ESG and SMEs: The Untapped Power of Small Business Responsibility

In the global focus on ESG, the crucial role of Small and Medium-sized Enterprises (SMEs) is often overshadowed by large corporations. Despite this, SMEs represent over 90% of businesses globally, making their collective potential for societal and environmental impact immense -"the whole is greater than the sum of its parts."

Key Role and Characteristics of SMEs

In Israel, SMEs are particularly vital, accounting for 99.5% of businesses and contributing 54% of private sector GDP. These companies are characterized by flat organizational structures, high flexibility, and a founding motivation often driven by inherent values to address market and social gaps. They possess a natural inclination towards "doing good," which forms part of their organizational DNA.

Bridging the Knowledge Gap

The main obstacle for SMEs in maximizing their impact is the lack of awareness, knowledge, and accessibility to structured processes for responsible management and measuring impact. This leads to valuable, values-driven actions being treated as hidden philanthropy rather than being strategically connected to the core business and communicated externally. To realize their full potential, SMEs need to embrace a clear, business-focused impact language, start with small, measurable actions, and be supported by collaboration and knowledge sharing from larger corporations. Adopting an impact strategy is not optional; it is essential for their growth and for promoting a sustainable society.

---

Michal Tamam, Consultant, Lecturer, and Project & Community Manager specializing in Growth, Innovation with Social Impact, and Cross-Sectoral Collaboration.