THE ROLE OF THE GOVERNMENT IN FACILITATING ESG ADOPTION AMONG MALAYSIAN SMEs

Abstract

Environmental, Social and Governance (ESG) practices are becoming important for Small and Medium Enterprises (SMEs) in Malaysia to stay competitive and to meet global sustainability standards. However, SMEs often face challenges extending from limited resources to lack of knowledge and confusing ESG requirements. This paper intends to investigate into the role of the government in helping SMEs with ESG adoption by focusing on two guidelines: the National Industry ESG Framework (i-ESG) or the i-ESGStart by the Ministry of Investment, Trade and Industry (MITI) and the Simplified ESG Disclosure Guide (SEDG) for SMEs in Supply Chain by Capital Markets Malaysia (CMM). i-ESGStart gives comprehensive instructions for reporting and improving ESG practices while SEDG, on the other hand is simpler and easier to use, especially for smaller companies just starting with ESG. Thi paper begins with description about the i-ESGStart and SEDG, and followed by discussion on the strengths and weaknesses of both guidelines and concludes that they can complement each other to help SMEs adopt sustainable practices and enhance ESG transparency.