ESG CHALLENGES FOR
SMALL BUSINESS PODCAST. 

The Procurement Act 2025 commits 30% of government spending to SMEs that meet ESG and sustainability criteria. Joe highlights that businesses demonstrating clear carbon-reduction plans, ethical governance, and social impact are more likely to win tenders from local authorities, the NHS, and corporate clients. ESG essentially lowers perceived supplier risk and gives SMEs a competitive edge in bids.

Small and medium-sized enterprises (SMEs) may not be legally required to report on ESG, but doing so delivers real business benefits. As Joe Gallagher explains, ESG helps SMEs strengthen competitiveness, attract new customers, and meet growing client expectations. Many large companies and public-sector buyers now prefer suppliers that can show credible sustainability performance, making ESG a direct route to new opportunities.

Net zero focuses specifically on reducing greenhouse-gas emissions, while ESG takes a broader view of business responsibility. ESG includes environmental issues such as carbon and waste, social factors like employee well-being and community engagement, and governance practices covering ethics and transparency. Joe stresses that combining net zero commitments within a wider ESG framework delivers both compliance and long-term business resilience.

It is recommended to begin with a simple carbon-reduction plan and visible sustainability commitments. Assess your top customers’ ESG goals, align your policies with their priorities, and publish your actions on your website. From there, small steps—such as switching to renewable energy, improving waste management, or engaging employees in sustainability—can make a measurable difference and help position your business for future growth.

Adopting ESG practices improves reputation, attracts talent, and builds customer trust. It can also lead to operational efficiencies, cost savings, and higher margins, particularly when businesses are seen as low-risk, responsible suppliers. As Joe concludes, ESG is not just about meeting regulations—it’s about using sustainability to create lasting value for people, the planet, and profit.

Joe Gallagher (00:08.167)
Hi everybody, my name’s Joe Gallagher. Today I’m going to be taking you through a presentation which is very much focused at making sustainability made easy for SMEs. We’re going to cover some insights, some tips and really fundamentally this is all about helping you build a strategy to enable sustainable business growth.

Joe Gallagher (00:43.689)
Stop, pause, start again.

Joe Gallagher (00:51.165)
Hi everybody, my name is Joe Gallagher and today’s objective is to take you through a presentation which I’ve put together which is all around making sustainability made easy for SMEs. Fundamentally, I want to try and give you some insight and some tips to use ESG and sustainability as a lever to fuel business growth. Today’s objectives, there’s many that I’m going to try and cover. Ultimately,

Can this subject give you a competitive edge? Really, it’s very much about anticipating and being proactive about key and potential customer demands around the subject of ESG. How can you leverage ESG with respect to bids, in particular with local government and local authorities, and very much tuning into what is becoming more a global business approach in SMEs.

working on how they can position themselves against key customers very much within a 20, 30 mile locality of where they are. And really some ideas to help you start your journey. Many SMEs, less than 250 employees are under no regulatory requirement to do this. It’s voluntary, but hopefully you’ll see from today how you can see some opportunities using ESG fundamentally as your key strategy. And why not?

open up more business meetings tuning into what you’re doing around this subject and there is a growing consensus that you can attract new talent with stronger ESG values and really as I said earlier it’s about building a foundation to enable sustainable growth.

So when we talk about this subject, quite often when I’m talking to people, I talk about, is this relevant to me and our company? So there’s going to be three questions. First one being your own personal focus. Are you interested in environmental matters that protect our planet for future generations? From a company point of view, are you looking for ideas to create a competitive advantage? Do you have any customers?

Joe Gallagher (03:08.115)
that are 250 employees or more, 36 million plus turnover. The reason for that is that those are the companies in the UK and in the EU that are regulated. Therefore, they’re going to need their supply chain to help them. Do you and or your customers supply local government, local authority, NHS? And do you have any customers that may be B Corp recognized? So that’s from a company point of view. And if you’re looking at the company future,

Are you trying to build long-term profit and viability in the business? So I would think if the answer is one, two or three of those, there should be an appetite to embrace sustainability within your company.

So how does the topic impact you? Sometimes I put this across in the what if you can see the ace up the sleeve. But there is in my experience, there has never been a better time to seek and get first meetings with people talking about your product, your service, leveraging sustainability as a core topic. It will without question expand C level relationships in the boardroom and with very large businesses.

certainly the ones that are listed, there is now a percentage of their annual bonuses aligned with the delivery of an ESG strategy. And why not create a competitive lockout by just presenting yourself as little or zero risk. And there is an opportunity potentially to get some referrals into your customer’s supply chain. So you will establish a genuine competitive advantage. And if you can go through potentially

year-on-year renewals then you might find the opportunity to lift gross margin on some of the services you have because you’re perceived as less risk.

Joe Gallagher (05:06.343)
Sometimes when we’re talking this is I can’t take the credit for this. This is the golden circle It was a concept Simon Sinek introduced in 2009 and really what it’s saying is that From a what point of view every organization on the planet knows what they do some know how they do that and There are very few that know why and this is really fundamentally

where I believe ESG can help really define the new why, the new purpose. So when I’m talking to SMEs and in fact sometimes larger companies, I often just use this one slide and just talk about what are the drivers for ESG and sustainability and different companies and in fact different personas within each organization have different key drivers.

linked with ESG and sustainability. So I’ll let you sort of read, you know, you can see those for yourself there. But, you know, some I’ve talked about regulation, that’s normally the larger companies, they’re then pushing down requirements from their supply chain. I’ve talked about talent acquisition, and there is now in competitive tenders, between five to 20 % of a weighting of decision linked with ESG.

And in the centre there I’ve put what I describe as the potential for the new DNA which is leveraging ESG, wrapping everything around it to drive that competitive edge but also bring all of your people on board with something that has genuine purpose.

So there are so many acronyms with sustainability, ESG, carbon emissions. So sometimes people is, what is sustainability? When people are talking about emissions, what does that really mean? And then you’ve got ESG. So I think with sustainability really at a high level, this is basically talking about making sure that we meet the needs of the present without compromising the ability of our future generations to meet their own needs.

Joe Gallagher (07:24.169)
When we’re at GHG carbon emissions and net zero, this is where organizations are making commitments, sometimes to shareholders, but they’re making public commitments about achieving net zero. And to do that, they have to effectively calculate all of their carbon emissions. And that includes the supply chain, which is invariably about 90 % of their emissions. We’ll come back to that bit later on. And when we’re talking about ESG,

This is broadening the focus away from purely carbon emissions and the E, this is embracing and embodying social and governance as well as environmental aspects. Fundamentally it’s risk management, risk bringing in climate change, human rights and adherence to laws which could be geographically positioned dependent on where your company or products go.

I’ve talked about the various acronyms and this is just this is not all, but this is many of the key areas of focus. You may have heard that some companies talk about potentially their B Corp. Historically, that’s normally where there’s a B to C product or service. Ecovardis is globally recognized as the leading sustainability rating platform. Invariably, we’re the large companies.

forced in some examples onto their tier one suppliers to present back in an eco-vardis format. GRI is globally recognized. That’s the Global Reporting Institute. Certainly from a financial reporting, often there’s a link with the GRI metrics there. On the right hand side, I’ve got the UN. There’s 17.

sustainable development goals. There’s only 16 on the slide, apologies for that. Invariably what some companies will do is align their SDGs to their company and then they report back on those and some of which then use the GRI reporting metrics to align to those SDGs. On the top left you can see the streamlined energy and carbon reporting.

Joe Gallagher (09:41.103)
Its shortened version is SECA. This is for companies in the UK that reach two out of the three thresholds, 250 employees, 36 million turnover, 18 million balance sheet. They have to report their carbon emissions along with a net zero commitment and a carbon reduction plan as part of their annual account submission. And sometimes the failure to do that or to do it

not to the standard they’re looking for could mean that your company’s accounts are rejected, which could be a PR catastrophe for many, many large companies. On the top right, you’ll see the EU CSRD, which at the moment globally is probably the most rigorous sustainability reporting initiative. And in the EU, there’s a new version of the VSE that’s coming out, which is to align SMEs as well. And then…

The center there I’ve mentioned the TCFD, is the Task Force for Climate Related Financial Disclosures. Many large companies are now reporting the impact of climate risk modeling back to the balance sheet as a percentage of revenue impact that it could have on them as a business. So it’s a huge, a huger challenge linking climate risk back to your company’s profitability.

If I bring us back closer to the UK at the moment, the new Procurement Act changed in February 2025. You’re probably wondering why there’s a picture of some meat and on the right hand side, that’s actually, it’s supposed to be a mat, it could be Aladdin’s carpet. But anyway, on the Procurement Act, the way that decisions were awarded initially was on the…

most economically advantageous tender shortened to meat which therefore put a bias in my opinion to much larger companies that would primarily target local authority NHS government spend and they had the powers to be able to grab market share at a lower price than they normally would do to help them.

Joe Gallagher (11:58.587)
If we’re looking at the shift now, it’s basically been shortened to the most advantageous tender, shortened to MAT, and therefore it enables now SMEs to compete for that business. And in fact, the Procurement Act has now made a commitment from central government that 30 % of an annual spend in excess of $400 billion a year will be awarded to SMEs on the condition

that they sign up to various initiatives linked with ESG. So you’re going to need a carbon reduction plan, you’re going to need to demonstrate social value and impact, local employment opportunities, but there’s never been a better time, in my opinion, for an SME to step in and take a piece of huge £120 billion spend a year.

Joe Gallagher (12:53.307)
So the Procurement Act, there is requirements. I’ve touched on a few of those, but you will see with them, I’ll cover a little bit more depth, the scope one, two and three mission areas and really scope one and two are mandated, but you’re going to need to focus on five of the scope three areas to help you. And clearly this is something that we can help you with. And then you can see also.

Lower down I’ve talked about supply chain collaboration and risk assessment is recommended. What they’re basically trying to do is to make sure that you’ve got key policies in place. You take sustainable procurement as really key and that you also are very mindful both directly and in your supply chain around things like modern slavery, anti-bribery and corruption and health and safety.

Joe Gallagher (13:51.515)
Alongside the Procurement Act, the NHS, and it’s quite incredible that there’s apparently 80,000 direct suppliers of the NHS. And what the NHS have done is put together their own sustainable supplier assessment. It’s branded as Evergreen and it really has four levels of maturity. And I’m not going to go through all of these at the moment with you. However,

It would be fair to say that most companies, if they are supplying directly or indirectly, can probably get to level one or level two themselves. But if you have an appetite to get to level three and or level four, you’re going to need some third party engagement and you’re going to need to do a full sort of supply chain analysis. And the NHS is very much using this as a guide to their decision making.

So again it comes back to there’s risk with not doing anything if you are supplying the NHS and or it could be a key customer of yours is a direct supplier that they will be coming to you. On the other hand there is an opportunity to drive incremental business because if they’re looking at your company versus somebody else they’re level one and you happen to be level three I’d like to think there’s more opportunity for them to award the business to yourself.

So that’s the NHS. Sometimes, you know, we’ve all run companies where we don’t necessarily have one sector. So if I’m looking at some of the key sectors where this subject is really appealing, what I’m trying to do here is just give you an idea. So from a manufacturing company point of view, they’re heavily focused on the supplier management within their value chain. And there is so many components and suppliers that feed into that.

So they are very, very heavily weighted towards focusing on the supply chain and risk mitigation. Retail and wholesale, well, the demand driver there is the consumers that potentially buy their products. With healthcare, loads of focus on governance with ESG. In the built environment, I’m talking construction, real estate, lot of regulatory aspect, lots of focus on bids and tenders.

Joe Gallagher (16:20.913)
and often I know with housing associations as an example is a 20 % waiting on ESG. With professional services, they tend to embrace this subject looking at their clients and really it’s PR reputation and very much trying to present their services to the up and coming, the new green economy. With logistics and transportation,

A lot of these companies are very limited with some of the initiatives that they can put in place because it’s quite hard to move away from traditional fuel and therefore they’re focusing on other areas and their supply chain because fundamentally they may not be in a position at the moment to re-engineer and convert all of their articulated lorries into electric. Education, this is,

looking at the compliance, the governance, its governance and also with students. There is a growing appetite from new students to look at universities, higher education with a view to what are they doing about sustainability before they make a decision as to which ones they commit to. And hospitality and leisure, this is again focused very much on consumers but also if they’re trying to appeal to corporates for events and things.

making sure they’ve got a great story wrapped around it. I think at the bottom in the green, can see there, I’ve put, you know, if this is not your priority, but it is your customer’s priority, it will become your priority because if they start asking questions, you’re going to need to be in position to help them. On the right hand side, I’ve just put some role-based personas. You your CFO, it’s a, you know, regulatory compliance.

Your CEO, know, it’s headline revenue, protecting key clients, winning bids and tenders, HR, it’s staff retention and how do we attract new people. The chief operation officer, he’s got a really big challenge in bedding sustainability within their operations. And now with procurement teams, they’re focusing on sustainable procurement and supply chain risk and resilience. it’s fact now that

Joe Gallagher (18:37.449)
60 to 70 % of a company’s emissions reside in the decisions that the procurement teams make. If it’s a manufacturing company, it’s 90%. So the procurement teams carry a heavy, heavy focus around the subject of ESG and helping their companies reduce their emissions.

So I said I would potentially share some tips and how you can be proactive. And ESG, there’s never been a subject like it where you can really find out information online. So I would suggest you look at your top five customers initially, look at their website, the company report, online, LinkedIn as example, and just see what they’re saying and you will pick up little nuggets, which might be they talk about.

we are going to embark on a supply chain assessment. Therefore, you could wait for them to come to you and ask you what you’re doing, or you could get one step ahead and be proactive and actually go to them to tell them actually what you’re doing. What you should be looking at is things like have they committed to a net zero or carbon date and is that published? Because as an example, if they were working towards becoming net zero by 2040,

and you went long range and said, we’re going to be net zero by 2050. There’s a disconnect. Therefore you’re putting yourself at risk to them to be a viable supplier because you’ve got your 10 years behind them on your net zero journey. So these are little things that you can pick up and it should be easier, a lot easier for an SME to become net zero than a much, much larger organization. I always encourage if you’re putting together a carbon reduction plan,

to have that visible on the website. It is a prerequisite for the Procurement Act. But if you’ve got people searching online about shortlisting suppliers, maybe for a tender coming up, if you’re really displaying what you’re doing on the website, you’ve got a much better chance of making the long list or a short list before they go out to tender. The other thing I find that you can pick out of the company reports and the website is really

Joe Gallagher (20:53.437)
What are they sort of saying around their values and their vision around DSG, around their people, around their suppliers? And sometimes I talk about mirroring where you can think about what you’re doing as a company and how that mirrors and aligns with them.

Joe Gallagher (21:11.643)
So carbon emissions scope one scope two scope three. I’ve tried to frame this using an iceberg because essentially an iceberg normally 80 % or more of an iceberg is actually underwater and I think to be fair with scope one two and three Normally scope one and scope two is less than 10 of a company’s emissions the other 90 or more sits in know, an iceberg is up underwater

and there is 15 categories in scope three. And these categories invariably are out of your direct control. So you need to leverage and work with your supply chain to try and help reduce emissions. If I look at some of these, I won’t go through all 15. Business travel, is initiatives, companies are changing the way they fly their senior people all around the world.

With employee commuting, that’s encouraging potentially cycle to work. We help with a little survey to understand the impact from employee commuting. But of the 15 categories, purchase goods and services, which is category one, normally is 40%, if not more, of scope three. So this is really the key area to focus on. And the bottom line here is…

that if a company has made a commitment to be net zero, they’re gonna need to get into scope three and they’re gonna definitely need to get into purchase goods and services. So if you are in that part of it, you’re gonna need to show them what you’re doing in an ideal world, be in a position where you can say that we are reducing the impact of our product, our service on you. And that will be just music to their ears.

Joe Gallagher (23:08.403)
So when we look at sustainability, the E of ESG, these are some of the things that you could focus on just from a company point of view. having a carbon and greenhouse gas emissions, calculating what that is and very much looking to then look for year on year improvements, your energy use and efficiency.

Now, sometimes there’s things that you can do, which, you know, it’s not that difficult, just encouraging good behavior when people are leaving the building, know, switching lights off, know, et cetera, et cetera. Waste is quite a topical example now. So I think from an environmental point of view, there’s a lot of companies working to sort of strategies, which is zero waste to landfill. So tuning into that can really, really help.

Water use and conservation, know, some are looking at ways how can they, you know, conserve and not waste water because it very much links to that underlying strategy of protecting our resources. I’ve talked about a sustainable supply chain and then sometimes when you look at a product sustainability and the packaging, sometimes it’s easier for companies to

change the packaging to a more sustainable packaging, then it is to basically re-engineer the whole product. But if you’re building a new product, you really should have sort of the ecosystem, the circularity of that product and the long-term sustainability. It’s a lot easier to design it upfront than to try and retrofit later on. Biodiversity is really growing. So we’ve seen examples where people are looking at, you know, butterfly conservation.

putting living walls in, or just things like wildflowers to try and do something that’s sort of all embracing around that biodiversity. And I think where I see from a sustainability point of view, more success is where you really bring in your employees and communities and you engage and collaborate on ideas and initiatives. And I think the beauty of this subject, if you’re educating your teams,

Joe Gallagher (25:32.689)
is that those people then go home into their own personal environment and they may make lifestyle changes at home tuning into what they’ve learned from the initiatives as a company.

So some tips to help you on your carbon reduction. Brilliant if we could do this, switching to renewable electricity, switching to things like LED lighting, turning off things when you don’t need to use them, insulation, reducing travel or alternative transport. It’s not easy for everybody to walk to work and or cycle.

but just looking, are there good public transport links? Can you encourage car sharing? And internally, the whole aspect around recycling. And I really think by setting up an internal sort steering committee, environmental group, you can then just get everybody together. It’s a bit of team building, but fundamentally it’s a great purpose for the output.

Joe Gallagher (26:39.303)
In the midterm, this is not an easy thing, but some people are looking at electric vehicles and how you can migrate to that. It’s not always feasible, but if it’s not feasible, it’s better to conduct a feasibility study to realize that it won’t work at the moment than to just park it and not look at it. Responsible sourcing, so this is talking around where you’re sourcing if you are, raw products and stuff like that, raw materials.

And then how can you get to this zero waste landfill? And I always encourage putting this topic as an agenda on management meetings. And that sometimes then can reward those individuals in the company that are driving this. So they feel that they’re connected with the boardroom. And I’ve talked about re-engineering potentially the packaging. Longer term, and in fact, what’s happening

with embodied carbon in products, the companies are now being challenged around what is the embodied carbon in your product, because like in the construction sector, there’s a focus on the physical build and what embodied carbon is in that. So they’re asking companies for that information. And there’s also now a requirement which is started in the EU, which is a carbon.

board and adjustment mechanism effectively it’s a tax on five products and there potentially is the extension for that to move beyond those five products without naming all five but just thinking of aluminium, there’s cement, fertilisers, so it’s products that carry sort of a high embodied carbon so there’s going to be a tax on that but also there’s a requirement to be able to account for that embodied carbon. So we’re seeing now

Companies looking at environmental product declarations or life cycle assessments. And with the supply chain, you too could potentially look at your own supply chain emissions reduction to help support your own scope three journey. And I mentioned that when you’re talking about product design, it’s a lot, lot harder to retrofit an existing product. So it’s got that circularity in, but if you’re starting with a new product range, then you should have that in mind.

Joe Gallagher (29:06.365)
The waste regulation I think is in waiting. This is talking a lot about the regulation is around segregation. sometimes people talk about, I’ve seen the five aisles, I’ve seen the six aisles, I’ve seen the seven aisles. But if you just think about the six aisles, and this is really, sometimes it could be just refusing to buy something because you know.

Maybe you don’t need it. There’s the reduction. So in the classic here, maybe something like food, know, buy as much because you know you’re going to waste it at the back end. And then what can you reuse if you’ve got products, maybe technology products, you know, could they be repaired? Is there a second market? And if there isn’t, potentially you’re recycling. But at the top right is talking about rethinking about how you design things with the sort of the six Rs in mind.

I’m going to move now onto ESG. And in summary, to me, it’s all around continual improvement. A lot of companies may have signed up and have already got different ISO accreditations, which invariably is like your car MOT once a year. It’s a pass or a fail. With ESG, it’s about continual improvement. So you shouldn’t be scared or frightened about going in and worrying about whether you’ve done enough to pass.

You should be thinking about what can you do to start your journey and then more importantly, what can you do the following year to improve and just carry that on? Now there are a number of stages within within ESG. If we’re looking at them broken down, effectively you could say there’s four stages. The first one, number one is really just getting a feel for where you are at the moment. So it’s that sort of benchmark.

to see where you are, then once you’ve done that, you can then move into really the carbon emissions, I think is a critical point for every SME. The supply chain brings together and harmonizes your own value chain. So you can see what you can do to help, which fundamentally will help you drive down your scope three emissions, but it’s also protecting the risk in your own supply chain because your customers will want to know there’s no risk with you.

Joe Gallagher (31:32.297)
but there’s also no risk in your suppliers. And then you can start thinking about, sometimes we do like an ESG preliminaries, and some of this is basically doing a materiality assessment, which fundamentally is understanding what all of the stakeholders linked with your company are looking for from this subject. And then in the third area, we’re now moving into sort of ESG reporting, which could be.

you know, quite basic to reflect your size of company or there’s a more advanced offering. And then on the far right, we’ve got the sort of regulatory requirements for those larger businesses, which for many of you, you may not be regulated in that way. But if your clients are, you’re going to need to tune into what they’re trying to achieve themselves. So with ESG, I’ll break this down into the E, the S and the G. The E is very much the environment

but it’s focused on the responsibility. And a lot of this is harmonized around climate change, mitigation, bringing in energy, water and waste management. And then the biodiversity and land use as an additional topic. Obviously there’s offshoots off of those four key headings. When we’re looking at the S in the ESG, that’s the social. And here I make the link with the brand and the reputation.

And this is really making sure that from a labor practice point of view, human rights, responsible supply chain, understanding the impact or connecting and adding value to your local community with really good engagement. The diversity, equity and inclusion, how do you make things fair within your company and there are certainly suppliers that you may select in the future. And then those customer relations really…

making sure, know, in an ideal world, you may have a product which you deliver and it’d be nice for them to return it at the end of its journey so that you may be able to dispose, recycle or reuse in some capacity. And the stakeholder relations, whether these are shareholders, investors, I’m seeing examples now with banks who are very much harnessing ESG and the S before they lend money.

Joe Gallagher (33:57.209)
So you might want to potentially get a loan for some green initiatives and that loan could be achieved with a lower percentage of interest if you’ve got a strong ESG presentation. So from some tips on the social side what you can do I think fundamentally always encourage making sure you’ve got some clear policies around key top

topics like health and safety, like modern slavery. You could conduct an employee satisfaction survey, which might just bring in some ideas that might then foster into things that you could do differently to improve the wellbeing of your staff. Fundamentally here, it’s about making those links so that you can protect and reduce your attrition rate. So that’s the key benefit you could attain.

We do see with the social community engagement that some companies will offer their employees voluntary days where they can go out to a charity of their choice. And these can also be used for things like team bonding. Clearly, if you’ve got 50 people, you don’t want all 50 of doing voluntary days on the same day, but you can stagger it. And there’s a huge return that those individual gets from doing that. And then I think in the midterm,

there’s an opportunity then to look at lifting training and development for your employees. So it’s, know, continually investing in them, the potential to open up some form of relationships who encourage an apprentice, apprentices into your company. And why not partner the business with some local charities? And if you’ve got people doing, it could be marathons, bike rides, know, climbing Snowdon.

that you can do some match funding. Again, it’s really great PR to add to your marketing collateral.

Joe Gallagher (36:00.541)
So now if we look at the G, which is the governance here, it’s around integrity and transparency. And the governance can bring in things like, you know, the board composition. And when I talk about composition, that could be academic, it could be gender, a number of different things. know, have you, in career developed people from within or are you bringing people in from outside? I’ve talked about, there is a link now with the executive.

compensation around ESG, data protection. Every day I think now we see something in the press, cyber attacks. So, you know, how are you protecting the relationship with your clients around things like data protection? And ultimately, you know, management in your own company is gonna be perceived incredibly well when you’re talking to your larger clients.

So some tips around governance. I’m sure many of you are doing these in different ways. This, you know, from policies point of view, code of conduct with your employees. It could also be your supply chain. When you look at things like anti-corruption and bribery, you know, what you should, stroke could do is actually provide some training to people.

So they really understand what this means from your own company’s point of view and make sure they sign up and adhere to doing that. And I’ve talked a bit about, you know, the protection around cyber and data protection. Some companies will just issue a policy around it without providing the training. And sometimes it’s eliminating the fear. So if you’re, if a staff member lost a laptop that they don’t sort of worry about that.

that they feel that confident they can come to you and log that because it’s a potential risk. But if you’re recording it, these things happen. There’s no way that you can get avoided completely, but it’s just making people feel confident. They’re not gonna lose their job if they lose their laptop because of the leaked with risks on data protection as the example. And then on the governance, you can see lower down I’ve talked about.

Joe Gallagher (38:26.025)
climate risk modeling. This is elevating in what companies are being asked to do now, where they’re quantifying the risk attached with climate on the business. And that’s not just in the offices you are, where you are, it’s actually where your suppliers are. So it’s quite a big task. certainly if you’re part of that supply chain, don’t be surprised if you get questions in the future linked with climate risk.

We’ve got three client stories here. And the first one I know very well because it was actually in a previous company that I worked for. We lost a key account in 2021, a 750,000-pound contract, 20 % waiting on ESG, and we were not able to present ourselves in a strong enough way. We’d been supplying them for 12 years. They were very happy.

but they had to go out to formal tender, had to get at least three proposals and we lost them. So that was a huge wake up call from that day onwards. So we then put in initiatives around DSG to help us defend other key clients. That was a top 10 client. I’m pleased to say, I don’t know what’s happened in last couple of years, but we never lost another top 10 client because we put a defense strategy in. The second one was,

an organization that I helped where they were generally feeling they weren’t getting involved in as many bids and tenders from a consideration point of view. So we’ve put a strategy in now to help them put front of house what they’re doing on carbon emissions and around ESG so that they can, when someone’s clicking on them, present front of house what they’re doing to get them to that first stage or second stage, which is the pre-qualification questionnaire.

And the third one is an example of a company, I always encourage your SMEs, if you’re doing this, go and talk to your customers about it. And there was an example where a company went to their large client and said, hey, we want to talk to you about what we’re doing around ESG. And they were absolutely blown away that they’d taken this subject seriously. were 25 employees and all of a sudden,

Joe Gallagher (40:56.263)
I think now that they’re looking at other revenue areas that they can provide because they were doing a small percentage of a certain subject. So this subject is now helping them grow wallet share within this key client.

Joe Gallagher (41:13.449)
So when we look at customer benefits with ESG, there’s a number of different points here. I’ve talked about helping meet that growing regulatory requirement. And that is country, region, sector, or even product specific. It can help you retain key customers and build that loyalty. If a company’s got 400 suppliers, they’ve sent out risk assessment and 20 have come back.

They’re going to be focusing their energy on the 380 that have not responded and they’re potentially vulnerable. So you’re in a safe place if you can help them in that respect. New business acquisition in particular, anything bids and tenders linked with large frameworks, government, local authorities, but also corporates will be using ESG as a potential differentiator to make decisions.

You can’t guarantee this, but there might be an opportunity when you get into your annual price increases, potentially to rather than the fear of what if we put a few extra points on the annual increase. Again, if you’re presenting as less risk on ESG, you might find that easier. You might also find if you’re doing a bid and tender and you’ve got a strong ESG message.

you might be able to make two or three points more on gross margin.

Joe Gallagher (00:10.988)
So what I’d now like to talk about is three client stories which really tried to bring to life both the risk and opportunities aligned with ESG for SMEs.

The first one is very near and dear to me because it was actually an example of a customer that we had in a previous business going back to 2021. Very happy customer. They had to go to a formal RFP process, a housing association. The contract was worth 750,000, but there was a 20 % waiting on ESG, which we really struggled to deliver back in quality what the

information that we needed and

We lost the client. I then undertook to basically bring in ESG Pro then as a partner to actually help us build and strengthen our case for other clients. That was a top 10 customer. And I know going forward that we were very much using the work from an ESG point of view to help defend other key relationships. And we never lost another client based on our ESG credentials.

The second one is really an organization that I helped but basically had seen that they were not getting involved in as many bids and tenders from a consideration point of view. The first wave of engagement is a pre-qualification questionnaire and what they discovered and found out is that they didn’t have a carbon reduction plan visible on their website.

Joe Gallagher (01:52.488)
So we undertook to help them gain, get that carbon reduction plan visible. And subsequently, they’re now leveraging that to open up other doors to basically get them to the first or second stage in a formal bids and tenders process. And why that’s even more important now, if you’re doing any business in the Procurement Act frameworks, is that there is a mandatory requirement to have

is called a PPN006, a carbon reduction plan visible on your website. The third one is an example of a smaller business that we helped from an ESG point of view and we basically said to them, why don’t you just go out, be proactive and talk to your key customers about what you’ve done.

And the customer, a large organization, was blown away that this small business had actually undertook, voluntary to engage from an ESG point of view. And they’re now in dialogue around increasing the wallet share of the services and revenue that they get because they’ve presented as a low risk SME to that particular organization. The customer benefits with ESG are really quite broad.

and they cover a number of areas. You’ve got the sort of regulatory requirements, which I’ve talked about already today, tuning into those organizations, know, circa 35 million turnover, 250 employees. So very much we’re helping protect those companies from a regulatory point of view. We’ve talked about customer retention, and in my opinion, there’s an opportunity to build ongoing loyalty.

And without question, it strengthens your opportunity to win new business, whether that’s direct with corporates and or working within some of the frameworks within local authorities, et cetera. And we’re seeing opportunities where by building brand PR and reputation, you’re potentially lifting the company valuation. And as we see the new generation of workforce coming in,

Joe Gallagher (04:11.53)
potentially a lot of them have higher values attached to ESG, so therefore you can use it to attract new hires, but anything you do relative with ESG, you might find that you’re hopefully going to improve your staff retention as well. So when we look at the sort of

Overall benefits. I’m a big fan of the Harvard Business Systems the triple bottom line You can go online YouTube find the video. It’s about three and a half minutes but basically it’s about the three piece the triple bottom line and it refers to Planet people and profit and where I find companies succeed the most

And from my engagement with them, I try and harness all three of these elements together so you can see the benefits both from an environmental aspect and doing your best to protect the interests of the planet for future generations. You know, reducing carbon emissions, avoiding things like climate risk.

helping out with air pollution and then you move into the sort of P for people where there’s a stronger emphasis on local communities, social impact, your ability to connect, collaborate and influence your supply chain and we’ve already talked about employee retention and attracting new talent. With the profitability, well yes there’s an opportunity to avoid regulatory fines, customer retention

You know, people talk about it’s five times harder to win a new customer. So customer retention clearly helps. And you might find that you’ve got the potential to have higher gross margin and and or non compete renewals. We’ve talked about increasing chances of winning new business through Bits and Tenders.

Joe Gallagher (06:08.702)
And there is a growing appetite now from banks and lenders when they’re looking to make loans to companies to help them gear for growth, that there is ESG criteria built into that. So by delivering that back, one thing you get access to the money. And there’s also lenders now where there’s examples of a interest rate applicable to having a presenting yourself from a lower risk perspective as well.

And sometimes, you know, gets overlooked. This is perception, you know, you’re going to pay to be green. But actually, it’s quite the opposite that there is a huge opportunity to reduce operational costs whilst you’re reducing carbon emissions. And clearly, with brand and reputation, one would look for increasing company valuation going forward. So who are we? You know, we are ESG Pro. We’re sort of a boutique.

ESG related consultancy services. We don’t wear any blinkers with respect to the output we’re helping our clients with so we’re very fortunate to be an eco-virus gold accredited organization as well as certified to B Corp and we carry an ESG rating as well. So therefore when we’re working with our SMEs we’re very much looking at what you need for your business, your clients.

and then we will basically align the way we work with you based on that.

Here’s some examples of our client base and I think where again our engagement is across multiple sectors and therefore we’re in a wonderful position to be able to share with you different examples of where other companies have leveraged their ESG journey and there’s never been a subject like it from a collaboration point of view.

Joe Gallagher (08:12.681)
Here’s a summary of some of the key services that we offer.

Stop.

Holes.

Joe Gallagher (08:50.988)
Okay.

Joe Gallagher (08:57.036)
So here is an example of a summary of the key services that we can provide. They range from, in some examples, it’s purely focused on.

the E of ESG, so very much weighted towards carbon emissions reporting. For some companies, they want to achieve carbon neutrality. We then move into the full ESG reporting spectrum I’ve talked about, whether that’s the Global Reporting Institute, whether it’s B Corp or Ecovardis.

and we are very geared up to helping organizations of all sizes. The smallest I believe is sort of about a million pound turnover, our largest client 1.4 billion. There’s a growing need for supply chain ESG risk assessments and more and more companies now looking at scope three.

both from an emissions reporting, but making improvements. And also that supply chain risk assessment is linked with that. And for some companies, there’s a growing challenge where they’re being asked for term is EPDs and LCAs, it’s environmental product declarations and life cycle assessments, very much to understand the embodied carbon within these products.

which in certain sectors like manufacturing, like construction are really, important as people put together their plans for, as an example, a new build. One of the other areas that we help our clients with is ESG peer benchmarking. So you can see how you’re doing against your competition. And this helps you then when you’re thinking about

Joe Gallagher (10:47.871)
going for business, you know, the big question is do we compete and put the time and effort into a bid or a tender? The second thing is, dependent on who you’re up against, maybe that will help you determine the sort of margin, anticipation and expectations that you can get back. And we firmly believe that, you you should be celebrating everything you do with some high impact ESG marketing collateral.

Sometimes when we’re working with companies, they’ve got marketing teams who are very good about talking about their product and their service. They’re really nervous about talking about ESG. So that’s where we step in to compliment them on that messaging and make sure they don’t overstate, which is obviously in the fear of greenwashing in the same token. We don’t want them to say nothing because that’s green hushing. So it’s really just trying to get that balance absolutely correct. And we also have an opportunity where we can

cost optimization to help you self-fund your net zero efforts as opposed to taking money out of profit. So I’m going to wrap up now. I firmly believe that ESG is not a compliance task. You can use this to generate real value.

We very much help clients set smart and realistic targets and work with them. And I think for me, one of the key things is to be proactive with your customers. If you wait and you’re reacting, you’re at risk of losing them. And you’re also at risk of not being able to put together your ESG story and narrative.

in maybe a four to six weeks time of a bidding process as an example. And why not be one step ahead of your competition, create another unique value point against your competition. And fundamentally, where we do see success is where companies embed ESG factors into their operations, their supply chain, their DNA and culture. And as I’ve said before, why not engage, communicate to all stakeholders what you’re doing and

Joe Gallagher (12:57.737)
the bottom, know, I think there’s an opportunity and SMEs are about 98 % or more of the companies in the UK as an example. So I think, you let’s all do our bit to save the planet. You know, after all, there is no planet B. Thank you very much for your time and look forward to engaging in the future.