Tackling the “E” and “S” in ESG: Helping Companies Source from Diverse and Green SMEs

Tackling the “E” and “S” in ESG: Helping Companies Source from Diverse and Green SMEs

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By Nathan Associates, a Cadmus company, and GIST Impact

As climate change becomes a growing global concern, businesses of all sizes are striving to become as green as possible—that is to adopt practices and strategies that prioritize environmental sustainability and minimize any negative impact on the planet—as part of their Environmental, Social and Governance (ESG) profiles. Protecting the environment has therefore become a key focus for multinational companies, and adopting a sustainability mindset provides companies with the necessary competitive edge to thrive in an ever-changing global market.

Large companies are increasingly recognizing the value of small and medium enterprises (SMEs) into their supply chains. SMEs account for more than 90% of all businesses and play a critical role in larger corporate value chains. Moreover, they contribute to nearly half of the global GDP, and provide employment opportunities to over 2 billion people. These dynamic enterprises serve as drivers of innovation and growth as the demand for sustainability grows, and the greening of SMEs’ supply chains and operations will have a substantial and positive impact on the environment. By supporting SMEs in adopting eco-friendly practices, larger companies can foster a collective movement towards a more sustainable future.

Another important imperative for large multinationals is to demonstrate to their customers, shareholders, and the community that they are embracing diversity in their business practices, which includes adding women and other diverse suppliers to their supply chains. Investing in women-owned businesses (WOBs) and integrating them into global corporate procurement is not only good for gender parity but also good for business. A number of studies confirm that gender-responsive procurement practices can have a positive impact on profitability, resilience, security and return on investment. Inclusive procurement policies not only enhance the reputation of companies but also improve the Social indicator in ESG, as investing in women leads to better social development outcomes. However, it is concerning that in 2023, less than one per cent of spending by large corporations on suppliers goes to WOBs. Despite their significant contributions to the world economy and job creation, WOBs face barriers in accessing global value chains, creating a significant gap. Closing this gap is essential to unlock the full potential of WOBs and foster a more inclusive and prosperous business environment.

Nathan, a Cadmus Company’s project US-SEGA, funded by USAID, is partnering with UPS, GIST Impact, a leading impact data and analytics provider, and the International Chamber of Commerce (ICC), among others, on a new initiative to help multinationals make their supply chains both diverse and green.

In 2022, the global logistics company UPS launched the Green Exporters Program (GEP) along with partners GIST Impact and the International Chamber of Commerce (ICC) to support small businesses in accessing training platforms and know-how on how to measure, manage, and reduce their environmental impact. The program was successfully piloted in the UK and is now live in various countries including Chile, Colombia, Costa Rica, Mexico, and Singapore.

As the GEP expands into India, Nathan’s US-SEGA project is teaming up with UPS and partners to create a powerful public-private collaboration. This effort actively supports SMEs trained through the GEP in accessing new markets, particularly procurement opportunities from large multinational buyers. Notably, the partnership emphasizes gender diversity by ensuring a significant number of trained businesses are women owned. To further this mission, the US-SEGA project and partners are working with the Federation of Indian Chamber of Commerce International—one of India’s largest trade bodies—under their G20 Empower initiative, and with WEConnect International, an organization which certifies women-owned small businesses (51% owned and managed by women). The training sessions, scheduled for July 13 and 14, 2023, will be followed by close collaboration between the US-SEGA project and WEConnect International to support the primarily women-owned small businesses in forging connections with international buyers.

Through this partnership effort, the US-SEGA project and partners aim to promote gender-responsive global sourcing, and empowering small businesses to engage with international buyers seeking diversity and sustainability.

A number of Indian SMEs will be attending the GEP on July 13 and 14, 2023, receiving training on sustainability, certifications, export standards requirements, marketing and trade agreements, customs and brokerage, carbon accounting and standards, and carbon taxes and credit. Led by UPS in collaboration with USAID, GIST Impact, ICC and other partners, this comprehensive program offers registered SMEs free access to a two-day virtual workshop and a sponsored subscription to SME360X—an intuitive, easy-to-use digital assessment platform that measures, benchmarks, and evaluates the environmental impact of business operations. Upon completion, participating SMEs will receive an official ICC Certificate to demonstrate their accomplishments to customers and stakeholders.

Following the GEP training, US-SEGA and its partner WEConnect International will support certified women-owned small businesses in pitch training and buyer-seller matching events. Participants will learn to pitch their products and services to both international and domestic buyers in India, facilitated by a growing demand for sustainable and diverse suppliers. This program focuses not only on training and qualifying small businesses, but also actively connecting them with corporate procurement leaders. This partnership has the potential to be a game-changer, expanding WOBs’ access to the global economy while contributing to a greener planet.