Felicia Design: ESG is No Longer Optional, Start the Journey Now

Felicia Design: ESG is No Longer Optional, Start the Journey Now

The largest obstacle SMEs face when trying to adopt an ESG framework is financial strain, manpower and time, or a lack thereof. With the majority of resources diverted into operations and growth, adding these principles feel like a burden for most. Some owners may even believe they distract from more important aspects of business. In reality, SMEs that fail to adapt will find themselves left behind.

The statement is not simply advice for SMEs in Thailand. Businesses globally, including those in Thailand, are in the midst of a reckoning that can no longer be ignored. It is something jewellery manufacturer Felicia Design experienced firsthand.

“I am not sure Felicia Design would be where we are today, without embracing ESG,” Ms Vibeke Lyssand Leirvåg, Felicia Design Founder & Managing Director, states. “For us, our customers and larger and respected design brands, demand a transparent supply chain. Having sustainable and social practices in place won’t matter if governance doesn’t exist or hasn’t been fully developed and implemented, with proper third-party audits.”

Many SME owners think they are creating governance structures or participating in sustainability efforts to meet various requirements for exporting products or being part of value chains. It is only one part of the equation, though.

“There are more stakeholders now interested in ESG. Consumers are asking questions. They want to know your policies and how your company conducts its ESG practices,” Ms Leirvåg says. “No matter where you turn, compliance matters. Someone will want to know what your company is doing. You have to document everything and often prove through a third-party audit.”

ESG compliance may no longer be optional, whether you are in the EU, Thailand or elsewhere in the world, but achieving it isn’t always a smooth process for SMEs. Gaps or unintended consequences in regulations create confusion and stress. An international standard does not exist.

“We have experienced issues with compliance. For example, when we are asked to calculate our carbon footprint. There is no standard industry tool for us to do that. We asked around but are still trying to find a tool that meets our customers requirement and are in line with regulations,” Ms Leirvåg recounts. “There are times when you need to be proactive and raise issues if something doesn’t make sense or can’t be done. You may not get an answer right away, but eventually it will come.”

Governance and its challenges

The ‘G’ in ESG can seem more complex than the other two components. Governance hasn’t been developed with SMEs in mind. This has led to requirements and regulations that can seem overwhelming, especially for those starting from scratch. Ms Leirvåg urges business owners to look at the bigger picture.

“Governance is a journey, and one you simply have to start. It is essential to acknowledge that you won’t build everything at once,” Ms Leirvåg explains. “I encourage SMEs to approach the journey with pragmatism. Prioritise short-term goals and make long-term plans. This is how you create a solid framework.”

Another common misconception surrounding governance is the cost associated with it. SMEs in Thailand may view this as an expense rather than seeing the opportunities.

“Governance should be seen as an investment. It provides competitive advantages and creates opportunities. Big corporations will often not work with SMEs that don’t meet all ESG requirements due to company policies or regulations. The only way you can realise the benefits that come with having governance in place is to start the journey,” Ms Leirvåg notes.

“I encourage companies, regardless of size, to start a clean business. By clean business, I mean following all laws and processes. Register the company, fulfil tax commitments, and do everything by the book from day one,” Ms Leirvåg states. “If you don’t, it can be difficult to scale moving forward. It can also be hard to implement governance if you don’t start from a solid foundation. When you don’t have governance and transparent business practices, it could be difficult to find new business opportunities, especially if you want to work with customers in Europe or other areas where ESG has become mandatory.”

Felicia Design didn’t begin its governance journey because it was mandatory. The business culture has always been based on Scandinavian principles, emphasising ethical business practices with sustainability at the forefront. Of course, doing the right thing isn’t a substitute for compliance.

A social endeavour

Environment and governance are the pillars of ESG that receive the most attention. Yet, the social component is equally vital as expectations for transparency in areas such as labour rights, diversity and community engagement rise.

“At Felicia Design, we see our team as the heart of the company, and caring for the social aspect is very important. We invest in safe working conditions, skills development, and fair employment practices, both through clear policies and implementation,” Ms Leirvåg says. “Our staff consider Felicia Design their home, and by creating a fair and safe workplace and investing in their well-being, we see they tend to stay with us.”

That investment has included providing staff with opportunities for training, reskilling and upskilling. The jewellery industry needs to move away from being labour-intensive and instead utilise technology, combined with a highly skilled workforce, to complete tasks. Ms Leirvåg believes SMEs that embed social values into their operations often build stronger, more resilient workforces.

“We have taken an active step in building the future workforce by signing an MOU with the Royal Goldsmith College. We presently have eight students completing their dual vocational education with our company,” Ms Leirvåg explains. “It is also important for our company to contribute back to society. We do this by organising activities, including teaching soft skills and entrepreneurship, at underprivileged schools. Additionally, Felicia Design provides women facing hardship in life with education and support, so they can rebuild their strength and re-integrate into society.”

Finding guidance

ESG is a challenge that doesn’t have to be approached alone. There is a wealth of resources and tools now available that can reduce the cost and time required for SMEs to build their own framework and policies.

“The only way we have been able to adopt our approach has been through tools and learning. Knowledge sharing has been vital as well. For local issues, you can reach out to a chamber of commerce or similar companies that have likely faced these issues already. For more global challenges, others within your industry, especially larger companies, can serve as a valuable resource. For us, being a part of the Responsible Jewellery Council, CAC Thai and the Thai Gem and Jewelry Traders Association was important,” Ms Leirvåg points out.

She continues, “The support and knowledge sharing that comes with being part of a network benefits everyone. We all need guidance. Everyone is learning and trying to figure out how governance works or how our companies are expected to conduct reporting. ESG is an area where you never stop learning.”

“There are many toolkits on the Internet to guide businesses in creating policies or establishing procedures. It is now possible to use AI to create a template for things like governance. It doesn’t take much to create a roadmap that will ensure compliance,” Ms Leirvåg notes. “It must be stressed that one size doesn’t fit all when it comes to ESG. Every industry and company are different. Take what you can from the available tools to create a blueprint, but make sure plans and policies are your own. You can’t simply copy and paste.”

Fact Box

• SMEs should view governance as an investment that creates business opportunities, as opposed to seeing it as an additional cost
• Thailand-based companies that are part of EU value chains will need to be required to provide reporting capable of meeting CSRD and CSDDD requirements
• Governance and ESG toolkits can be found online, both general and industry directed, while AI can assist with certain elements of policy creation, but at all times used it as a guide and create your own. Do not copy and paste!
• Not only are businesses more mindful of ESG, but consumers now want to know how businesses are fulfilling ESG requirements
• Start your business in a transparent and sustainable way by registering the company and carrying out related tasks before starting operations in order to avoid governance issues and allow for an easier way to scale your business

For other interesting articles from our members and chamber activities, please visit our website.