5 reasons why ESG is such a pain for smaller businesses

For most of the SME business owners we speak to, ESG just doesn’t make sense.

Part of the problem is language…it doesn’t make actual sense. It’s over-complicated, confusing and jargon-infested. But even more of an issue—it doesn’t make clear business sense. The payback doesn’t seem obvious given the apparent cost in time and resources.

It’s not that people don’t care. They want to do the ‘right’ thing in the narrower sense for their company and (broadly speaking) for the wider world. What they’re short of is time, clarity and a process that feels proportionate to the realities of running a smaller business day-to-day.

Here are the five comments we hear most often from business leaders.

1—ESG is designed for big business

ESG frameworks were built for large corporations with dedicated teams and enterprise systems, then awkwardly retrofitted for SMEs. The templates, thresholds, and requirements all assume resources and capabilities that smaller companies simply don't have.

2—It’s just too confusing

There are multiple competing ESG frameworks and an alphabet soup of standards with no single playbook for smaller companies. Most business owners can’t even work out where to start with ESG, let alone which direction to head—or what success should look like.

3—It seems like a moving target

You're trying to comply with rules that shift faster than you can implement them, so what works today may not tomorrow. Goal posts are moving, standards are in constant flux, governments are consulting on new requirements and supplier demands change regularly.

4—It’s too expensive

Implementation costs are often unrealistic for smaller firms (£10k-50k plus ongoing annual expenses). Consultant fees, software costs and admin overheads burn time and cash that should be focussed on serving customers and growing revenue.

5—It’s too technical & too complicated

ESG is awash with technical jargon, complex methodologies and specialist terminology that assumes knowledge you just don't have. Documentation is a nightmare and data requirements outstrip anything your current IT and processes could handle.

Sustainability has to make sense for any business if it’s going to stick. But for SMEs, the value equation looks very different to bigger businesses.

If ESG is ever going to be a realistic and obvious route rather than overwhelming, it has to make sound commercial sense—not just the right thing but the right thing for this business right now.