Barriers to ESG Adoption in Malaysian SMEs: A stakeholder theory perspective

Anis Farzana Zulkefli; Memiyanty Abd Rahim; Nor Suziwana Tahir

doi:10.21834/e-bpj.v10iSI38.7639

Authors

Anis Farzana Zulkefli Postgraduate Student, Universiti Teknologi MARA (UiTM), Shah Alam, Malaysia
Memiyanty Abd Rahim Senior Lecturer, Universiti Teknologi MARA (UiTM), Shah Alam, Malaysia; Institute for Biodiversity and Sustainability
Nor Suziwana Tahir Associate Professor, Universiti Teknologi MARA (UiTM), Shah Alam, Malaysia

DOI:

https://doi.org/10.21834/e-bpj.v10iSI38.7639

Keywords:

Environmental, Social, and Governance (ESG), Small and Medium-sized Enterprises (SMEs), Stakeholder Theory, Sustainability barriers

Abstract

Environmental, Social, and Governance (ESG) practices are vital for responsible business conduct, yet adoption among Malaysian manufacturing SMEs remains limited. Using Stakeholder Theory, this concept paper examines internal barriers such as resource constraints, limited ESG expertise, and low awareness, including external barriers like complex regulations and weak stakeholder support. These challenges hinder SMEs from meeting stakeholder expectations and aligning with sustainability goals. This paper offers a structured understanding of why ESG is underutilized in SMEs, highlighting implications for policy, stakeholder engagement, and SME resilience, and suggesting future research on how stakeholder demands interact with these barriers.

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