Insufficient expertise and resources hinder the sustainability of Philippine SMEs

As the increasing number of businesses become sustainable, many small and medium enterprises (SMEs) in the Philippines have been left behind due to a lack of expertise and resources.

“Many probably don’t care much about sustainability reporting, and it’s easy to see why. “Unlike larger organizations, most SMEs lack the time, knowledge and resources to deal with such massive issues as climate change or social bias,” according to the Association of Certified Public Accountants in Public Practice (ACPAPP)said in an article about SMEs’ journey to sustainability.

Furthermore, ACPAPP mentioned that the most popular way to present sustainability to SMEs is to promote it as a cost-effective option rather than compliance.

“Practices such as energy conservation, waste recycling, the use of energy efficient equipment, solar energy and water conservation mechanisms help keep costs down and have proven to be more cost effective than conventional energy use. “SME accountants can use their role as financial advisors to encourage SMEs to adopt these practices by highlighting the quick gains a company can make over the years through efficiencies,” the association said.

The Commissioner for Securities and Exchanges Javey Paul Francisco also confirmed on March 24 that sustainability reporting is more than just compliance. It is a long-term investment for business, society and the environment.

In 2022, the Philippine Statistics Authority (PSA) registered 1,109,684 businesses in the country, of which 99.59% or 1,105,143 are categorized under Micro, Small and Medium Enterprises (MSMEs).

PSA defined MSMEs into two categories based on asset size and number of employees.

• Micro has one to nine employees with an asset size up to P3,000,000,
• Small has 10 to 99 employees and an asset size of P3,000,001 to P15,000,000
• Medium has 100 to 199 employees and an asset size of P15,000,001 to P100,000,000.

“Filipino companies and supply chains are under increasing pressure to embrace sustainability reporting and full supply chain transparency,” Global Compact Network Philippines (GCNP) and STACS said in a press release last Wednesday.

To successfully achieve business sustainability and reporting among local companies and SMEs in the supply chain, GCNP has collaborated with STACS, an Asian environmental, social and governance (ESG) data and technology solutions company, in building the ESGpedia platform to facilitate companies’ struggles.

Integrating the digitized Sustainability Reporting Form (SuRe Form) into ESGpedia would assist entrepreneurs through digital assessment with guidance for additional information on the requirements of the said report.

“Digital support is critical to helping corporations and SMEs navigate evolving ESG regulations and maintain competitiveness in the global supply chain,” said Benjamin Soh, Managing Director of STACS ESGpedia.

Later this year, the Securities and Exchange Commission (SEC) will release the SuRe form and implement reporting, which is due in 2025. – Almira Louise S. Martinez