Simplifying sustainability in Practice: When Global ESG Drivers Become Local Business Decisions
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- 5 min read
In my last article on simplifying sustainability in practice, I looked at three of the drivers shaping the global sustainability agenda: frameworks, regulations and standards; climate change and the energy transition; and biodiversity and natural capital, and their implications for African SMEs
This article, drawn from Module 4 of Simplifying Sustainability: A Handbook for African SME Leaders, covers three more. Sustainable finance and investing; digital transformation and inclusion; and financial inclusion.
They may sound like issues for governments and large companies, but they can show up in the everyday business decisions of small and medium-sized businesses.
1. Sustainable finance and investing
My experience working with banks, investors and development finance institutions (DFIs) is that ESG factors play a role in their investment and lending decisions. These may be the result of regulatory requirements; for example, across Africa, central banks are building ESG into banking supervision, from Ghana’s Sustainable Banking Principles to Kenya's phased climate-risk disclosure guidelines for banks, to South Africa's Green Finance Taxonomy.
Sometimes it comes from investors managing the risks of their investments. DFIs, which are a source of investment funding for African businesses, build ESG criteria into their funding processes.[1]
That means an African SME seeking funding, whether as a loan or an investment, may be asked not only about its revenue, margins, and growth plans, but also about its environmental management, social performance and governance practices.
Are your premises exposed to flooding?
Are you and your suppliers complying with environmental and labour requirements?
How are key decisions made and who is accountable for them?
Sub-Saharan African SMEs already face a financing gap of roughly USD 330 billion.[2] I know from working with African SMEs and mentoring some of their leaders how hard it is to access finance. This is made even tougher when their eligibility is viewed through an ESG lens. But it is today’s reality.
The ESG questions may be overwhelming; some may even not be relevant. However, it is important to understand what financiers want and to be prepared to meet their expectations as appropriately and effectively as you can.
So, as a business leader, you need to know what may be asked of you and the evidence you must provide to support your answers. That evidence may be as simple as records of energy and water use from your bills, staff policies, insurance documents, information on key suppliers, health and safety records and evidence that you know the major risks of your business and are managing and monitoring them. These are simply good and responsible business practices.
There is a real cost to not being able to provide information on your ESG performance. It can be the difference between whether the business gets a loan, secures investment, wins grant funding, or enters a new market.
Suggested Action: Next time you have a conversation with your bank or DFI contact, ask them what ESG information would strengthen your next funding application. Do not wait till you need to apply for the money to find out.
2. Digital transformation and inclusion
The benefits of technology are now well known. For example, it helps businesses reach customers, manage payments, improve efficiency, reduce waste, keep better records and enter new markets.
African businesses should take full advantage of these benefits. But when adopting new technology, it shouldn’t simply be because the other business across the road did and seems to be doing well. Business leaders need to consider whether the technology they are thinking of buying can be used easily by customers and staff. A contactless card terminal may work well for certain customers who are banked and use cards. But it will be unsuitable for many who use cash and mobile money. Digital exclusion is a critical issue in sub-Saharan Africa, where, according to the International Telecommunication Union, only 38% of the continent’s population is online, compared with a global average of 68%
Technology also comes with responsibilities around managing the potential adverse impacts on privacy and data protection. An SME may collect customer names, telephone numbers and addresses, copies of identity documents, and payment information. This is all personal data, which is subject to regulations on how it is kept and used.
A basic data protection checklist, drawn from guidance used across African markets, gives most SMES a workable starting point:
List what personal data you collect.
Know where it is stored and who on your team can access it.
Put appropriate measures in place to protect it.
Use strong passwords, limit access to staff who genuinely need it, and back up data regularly.
Tell customers in plain language what you collect and how you use it. It can be as simple as a short notice on your website or printed on your receipts
Have a simple plan for what you will do if data is lost or a system is breached (who to tell and how fast)
Review all this once a year or whenever you add new software or a new payment provider.
Suggested Action: Before adopting any new technology, ask: What problem are we looking to solve? Does this work for our customers and staff? Could it exclude people we want to serve?
Then run through the checklist above to make sure that you can protect data you collect.
3. Financial inclusion
Financial inclusion is about making sure individuals and businesses can access affordable and useful financial services, including bank accounts, payments, savings, credit and insurance. It is closely tied to digital inclusion. People and businesses cannot fully benefit from financial services without access to digital devices and connectivity.
Access to appropriate financial services makes it easier to manage payments, obtain working capital, and take on larger contracts that may require upfront investment before you are paid.
Sub-Saharan Africa’s formal account ownership jumped from 34% in 2014 to 58% in 2024, the fastest financial-inclusion growth of any region worldwide. Mobile money accounts are now held by 49% of adults in sub-Saharan Africa,[3] the highest of any region globally. Yet over 350 million adults remain unbanked, and youth inclusion lags at around 48%. That gap matters to your business.
The more financially excluded your market is, the fewer payment, savings, and credit options your customers may have. A customer without access to suitable digital payment methods will not be able to make purchases remotely. One without access to credit may not be able to make larger purchases, and a business customer without working capital may delay paying you.
Suggested Action: Map out how many of your current or target customers pay digitally vs cash-only, since that number tells you how exposed your revenue is to inclusion gaps. If a large share still pays in cash, that signals you may need to keep cash-friendly options rather than force a digital-only switch that would shrink your market. If a growing share is moving to mobile money, that’s a signal to invest in that technology. If you are looking to expand into new markets, assessing the level of financial inclusion will tell you whether to budget for cash logistics, agent networks, or simpler digital tools.
Global Drivers. Local Decisions
These drivers may sound global, but their effects are very local. Each of these drivers may already touch your funding, your customer or your growth plans.
Ask yourself:
Which of the drivers is already affecting how I run or grow my business?
Which ones could affect my access to finance, customers or markets?
Which ones could create an opportunity if I paid attention early enough?
If this is a conversation you are beginning to have in your business, or realise you should be having, the Handbook is a useful tool. You can access it here Simplifying Sustainability: A Handbook for African SME Leaders (Volumes 1 & 2) — Kijani Nexus
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