From survival to sustainability: Integrating ESG into the SME landscape

By Dickson ASSAN and Ahmed TAHIRU

Small and Medium Enterprises (SMEs) are the backbone of Ghana’s economy, driving job creation, poverty reduction, and innovation. According to the Ghana Statistical Service, SMEs account for more than 80percent of firms and employ around 85percent of the workforce (Quartey et al., 2022).

Despite this crucial role, many SMEs in Ghana operate in “survival mode”, facing challenges such as limited access to finance, weak governance structures, high operating costs, and exposure to climate and market shocks.

In today’s interconnected global economy, Environmental, Social, and Governance (ESG) principles offer SMEs a framework not only to survive but to thrive sustainably. ESG adoption is no longer reserved for large corporations, it is becoming a strategic necessity for SMEs to build resilience, attract investment, and remain competitive in both local and international markets. This article explores how Ghanaian SMEs can transition from short-term survival to long-term sustainability by integrating ESG into their operations.

The case for ESG in SMEs

1. Environmental sustainability – Adopting environmentally friendly practices reduces both risk and cost. For instance, SMEs in agribusiness can embrace climate-smart agriculture to reduce post-harvest losses, while small manufacturers can adopt energy-efficient equipment to lower utility bills. Waste recycling, renewable energy, and eco-friendly packaging are no longer “luxuries” but business opportunities.
2. Social Responsibility – As Ghana’s largest employers, SMEs significantly influence social outcomes. Embedding fair labor practices, ensuring workplace safety, promoting gender inclusion, and engaging communities build stronger businesses and healthier societies. For SMEs, even modest social initiatives such as supporting schools, sponsoring vocational training, or health outreach, can strengthen their reputation and customer loyalty.
3. Governance and accountability – Weak governance remains a critical vulnerability for SMEs, many of which are informal or family-owned. Simple steps such as separating personal and business finances, maintaining accurate records, complying with tax obligations, and creating succession plans boost transparency and investor confidence. Governance is the “glue” that binds environmental and social practices into credible, sustainable operations.

By adopting ESG principles, SMEs can align their operations with Ghana’s Sustainable Development Goals (SDGs) commitments, national green growth strategies, and the opportunities presented by the African Continental Free Trade Area (AfCFTA).

Challenges to ESG adoption in Ghanaian SMEs

While the benefits of ESG are clear, the path to adoption is not without obstacles. Many SMEs struggle with limited resources, both financial and human, which makes investing in compliance and reporting difficult. Knowledge gaps also persist, with many entrepreneurs unfamiliar with ESG frameworks or perceiving them as irrelevant to small-scale operations.

The informality of a large portion of Ghana’s SME sector compounds the challenge, as record-keeping and data collection become inconsistent, making monitoring and reporting difficult. Added to this is the absence of strong incentives. Without government-backed measures such as tax rebates or preferential procurement policies, many businesses see ESG adoption as an added cost rather than a strategic benefit. Global ESG standards like GRI, SASB, or the IFRS Sustainability Standards can also appear overly complex and intimidating, creating hesitation among smaller firms.

These realities highlight the need to simplify ESG adoption in Ghana, ensuring that frameworks are adapted to local business contexts while remaining credible and impactful.

Enablers for ESG integration

Policy support, professional institutions such as ICAG, SME associations, financial institutions, and affordable digital tools all have a role to play in accelerating ESG integration. Government can design simplified guidelines and link ESG compliance to procurement opportunities, while ICAG ensures transparency and accountability through training and compliance enforcement. Associations like AGI and GNCCI provide peer platforms and toolkits, while banks and microfinance institutions can tie lending rates to sustainability performance.

Affordable digital tools then serve as the bridge, making record-keeping and reporting less costly and more efficient. Beyond these, collaborations between regulators, academia, and development partners can create sector-specific ESG frameworks that reflect local realities while staying aligned with international standards. When these enablers converge, SMEs are not only supported to comply but also empowered to innovate, compete globally, and strengthen long-term resilience, making ESG a driver of growth rather than a compliance burden.

Pathways from survival to sustainability

The journey from survival to sustainability requires patience, planning, and a phased approach. SMEs should begin with a few manageable ESG priorities, such as energy efficiency, employee welfare, or better governance structures, and then gradually expand their efforts as capacity grows. Capacity building, through training programs for owners and managers, is essential to embed ESG understanding at the leadership level.

Partnerships can also play a significant role. By collaborating with NGOs, international organizations, or larger corporations seeking sustainable supply chains, SMEs can share resources and reduce the burden of transition. To avoid being overwhelmed by complex global standards, SMEs can adopt simplified ESG-lite frameworks, tailored templates, and scorecards that make reporting less intimidating. Most importantly, SMEs must shift their mindset to see ESG not as a burden but as an opportunity. Integrating ESG practices can unlock access to new financing options, open doors to export markets, and enhance resilience against economic or environmental shocks.

Conclusion

Ghana’s SMEs have long been the engine of growth, but their survival is often threatened by economic shocks, limited resources, and governance weaknesses. By embracing ESG, these businesses can move beyond survival to sustainability, building resilience, enhancing competitiveness, and contributing to national development. The transition will not be easy, but with the combined support of government policy, ICAG, SME associations, financial institutions, and digital innovation, Ghanaian SMEs can integrate ESG into their DNA. Sustainability is not just for multinationals. For Ghana’s SMEs, it is the pathway to securing a future where growth is inclusive, resilient, and globally competitive.

>>>Dickson Assan, CA, MSc, BSc (First Class) is a Chartered Accountant and Business Coach. He serves as the Operations Manager for Lantini Limited and is passionate about responsible business practices, sustainability, and SME development. Contact: [email protected] and linkedin.com/in/dickson-assan-accountant-financemanager

>>>Ahmed Tahiru is a strategic writer and advocate for financial literacy, governance, and SME growth. With a focus on empowering individuals and communities, he believes financial education is key to sustainable development. Ahmed is dedicated to equipping others with the tools to unlock their financial potential and drive economic progress. Contact: 233 543 460 166 or [email protected] and www.linkedin.com/in/ahmed-tahiru

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