Launched in 2015, the SDGs are a blueprint for a better and more sustainable future for all. They cover everything from eradicating hunger to providing education.

Here, we highlight three small- and mid-cap (SMID) companies that are helping to address SDG Goal 8: “promoting sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.”

What are the challenges?

According to the UN, two billion workers are in precarious, informal jobs without social protection. Young women are more than twice as likely as young men to be in these circumstances. Globally, nearly one in four young people were not in education, employment, or training in 2022. Worse, the number of children in child labour rose to 160 million worldwide at the beginning of 2020. This is an increase of 8.4 million children over the previous four years [1].

The climate crisis, the war in Ukraine, a weak global economy, and the lingering effects of the COVID-19 pandemic have exacerbated the situation.

Achieving Goal 8 will require a wholesale reform of our financial system to tackle rising debts, economic uncertainties and trade tensions while promoting equitable pay and decent work for young people.

The importance of SMIDs

SMID companies’ contributions to Goal 8 are often significant. Many promote inclusive and sustainable economic growth, providing decent employment for the poor. They also advance sustainable industrialisation and innovation. These measures help improve the quality of life, increase education levels, and support good health and well-being.

SMIDs often create stronger bonds with their workers, society and the environment in which they operate. They are crucial to most local economies, especially in developing countries. Experience has shown these companies are nimbler and closer to local communities than their larger peers, creating new employment opportunities in underserved areas.

In emerging markets, four out of five new job opportunities are created by smaller companies, which is almost 90% of the total opportunities. The World Bank estimates 600 million new jobs will be required in the next 15 years to address the growing global population. SMIDs are vital for reducing poverty, especially in countryside areas and between women and disadvantaged groups.

Meanwhile, European Commission data shows that over 99% of European companies are SMIDs enterprises. Together, they generate around 58% of the value added in the EU while providing 67% of the employment [2].

How does this look in practice?

One company to highlight is Poland’s Dino. It operates a large chain of discount stores across the country, focusing on smaller rural towns. Unemployment rates and gross domestic product (GDP) per capita vary significantly across Poland. According to the Organisation for Economic Co-operation and Development , the country has one of the highest rates of regional economic disparity among member nations. To help address this, Dino has consistently expanded its store network and workforce, with five-fold increases from 2014 to 2022. It has also paid salaries at a double-digit premium to the minimum wage. Dino provides an invaluable dual outcome: affordable groceries and meaningful employment in underserved areas.

Like Poland, Italy faces significant challenges in employment and labour practices. There’s also a large disparity in unemployment versus the rest of the EU. Enter luxury fashion brand Brunello Cucinelli. It has a quality-focused philosophy, meticulously making everything from shoes and bags in the hamlet of Solomeo. The company has exemplary employee management practices, prioritising the well-being of its workers. Brunello Cucinelli also promotes the education and employment of young people through its School of Contemporary Arts and Crafts. This helps Italy’s youth onto the employment ladder, while paying them a salary and teaching them artisan skills.

Of course, quality of life goes beyond merely holding a job. Employees should expect to be treated fairly, with their welfare central to any business decision. This brings us to MSA. Every day, 7,500 workers die from work-related causes, with 4% of global GDP lost to preventable incidents. MSA innovates, develops and sells safety equipment for areas such as the fire service, construction and utilities. Products include wearable gas detection devices, safety harnesses and head protection gear. The company integrates electronics, mechanical systems and advanced materials to create a safety ecosystem, which helps to protect people and infrastructure.

Final thoughts…

The UN’s celebration of SMEs confirms the important role such enterprises play in helping tackle the world’s major issues. And nowhere more so than when it comes to work and employee welfare. For us, investing in SMEs enables us to access companies that are not only delivering on their business ambitions, but also helping to create a better, fairer and more sustainable world. We’ll raise a glass to that.  

Companies are selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance. Past performance is not a guide to future results.