While the world’s largest businesses had the resources to be first movers, regulatory changes means that small businesses are impacted by their association with larger customers. And the benefits of them getting on board with it are plain to see. For example, demonstrating ESG efforts can help attract and retain customers, and secure positions as a preferred supplier for big business who prioritise partners that operate sustainably. However, for many business owners, beginning this journey can feel daunting, particularly given the increasing levels of mandatory reporting facing large businesses.

Often, small business owners have to wear multiple hats, from marketing manager to IT support. This means many don’t have time to understand what data they need to collect and report on as they are already stretched chasing invoices, managing cash flow and ensuring staff are paid. Fortunately, there are tools available which entrepreneurs can use if they want to start getting ahead.

A higher bar to clear

The ascension of issues like climate change and cybersecurity up the business agenda adds pressure across the supply chain. Most large firms now expect anyone they work with to meet a minimum standard of security, to ensure the safety of their own data. Likewise, ESG reporting requirements mean large firms need to have emissions data on any project or activity they undertake – including suppliers of any size they engage – and will prioritise those with evidence they are more sustainable.

But many small businesses lack the resources to handle these new requirements. While some are being driven by regulators and governments, larger businesses are also setting voluntary standards in response to trends towards ethical consumerism, which can vary from company to company. This means small businesses often have to create bespoke reports for each customer, drastically increasing the workload.

Take a two-pronged approach

Handling the extra demands placed on small businesses comes down to innovation and community. The two-pronged approach of using digital tools and leaning on industry peers for advice can simplify and demystify the complexities around ESG regulation.

As John Pye, General Manager of Santis Global, a London-based courier service which recently started their ESG journey, comments: “Owners can be quickly overwhelmed when confronted with significant new mandates. My advice would be to take things one step at a time, instead of trying to meet every requirement at once. Similarly, find experts who can help plug the gaps in your knowledge and offer guidance on where to focus your attention.”

As regulatory requirements have evolved, so has the technology available to manage ESG data, helping business owners cut down on the admin required to reap the benefits to the bottom line. Tools that help to track emissions data are a vital part of the arsenal, providing insight on how firms are performing against sustainability targets.

As Pye states, “Logistics is a major contributor to CO2 emissions, so being able to reduce them through initiatives like electric vehicles helps. However, this makes our service more expensive as electric vans cost more than diesel ones, which can put off customers. Ultimately, it’s about giving our clients choice and flexibility. For instance, some may choose to offset emissions through buying trees, whereas others just need the data to hand for when their supply chains come asking.”

It’s digital tools that can provide owners with this flexibility, so they can meet ESG targets without increasing the workload and put more time into building their organisations.

Despite the value of corporate ESG to people and the planet, the introduction of new reporting responsibilities will undoubtedly challenge stretched business owners. But there is a golden opportunity to turn this additional work into a positive impact on the bottom line. By making sure they have accurate insight across day-to-day operations, from accessing ESG data for easy reporting, to forecasting cash flow, small businesses can stay across the latest requirements from regulators and customers and put themselves in the best position to thrive.

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