ESG and sustainability for small business

In short

ESG covers your environmental impact, how you treat people, and how well the business is run and protected.
Large Australian companies are phasing in mandatory climate reporting that includes their supply chains, so expect customer questionnaires about energy, emissions and labour practices.
Start with the easy wins - energy, waste, transport - and measure them so you can answer questions with numbers.
The social side is about fair treatment of workers and suppliers, safety and community.
Good governance includes resilience - planning for the disruptions that could stop your business.

What ESG means for a small business

	What it covers	Small business examples
Environmental	Energy, emissions, waste, water, materials	Power bills, vehicles, packaging, recycling, suppliers’ practices
Social	People inside and around the business	Fair pay and conditions, safety, diversity, suppliers’ labour practices, community involvement
Governance	How the business is run and protected	Clear decision-making, ethics, data privacy and security, risk management, business continuity

Why it matters now

Your customers’ reporting. Australia’s mandatory climate-related financial disclosures are being phased in for large companies from 2025, starting with the biggest. These reports cover emissions across a company’s value chain, including suppliers. Large businesses are also required to report on modern slavery risks in their supply chains. If you supply larger businesses or government, expect questionnaires.
Winning work. Tenders and procurement increasingly score suppliers on sustainability and ethical practices.
Customers and staff often prefer businesses that act responsibly.
Lower costs. Using less energy, fuel and materials saves money.

Most small businesses aren’t required to report on ESG themselves, but being able to answer customers’ questions clearly is becoming a competitive advantage.

Environmental: practical first steps

Measure your starting point

You can’t improve, or answer a questionnaire, without a baseline. Gather a year of:

electricity and gas bills (kilowatt-hours, not just dollars),
fuel for vehicles and equipment,
waste and recycling volumes,
major purchases and materials.

Free online calculators can turn these into an estimate of your emissions.

Easy wins

Energy: LED lighting, efficient appliances, turning off equipment overnight, checking your energy plan, and considering solar if you own or can negotiate with your landlord.
Transport: plan routes to cut kilometres, maintain vehicles, and consider hybrid or electric for the next replacement.
Waste: reduce packaging, separate recycling, and choose suppliers who take back packaging.
Purchasing: buy durable, repairable equipment, and prefer suppliers with credible environmental practices. See Purchasing, suppliers and supply chain.
Digital: go paperless where you can.

Avoid greenwashing

Only make environmental claims you can back up with evidence. Vague or exaggerated claims such as “eco-friendly” or “carbon neutral” can mislead customers and breach the Australian Consumer Law, and the ACCC actively pursues greenwashing.

Social: people and community

Fair treatment: pay correctly, provide safe workplaces, and listen to your team. See Workplace health and safety.
Inclusion: hire and promote fairly, and make your workplace and services accessible.
Suppliers: ask about their labour practices, especially for goods made overseas, and pay small suppliers on time.
Community: local sponsorships, volunteering, buying locally.

Governance: running the business well

Clear responsibilities and decision-making, even if it’s just you.
Ethics: a short code of conduct covering honesty, conflicts of interest and gifts.
Data and privacy: protect customer information. See Cyber security and backups.
Records and compliance: keep registrations, licences, insurance and tax obligations up to date.

Resilience and business continuity

Good governance includes making sure one bad event doesn’t end the business. Think about what could stop you trading, and plan for it:

Risk	Example	Plan
Natural disasters and extreme weather	Flood, bushfire, storm, heatwave	Know your local risks, protect stock and records, have a plan to work from elsewhere
Cyber incident	Hacked email, ransomware	Multi-factor authentication, separate backups, an incident plan
Key supplier failure	A supplier closes or can’t deliver	Identify a backup supplier for critical items
Key person	You or a key staff member can’t work	Document how things are done; cross-train; keep logins accessible to a trusted person
Loss of a major customer	One client is most of your income	Diversify; keep a cash buffer
Power or internet outage	Equipment and payments stop	Backup options for payments and communication

Write a one-page continuity plan: your most critical activities, what you’d need to restart them, who does what, key contacts (staff, suppliers, insurer, bank, IT support), and where backups of important records are kept. Keep a copy somewhere you can reach without your office or email. Review it once a year, and test it with a short “what if” exercise with your team. Your state government and business.gov.au have emergency planning templates, and business.gov.au lists assistance available after declared disasters.

Answering customer questionnaires

When a larger customer sends an ESG or supplier questionnaire:

Answer honestly, including what you don’t do yet.
Use your measurements (energy, fuel, waste) rather than guesses.
Describe your plans and timelines for improvement.
Keep a master copy of your answers and policies to reuse next time.