The contribution made by small and medium-sized enterprises (SMEs) to promote positive social, environmental, and economic change is often ignored. These companies make huge contributions to GDP, exports, employment, and livelihoods in developed countries and have the capacity to shape future local and global agendas. They play an important role in shaping the growth, innovation, and sustainability of our local, regional, and global economies.

Evidence shows that SMEs contribute to more than 90% of all companies and are responsible for 50% of employment worldwide, as well as up to 40% of GDP in emerging markets, according to the World Bank.

The challenges faced by SMEs

The imperatives faced by SMEs a few years ago have become more pronounced as the world changes to the next normal. They mask the struggles that SMEs have to overcome. They often face tough competition, increasingly on a global scale, which is partly responsible for their high failure rates; they have limited resources, which means that they cannot always build solid supply chains; and often they cannot invest in technologies that could help them save time and money.

The opportunities offered to SMEs

However, SMEs that manage to overcome these obstacles are often better positioned to take advantage of fleeting opportunities than their larger competitors. Being small and agile means that they can quickly adapt to economic change and take advantage of opportunities as they arise. This is because they have fewer and more direct channels of communication between leaders and those on the ground, so they can make decisions quickly. A recent debate of the World Economic Forum in The New Champion Dialogues, Championing the Entrepreneurship Agenda, highlighted several SMEs that had used tenacity and speed to adapt to succeed.

Those SMEs that overcome great challenges can take advantage of resilience to grow

Chen Xiaohua, founder and CEO of Daojia

Pivoting towards sustainability

We will see an increasing boost from SMEs to pay attention to ESG, says Helle Bank Jorgensen, CEO, and founder of the Competent Board and the provider of climate training programs Competent Boards. Speaking in another discussion of the World Economic Forum, Adaptation to the evolution of ESG requirements, she highlighted how enthusiastic young business leaders should be educated in ESG and climate change, stimulated by investors and other stakeholders who expect the board directors to be ESG and climate prone. But not only should they talk, but they must also act, she says: “They need to go beyond compliance and make implementations and listen more to their stakeholders. It’s not just about being educated in ESG, it’s also about showing how they are implementing ESG.”

By accepting the benefits of being relatively small and agile, becoming the first to adopt technology, and showing the willingness to support the most significant social and environmental good, SMEs have opportunities to shape future local and global agendas. It is also up to all of us to help them flourish.

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