ESG: that thing that many companies only find out about five minutes before the due diligence begins.

There comes a specific point in the life of some SMEs.

It is not when the company was founded.

It’s not when the first important client turns up.

It’s not when the first foreign market opens.

It is when an investor asks:

“Do you already have an ESG risk assessment?”

Silence.

Downcast eyes.

Someone is coughing.

Then, as usual, comes the immortal line:

“We’re working on it.”

Which translates as: “We have a page on our website that says ‘sustainability’ and perhaps features a photo of a forest.”

The problem is that these days, ESG is no longer just the ‘let’s look good’ department.

It’s not the green sticker.

It’s not the leaflet with the child, the tree and the sunset.

It’s not even the sort of word you’d put in a company profile when you’re two lines short of filling the page.

ESG is far more annoying.

Because he asks questions.

Simple questions, but unpleasant ones.

Tipo:

• Who really calls the shots in the company?
• What happens if the founder goes missing for two weeks?
• Are suppliers assessed or selected using the ‘lowest cost’ approach?
• Do key staff members stay because they are motivated, or because they haven’t updated their LinkedIn profiles yet?
• Can we back up what we say about sustainability, or is it just a leap of faith?
• If a bank, a fund or a major client comes along, do we come across as solid, or do we come across as ‘heroic in an artisanal sort of way’?

That’s the point.

Many Italian SMEs are extremely good at making products.

Much less at to make it clear how they work.

They have qualities, connections, skills and business acumen.

But ultimately, governance is down to the owner.

The supply chain is in an Excel file called “final suppliers – the very last 3”.

These traditions are passed down orally, just like Greek myths.

Sustainability is “we’ve always done these things”.

And perhaps that’s true, too.

But in the world of investors, banks and major clients, ‘trust’ is not a metric.

“We know that” is not an indicator.

“I’ve never had any problems” is not a risk management system.

And this is where ESG comes into its own.

Not because it turns the entrepreneur into a climate activist with a stainless-steel water bottle.

But because it forces the company to take a hard look at itself.

And to ask oneself:

Are we really well-organised?

Are we really eligible for funding?

Are we really scalable?

we really are ready for an industrial or financial partner?

Or are we simply very good at surviving, thanks to three key people, two long-standing suppliers and a worrying amount of WhatsApp?

For an SME, working on ESG does not mean striving for perfection.

It means becoming easier to understand.

Tidier.

More justifiable.

More credible in the eyes of those who have to invest money, credit, reputation or trust.

Because, at the end of the day, ESG isn’t going to save the world in the next quarter.

More modestly, it serves to prevent the world — banks, customers, investors, regulators, the supply chain — from saving itself at our expense.

The moral of the story: sustainability is no longer just the smart outfit you put on when an investor comes round.

It’s more like having your car serviced.

You can also postpone it.

But don’t complain if they stop you.