Assessing the Opportunity for Small Businesses
Environmental, Social, and Governance performance is a key component of stakeholder capitalism and a necessary element of strong enterprise risk management.
While big business and large institutional investors have begun to implement ESG programs and requirements, most small businesses have lagged in adoption due primarily to a lack of awareness or understanding of ESG and its potential benefits.
Small businesses can reap benefits from ESG-focused strategies including:
- Cost reduction driven by improved efficiencies
- Improved recruiting efforts
- Risk reduction and more affordable access to capital
- Further operational excellence
- Improved business continuity through enhanced risk mitigation
- Strengthened relationships with customers and suppliers
- Enhanced reputation
By integrating an ESG plan into other corporate strategies, a firm can maximize its potential and its beneficial impact on society, and can increase the value to owners, investors, customers and employees.
An ESG program operates in stages from:
- Materiality Assessment: Develops an understanding of baseline and highlights critical points to success.
- Formal ESG Action Plan: Incorporates information from the Materiality Assessment and the company’s goals.
- Progressive Reporting Function: Tracks progress toward achieving the ESG Action Plan.
Interested to know what an ESG program for your company could look like and how you could benefit? Please reach out to DKB to help you assess the opportunity.
Anthony Venette, CPA/ABV
Senior Manager, Business Valuation & Advisory