Navigating the Supply Chain Sustainability

Small and medium enterprises (SMEs) and medium-sized businesses are the backbone of the world economy, creating about 70% of jobs and 90% of total companies worldwide and 40% of industrial pollution across the Organisation for Economic Co-operation and Development (OECD) countries (WEF, June 2025). However, while collectively important, they often face particular difficulties in adopting sustainability practices, ranging from limited resources to a lack of knowledge and experience. This constrains the adoption of sustainability best practices in SMEs and medium-sized companies in the manufacturing and supply chain sector compared to large global corporations. These global businesses have started to embrace the benefits and potential of sustainability in areas such as low-carbon product innovation, circular supply chain configurations, green procurement and more detailed sustainability reporting to meet investor and regulatory requirements.

 SMEs have become integral to global supply chains, often working closely with multinational corporations through supply and subcontracting arrangements. Their participation has fuelled economic diversification, enhanced employment opportunities, and introduced new technologies. In the United Arab Emirates (UAE), SMEs represent over 94% of the UAE’s businesses and contribute more than 60% to non-oil GDP, with plans to reach one million SMEs by 2030 (AB Magazine & UAE Government Portal, July 2025). For many developing economies, including the UAE, their integration into global value chains has been instrumental in achieving key development priorities and accelerating growth.

 Although SMEs and mid-sized companies face distinct challenges, they also possess the agility and potential to drive meaningful change when equipped with the right tools and support. By aligning sustainability with business strategy, not as a cost but as a competitive advantage, they can contribute significantly to global climate goals while securing long-term economic growth. The impacts of globalisation have heightened challenges for multinational companies to implement sustainable practices. These immediately extend to suppliers. This poses new opportunities for some sectors, notably for logistics SMEs, to use sustainability as an innovation driver for efficiency and provide a competitive edge long-term. Focusing on sustainability as a pathway to operational excellence and global recognition will substantially improve the competitive position of SMEs. Nonetheless, the other side of the coin creates new challenges. Apart from meeting the social responsibility benchmarks of ethical employment, transparent procurement, and humane sourcing, SMEs face the constraints of insufficient financing, a lack of skilled labour, weak institutional support, high compliance burdens, and multinational supply chains. For logistics SMEs with multi-geography supply chains, the burdens become even more pronounced.

The UAE stands out as a country that possesses a supportive ecosystem for SMEs that wish to embrace sustainability initiatives. The UAE’s geopolitical position provides opportunities to align with global ESG standards due to the country’s innovation-driven agenda, commitment to green growth, and investments in digital infrastructure. Moreover, the introduction of the first climate law as a net-zero milestone suggests a shift in policy-framed action in the region. The UAE also provides practical opportunities for SMEs to embrace sustainability in logistics through green warehousing, energy-efficient transport, and digital tracking systems.

To manage this shift, SMEs must take a more conscious approach that prioritises awareness and capacity-building. Specifically, accessing self-sustaining platforms, as well as examining trends across a broader industry and the international sustainability scene, can help SMEs craft smart and efficient actionable steps. Starting with basic energy reduction measures, transport route optimisation, and waste segregation, SMEs can experience small wins which will enhance commitment towards larger goals. Exploring these initiatives often results in cost-efficient operations while showcasing a commitment towards sustainable practices.

 Access to finance is a critical factor in facilitating substantial change. Many small and medium-sized enterprises are reluctant to invest in green technologies or process improvements because of perceived high costs. The International Chamber of Commerce (ICC), in collaboration with Sage, has launched a global report during COP 29 which reveals a $789 billion green finance opportunity for small businesses. The report exposes a gap between SMEs’ sustainability ambition and their ability to take action, preventing them from accessing vital green finance needed to drive their initiatives. 

The introduction of green financing mechanisms and sustainability-linked incentives by the UAE government and regional financial institutions has expanded opportunities to obtain funding for sustainability initiatives. For logistics SMEs, investments in low-emission vehicles, warehouses powered by renewable energy, or digital supply chain management tools can reduce operational costs and improve market competitiveness over time.

Another consideration is the need for workforce development. Meeting sustainability compliance related to emissions and reporting and ethical labour practices requires skilled practitioners who understand both the regulatory landscape and the operational environment. Through collaboration with businesses, universities, and vocational and industry associations, SMEs have the opportunity to develop the appropriate internal sustainability competency through targeted training. Beyond these collaborations, the adoption of new technologies offers profound transformative potential. Real-time tracking systems, automated documentation systems, and carbon footprint calculators are digital solutions that promote compliance with sustainability requirements and enhance transparency throughout the supply chain. In the case of logistics SMEs, where visibility and operational performance are critical, these solutions not only aid in sustainability reporting, but they also provide considerable value-add to the logistics services offered.

Collaboration enhances the impact of sustainability initiatives by enabling SMEs to participate in industry clusters, trade associations, and public-private partnerships. These collaborative structures enable small and medium-sized enterprises (SMEs) to share best practices, pool resources for workforce training and technology implementation, and engage with regulatory agencies to develop integrated sustainability frameworks.

 To move forward, SMEs should integrate sustainability into all decisions, use their agility to drive innovation, and include climate KPIs in business metrics and ESG practices across procurement, product design, and operations. The implementation of these strategies allows SMEs to function as strategic partners within global value chains, increase resilience to regulatory changes, and attract collaborators with aligned values. Logistics professionals in the UAE have opportunities to improve supply chain efficiency, competitiveness, ethics, and environmental responsibility. SMEs can also seek the EcoMark Global Accreditation, which is the sustainability accreditation framework for micro, small and medium-sized enterprises (MSMEs). This framework was developed to enhance the competitiveness of MSMEs in the global green economy through streamlining and standardising the regulatory processes surrounding sustainability benchmarking worldwide. These initiatives enable small and medium-sized enterprises to contribute meaningfully to net-zero emissions goals. The shift towards sustainability is likely to benefit SMEs that embrace such practices during the current international climate. It is time that both the government and the private sector collaborated to assist businesses of every scale in the manufacturing and supply chain sector in their transition to sustainable practices. The UAE provides a pioneering practice through supportive policies, new financing mechanisms, and ongoing innovation which enable the small and medium-sized enterprise sector and logistics industry to address sustainability challenges effectively while establishing a competitive advantage.