2024-10-15 09:00:00
In a critical global economic situation, Tunisian small and medium-sized enterprises (SMEs) find themselves faced with the obligation to follow new requirements, the approval of Environmental, Social, Governance (ESG) criteria is no longer an alternative but an obligation .
ESG criteria, an acronym that stands for Environment, Social and Governance, are part of a new approach to extra-financial evaluation of a company’s performance in terms of social, environmental and governance aspects. Ridha Mrabet, former CEO of a regional Sicar, explains that the integration of all these aspects in the performance of this activity constitutes the basis of a new economic model. According to him, the ESG criteria come to formalize the transition towards an economic model of optimization of the resource employment process.
“In a context of environmental crisis, companies must reduce their carbon footprint and implement a system of good practices for better waste management, particularly through the circular economy approach, the reduction of greenhouse gas emissions , controlled electricity consumption, investment in clean and renewable energies or even the prevention of environmental risks,” says Mrabet.
Not just financial performance!
The manager elaborates: “We must not forget that social concerns always occupy a central place in the ESG approach. They mainly concern employment for certain categories of the population, wage gaps between men and women, and non-respect of labor rights. The evaluation of this criterion takes into account several aspects, such as accident prevention, staff training, respect for employee rights, employment of disabled people, social dialogue…”. According to Mrabet, it is therefore a question of ensuring that the company is managed in accordance with the rules of law. In particular through the independence of the board of directors, the treatment of minority shareholders, the fight against corruption, the feminization of boards of directors or the transparency of executive remuneration. “Across all environmental, social and governance criteria, financial performance is no longer the only indicator for evaluating the company. Indeed, the evaluation must also highlight the positive impact on society and the environment,” says Mrabet. And to continue: “I believe that for the moment, it is mainly large groups and companies that are most targeted by regulations in relation to ESG criteria. But certainly, the approach could be extended through a gradual opening of these obligations, little by little, to other structures, such as start-ups, SMEs, etc. For example, international regulations on the energy transition require management companies to explain the consideration of environmental, social and governance criteria in the selection of securities appearing in their funds. The interlocutor informs that the Financial Market Council and the Securities Exchange have made available to Tunisian companies an ESG reporting guide based on the fact that the activities of companies generate not only economic and financial consequences but also extra-financial. This guide presents the basic concepts and usefulness of the CSR (Corporate Social Responsibility) approach and ESG reporting, as well as practical recommendations for their implementation while leaving companies with sufficient room for analysis to take into account of their own issues and their specificities. This guide is aimed, on the one hand, at directors, managers and executives of companies listed on the stock exchange, and, on the other hand, at the company’s stakeholders (auditors, staff representations, shareholders, investors, etc.). ). It is supposed to convince them of the usefulness of the ESG approach both for themselves and for the company.
An accessible and reliable system
“So the implementation of this system is much more accessible, especially on the stock market. This category of companies has a control and information system which is capable of providing reliable indicators and measurements for be able to assess environmental, social and governance criteria. In short, it is precisely capable of answering the various questions relating to the CO emission rate.2 annual and the Carbon Footprint in general, to the company’s electricity consumption, to corruption within the organization to the salary difference between men and women within the company and to all partners of company (national or international) whether or not they respect labor law,” says Mrabet. Thus, whether in developing countries or in developed countries, SMEs occupy an important place and constitute one of the most dynamic levers of economic and social growth in the development strategy of each country.
“In Tunisia, SMEs represent a significant part of the Tunisian economy and constitute more than 95% of businesses. The advantage of SMEs is also that they can recruit low-skilled labor.
They also help reduce the rural exodus by creating businesses in disadvantaged areas and improving infrastructure and the living environment. In addition, SMEs constitute a very important gateway from the sphere of public or private service to the sphere of business, we have real success stories which testify to successful transitions. Therefore, the SME concept itself contains an essential component among the ESG criteria, namely social inclusion. But this segment of the economy in Tunisia, and despite its importance, suffers enormously from the current economic situation both nationally and internationally, particularly in terms of access to financing, often due to the historical absence of business and relations with banks and financing institutions in general,” he mentions.
An ESG strategy is not that simple!
Implementing an ESG strategy within a company is not as simple as you might think, according to Mrabet. “The approach must be done on several levels. “You have to take into account commercial and production practices, set clear objectives and rely on the expertise of internal teams who require a lot of information as well as on consultants who understand the complexities of the organization,” adds the responsible. According to him, this need for expertise also extends to software tools which require adaptations to achieve a reliable and optimized ESG information system. “A well-founded ESG or sustainable development strategy brings many benefits to companies, of which we cite, as an example, the consolidation of profitability through cost reduction through ecological paperless systems, through remote working and by other green policies that can reduce a company’s overhead costs. On the other hand, improved brand awareness, customer loyalty through products produced in an environmentally and socially responsible manner and good reputation can lead to increased sales, turnover and profits. ESG-minded companies can also use their green and social performance to their advantage through greater chances of access to financing and better conditions.
But, it being specified that the ESG issue has a significant positive impact on the country’s economy through the improvement of its macroeconomic indicators and also the conditions of its access to international financing,” analyzes Mrabet. To conclude, he proposes: “The State must plan in advance an ESG compliance plan intended in a first stage for SMEs and in a second stage for very small companies which could be structured around the following points: taking in charge of technical support by ESG experts; the subsidy of the approach in these material components, expertise and software and finally the creation of an ESG Fund to finance these actions.
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