Higher costs push SMEs to deprioritise social, environmental initatives
23% less SMEs conducted social and environmental initiatives in 2022 from 2020.
Fewer small and medium enterprises (SMEs) in Singapore conducted social and environmental initiatives in 2022 compared to the year prior, wracked by challenges that push them to prioritize tackling these issues.
Only a little over half or 52% of SMEs conducted social and environmental initiatives at least once a year, a 7% drop from 2021, according to a study released by QBE Insurance based on a survey of 416 SMEs across the Lion City.
This is despite 76% considering ESG issues to be relevant to their business.
Cost remains the main barrier preventing small businesses from focusing more on social and environmental issues. Almost 1 in 3 or 32% of those surveyed indicated such.
SMEs also cited the lack of staff with relevant skills (28%), and said that social and environmental initiatives “take too much time” (27%).
This deprioritising of social and environmental initiatives by SMEs is potentially leading to worsening workplace safety and health (WSH) performance, QBE Insurance warned.
The year of 2022 now holds the record for the highest number of workplace fatalities in over a four-year period in Singapore, as per the Workplace Safety and Health Report 2022 published by the National Statistics, Ministry of Manpower.
Over half or 51% of SMEs surveyed by QBE Insurance also indicated that they experienced workplace incidents. This is an 8% increase from 2021, and 27% higher from 2020.
“These findings should serve as a wake-up call for SMEs. At a time when there has been a recorded uptick in workplace incidents, implementing the appropriate WSH measures are more critical than ever,” Ronak Shah, CEO of QBE Insurance Singapore, said.
Less than 1 in 10 conducted community initiatives
Environmental preservation and awareness campaigns remain the most popular amongst SMEs, with 54% indicating they conducted these initiatives in 2022. This is higher than 2021’s 52%,
Waste reduction and management initiatives are also popular, with 33% of SMEs surveyed picking this.
Of the initiatives conducted by SMEs in 2022, only 4% were for community cases. This is a drop from the 13% of SMEs who conducted community initiatives in 2021.
About 38% of SMEs said that climate change had impacted their business, as consumers now expect more environmentally-friendly goods.
Over 1 in 3 or 35% of SMEs noted more challenging and harsher working conditions for their staff, especially outdoors. An almost similar number of SMEs also said that climate change impacted the availability and cost of resources.
The survey suggests that SMEs are only concerned with the immediate impacts of climate change, rather than acting on long-term risks, QBE Insurance said.
“The environment’s impact on businesses – and in turn, their impact on the environment – is a modern-day conundrum that requires equal consideration. SMEs should consider environmental risks in their business plans. By doing so, this can lead to improved business performance over the longer term,” said Shah.
“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,” Shah added. These include risks related to 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.