BGK: 48% of SMEs only see ESG regulations through the prism of additional costs

Almost every second company from the SME sector (48%) perceives ESG regulations through the prism of additional costs for business, according to a survey conducted by Bank Gospodarstwa Krajowego (BGK). At the same time, 70% of companies surveyed reduce ESG risk management only to the legally required reports.

"The SME sector is clearly divided in the expressed attitude towards ESG. As many as 48% of surveyed companies perceive the implementation of ESG standards through the prism of the costs they will incur. The smaller the company, the more frequent the belief that involvement in the issues of sustainable development and ESG is unprofitable. In turn, 41% of entrepreneurs, most often larger, believe that issues related to ESG are rather an opportunity for business," said Rafał Boguszewski from the BGK Research and Analysis Department.

Nearly 7 out of 10 SME companies reduce ESG’s management to monitoring sustainability factors. A little over 10% of respondents indicate that ESG issues affect the decisions made in the company. Fewer than 1% of the total entrepreneurs who participated in the survey declare that ESG issues are inscribed in their company’s business strategy.

“Our study showed that the implementation of ESG and sustainable development in the Polish SME sector is mainly related to regulatory requirements. However, the formal guidelines still slightly translate into the implementation of ESG into the strategies of companies, and thus to business decisions. Medium-sized enterprises are best in this respect, which are starting to think of ESG as an integral element of their business. This is not surprising, because compared to the entire sector, they have the greatest knowledge about ESG and have relatively the best resources to manage these issues well," added Boguszewski.

Of the total number of companies that have not yet established ESG in their business strategy, more than half of the respondents explain this lack of adequate resources, competences and knowledge in the organization (54%). The high costs associated with the implementation of ESG standards (30%) are also frequently indicated, and only then the belief in the lack of significant benefits for the company (13%).

Since January 2023, the Directive for Enterprise Reporting Sustainable Business has been in force. Corporate Sustainability Reporting Directive, CSRD. EU Member States have until June 2024 to implement these regulations into national law.

Although companies from the SME sector are not explicitly covered by the reporting, they will have to adapt their activities to the new EU guidelines.

“By major companies and listed companies will also need to report information about the sustainable activities of their contractors. In this way, small and medium-sized companies not listed on the stock exchange, as well as micro-enterprises, were indirectly obliged. Implementing ESG standards can become a condition for companies that want to remain competitive in the market. Already, entities from the SME sector, as suppliers or subcontractors of services, very often cooperate with companies covered by the EU obligation," summed up ESG risk manager at BGK Monika Kaczyńska.

Source: BGK and ISBnews