Philippine SMEs Struggle with Sustainability Reporting Amid New Digital Initiatives

Small and medium enterprises (SMEs) in the Philippines are grappling with the adoption of sustainability reporting due to a lack of expertise and resources. This challenge has been highlighted by the Association of Certified Public Accountants in Public Practice (ACPAPP), which notes that many SMEs do not prioritize sustainability reporting because they lack the time, knowledge, and resources to address extensive issues like climate change and social prejudice.

According to the Philippine Statistics Authority (PSA), there were 1,109,684 businesses in the country in 2022, with 99.59% or 1,105,143 classified as micro, small, and medium enterprises (MSMEs). These enterprises are defined based on asset size and number of employees, and they play a crucial role in the Philippine economy.

To address the challenges SMEs face in adopting sustainability reporting, initiatives such as the ESGpedia platform and a digitalized Sustainability Reporting Form have been introduced. These tools aim to facilitate the process and encourage SMEs to view sustainability as a cost-effective opportunity rather than mere compliance.

The ACPAPP suggests promoting sustainability to SMEs by emphasizing practices that can reduce costs and increase efficiency. For instance, energy conservation, waste recycling, and the use of energy-efficient equipment are practical steps that can yield quick gains. As ACPAPP notes, "Practices such as energy conservation, waste recycling, using energy-efficient equipment, solar power, and water-saving mechanisms help keep costs down and have proven to be more cost-effective than the usual energy use."

Securities and Exchange Commissioner Javey Paul Francisco underscores the broader benefits of sustainability reporting, stating, "Sustainability reporting is more than just compliance. It is a long-term investment for business, society, and the environment. " This perspective highlights the potential for sustainability initiatives to drive long-term value for SMEs.

Despite these efforts, the transition to sustainability reporting remains a significant hurdle for many SMEs in the Philippines. The lack of expertise and resources continues to be a major barrier, but the introduction of digital solutions like ESGpedia and the digitalized Sustainability Reporting Form offers a promising path forward.

Ultimately, promoting sustainability as a cost-effective opportunity rather than a regulatory burden could encourage more SMEs to adopt sustainable practices. As ACPAPP points out, "Many probably do not care a lot about sustainability reporting, and it's easy to understand why. Unlike bigger organizations, most SMEs lack the time, knowledge, and resources to grapple with such extensive problems like climate change or social prejudice. "

Key Takeaways

• Philippine SMEs struggle with sustainability reporting due to lack of expertise and resources.
• 99.59% of Philippine businesses are micro, small, and medium enterprises (MSMEs).
• Initiatives like ESGpedia and digitalized Sustainability Reporting Form aim to facilitate sustainability reporting.
• Emphasizing cost-effective sustainability practices can encourage SMEs to adopt sustainable habits.
• Sustainability reporting can drive long-term value for SMEs, but lack of expertise and resources remains a major barrier.