Is It Time to Rethink ESG Strategies for SMEs in Supply Chains? Evaluating Implementation Priority and Performance With Decision Models

ABSTRACT The integration of environmental, social, and governance (ESG) principles into small and medium‐sized enterprises (SMEs) is fundamental for advancing sustainability, particularly in the highly interconnected logistics and supply chain (LSC) sector. While existing research predominantly addresses firm‐level ESG scoring, limited attention has been paid to industry‐level implementation analysis and the distinctive challenges SMEs face in ESG adoption. This study addresses this research gap by developing a comprehensive ESG implementation framework specifically designed for SMEs in the LSC sector. Through systematic analysis of academic literature, ESG disclosure frameworks, and industry reports, the study identifies 19 key ESG criteria relevant to logistics SMEs. The methodological framework integrates the Fuzzy Best‐Worst Method for criteria prioritization with the Three‐Way Decision Model for implementation level evaluation. Empirical validation through a case application in Hong Kong demonstrates the framework's practical utility and analytical robustness. The findings reveal four critical areas characterized by high priority but low implementation levels: Renewable/Clean Energy Utilization, Circular Economy Practices, Data Management and Protection, and Training and Career Development. These insights inform evidence‐based policy recommendations for accelerating ESG adoption among SMEs in the LSC sector. This study advances both theoretical understanding and practical application by introducing an industry‐specific ESG analysis framework that enables stakeholders to identify implementation gaps and develop targeted strategies. Moreover, it establishes a foundational methodology for developing sector‐specific ESG development indices, thereby facilitating the systematic integration of sustainability principles within SMEs.