An organizational and operational capability and maturity assessment for
SMEs in emerging markets towards the ESG criteria adaptation
Authors: Alkatheeri Haseena , Markopoulos Evangelos , Hamdan Al-qayed Hamdan 
Published: July 2023

SMEs are considered the backbone of every economy forming nearly 95% of
the private sector globally. As they are mostly family businesses, start-ups
or specialized enterprises, they operate mainly locally or regionally with a
direct impact to the society, the, employment and the national economy. On
the other hand, due to their limited size and operations they cannot afford
the cost and effort needed for long term planning and strategy development
that can secure the value, volume, reputation and recognition needed to
attract investments. The ESG criteria can be considered as a privilege
system primarily for the large-scale organizations and the Multinational
Enterprises whose financial and human resources can be easier allocated on
ESG activities that return serious financial and reputational benefits.
Research indicates that more than 90% of the investors invest only in
companies with high social and sustainable profiles. The message from
investors and consumers is that if companies cant show any sign of changing
their business models, they wont be able to sell. The same applies at
country level. Finland for example does not offer any business opportunities
to any company that does not have a solid and proven sustainability strategy
and track record. This trend, for clients and investors, to consider only
Green (sustainable) or Pink (Social) products and companies for their
purchases and investments, drives all types of organizations towards that
adaptation of the ESG criteria. However, and since such a strategy requires
investments, resources, funds and time that only Multinational organizations
can provide, SMEs are left out from any opportunity to develop, grow, and
compete. This paper highlights this ESG discrimination among the SMEs and
MNEs and intends to bridge this gap by identifying, in a smaller scale,
activities that reflect the ESG criteria and can be implemented by the SMEs
at organizational and operational level. Such an approach provides SMEs the
opportunity to record, report and receive credit, visibility and recognition
for their sustainable, social and ethical governance efforts and actions,
that can potentially enlarge their customer base and attract the investments
needed to further develop themselves. The proposed approach is based on an
assessment that creates an SME ESG roadmap framework for the SMEs to
initially identify their ESG awareness and maturity before adopting any ESG
related strategy and commitment. The assessment highlights the SMEs
capability and maturity to adopt such a mid-range strategy and align their
operations with the ESG criteria on a smaller scale. The results of the
assessment formulate an achievable ESG related strategy for each SME,
identify the key ESG activities to be implemented, indicate their order of
execution, and predict a performance score upon the completion of the
proposed strategy. This score can be utilized by SMES to receive social,
reputational and financial recognition for their contribution to the local
and regional society and economy. To secure the relevance of the SMEs ESG
oriented activities with the actual ESG requirements, the proposed approach
has been developed after studying several ESG reporting and scoring
methodologies such as the Refinitiv, FTSE Russel, BHI, and others, and
extractive the most relevant ESG requirements and metrics that can be
implemented and measured with the abilities of an SME.Due to the significant
variations of the SMEs operations, the proposed framework is targeted
primarily to SMEs in emerging markets where the economic development and a
structured business environments can help such a novel approach in SMEs
strategic management and leadership.