How do SMEs apply AI in ESG implementation?

As digital transformation and sustainable development trends become increasingly strong, artificial intelligence (AI) is considered a powerful tool to support businesses in managing and implementing ESG (environmental - social - governance) criteria. However, for small and medium enterprises (SMEs), the journey to access and apply AI still has many barriers.

Challenges for SMEs when applying AI in ESG implementation

Prof. Dr. Mac Quoc Anh, Vice President and General Secretary of the Hanoi Association of Small and Medium Enterprises and Director of the Institute of Economics and Enterprise Development, pointed out that the specific challenge of Vietnamese SMEs is the lack of personnel with knowledge of both ESG and AI, especially local businesses in remote areas where there are not many opportunities to access information or modern technology.

Another challenge is the wait-and-see mentality, not being proactive. Specifically, businesses often wait for requests from foreign partners before implementing ESG, instead of proactively building internal systems. "Units also lack a platform for sharing ESG data in domestic supply chains, making it difficult for SMEs to demonstrate transparent and complete environmental and social indicators," he said.

In particular, according to him, cost is still the biggest barrier that makes most SMEs reluctant to approach AI in ESG implementation. The initial cost of technology investment in AI is high, including AI software, cloud infrastructure, ESG data systems, etc. "As for the cost of training staff and maintaining operations, it is difficult for SMEs to maintain an internal team of AI or ESG experts. Outsourcing is also expensive, often ranging from 1,500-3,000 USD/month/person," he said.

Regarding the cost of collecting ESG data, especially Scope 3 (indirect emissions from the supply chain) is very difficult to measure, accounting for 75% of total emissions but depending on data from suppliers - something that SMEs have little control over.

In addition, Mr. Mac Quoc Anh said that SMEs lack specialized skills in AI and ESG and this gap is quite serious. "Enterprises lack "2-in-1" personnel. Experts who understand both AI and ESG are rare. Most SMEs have to separate these two areas, causing a lack of strategic connectivity," he said.

He also commented that SMEs often do not have experts who understand how to convert data on emissions, energy consumption, water, etc. into ESG reports according to international standards.

Mr. Mac Quoc Anh stated that in reality, many SMEs are still hesitant or consider AI as “an adult game”. Most of the outstanding case studies come from large corporations such as Unilever, Microsoft, IKEA, etc.  

What results will AI application achieve in ESG implementation?

According to a survey by the Vietnam Federation of Commerce and Industry in 2024, only about 14% of surveyed SMEs believe that ESG is a mandatory factor in their development strategy, and less than 5% apply AI in ESG management.

Many businesses still confuse ESG with individual charity and environmental protection activities, without approaching ESG according to international standards (GRI, CSRD, TCFD...). The application of AI is mainly limited to customer management, sales or internal automation, not clearly linked to ESG management...

According to Mr. Mac Quoc Anh, AI is emerging as an indispensable tool to help businesses, especially SMEs, implement ESG more effectively and transparently.

First, AI helps automate ESG reporting. Accordingly, AI helps collect and analyze ESG data in real time, minimizing manual errors. According to a McKinsey report, businesses using AI for sustainability reporting can save up to 30-40% of time compared to the traditional way.

Second, AI helps increase reliability and transparency. AI technology helps trace the origin of environmental data (such as emissions, energy use), thereby easily comparing it with EU standards.

Third is the detection of potential ESG risks. Thanks to big data analytics, AI can provide early warnings of issues related to climate risks, labor, and unsustainable supply chains. For example, many SMEs in Europe have applied AI to calculate Scope 3 emissions - a factor that was previously almost impossible to measure.

"Thus, AI is a tool that not only helps SMEs keep up with ESG requirements but also creates long-term competitive advantages in the global business environment," said Mr. Mac Quoc Anh.

Mr. Mac Quoc Anh pointed out some SMEs models that are applying AI in ESG in Vietnam. In the agricultural and food industry, there is Vinh Hoa Company - Ben Tre, Tu Le Herbal Tea Cooperative - Yen Bai . In the manufacturing - light industry industry, there is An Phat Holdings Plastic Joint Stock Company, although no longer an SME, is still a strong implementer. In the textile - footwear industry, there is Hue Textile Company, Dong Xuan Knitting (medium scale)...

"Many small businesses in the supply chain of Nike, Decathlon... are also starting to apply ESG dashboards (integrated AI) as requested by the companies," Mr. Mac Quoc Anh added.

Policies to reduce barriers for SMEs

To solve the problem of capital, skills, data and technology, Mr. Mac Quoc Anh suggested that policies need to be synchronized in the direction of finance - technology subsidies. "The government provides preferential loans for SMEs to deploy AI in implementing ESG or sponsor AI software, consulting costs for using AI in the first 6-12 months," he said. For example, in Germany, the federal government spends 3 billion euros to support SMEs in digital transformation, including the AI and sustainability categories.

The second is dual-skill training. The government needs to build free training programs or cooperate with universities to teach AI skills in parallel. In particular, the government needs to prioritize training for manufacturing and export enterprises.

The third is to standardize and make ESG data transparent. According to Mr. Mac Quoc Anh, it is necessary to develop a platform to share emissions and ESG data among businesses in the industry. Support SMEs to calculate Scope 1, 2, 3 quickly with user-friendly AI tools.

The fourth is to promote supply chain cooperation. Mr. Mac Quoc Anh encourages large enterprises to sponsor SMEs through tax deduction mechanisms or recognition of supply chain ESG indexes.

"It is necessary to build an AI - ESG network between large enterprises, SMEs, and technology startups," he emphasized.

Source: https://dantri.com.vn/kinh-doanh/doanh-nghiep-nho-va-vua-ung-dung-ai-khi-thuc-thi-esg-ra-sao-20250809004907892.htm