Exporting in new era: ESG reporting as strategic enabler for global market entry

As a country with a long-standing reputation for quality, especially in apparel, tea and many other agricultural products, Sri Lanka has much to gain by aligning its exports with global sustainability values

In an increasingly competitive and sustainability-conscious global marketplace, Sri Lankan exporters can no longer afford to view Environmental, Social and Governance (ESG) reporting as a corporate luxury or compliance burden. Instead, proactive ESG engagement must become a strategic priority if the country’s export sector is to remain relevant, competitive and resilient in the years ahead.

ESG as a market passport

Global buyers, especially in the European Union and North America, are tightening regulations and expectations around ESG standards. Initiatives like the EU’s Corporate Sustainability Reporting Directive (CSRD), the Carbon Border Adjustment Mechanism (CBAM) and growing consumer preference for ethical sourcing mean that ESG disclosures are fast becoming a passport to access premium markets. Exporters who fail to align with these evolving requirements risk being shut out of lucrative value chains.

Investor confidence and ESG

Increasingly, investors are incorporating ESG performance into their decision-making processes. For Sri Lankan exporters seeking to attract foreign direct investment or build long-term strategic partnerships, strong ESG credentials are increasingly shaping market positioning and investor perceptions. Transparent ESG reporting enhances a company’s reputation, demonstrates risk awareness and signals long-term viability factors that can significantly influence investor confidence and engagement.

Supply chain resilience and operational efficiency

Embracing ESG is not just about external validation. Companies that prioritise resource efficiency, clean energy, ethical labour and inclusive governance are often more resilient and better positioned for long-term growth. For instance, exporters who invest in cleaner production processes or ethical labour practices can boost productivity while ensuring compliance with buyer codes of conduct. Robust ESG systems, especially those focused on governance and supply chain resilience, can help exporters navigate the uncertainties brought on by geopolitical shocks and climate-related disruptions.

Strengthening Brand Sri Lanka

As a country with a long-standing reputation for quality, especially in apparel, tea and many other agricultural products, Sri Lanka has much to gain by aligning its exports with global sustainability values. ESG reporting offers an opportunity to tell a compelling story, one that resonates with today’s environmentally and socially conscious consumers.

From barriers to action: Supporting SMEs in the ESG transition

While the case for ESG adoption is increasingly clear, many small and medium-sized exporters in Sri Lanka face practical hurdles in making the transition. Limited awareness, lack of technical expertise and the high upfront cost of implementing ESG data systems, certifications and reporting frameworks remain major obstacles, particularly for resource-constrained SMEs.

However, these challenges are not insurmountable. Now it is the time for exporters, especially smaller firms, to take proactive, incremental steps toward ESG integration, with the right support in place. This means:

• Conducting materiality assessments to understand ESG risks and opportunities
• Collecting and disclosing basic environmental and social performance data
• Aligning with global reporting frameworks such as GRI, IFRS S1/S2, and TCFD
• Pursuing relevant certifications and traceability tools 
• Seeking support from government and industry bodies to build capacity and reduce compliance costs

To ensure no exporter is left behind, a coordinated push from policymakers, chambers, and development partners is essential. Tailored financial incentives, technical assistance and simplified ESG tools can help SMEs overcome entry barriers and stay competitive in evolving global value chains.

Conclusion

In a global trade environment increasingly defined by transparency, accountability, and sustainability, ESG reporting is no longer a box-ticking exercise, it is a strategic imperative. For Sri Lankan exporters, particularly SMEs, embracing ESG is not just about meeting compliance requirements. It is about building resilience, securing long-term market access, and enhancing international competitiveness. 

(The writer is an expert in ESG reporting, with a particular focus on helping SMEs align with global sustainability standards. He has over a decade of experience across the private and non-profit sectors, supported by an MPhil and Master’s degree from the University of Colombo. His work includes extensive consultancy engagements with international development organisations. He can be contacted at [email protected].)