FROM OBSTACLES TO OPPORTUNITIES: ENABLIGH ESG ADOPTION IN SMEs
Ladislava KNIHOVÁ - Petra JÍLKOVÁ
The objective of this article is to delve deeply into the role of Environmental, Social, and Governance (ESG) factors within Small and Medium Enterprises (SMEs), their impact on competitiveness and resilience, and the significant influence large companies have in promoting ESG adoption among their SME suppliers. The primary research, conducted in large corporations during the latter half of 2021 and the early part of 2022, lies at the heart of this paper. This research, although limited in its reach due to the ongoing pandemic, provides crucial insights into these corporations’ Corporate Social Responsibility (CSR) practices before the enforcement of the Corporate Sustainability Reporting Directive (CSRD) by the EU.
Our study illuminates the extent to which these companies integrated ESG reporting into their operations before introducing the CSRD, offering a distinctive pre-regulation perspective. Findings from our research questions revealed that 50% of large companies’ respondents incorporated CSR activities as a significant part of their marketing communication, while over 54% reported intensive CSR activities within their companies. These results indicate a proactive engagement in CSR practices among respondents despite the absence of regulatory compulsion.
Nevertheless, in the context of new EU directives and increased demands for ESG non-financial reporting, our data suggests that many large companies were not sufficiently engaged in non-financial reporting, primarily when it was voluntary. However, the introduction of the CSRD necessitates a radical shift in approach, requiring companies to demonstrate an authentic commitment to ESG, a step that we posit could engender greater stakeholder trust, an enhanced reputation, and better financial performance. Despite the limitations and challenges of our research, the insights gleaned provide a meaningful foundation for future study in a post-CSRD landscape.
Keywords: Corporate Sustainability Reporting Directive, ESG factors, greenwashing, non-financial reporting, sustainable report
JEL klasifikace: G32, M14, Q01, Q56