ESG in SMEs

: hype or opportunity? : investigating the ESG engagement in German small- and mid-sized companies

Abstract

With increasing economic losses from climate change, societal movements, and tightening regulations, environmentally and socially corporate management is becoming mandatory. Sustainable reporting requirements as part of the EU’s Green Deal require public-interest firms to disclose their ESG data from 2024 onwards.Despite accounting for most businesses in the EU, small- and medium-sized companies are not affected by these regulations until 2026. This study aims at analyzing the current ESG engagement in German SMEs. More precisely, the activities managers engage in, the drivers behind them and the perceived barriers and weaknesses will be identified to present a cross section of SME management practice. This study serves to provide both a theoretical contribution to literature, but also to validate the need for an ESG platform, RHEA, for SME managers in Germany. A qualitative study in form of 20 expert interviews was conducted. Managers with decision power from German SMEs across various industries, as well as ESG consultants specialized on SMEs were interviewed. The results show a certain ESG awareness amongst the SMEs, but implementation is treated subordinate. Governmental criteria are most compliant, whereas engagement is the highest in environmental activities. The main motivational drivers identified are extrinsic. Findings also show that the most severe barriers are lacking resources and incentives. Lastly, product features of the ESG platform can be derived from the interview results.

Date of Award	26 Jan 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Rute Xavier (Supervisor)