ESG is a business tool, not just compliance
Many SMEs see ESG as mandatory red tape: learn how to turn it into a real competitive advantage and a driver of growth.
The third ESG questionnaire of the quarter arrives, from a bank, a large client or a tender, and it is understandable that the subject feels like yet another folder of red tape. You fill it in, send it, file it, and the following month it starts again in a different format.
This article argues for a different reading. The data that answers those requests can also cut costs, win contracts, negotiate financing and increase the value of the company, as long as ESG is used as a management tool and the information collected is treated as an asset.
The central idea
Well-organised ESG information answers external requests and, at the same time, shows where the company spends too much, where it is exposed to risk and where it can gain an edge over the competition.
Why does ESG feel like red tape?
The feeling has a concrete origin. Many companies come to ESG through an external request, whether a bank form, a large client's questionnaire or a requirement in a tender. Each request has its own format, the answers come from different spreadsheets and, once they are sent, nobody inside the company uses the numbers again. When the data only travels outwards, the effort feels like all cost and no return. The cause lies in how the information is handled, and the solution is to centralise it and ask management questions of it.
Four ways ESG creates value
Lower costs
Measuring energy, water and waste consumption forces you to look at bills that almost nobody analyses in detail. Those who measure usually find waste, such as equipment left on out of hours, material losses or waste that could be recovered, and each of these translates into euros on the income statement.
More contracts and fewer losses
Large clients that report under the CSRD (Corporate Sustainability Reporting Directive) need data from their suppliers. From the 2027 financial year, the law limits what they can demand from suppliers with up to 1,000 employees to what is in the VS (Voluntary Standard, formerly VSME), the voluntary European standard for companies not covered by the CSRD. Those who respond quickly and with consistent data start ahead in a tender or a contract renewal.
Financing on better terms
Portuguese banks, like all European ones, are including more and more ESG criteria in their risk analysis. For the CFO, this means that organised data and credible targets strengthen the conversation about credit, sustainable financing lines and negotiated terms.
Less risk and more value
A potential buyer or investor will probably carry out ESG due diligence. A company with documented policies, data and track record goes through that process with less friction and fewer surprises, which protects the price and the timetable of a deal. For private equity portfolio companies, this argument weighs even more.
The three pillars of ESG feed these levers:
Environment
Energy and Scope 1 and 2 greenhouse gas emissions directly affect costs.
Social
Health and safety (with reference to ISO 45001), training and staff retention influence productivity and absenteeism.
Governance
Clear policies and documented decisions give banks and investors confidence. Governance includes innovation, since that is where the decision to invest in more efficient processes and products is made.
What separates compliance from strategy
| Compliance approach | Business approach | |
|---|---|---|
| Starting question | What am I being asked for? | What can I improve and gain from this data? |
| Data | Collected for each request, in different formats. | Collected once and reused in several contexts. |
| Owner | One person on their own. | Management and finance involved. |
| Result | A report that is filed away. | Decisions on costs, investment, pricing and financing. |
The difference rarely lies in the amount of work and almost always in where the information goes. With the same collection effort, a company can produce a form for the drawer or a dashboard that management consults before deciding.
Where to start without overcomplicating
Choose one business question
For example, where the most energy is spent, or what information large clients ask for most often. A concrete question guides the whole collection.
Create a single database
Bring together in one database the data that already exists, using the VS Basic module, with its 11 disclosure requirements, as a guide, instead of answering each questionnaire from scratch.
Take the numbers to the management meeting
Present them alongside the financial results and decide what to do with them: invest, renegotiate, change a process or commit to a target for a client.
The request from the bank or the client will keep coming. The company decides whether to treat it as a task to be dispatched or as the opportunity to organise, once and for all, the information that underpins its best decisions.
Explore Sustanya's business-oriented ESG approach
See how to turn your company's ESG data into savings, contracts and better financing terms.
Book a DemoRead also
Clients demanding ESG? How to turn an obligation into an opportunity
Six steps to respond to requests from large clients
How ESG helps Portuguese SMEs access better financing
Why banks ask for ESG data and how to respond
How to create your first sustainability report without a consultant
Eight steps, from objective to publication
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