A new study found that fewer Singapore small and medium enterprises (SMEs) are conducting social and environmental initiatives, even though 76% consider ESG to be relevant to their respective businesses.
The QBE survey found that only a little over half (52%) of SMEs prioritise ESG initiatives by conducting relevant programs at least once a year, a 7% drop from 2021. Cost remains the biggest barrier for those surveyed, with almost one-third (32%) listing it as the top challenge. This represents a 6% rise from 2020.
SMEs surveyed also listed lack of staff with relevant skills (28%) and that social and environmental initiatives take too much time (27%) as two other barriers to their ESG framework.
The survey results also suggest that this deprioritizing of social and environmental initiatives by SMEs has a correlation to worsening workplace safety and health (WSH) performance. In 2022, 51% of SMEs indicated that they experienced workplace incidents, representing an 8% increase from 2021. This also coincides with 2022 being a record-breaking year in terms of workplace fatalities over a four-year period in Singapore.
Despite the rise in workplace incidents, SMEs are also doing less to mitigate the impact, with 29% of those polled saying that they were either not fully informed about WSH insurance requirements or unaware or unsure of where to get relevant information from. Additionally, the survey found that 14% of Singapore SMEs do not provide their employees with WSH insurance beyond what is mandated.
Of the ESG initiatives conducted by SMEs in 2022, only 4% were for community causes, a noticeable drop from 13% in 2021. Environmental preservation is still the initiative of choice for most, with 54% saying that they conducted these programs in 2022. Another environmental initiative, waste reduction and management, is also popular, with 33% listing it as being carried out by their businesses last year.
Regarding climate change impact, 38% of respondents said that it has resulted in a change in consumer demand as more customers are now expecting more environmentally friendly goods. Working conditions have also been impacted, with 35% of SMEs saying that it is now more challenging and harsher for staff to work, especially outdoors.
QBE Singapore CEO Ronak Shah said that these findings should serve as a wake-up call for SMEs, especially as the risks associated result in more WSH incidents.
“Ignoring the growing sentiment that sustainability initiatives are a must, as opposed to a nice-to-have, could expose SMEs to unnecessary risks across different areas of their businesses, such as labour conditions, brand and reputation, customer loyalty and resource efficiencies. We believe a focus on sustainability issues should be seen as an opportunity to build long-term business resilience, rather than a distraction – or worse, as a token initiative,” Shah said.
Elsewhere in the company, the insurer has raised its premium growth outlook for 2023 based on its performance for the first quarter.
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