A decision support system architecture for the development and implementation of ESG strategies at SMEs

Abstract

Strategic management and business development can be delivered easier in large scale organizations and Multinational Enterprisers (MNEs) due to their excess in human resources, expertise and time orientation. Small and Medium Size Enterprises (SMEs) on the other hand operate in unpredicted environments, with limited resources aiming for their survival first and then their development. The contrast between the two types of enterprises seems chaotic in numbers but not in plans and intentions. The contribution of the MNEs to national economies and impact to the society and the environment can be measured with a variety of standards, metrics and practices such as Corporate Social Responsibility (CSR), the Environmental, Social and Governance Index (ESG), the Social Responsible Investments (SRI) and other. On the other hand, SMEs that also have direct impact to the society, the local and regional economy, the employment, and offer the same, if not more, opportunities to their limited human resources in terms of skills development and effort recognition, cannot record and report such actions, plans and strategies and recognized for their responsible management and leadership. The ESG criteria help organizations develop reputational capital that evolves into financial capital. However, the effort and investments needed to score on the ESG indexes is forbidden for the SMEs who intentionally or intention successfully delivering ESG activities, in a smaller scale, without a system to record and report them. This paper introduces the core design of a decision support system that guides SMEs to maps their operations against the ESG criteria. An extensive literature review has been conducted to identity software systems that coordinate, propose and support ESG activities and analyze elements of such systems that can be extracted for the development of a light system. Such a system, with the relevant enhancements, presented in this paper can be useful tool for the SMEs to report their ESG performance. The system functions as an assessment tool providing a staged evaluation of the SMEs activities, identifies ESG gaps and proposes actions needed to fulfill the requirements of ESG criteria. The final output of the system graphs the distance between the current and the target stage of the SME on the most common ESG criteria. However, the proposed system does not evaluate the scale of each ESG activity implementation but its existence in the SME operations and the degree of its adaptation. The paper also highlights the pre and post conditions for the utilization of the proposed technology using a process map, the social economic impact, research limitations and areas of further research. The goal of this research is to indicate that SMEs can and should be awarded ESG scores as well. For this SMEs can use such supportive technologies to direct them towards ESG compliance, and report achievements and contributions that can help them attract investments needed for them to keep on delivering a greater contribution the local, and why not international, economy and society.

Keywords: ESG, SMEs, MNEs, Decision Support Systems, Management, Leadership, Technology.

DOI: 10.54941/ahfe1002916