which can strengthen their brand and credibility. 

Access to funding and business opportunities: Many investors and lenders prioritise companies with strong ESG performance. SMEs that incorporate ESG into their business model can more easily attract capital and loans, which can support growth and development. At the same time, SMEs can fulfil any requirements that larger partners might have for suppliers in their value chains. 

Risk management ESG considerations help SMEs identify and manage potential risks, such as environmental disasters or social controversies. This can protect them from potentially harmful consequences.

Innovation and efficiency  Working with ESG can promote innovation by encouraging SMEs to find new and more sustainable ways of doing business. This can result in cost savings and increased competitiveness. 

In a constantly evolving world, SMEs' decision to work with the ESG agenda is not only a voluntary act, but also a necessary one. It is an investment in their own long-term success and a fiduciary commitment to contribute positively to society and the environment. SMEs should not wait for legislation; they should take the lead and shape a sustainable future for themselves and future generations, while reaping the many business benefits of doing so.