Family business: ESG no longer an optional extra
ESG has moved up the list of priorities for small and family businesses. Accountants should communicate its value clearly.
In brief
- Many small and family businesses see ESG as a value driver but are put off by barriers such as perceived costs and lack of understanding.
- ESG strategies can help with risk management, access to capital, talent attraction and attrition, and meeting supply-chain expectations.
- Accountants can support businesses by reframing ESG as a practical, long-term opportunity and guiding them to start small.
Research shows many small and family businesses are not engaged with environmental, social and governance (ESG) matters. However, those that are embracing ESG strategies are experiencing a value-add.
Last released in 2023, the Grant Thornton Family Business Survey reveals 62% of family businesses believe an ESG and sustainability strategy has an extremely positive impact on their business. However, just 66% consider ESG moderately important, meaning about a third do not.
Obstacles to ESG and sustainability strategies include:
• Perceived cost and unknown benefits
• Low strategic priority compared to short-term goals
• Lack of clarity and understanding
• Lack of government policy and regulation
• Lack of resources, skills and experience.
So, why does this matter?
CA ANZ’s sustainability and business reform leader, Karen McWilliams FCA, says there are four main reasons a small or family business should focus on ESG strategies:
1. Supply chain pressure: “A lot of smaller entities are in the value chain of larger companies, which are focused on ESG. Larger companies want to see partners undertaking these initiatives.”
2. Access to finance: “A sustainability focus can lead to better finance options and lower cost of capital.”
3. Customer expectations: “Customers are paying attention to who they buy from. Are you meeting their values and expectations?”
4. Attracting talent: “Younger generations prioritise purpose and meaning in their careers. ESG-aligned businesses are more attractive to them and help improve staff engagement and retention.”
How can accountants help?
Melissa Grove FCA, director of Sustainable Edge Accounting & Advisory, says reframing ESG as an opportunity is key.
“Many are understandably hesitant, especially when they fear ESG obligations will be pushed onto them by bigger companies in the supply chain, or when they operate across jurisdictions like the US and aren’t sure of its relevance. I try to reframe ESG as a long-term value creator.”
Grove outlines the following benefits:
• Risk and resilience: “ESG practices help small businesses identify and manage risks earlier – from regulatory changes to supply chain disruption or reputational damage. That’s a competitive edge.”
• Supply-chain expectations: “Being proactive positions businesses as preferred vendors.”
• Access to capital and customers: “Banks, insurers, grant bodies and values-driven customers increasingly consider ESG credentials.”
• Global relevance: “Even in jurisdictions like the US, global ESG trends are becoming more unified. It’s worth aligning now.”
McWilliams adds ESG can drive productivity improvements, energy and resource efficiency, and increase success in tenders.
Where does a small business start?
Anthony Rohan FCA, director of Fairground in Christchurch, New Zealand, says businesses that are doing ESG well:
• Understand their impact
• Start with one or two key indicators
• Are transparent about their progress.
“The best ones aren’t perfect, but use that imperfection to focus on where they can improve over time and share their journey,” says Rohan.
McWilliams agrees: “Put simply, just start somewhere. There’s no one-size-fits-all approach. A marketing business might not focus on greenhouse gas (GHG) emissions, but concrete-heavy or transport-focused businesses likely should.”
Begin by assessing your business’s material risks and areas of relevance. Accountants can help with this process.
Grove adds that accurate records are vital: “Data is the foundation for avoiding greenwashing and supporting future disclosures or reporting requirements.”
“Ultimately, ESG for small business is less about perfection and more about progress – taking practical, right-sized steps now to stay credible, competitive and resilient in the long term.”
ESG support is available
While ESG once felt like the Wild West for small businesses, today structured support is growing. In Australia and New Zealand, grants may be available to boost ESG credentials.
Helpful tools and resources include:
• How SMEs Can Create a More Sustainable World
• ASIC Sustainability Reporting for Small Business
• The Climate Solutions Advantage by the Centre for Policy Development.
“Businesses that are doing ESG really well are not doing it just because it feels like the right thing to do,” says McWilliams. “They’re doing it because it offers strategic advantage – they’re more resilient, productive, and aligned with future trends.”
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