Sustainability initiatives and disclosures are not limited to large corporations. Small and medium enterprises (SMEs) are increasingly being drawn to the ESG conversations, with pressure coming from across the wider ecosystem.
Although SMEs are not yet directly regulated, these requirements will increasingly cascade through value chains as large companies seek ESG data from suppliers to meet their own disclosure obligations, UN Global Compact Network Malaysia and Brunei executive director Faroze Nadar said.
“This effectively makes ESG readiness a commercial requirement, not just a regulatory one. From my perspective, SMEs should see 2026 as a critical moment to strengthen resilience and competitiveness through practical ESG action.”
Faroze noted that SMEs that align with sustainability expectations are more likely to retain contracts and access new markets. In this environment, ESG readiness is increasingly a baseline requirement rather than a differentiator, he said.
Among the most accessible entry points into ESG for SMEs is energy efficiency, Faroze observed. Simple measures can reduce operating costs, improve margins, and strengthen resilience against energy price volatility.
“At the same time, banks and development finance institutions are increasingly integrating ESG considerations into lending decisions,” he added. “SMEs with credible sustainability practices may benefit from improved access to financing, incentives and technical support.”
