Conceptualising the Digital ESG Shift: A Stakeholder Theory Perspective on SMEs and Emerging Technologies

Abstract

Small and medium-sized businesses (SMEs) are under more pressure to adopt Environmental, Social, and Governance (ESG) practices. However, they face problems like not having enough resources, not knowing how to use technology, not having enough skilled workers, and not wanting to change. These challenges make it hard to understand how SMEs can stay competitive while also following ESG rules. This paper analyses the impact of digital technologies, such as artificial intelligence (AI), the Internet of Things (IoT), and digital platforms, on facilitating the adoption of ESG by enhancing transparency, efficiency, and stakeholder trust. Utilising Stakeholder Theory, this research articulates how digitalisation enhances relationships with customers, investors, and regulators. It puts forward a conceptual framework and ideas that explain how digitalisation and ESG adoption are connected in SMEs. The paper also talks about useful strategies like getting help from the government, getting formal training, and working with technology providers. By combining ESG and digitalisation from a stakeholder-focused point of view, the study adds to the ongoing discussions about sustainability and gives ideas for how to make SMEs more resilient and competitive in the long run.