In an exclusive interview with Dr. Vimi, a leading expert in data analytics and market intelligence, we explored the evolving landscape of Environmental, Social, and Governance (ESG) practices among Malaysian SMEs and how they compare to their regional counterparts. Dr. Vimi Ramasamy, the Chief Executive Officer & Founder of STRAVIK, Adjunct Professor, and TalentCorp Fellow, shares insights on the challenges and opportunities for SMEs in Malaysia. She offers a roadmap for businesses to effectively integrate ESG principles, ensuring competitiveness in a global market increasingly focused on sustainability
The State of ESG Preparedness in Malaysia
According to Dr. Vimi, Malaysian SMEs’ adoption of ESG practices is largely influenced by their engagement with multinational corporations (MNCs). “SMEs that are part of MNC supply chains are generally more attuned to ESG practices due to the stringent requirements set by these corporations,” she explains. However, SMEs not directly connected to MNCs often lack the same urgency in adopting ESG principles, despite government incentives and awareness campaigns.
Recent reports highlight a significant increase in ESG awareness among Malaysian SMEs, with figures rising from just 14% in 2022 to 80% in 2024. However, as Dr. Vimi points out, the gap between awareness and implementation remains substantial. “Only 38% of SMEs that have adopted sustainability practices report substantial revenue gains,” indicating that while awareness is growing, effective execution of ESG practices remains a challenge.
Regionally, Malaysia is making strides in ESG adoption, but Dr. Vimi notes that countries like Singapore and Thailand have set a higher bar. “These countries have stricter sustainability standards, putting pressure on Malaysian SMEs to improve their ESG practices in order to stay competitive on the global stage,” she states.
Sectoral Disparities in ESG Adoption
Dr. Vimi identifies the Electrical and Electronics (E&E) and manufacturing sectors as the frontrunners in ESG adoption within Malaysia, primarily due to their integration into global supply chains that demand strict sustainability standards. According to the 2025 Alliance Bank Malaysia ESG Report, 60% of manufacturing SMEs have embraced ESG practices, a notable increase from previous years. In contrast, sectors such as services, construction, and agriculture lag behind, with adoption rates ranging from 37% to 41%.
The Malaysian government is actively addressing these disparities with initiatives such as the National Industry Environmental, Social, and Governance (i-ESG) Framework, designed to assist sectors with lower ESG uptake. Dr. Vimi also highlights the allocation of RM300 million under the National Energy Transition Roadmap in Budget 2025, further emphasizing the government’s commitment to fostering ESG practices across all industries.
The Role of Digital Transformation and Data Analytics
As digital transformation becomes integral to business operations, Dr. Vimi emphasizes its role in enabling SMEs to integrate ESG principles effectively. “Digital transformation helps businesses optimize across the four domains—people, policy, process, and technology—creating a holistic approach to sustainability,” she explains. By leveraging digital tools and data analytics, SMEs can streamline operations, ensure compliance with ESG standards, and make better-informed decisions. This transformation also enables upskilling employees and improving workforce efficiency, creating a more sustainable and productive work culture.
Overcoming Challenges in ESG Compliance
One of the most significant challenges preventing Malaysian SMEs from embracing ESG compliance, according to Dr. Vimi, is the lack of understanding of what ESG truly entails. “Many businesses mistakenly believe that ESG compliance requires substantial financial investment and complex reporting processes,” she says. In reality, ESG is about aligning business practices with sustainability, optimizing operations, and ensuring long-term, incremental growth. “Unlike other forms of compliance, ESG is more about personal responsibility and continuous improvement,” Dr. Vimi adds.
Cost-Effective ESG Implementation
While concerns about the costs of sustainability are common among SMEs, Dr. Vimi argues that ESG strategies can lead to long-term savings and enhanced business performance. “By optimizing operations through ESG principles, businesses can reduce inefficiencies, lower energy consumption, and improve resource utilization, all of which contribute to cost reductions,” she states.
She also encourages SMEs to start small by addressing the most material issues identified through a materiality assessment. “Several government grants and incentives are available to support SMEs in their ESG journey, including the Green Technology Financing Scheme (GTFS) and the Low Carbon Transition Facility (LCTF), which provide financial support for sustainability-focused projects,” Dr. Vimi notes.
ESG as a Business Opportunity, Not a Burden
A common misconception among SMEs is that ESG is a compliance burden. However, Dr. Vimi sees ESG as a strategic business opportunity. “Adopting ESG practices can directly attract investors, open doors to new growth opportunities, and enhance brand reputation,” she asserts. By viewing ESG as a growth strategy rather than a regulatory obligation, SMEs can tap into a growing market that increasingly values sustainability.
Regional Policy Insights and Recommendations
Drawing on her extensive experience in global markets, Dr. Vimi suggests several regional policies that could benefit Malaysia’s SME sector. For example, she advocates for a national sustainability certification system similar to Thailand’s Green Industry Standard (GIS), which incentivizes businesses to adopt green practices. She also proposes the creation of a one-stop platform for SMEs to access all ESG-related grants, tax incentives, and financial support, akin to the European Union’s Green Deal.
Preparing for the Future: ESG Beyond 2050
Looking ahead to 2050, Dr. Vimi highlights the need for SMEs to make ESG a core component of their business strategy. “SMEs must integrate ESG into every aspect of their operations, from supply chains to energy efficiency, to remain competitive in an increasingly ESG-driven global market,” she advises. She also stresses the importance of investing in people and technology to ensure continuous improvement and long-term sustainability.
Dr. Vimi concludes with a powerful message for Malaysian SMEs: “ESG is not just a responsibility; it’s a commitment to future generations. By taking purposeful, deliberate steps now, SMEs can shape a sustainable future and thrive in an increasingly sustainability-focused world.”
In conclusion, while the road to comprehensive ESG adoption in Malaysia may still be challenging, it presents significant opportunities for SMEs that embrace sustainability. With government support, digital transformation, and a shift in mindset, Malaysian SMEs can position themselves for long-term success in a global market where sustainability is becoming a key driver of business growth.
