Becoming a sustainable SME citizen: environmental, social and governance factors
Consumers expect businesses large and small are now expected to perform well on environmental, social and governance (ESG) factors such as diversity, respect for employees and care for the environment.
Contributing positively not just to the economy and environment but to people and communities will help businesses sustain themselves in the long term. As investors seek ESG compliance across the whole supply chain, it becomes an important issue for businesses of all sizes.
Many of the other articles in this SME resources section have covered how you might cut waste and plastic pollution and build different relationships with consumers in new markets for repairs and durable products. This page uses a study by our Italian member, Altroconsumo of the textile industry to show how environmental, social and governance issues can come together with economic considerations to build a sustainable, responsible and successful consumer offer.
For the study, Altroconsumo partnered with Eco-mate, an start-up that has developed a tool for SMEs to assess how well they are doing on ESG activities. The ESG questionnaire covers 11 different areas which gave textile SMEs a snapshot of where they are in terms of sustainability across all of the different categories:
- Transparency: assessment of the company’s degree of transparency towards stakeholders, analysing the level of accessibility of information to the public and the protection of any sensitive data.
- Waste management: aspects related to waste production and management. It then assesses the company’s contribution to the circular economy, according to the principle of the 3 Rs (Reduce, Reuse, Recycle).
- Environment: aspects related to compliance and potential environmental impacts of the company’s activities (excluding waste, energy and life cycle of products and/or services which are covered in specific modules).
- Energy: management of building and energy consumption by the company, focusing on both the use of renewable sources and energy saving.
- Mobility: the sustainable mobility of its employees and also calculates an estimate of its Carbon Footprint.
- Products and services: aspects of the product value chain, including the sustainability of the supply chain, the reliability of the products, the services offered and the company’s behaviour as a stakeholder.
- Professional ethics: ethical aspects are respected in relation to various stakeholders, from employees to consumers. Different areas are considered, from the protection of human rights to voluntary additional support and facilities.
- Economics: the main financial, strategic and organisational activities with a focus on the economic sustainability of the business model.
- Health and safety: aspects related to various health and safety management requirements.
- Social Responsibility: aspects related to corporate social responsibility, assessing the application of the principle of inclusiveness in favour of different stakeholders and possible initiatives in favour of sustainable development and/or for compensatory purposes.
Innovation: company’s approach to innovation, considering different aspects: digitisation, flexibility, ability to seize new opportunities, open innovation, digital transformation, information security, IP protection.