Only one fifth of the UKs small-to-medium-sized enterprises (SMEs) are aware of what Environmental, Social, and Corporate Governance (ESG) is and most of them are doing nothing about it, a study has found.
The report by ID Crypt Global has revealed that of the 1,124 UK SME business owners surveyed just 19% are aware of what ESG is, while only 12% are actually implementing it.
92% also stated they had no plans of actively implementing ESG practices in the future.
CEO and Founder of ID Crypt Global, Lauren Wilson-Smith, said: “There remains a number of issues when it comes to ESG implementation for smaller businesses.
“The cost of obtaining and improving a score is certainly one factor, as well as a lack of prior knowledge on the subject. But there is also a lack of transparency due to the numerous score providers operating within the space.
“As it stands, ESG is inaccessible for many smaller businesses and more certainly needs to be done to drive home the benefits of ESG for companies of all sizes in all sectors.”
In the study the main reason SMEs said they are not going to implement ESG practices was that they felt it provided ‘no real benefit’ to their business, while many also had a lack of knowledge or awareness around the topic, with the cost involved to obtain a score via a third party also a barrier for most.
The study also found that those implementing ESG practices are primarily doing so to reduce their environmental impact, to ensure their societal impact is positive, as well as ensuring they are compliant with all current and future regulation changes.
In addition 73% stated that it has improved their company for the better and 87% would like to see ESG practices made more widely available for all companies, of all sizes, across all sectors.
This latest report comes after previous research from ID Crypt among the world’s biggest businesses, those who are prioritising ESG are enjoying 6.3% stronger profit growth than those who are not.
Lauren added: “It’s fair to say that while it is being increasingly adopted by big businesses, the implementation of ESG is being done for the wrong reasons with a focus on profits over positive impact.
“So it’s great to see that the nation’s smaller businesses are undertaking ESG activities for the right reasons, seeking to better their environmental and societal impact.”
Jobs should be offered on merit not ESG