A new report finds that small and medium suppliers face growing expectations from their larger customers to report on environmental, social and governance (ESG) standards.
The Business Development Bank of Canada (BDC) survey of 121 large companies and public-sector buyers found that, already, 82% require some disclosure from their suppliers on ESG, but that’s expected to grow to 92% by 2024.
The entrepreneur-focused BDC says three-quarters of the large organizations surveyed also said that over the next five years they plan to increase their ESG expectations on a range of areas like energy use, diversity in hiring and environmental risk management.
The rising standards on smaller companies come as big companies are under pressure from investors to report a more detailed ESG picture across their entire supply chains.
The bank says that in a separate survey of 1,251 small- and medium-sized companies, three-quarters said adopting ESG practices had benefited their business, including through new opportunities, employee well-being and easier financing.
BDC chief executive Isabelle Hudon said in a statement that the report captures a “sobering reality for small businesses”: if they don’t have ESG reporting, they’re going to be cut off from some of the most lucrative supply chains.