Saturday, May 17, 2025

IBB! says: When good intentions threaten SME survival

Is ESG being blown out of proportion? If the origin of water required to clear out our waste is going to matter more than reducing the barriers for SMEs to succeed and thrive, then yes, perhaps it is.

The world had always rather shuffled around climate change awareness and action, but the coronavirus lockdown crystallised it into something bigger and broader called ESG (Environment, Sustainability, Governance). Currently, a kind of overzealousness has crept in, even.

I recall in 2022, three 5irechain founders came to KL to receive a USD100 million cheque and to talk about their mission. Many things have happened since then, but I remember thinking that the lockdowns had increased awareness for compassion all around the world, and 5irechain’s timely mission of getting companies to operate for-benefit instead of for-profit really tapped into that.

The author snaps a pic with Pratik Gauri,who had come to Malaysia to talk about a groovy sustainability mission which many latched onto.

5ire had indexed over 650 ESG metrics and found a blockchain-powered way to rank and reward ESG-based projects. This also directly incentivised companies to adopt and report sustainable practices.

Well, that was three years ago. And the current form of ESG (at least in Malaysia) could potentially “punish” instead of reward.

IBB had reported previously that SMEs’ non-compliance with upcoming ESG requirements could have devastating impacts upon them, even to the point of businesses shutting down due to loss of market access, incentives, and competitiveness.

In response to that article, a lot of ire had been directed at the two main associations driving ESG initiatives in the country.

Raised concerns

Concerns were raised by members in the industry who commented, “I reckon the question should be why isn’t anyone questioning the reason two non-profit organisations are influencing policy makers. Were SMEs consulted about whether NPOs should influence policies that affect how SMEs do their business?

“What’s in it for those two or other related organisations, to meddle in SMEs’ capabilities, employability, and profitability?”

Yet another little bird chirped to IBB agitatedly, “Is it really important, for example, that your company uses rainwater to flush your toilets?”

Left disillusioned by multiple training sessions on how to be approved as an ESG-compliant vendor, this anonymous tipster opined, “Business is about capability and experience, getting the right people to do the job and deliver outcomes. (It’s) not to focus on differences, for example, who is using the right source of flush water!”

When is enough, enough?

Let’s be clear. ESG frameworks are needed. But let’s also look at the timeline required for SMEs to be ready and the consequences if they can’t pull it off.

Our anonymous insider reckons ESG should not be positioned in a government’s structure. The rationale is simply because, “Why add on to an already bloated bureaucracy? Let SMEs flourish and focus on innovation and meeting the needs of the country. Apply positive elements of ESG, as best practices, acceptable and in agreement by the SMEs.”

IT BYTES BACK! Says: Is ESG being blown out of proportion? If the origin of water required to clear out our waste is going to matter more than reducing the barriers for SMEs to succeed and thrive, then yes, perhaps it is.

Cat Yong
Cat Yong
Cat Yong is Editor-in-Chief of Enterprise IT News, a regional news website which began in Malaysia circa 2011. A common theme in all of her work - opinions, analysis, features and more - is how technology and innovation drives business and outcomes. A career tech journalist for 22 years, her work has evolved to also encompass narratives of tech powering human potential.

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