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Investing in the future: why should SMEs invest in ESG?

Image alluding to sustainability, namely ESG factors on a hand and with a green background.
Investing in ESG is not only a legal obligation or an ethical duty, but also an intelligent and strategic way of doing business. SMEs that invest in sustainability today are contributing to a better tomorrow, and ensuring their competitiveness in an evolving global market.

In the current economic scenario, marked by growing environmental challenges, the transition to more sustainable businesses based on the ESG (environmental, social and governance) pillars is inevitable for all companies, regardless of their size.  

The “new” European corporate sustainability reporting rules, associated with the CSRD directive – Corporate Sustainability Reporting Directive (EU Directive 2022/2464), oblige large companies listed on the stock exchange to present, in 2025, in relation to the fiscal year 2024 , its performance in terms of sustainability, and must do so under the ESRS (European Sustainability Reporting Standards). As for small and medium-sized companies (SMEs), only listed ones need to do so, and only in 2027 in relation to the 2026 tax year, with the rest being exempt from the obligation. 

However, the pressure of an interconnected global ecosystem makes it essential that everyone – without exception – prepares to respond to the impacts that the ESG transition can bring to their businesses. In this article we explore the reasons why SMEs should care about ESG factors and use them to boost their competitiveness. 

Challenges and opportunities for SMEs 

Among the 10.000 Portuguese SMEs with the best management and financial performance, 40% do not see clear benefits in adopting ESG practices, according to a survey carried out by the Catholic University in collaboration with IAPMEI – Agency for Competitiveness and Innovation. However, evidence suggests that ignoring this trend can have adverse consequences. 

Value chains

ESG reporting is carried out according to three scopes: scope 1 emissions are direct, which are owned or controlled by a company; Scope 2 and 3 emissions are indirect, that is, a consequence of a company's activities, which occur from sources that are not owned or controlled by it; those in scope 2 are linked to energy consumption and its origin, those in scope 3 come from the value chain.

ESG reporting scopes

Companies legally obliged to report their ESG performance are, in scope 3, forced to demand identical reporting from their partner or supplier entities (which may or may not be required by law to do so). In this sense, and faced with a complex and intricate business fabric, an organization with weak or no ESG performance can easily contaminate the score of another, and therefore become less attractive. 

To remain competitive, protect and defend their reputation and ensure the vitality of their relationships with their customers, companies must make efforts to comply with ESG goals and more sustainable practices, as otherwise it could mean passive exclusion from the market. 

Pressures on the financial system

The financial system – made up of banks, investors and insurance companies – is also required to carry out this ESG report. Here lies a direct problem for SMEs: access to financing is conditioned by the risk that the business represents to the integrity of the value chain (scope 3) of the financial entity. For this reason, the financial system chooses to finance those with an already outlined ESG strategy and measurable results, thus ensuring their protection against legal obligations. 

Talent attraction

Despite the significant impact that customers and the financial system have on companies to define and meet ESG objectives, there is another pressure that deserves recognition: employees. Increasingly, purpose-driven work is an aspiration for some and a requirement for others. Therefore, if a company wants to attract and retain talent, it must demonstrate its commitment to ESG factors. The new generations demand this: organizations with values ​​compatible with their own, including concern for people and the environment, and close, inclusive and democratic leadership. Betting on ESG is also betting on talent. 

Start early

We can say that the objective of any company is to grow its business size. SMEs must take advantage of the market's ESG concerns today as an opportunity to rethink their growth in a sustainable way and in accordance with the profile of new customers that emerges with the change in values ​​in new generations. More than that, SMEs must now take advantage of their scale to begin reporting efforts so that, eventually, as their growth becomes easier.  

SMEs will thus be able to grow from the outset, also considering the environmental, social and governance challenges and opportunities that will be required of them in the future. In this way, more sustainable and resilient businesses are created. 

The regulatory landscape is changing progressively, in an attempt to respond to the goals and objectives defined in the fight against climate change. Companies, as relevant agents of this change, must see this transition as an opportunity to rethink their business and operations models, in order to adopt more sustainable practices for the planet, promote environments of well-being and happiness, build firmer governance and resilient, and contribute to stronger, circular economies. 

Ultimately, investing in ESG is not just a legal obligation or an ethical duty, but also a smart and strategic way to look at the future of business. SMEs that embrace sustainability today are not only contributing to a better future, but also ensuring their own resilience and competitiveness in an evolving global market. 

To learn more about the topic, we suggest watching the video of the session “ESG PME Exporters Program: ‘ESG Fundamentals’ Course”, coordinated by AICEP and IAPMEI, here.

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Privacy policy

This Privacy Policy describes how we process your personal data and how you can exercise your rights as holder of personal data processed by LBC.

Within the scope of its activities, LBC is the entity responsible for the collection and processing of personal data, which are processed and stored in an automated and non-automated manner.

1. LBC Commitment

Leadership Business Consulting, Consultoria e Serviços, SA “, Registration and Single NIPC 505 355 108, registered at the Commercial Registry of Porto, previously registered under No. 11.505, in the 2nd Section, of the Commercial Registry of Lisbon, with share capital of € 240.000,00 (two hundred and forty thousand euros), headquarters at Rua Gonçalo Cristóvão, n.º 185, Rés do Chão, 4049-012 Porto and establishment at Rua General Firmino Miguel, Torre 2–3º –3B, 1600-100 Lisboa (hereinafter LBC), in the context of its business object, processes personal data, intending to ensure rigorously, effectively and securely the protection of all data that it collects and processes on a daily basis.

This data processing is unique and is integrated with its subsidiaries and their programs:

  • Leadership Portal (www.portaldalideranca.pt)
  • Best Leader Awards (www.bestleaderawards.com)
  • Global Strategic Innovation (www.globalstrategicinnovation.com)

LBC is committed to:

  • Process your personal data in a lawful and fair manner, collecting only the necessary information relevant to the purpose for which it is intended;

  • Allow you, as the data subject, to access and correct the information concerning you, transmitting it in clear language and rigorously corresponding to the content of the registration;

  • Do not use the collected data for a purpose incompatible with the collection;

  • Keep the data accurate and, if necessary, current;

  • Ensure the consent of the data subject under the terms of the legislation in force;

  • Guarantee the right to delete data in accordance with the legislation in force;

  • Respect professional secrecy in relation to the data processed;

  • Limit interconnections of personal data to the essential minimum;

  • Have implemented adequate protection and security measures, which prevent the consultation, modification, destruction or addition of data by unauthorized person to do so

2. Data processing and data protection officer

Under the terms of the General Data Protection Regulation (Law n.º 58/2019 of August 8), LBC does not have a Data Protection Officer appointed. However, with the aim of facilitating the contact of the holders of personal data with LBC or any of its subsidiaries, we have created an email to which all messages related to subjects that fall within the scope of our privacy policy and the Specific General Data Protection Regulation: privacy@lbc-global.com. LBC will provide an adequate response to all questions that come to us in this regard.

We ensure, among other aspects, the processing of data in accordance with the legislation in force, verifying compliance with this Privacy Policy. 

3. Personal Data, personal data holders and categories of personal data

What is personal data?

Personal data is all information of any nature, collected on any type of support, relating to an identified or identifiable natural person. Identifiable is the set of information that can lead to the identification of a particular person, namely by reference to an identifier (such as an identification number or location data).

From whom do we collect personal data?

In view of LBC's business object, most of the data of individual and legal persons (companies and associations) are processed. However, for the performance of its duties, data from the following types of natural persons may be collected and processed (non-exhaustive list):

  • Customers/investors and their employees
  • Service providers and their employees;
  • Employees from any of the companies in the LBC universe
  • Candidates and interns;
  • Recruitment processes;
  • Prospects;
  • Candidates and clients of programs promoted by LBC, such as the Global Strategic Innovation and the Best Leader Awards;
  • Participants in events promoted by LBC;
  • Subscribers to newsletters developed by LBC, or by any of its subsidiaries and development programs;
  • Visitors to LBC facilities.

 

What personal data do we process and how do we collect it?

LBC only collects data that are adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed.

The collection of your data can be done orally, in writing (namely through forms and contracts), as well as through the LBC website. As a general rule, we collect your data directly, within the scope of a project with customers or commercial interactions, and personal data may also be collected through public sources (such as internet sites and official public lists).

For the execution of different purposes, we may collect the following types of personal data:

  • identification data (such as name, place of birth, citizen card or date of birth)
  • contact details (such as mobile phone, address or e-mail);
  • qualification data and professional status (such as education level and CV)
  • data relating to functions or positions held
  • bank or financial details in case of economic transactions (such as IBAN or tax identification number)
  • location data (such as IP address)
  • footage from recording events or video conferences

As a rule, LBC does not collect special data, such as health data or data referring to administrative offenses or criminal offenses.

 

4. Fundamentals and Purposes of Personal Data Processing

Why and on what basis do we use your personal data?

All data collected and processed by LBC are based on one of the following conditions of legitimacy

or consent: When the collection is preceded by your express, specific and informed consent, through written support or via the web. We collect your consent, for example, for purposes related to the registration in the activities and initiatives of LBC and its subsidiaries, for the subscription of newsletters or for the registration in actions promoted by LBC.

For carrying out professional and commercial relationships, such as project activity and training programs and others.

Execution of contract or pre-contractual measures: when processing is necessary for the performance of a contract to which you are a party or for pre-contractual measures. 
This condition will be fulfilled when we process your data for the purpose of managing programs and financing and cooperation protocols or contracts for the supply and provision of services.

Compliance with legal obligations: when processing is necessary for the fulfillment of a legal obligation. This includes, for example, the communication of data to public bodies (national and community), fiscal or judicial.

the public interest: when processing is necessary for the exercise of functions in the public interest.

the legitimate interest: when the processing proves necessary for the pursuit of legitimate interests of the entity responsible for the treatment or of third parties, without harming the rights and freedoms of its customers and/or users. This includes all processing resulting from attributions conferred by law, namely commercial disclosure to representatives of LBC's client or partner companies or any of its subsidiaries, or even the processing of data to improve the quality of service and when our reasons for their use shall prevail over data protection rights.

What are the purposes for which we collect your data?

The personal data collected by LBC are only processed for specific, explicit and legitimate purposes. Whenever personal data are collected, they are intended exclusively for the purposes expressly identified at the time of collection. Here we list the main purposes that justify the collection of personal data by LBC

  • Contracting and project management with clients;
  • Recruitment;
  • Management of events, programs and offers promoted by LBC;
  • Contracting of supply and service provision contracts;
  • Disclosure of newsletters / publications;
  • Improved offerings and experiences;
  • Physical Security of Facilities and People.

5. Period of retention of personal data

LBC processes and retains your data only for the period that is necessary to pursue or complete the purposes of the treatment for which they are intended, in compliance with the maximum periods necessary to comply with contractual, legal or regulatory obligations.

As a general rule, and when there is a contract that legitimizes the processing of your data, LBC will keep such data as long as such contractual relationship is maintained. Other circumstances exist, such as compliance with legal or regulatory obligations (for example, for the purposes of complying with tax obligations, personal data relating to invoicing must be kept for a maximum period of ten years from the performance of the act), as well as the pendency of a judicial process, which may legitimize your data being kept for a longer period of time. At the end of the retention period, LBC will delete said data.

Regularly, every 5 years, LBC will contact the holders of personal data to renew their consent or, if that is their preference, delete them from our databases. However, if you wish to change your preferences, you can do so at any time by sending an email to privacy@lbc-global.com.

6. Rights of data subjects

Under the terms of the legislation in force, from the moment we collect and process your data, there is a set of rights that, at any time, you can exercise with LBC.

What are your rights?

Right of access: right that allows you to obtain information regarding the processing of your data and its characteristics (namely the type of data, the purpose of the treatment, to whom your data may be communicated, conservation periods and which data you must provide, mandatory or optionally).

Right of rectification: right that allows you to request the rectification of your data, demanding that these are accurate and current, for example, when you consider that they are incomplete or out of date.

Right to delete data or “Right to be forgotten”: right that allows you to request the deletion of your data, when you consider that there are no valid grounds for the conservation of the data and provided that there is no other valid ground that legitimizes such treatment (such as the performance of a contract or compliance with a legal obligation or regulatory).

Right to limitation: right that allows you to suspend processing or limit processing to certain categories of data or purposes.

Direito a portabilidade: right through which you can request the sending of your data, in a digital and commonly used format, which allows the reuse of such data. Alternatively, you may request the transmission of your data to another entity that becomes responsible for processing your data.

Right of opposition: right that allows you to oppose certain purposes and provided that there are no legitimate interests that prevail over your interests. One of the examples of this right concerns opposition to direct marketing purposes (marketing).

Right to Withdraw Consent: right that allows you to withdraw your consent, but that can only be exercised when your consent is the only condition of legitimacy.

How can you exercise your rights?

All the rights described above may be exercised, with the limitations provided for in the applicable legislation, upon written request, to be sent via email privacy@lbc-global.com.

7. Data transmission

With whom do we share your personal data?

In view of LBC's attributions, and depending on the respective purpose, your data may be shared with third parties, which include national and international public bodies and private entities for the purposes of complying with legal or regulatory, contractual obligations or functions of interest public. 
Your data may also be accessed by LBC service providers, considered necessary for the execution of the purposes described above, namely with regard to information security and archiving services. LBC guarantees that it only resorts to service providers that present the guarantees of execution of technical and organizational measures necessary and adequate to protect your personal data.

LBC does not sell data from natural or legal persons.

Transfers of personal data outside the EEA

As it operates in different geographies, LBC may, exceptionally, transfer your personal data to third countries (outside the EEA – European Economic Area).

In these cases, LBC will ensure that data transfers are carried out in strict compliance with applicable legal regulations.

8. Cookies Policy

What are cookies:

Cookies are small text files with relevant information that is downloaded by your access device (computer, mobile phone/smartphone or tablet), through the internet browser (browser), when a website is visited by the user, being used to store information about the user visits.

Os cookies, depending on how long the user remains on the page, can be classified as session or permanent cookies. The first type of cookies expires when the user closes the browser. The second type of cookies expires when their purpose has been completed or when they are manually turned off.

Os cookies used by LBC websites do not collect personal information that allows identifying the user.

Os cookies used on our websites are:

  • Analytics – collect information about users' browsing experience on the website, anonymously, although sometimes they also allow a user to be identified, uniquely and unequivocally to obtain information about the user's interests in the services provided by the website.
  • Advertising – persistently active but for a limited period, in order to collect user information about internet browsing habits so that the advertising viewed by the user corresponds to their needs and interests.
  • From third parties – allow the site to remember browsing preferences, language, region and collect information from users to target advertising to their interests.

Os websites:

utilize cookies to collect statistical information in order to analyze the functioning of the website and the users' browsing experience, and to evaluate the effectiveness of advertising and promotional campaigns.

Disable the use of cookies

All browsers allow the user to accept, refuse or delete cookies by selecting the appropriate settings in their browser. Thus, users can deactivate the use of the cookies our sites of the LBC universe by modifying the settings of the browser.

However, it is important to point out that deactivating cookies may prevent some web services from working properly, affecting, in whole or in part, navigation.

9. Legislation

The processing of personal data of users and customers carried out by LBC, as well as the sending of commercial communications carried out by electronic means, comply with national and community legislation in force, namely the General Data Protection Regulation.


LBC reserves the right to periodically review and change this policy. The date of last modification is indicated at the end of this document. Any changes to this policy and the way in which we use the personal data of the data subject will imply the publication of an updated version on our website.


Last update: 08/11/2022