In recent years, ESG—Environmental, Social, and Governance—has become the talk of the town. But what does ESG really mean for Singapore SMEs? Is it just corporate jargon or a fancy new marketing ploy? Not quite. In fact, embracing ESG might be one of the smartest business decisions your SME can make today. And no, it’s not just about saving polar bears (although they are pretty cute). It’s about giving your business a competitive edge that can help you thrive in a changing world.

So, let’s break down why ESG could be your new secret weapon, shall we?

ESG as a competitive advantage for SMEs

Better access to financing

Money talks. And these days, it’s speaking the language of ESG, with investors increasingly favouring businesses with strong ESG credentials. For instance, in Singapore, a 2024 APAC investor study by Fidelity International found that 54% of Singaporean investors believe in ESG investing, with 27% already invested in sustainable products. Additionally, a 2021/22 sustainability report by the Monetary Authority of Singapore (MAS) also highlighted that sustainable financing in Singapore reached over SGD 22 billion. That’s a lot of zeros!

But why, you ask? It turns out ESG isn’t just about looking good on paper; it’s a good way to future-proof your business. Investors and banks understand that. They know companies that operate sustainably are less likely to face disruptive risks—whether regulatory, reputational, or environmental.

And then, there are the government incentives. The Singapore government isn’t just cheering the push for ESG from the sidelines; it’s offering tangible financial support to help SMEs in their ESG journey. Recent sustainability enhancements to Singapore’s Budget 2024 have seen the Enterprise Financing Scheme (EFS)–Green extended by two years to March 31, 2026. This extension provides Singapore SMEs with greater access to capital, facilitating the adoption of sustainable practices. Moreover, the Energy Efficiency Grant (EEG), which offers financial support for energy-efficient appliances, has been expanded to include more sectors, such as manufacturing, construction, and maritime. This expansion enables a broader range of SMEs to invest in energy-efficient technologies, reducing operational costs and environmental impact.

Meeting consumer expectations

I know some of you might be sceptical, but Singaporean consumers really are becoming more eco-conscious by the day. Recent consumer attitudes studies by McKinsey and SEC Newgate show that local consumers expect the businesses they support to be both socially and environmentally responsible, not just offer good products. If your SME can show it’s taking meaningful steps toward sustainability—reducing carbon emissions, cutting down on plastic waste (or just waste in general), or supporting fair labour practices—it’s likely that you’ll win the hearts (and wallets) of these conscious consumers. More people are choosing brands that reflect their values, and that means showing a bit of love for the environment and the community isn’t just nice—it’s profitable.

Attracting and retaining talent

This may come as a surprise, but Millennials and Gen Z are taking over the workforce (shocking, I know)—and they care about ESG. Like, a lot. A 2024 Deloitte survey of more than 23,000 Gen Z and Millennials across 44 countries, including Singapore, found that around half of these younger employees choose employers whose values match their own, especially concerning sustainability. SMEs with a clear commitment to effecting positive environmental and social change will have an easier time attracting and retaining top talent. Employees today want to feel that their work contributes to something larger than themselves— and ESG can give them that sense of purpose, which can lead to better productivity, loyalty, and overall happiness at work.

Tangible benefits of ESG adoption for SMEs

Improved operational efficiency

One of the simplest but most impactful aspects of ESG is improving operational efficiency. Going green often means reducing waste, which also means saving money. From energy-efficient lighting to better water management, focusing on sustainability can significantly cut down on your operating expenses. Less waste, lower costs, more profit. It’s as straightforward as that.

Enhanced brand image and reputation

In an age of social media, reputation is everything. A well-documented ESG strategy can help Singapore SMEs build a strong and loyal customer base. Customers talk, and when they do, they’re more likely to spread the word about a brand that’s committed to making a positive impact—whether that’s reducing plastic waste or supporting local communities. ESG gives your brand a story worth telling, and that story helps build credibility.

Risk management

Governance is often the unsung hero of ESG. By adhering to good governance practices, SMEs can reduce the risk of regulatory or compliance issues, mitigate potential scandals, and build trust with stakeholders. Implementing transparent policies and ethical business practices can significantly reduce unforeseen risks.

How SMEs can start their ESG journey

So hopefully, by now you’re thinking, “Alright, I’m convinced. But where do I start?” Well, so glad you asked! Here are a few practical steps you can quickly take:

1. Kick-off with an ESG assessment

Take a good, hard look at your current operations. Identifying where you stand is the first step toward where you want to go.

2. Craft your action plan

Outline the steps, big and small, that will get you closer to your ESG objectives. Prioritise actions that offer the most bang for your buck. Remember, Rome wasn’t built in a day, and neither is a full-fledged ESG strategy. Remember to set SMART goals—Specific, Measurable, Achievable, Relevant, and Time-bound.

3. Get everyone on board

ESG isn’t a solo gig. Engage your employees, suppliers, and even your customers. The more, the merrier!

4. Tap into government grants and incentives

Don’t leave money on the table. Programs like the Productivity Solutions Grant (PSG) and Enterprise Development Grant (EDG) can provide significant financial support.

For example, with the EDG, you could get up to 70% funding support for projects that boost efficiency or sustainability. That’s like having a sale on business improvements!

5. Keep an eye on progress

Set up systems to track how you’re doing. Regular check-ins will keep you on course and let everyone know you’re serious about this ESG thing.

6. Don’t be afraid to ask for help

ESG can feel like a big mountain to climb, but you don’t have to do it alone. ESG consultants–ahem, like antics@play–can be your Sherpas, guiding you every step of the way.

Avoiding ESG pitfalls: Be genuine, not just “green”

Finally, a word of caution: Nobody likes a faker. Greenwashing, or pretending to be more sustainable than you are, can backfire spectacularly. Stay authentic in your ESG efforts. If you’re just starting out, it’s okay! Be honest about your journey, and you’ll earn respect (and maybe some kudos) along the way. For guidance on authentic ESG communication with a Singapore context, you might find our guide on “How PR professionals can spot and avoid greenwashing in communication” helpful.

Conclusion

ESG isn’t just about saving the planet or ticking a few boxes for regulatory compliance—it’s about future-proofing your business. It’s about making your SME more competitive, resilient, and attractive to customers, investors, and employees alike. By adopting ESG practices, you’re not just doing good—you’re positioning your business for long-term success.