Small and Medium-Sized Enterprises

This is one of three Issue Briefing Notes produced by a partnership of six sustainable development-oriented non-governmental organizations, including three international organizations and three organizations based in developing countries. The Issue Briefing Notes present a general overview of three issues that deserve particular attention in discussions on the possible development by the International Organization for Standardization (ISO) for international Social Responsibility standards. They address issues related to small and medium-sided enterprises (SMEs); stakeholder capacity to engage in corporate social responsibility (CSR); and national differences in CSR definitions and priorities. While written with an international focus, the papers are drawn particularly on insights from Chile, India and South Africa. For more information, please visit • Although their significance is difficult to measure, it is clear that small and medium-sized enterprises (SMEs) are the mainstay of most economies, particularly in terms of employment and overall development impacts. • Although their individual social and environmental impacts are small, the cumulative impacts of SMEs are highly significant, offering the potential for significant progress towards sustainable development if the SR agenda can be made more relevant and applicable for SMEs. • Currently, the greatest driver for SMEs to engage with SR is within the supply chain of larger companies. The " linkages " theme, in which support for SME development is an element of the social responsibility of large companies, is gaining prominence within the SR agenda. • But otherwise, the existing SR debate, both in terms of the business case and the tools, is often not conducive to the engagement of SMEs. And even supply chain-based SR initiatives can act against the interests of SMEs. • While a future SR standard offers the opportunity to engage SMEs, it also runs the risk of acting as a barrier to their market entry, hence undermining livelihoods and broad-based development. • An international SR standard needs to consider SMEs in relation to both the content of a standard, and the incentives for SMEs to implement it.