ESG in Small and Medium-Sized Enterprises: Malaysian Perspectives

Faculty of Business, Economics, and Social Development, Universiti Malaysia Terengganu, Terengganu, Malaysia

^* Corresponding author: akmalia.ariff@umt.edu.my

Abstract

The financial health of small and medium-sized enterprises (SMEs) is crucial for sustaining and fostering economic development in developing countries. The integration of environmental, social, and governance (ESG) has been promoted as contributing to the financial performance of SMEs. This study explores the ESG in SMEs by reviewing on the regulatory framework associated with the ESG commitments in the Malaysian setting. Review is done on the evidence linking between ESG and financial performance. This study also reviews the benefits and challenges of ESG commitments among the Malaysian SMEs. This study provides an understanding on how ESG commitment of the SMEs can be strategically mobilised to enhance their financial performance. The review intends to expand the strategic perspectives of SMEs, shifting ESG from a peripheral component of corporate social responsibility to an integral driver of competitive advantage and value creation.