ESG, Risk Management and SMEs: What Are the Potential Links? An Empirical Analysis of Friulia S.p.A.’s Investment Portfolio

This paper examines the determinants of Environmental, Social, and Governance (ESG) adoption in small and medium-sized enterprises (SMEs) financed by Friulia S.p.A., a privately managed institutional investor under public control of the Friuli Venezia Giulia Region. Using data collected through a structured questionnaire, we build a synthetic indicator of ESG activation through Principal Component Analysis (PCA), which captures the degree to which firms internalise sustainability practices. The first three principal components extracted through PCA represent distinct ESG dimensions and are used, separately, as dependent variables in Ordinary Least Squares (OLS) regressions, with environmental certification and firm size as explanatory factors. Results show that the presence of an environmental certification is significantly associated with stronger ESG activation – particularly along the operational dimension – confirming its role as a key driver of structured sustainability practices. By contrast, firm size does not emerge as a significant predictor, suggesting that financial support (equity, specifically) from a professional investor may offset resource disparities across SMEs. Secondary ESG dimensions related to governance and residual social behaviours are not explained by structural variables, pointing instead to cultural and organisational factors. The findings contribute to the literature on SME sustainability by demonstrating that certifications serve as both signalling and learning tools, while also providing practical guidance for policymakers and public investors on how to design effective strategies to support the ESG transition of SMEs.