An increasing number of Polish micro, small and medium-sized enterprises see the potential for expansion into foreign markets. However, entering new, often challenging markets is not just a matter of product quality or competitive pricing. Modern business standards, especially those related to ESG, are often becoming a prerequisite for establishing cooperation with foreign contractors and for participating in tenders. In our interview with Marcin Graczyk, PAIH Management Board Plenipotentiary for the Brand of the Polish Economy, PAIH Spokesperson, Head of the ESG Working Group at PAIH, we take a look at the readiness of Polish SMEs for the challenges of the global market, the role of ESG in building a competitive advantage and the applicable regulations in different parts of the world.
Are SMEs in Poland ready for international expansion in terms of competence, processes and operational standards?
Marcin Graczyk (M.G.): Polish SMEs today have an increasing potential to expand abroad – both in terms of the quality of their products and their operational capabilities. At the same time, it should be made clear: many companies are still not fully prepared for the challenges of international markets. They often lack structured processes, standardization, as well as the awareness that competition in foreign markets is based not only on price, but also on values – such as transparency, sustainability or ethics. Increasingly, these are the deciding factors for entering the supply chains of global companies.
Can ESG help SMEs win new contracts – for example, in public tenders or in the supply chains of large companies?
M.G.: Definitely yes. In an increasing number of public tenders – especially in Western European countries – ESG is no longer an add-on, but a condition for participation. This applies not only to large contracts, but also to smaller contracts in which SMEs have real opportunities.
To what extent are ESG requirements already standard in business relationships in foreign markets – and how do Polish companies compare to their competitors?
M.G.: In markets such as Germany, Scandinavia, the Netherlands or France – ESG is a de facto “license to operate.” There, no one asks anymore if a company implements ESG, but how it does it and how it reports it. Polish companies, while technologically and qualitatively competitive, often fare worse when it comes to formal approaches to sustainability. This, however, is changing – especially thanks to new EU regulations such as CSRD, which also motivate smaller companies to implement ESG standards.
In Germany, the Supply Chain Responsibility Law (LkSG) has been in effect since 2023, requiring large companies (over 1,000-3,000 employees) to monitor their entire supply chain for human rights and environmental standards. This has had a knock-on effect: large companies are enforcing detailed ESG data from their suppliers (including SMEs). The bottom line: companies not meeting these requirements may find it harder to maintain relationships with German partners.
What aspects of ESG are most frequently evaluated by foreign trading partners?
M.G.: In practice, three main areas are most often analyzed: environmental, social and relating to management practices, with environmental aspects still the priority. Special attention is paid to CO₂ emissions, the company’s climate policy and the carbon footprint of products. Energy efficiency of processes and how resources are managed are also important. Increasingly, the focus is also on how the company communicates with stakeholders and its willingness to conduct an independent ESG audit. For many foreign counterparties, these are becoming prerequisites for establishing or continuing cooperation.
What ESG regulations are in place in the EU and in other parts of the world – such as the US or Asia?
M.G.: In the EU, the most important regulatory impetus at the moment is the CSRD and the EU Taxonomy, both of which have specific reporting and sustainable investment requirements. In the U.S., the approach to ESG is more market-based, although there too there is increasing pressure from investors and stock exchanges to disclose ESG risks.
In Asia, the situation varies – Japan and South Korea, for example, have their own ESG standards, and China emphasizes sustainable production, although not always in the spirit of transparency. In the Middle East, ESG is just gaining ground, mainly in the investment and real estate sectors. The example of the largest emitter of greenhouse gases, China, is interesting. Although they do not have a nationwide ESG taxonomy, they have introduced a number of sustainability regulations. In 2024, China’s three major stock exchanges published ESG reporting guidelines for listed companies, which will take effect in 2026. The guidelines cover four main areas: governance, strategy, risks and opportunities, and indicators and targets. Additionally, in 2024, China’s Ministry of Finance released draft guidelines for sustainability-related disclosure, with a plan to introduce national standards by 2030. Despite the lack of a nationwide ESG taxonomy, China is taking steps toward sustainable development and sustainable investment. Companies operating in China should be aware of these regulations and align their ESG strategies with applicable requirements.
Can the lack of an ESG strategy be a barrier to entering a foreign market?
M.G.: Yes, and increasingly so. The absence of any ESG strategy – even in the form of a simplified environmental or ethical policy – can result in exclusion from a tender, rejection of a bid by a potential partner, or loss of supplier certification. For companies in the SME sector, this is a concrete business risk that can derail their chances of entering a new market, despite an attractive product or competitive price.
The project “Science of Sustainable Development for Small and Medium-Sized Enterprises” is co-financed by funds from the state budget, allocated by the Minister of Education and Science, within the framework of the Program “Social Responsibility of Science II”.