Operational benefits beyond compliance

Business Post

05-07-2025

The business landscape is undergoing a profound transformation as environmental, social, and governance (ESG) considerations move from the periphery to the heart of corporate strategy. And while regulatory compliance often serves as the initial driver, the real value of ESG implementation lies in its operational benefits.
However, for small and medium-sized enterprises, this evolution presents both challenges and unprecedented opportunities for growth, operational efficiency, and long-term resilience.
While large corporations have been grappling with ESG requirements for some time, SMEs are increasingly finding themselves in the spotlight. The Corporate Sustainability Reporting Directive (CSRD) may not currently mandate reporting for smaller businesses, but not only is this exemption temporary: more immediately pressing is the growing demand from larger entities for ESG data throughout their supply chains, creating a ripple effect that reaches even the smallest suppliers.
The complexity of ESG reporting can appear daunting. With approximately 200 data points to consider across environmental, social, and governance metrics, many SME owners and staff feel overwhelmed before they even begin. This complexity is compounded by the fact that ESG encompasses everything from energy consumption and waste management to employee wellbeing and board diversity. The challenge is often exacerbated by SMEs discovering their need to provide ESG data only when larger clients make sudden demands.
Ashleigh Connors, an ESG consultant at TEKenable, said that businesses often remain 'blissfully ignorant - until someone comes knocking on their door looking for specific data points'.
The pressure is mounting from multiple directions. Large corporations, increasingly held accountable for their entire value chain's environmental and social impact, are demanding greater transparency from suppliers. Meanwhile, public and private tenders now routinely include ESG criteria, making sustainability performance a competitive differentiator rather than merely a regulatory requirement.
While regulatory compliance often serves as the initial driver, the real value of ESG implementation lies in its operational benefits.
'There are also cost savings to be had, as it makes energy use very obvious,' Connors said, pointing to how systematic monitoring of environmental metrics makes consumption patterns immediately visible, highlighting inefficiencies that might otherwise go unnoticed for years.
There is also the example of supply chain responsibility: 'It's not just what you're doing as a company,' Connors said.
'If you're buying from other companies that has a knock-on effect. If you buy palm oil, it's your responsibility to ensure it's not contributing to deforestation.'
This extended responsibility might seem burdensome, but it actually drives innovation in sourcing strategies and can lead to more resilient supply relationships.
The competitive advantage
However, the financial implications are equally compelling. Energy audits frequently reveal substantial cost-saving opportunities, while improved resource management can significantly reduce waste-related expenses. Companies that embrace ESG early often discover that what initially appeared to be additional overhead actually enhances their bottom line.
The key to successful ESG implementation lies in systematic data collection and analysis. Modern technology solutions can integrate with existing business systems, automatically capturing relevant metrics and presenting them through intuitive dashboards.
As Connors puts it: 'If you're not tracking it, then you're not managing it.'
For businesses wondering where to begin, Connors recommends starting with energy management.
'Starting with energy makes sense as it's the biggest thing,' she said; as energy consumption typically represents one of the largest controllable operational costs, it is an area where improvements deliver immediate, measurable results. A comprehensive energy audit examining heating systems, transport, and machinery provides a solid foundation for broader ESG initiatives.
Once baseline measurements are established, the focus naturally shifts to optimisation. This might involve upgrading to more efficient equipment, implementing smarter scheduling systems, or simply raising awareness among staff about energy consumption patterns.
Crucially, SMEs embarking on their ESG journey need not go it alone, Connors said. 'There's a lot of support out there. You have the likes of Enterprise Ireland, you have the IDA and so on. There is money sitting there, from the EU, ready to help SMEs do things in this area.'
The European Union has also introduced the Voluntary SME (VSME) standard, providing a structured framework for companies ready to embrace ESG principles without the full complexity of enterprise-level reporting requirements. This graduated approach allows businesses to build capability progressively rather than attempting to implement comprehensive systems immediately.
Simply looking at heating, transport, and machinery, you can audit that and at TEKenable we can create dashboards
Professional guidance can prove invaluable in navigating the initial complexity. ESG consultants help businesses identify which metrics matter most for their specific sector and circumstances, avoiding the paralysis that can result from trying to address everything simultaneously.
Forward-thinking SMEs are discovering that early ESG adoption creates significant competitive advantages. As procurement processes increasingly incorporate sustainability criteria, companies with robust ESG credentials find themselves better positioned to win contracts and attract investment.
The reputational benefits extend beyond formal procurement processes. Consumers, particularly younger demographics, increasingly favour businesses that demonstrate genuine commitment to environmental and social responsibility. This trend is particularly pronounced in business-to-business (B2B) relationships, where corporate customers face their own ESG reporting requirements.
The ESG revolution represents more than regulatory compliance or market pressure; it reflects a fundamental shift towards more sustainable and resilient business models. For SMEs, early engagement with ESG principles offers the opportunity to shape their approach proactively rather than reactively.
Success requires viewing ESG not as an additional burden but as a framework for operational excellence. Companies that embrace this perspective often find that ESG implementation enhances decision-making processes, improves risk management, and creates new opportunities for innovation and growth.
The message for SMEs is clear, said Connors: ESG engagement is no longer optional for businesses serious about long-term viability. With appropriate support, strategic planning, and the right technological tools, even the smallest enterprises can successfully navigate this transformation while unlocking new sources of value and competitive advantage.
'Simply looking at heating, transport, and machinery, you can audit that and at TEKenable we can create dashboards. After that you start optimising – you will then be able to start to move the dial,' she said.