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Writer's pictureDanyal Alaybeyoglu

ESG and SMEs: A challenge and an opportunity at the same time




Many German SMEs are currently barely or only rudimentarily prepared for the statutory reporting requirements in the areas of environment, social standards and corporate governance (ESG). A new study by GHK Management Consulting in collaboration with the University of Mainz shows that 90 percent of the top decision-makers surveyed expect more additional costs than benefits from the introduction of ESG reporting. Although 82 percent of larger SMEs want automated ESG reporting, they are still a long way from implementing it. The ESG indicators required from 2024 have yet to be developed, and many companies are only just defining the processes for collecting data.




ESG criteria fairs SMEs KPI sustainability
ESG criteria measures

Despite the legal obligations, many decision-makers see no added value for the operational management of their companies. However, Dr. Andreas Dahmen from GHK Management Consulting emphasizes the need to review the level of digitization of business processes in order to meet ESG requirements. Professor Dr. Louis Velthuis from the University of Mainz observes a hesitant attitude among medium-sized companies to recognize the advantages of the ESG reporting requirement. This is reflected in the fact that around 90 percent of companies subject to reporting requirements have not integrated ESG reporting into their operational controlling.


Sustainability as a value driver


Sustainability makes companies valuable. It becomes an important building block in communication between companies and banks, creates attractiveness for customers and employees, increases the interest of investors, facilitates succession and company sales, secures the development of sales and earnings and ensures future and crisis resilience. A focus on sustainability means being a "good entrepreneur" in a comprehensive sense. A "good entrepreneur" runs a successful and future-oriented business, cares about his environment, has a high regard for employees and customers and runs his company with values and responsibility.


The "green BWA" as a possible instrument for measuring sustainability


An excellent tool for measuring and demonstrating sustainability could be a green BWA (business analysis). In contrast to the regular BWA, which evaluates the economic development of a company, the green BWA records the sustainability of a company. It looks at the economic, ecological and social areas and shows the effectiveness of sustainability measures through key performance indicators (KPIs). These KPIs include, for example, the consumption of paper or water, accessibility and diversity as well as compliance with legal regulations. Currently, over 200 KPIs can be measured and evaluated.


Data collection for the green BWA distinguishes between quantitative and qualitative factors. Energy consumption can be recorded through invoices, for example, while value orientation is collected through questionnaires for customers and employees. Each company sets its own individual goals based on a jointly agreed milestone and broken down sub-goals.


The role of PR and sustainability communication


In addition to the implementation of ESG measures, the communication of these initiatives plays a crucial role. PR and sustainability communication are becoming increasingly important for medium-sized companies. Transparent and strategic communication about one's own sustainability efforts can strengthen the trust of customers, employees and investors. Companies that take sustainability seriously and report on it transparently will have a clear competitive advantage. It is crucial that companies not only implement their sustainability measures, but also communicate them clearly and prove them with reliable data.


The results show that German SMEs are facing a major challenge - and at the same time have the opportunity to benefit in the long term through digitalization and strategic integration of ESG processes. The green BWA offers a valuable tool for making sustainability measurable and transparent and strengthens internal and external communication. Through strategic PR and clear sustainability communication, SMEs can not only meet legal requirements, but also sustainably increase their attractiveness and competitiveness.


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