The main concern of start-ups and small and medium-sized enterprises (SMEs) is their survival; this struggle for survival generally revolves around questions such as how to secure a market for one's products or services? How to raise funds to finance investments and working capital requirements? etc. In this context, should startups and SMEs be concerned with ESG issues? The answer is a resounding yes! In this article, we'll explain what ESG principles are, and what a startup or SME would gain from integrating these principles into its strategy.
Every start-up and SME aims for economic growth and profits. However, we are aware that economic growth has contributed significantly to global challenges such as climate change and social inequality. For example, a recent study revealed that 100 energy companies are responsible for 71% of all industrial emissions worldwide, contributing to the degradation of nature. Social inequality continues to be a challenge, with reports from Credit Suisse showing that the richest 1% own almost half of the world's total wealth, leaving the vast majority in poverty.A recent Forbes study on gender pay inequality showed that women earn on average 23% less than men. Combining economic growth, quality of life, including equality, and environmental protection has become imperative for every company, including startups and SMEs, in order to ensure a sustainable future for nature and humanity, as set out in the United Nations' agenda for sustainable development.
In response to the challenge of reconciling economic, social and environmental objectives to achieve sustainable development goals, ESG principles have been developed.ESG refers to the overall strategy implemented by a company or organization to achieve its business objectives while contributing to improving the quality of life of communities, and to do so in a way that respects the environment and the standards and laws in force in the country in which the company or organization operates. This requires the implementation of effective business strategies and procedures to create wealth, but without harming the well-being of people and the environment, and without breaching laws relating to professional and business practices. ESG principles are detailed in an ESG policy document in which the company or organization undertakes to respect them.
These ESG principles translate into measurable environmental, governance and social commitments. These include, but are not limited to, commitments to reduce the carbon footprint of their activities, and to engage in activities that contribute to the preservation and protection of nature. With regard to governance, commitments are generally aimed at combating corruption and financial crime, as well as legal and tax compliance, among others. The company's social commitments include the creation of a prosperous environment for its employees, including workplace safety; decent remuneration; recruitment, promotion, working conditions and representation, based on merit and not on personal characteristics unrelated to the inherent requirements of the job; the implementation of policies and procedures encouraging whistle-blowing, and so on.
What would Chadian startups and SMEs gain by applying ESG principles to their activities?
Startups and SMEs account for over 95% of registered businesses in Chad, and provide more than 60% of informal and formal employment. These startups and SMEs may be small in size, but they are numerous and, as a result, their combined impact on sustainable development goals should not be overlooked or underestimated. What's more, startups and SMEs have immense growth potential and are a driving force behind sustainable innovation. Investing to raise and maintain the level of commitment of this segment of the private sector to ESG criteria has enormous potential to help reduce environmental and societal challenges for a sustainable future.
The application of ESG criteria is both a necessity and a business opportunity for any company, whatever its size.The application of ESG criteria in strategy and procedures has many advantages, whether for a startup or an SME. These include direct benefits for the start-up or SME, as well as benefits for society and the natural environment. For example, being recognized as a company whose practices are in line with ESG principles is particularly attractive to partners, and gives the company a better perceived brand image, helping to strengthen partners' loyalty and trust in the company. In other words, it makes the company more valuable to investors, customers, employees and suppliers alike. For example, environmental, social and governance performance are becoming increasingly important factors in investment decisions, given growing ecological and social concerns. Similarly, customers are increasingly aware of the need and urgency to protect the environment, and have a propensity to buy sustainable products and/or from sustainable companies. Finally, creating an inclusive and caring work environment attracts and retains the best talent in the company, helping to increase productivity and competitiveness.In short, integrating ESG principles enables startups and SMEs to remain competitive and at the forefront of market trends and innovations.
In addition to direct benefits for the company, the application of ESG principles can also lead to indirect benefits, such as environmental advantages. Given the lack of national data on environmental pollution by companies in Chad, it is difficult to determine the extent to which they contribute to it. However, it appears to be considerable, and will only increase due to the bottom-up dynamics of the Chadian private sector, which has so far remained under-exploited; unless ESG factors are immediately taken into account by the private sector. Indeed, any disruption to the environment can have negative repercussions on the activities of startups and SMEs, particularly in their supply and distribution chains. The application of ESG criteria, for example, enables these startups and SMEs to control and reduce their pollution of air, water and soil, etc., thus helping to maintain environmental integrity, one of the fundamental conditions for business prosperity.
Integrating ESG criteria into a company's activities is both a necessity and an opportunity for any start-up or SME looking to invest and conquer the market. From 2023 onwards, Job Booster Chad Entreprise has integrated ESG issues into its curriculum for entrepreneurs. If you'd like to develop, implement and measure ESG indicators in your startup, SME or organization, don't hesitate to contact the Job Booster Chad Entreprise team. Our ESG experts will be delighted to support you.
Hyacinthe NDOLENODJI, Sustainable Development Specialist, Manager of Job Booster Chad Entreprise
