[SINGAPORE]
There is growing momentum among micro, small and medium-sized enterprises
(MSMEs) in South-east Asia to adopt sustainability practices, but stumbling
blocks such as financial constraints remain.
This issue
was raised in a report by the Centre for Impact Investing and Practices (CIIP),
titled Transforming for Sustainability: Driving Impact and Value
through Supply Chain Action, released on Wednesday (May 7) at an
Ecosperity Week event.
The report found
that MSMEs in the region recognise the business value of adopting
sustainability practices, with 39 per cent of respondents agreeing that they
lower costs and improve long-term efficiency. Twenty-seven per cent believe
these practices can attract or retain talent in a values-driven workforce.
This is a
crucial trend as many multinational corporations are setting higher
expectations across their supply chains in pursuit of their long-term
sustainability commitments, the report noted.
MSMEs are often
key suppliers for these global companies. Therefore, aligning themselves with
the evolving standards is increasingly vital for these businesses to remain
competitive and secure long-term growth opportunities, the study added.
Dawn Chan, chief
executive officer of CIIP, said: “MSMEs are the backbone of South-east Asia’s
economies and essential partners in advancing sustainable supply chains.”
The findings are
based on a survey of more than 3,500 MSMEs from countries in the region – such
as Indonesia and Vietnam – as well as interviews with about 85 organisations in
Asia.
The report also
revealed that 84 per cent of MSMEs have adopted at least one environmental,
social and governance (ESG) practice, with social measures being the most
common due to mandated employee protection policies in each of the countries
studied.
However,
financial constraints remain a key hurdle to adopting more of such practices,
with many of the MSMEs surveyed citing high upfront costs. This is despite half
of them planning to increase their ESG budgets by 2027.
Manpower also
remains an issue, with 60 per cent of respondents reporting moderate to
significant difficulties in hiring staff for sustainability or related roles.
Some also cited
the inability to derive immediate benefits from embracing ESG practices.
Thirty-two per cent said the ability to gain new clients or enter new markets
would be an important motivating factor for the future adoption of ESG
approaches.
Key enablers
To help MSMEs,
the report identified five key enablers – among them is making the concept of
ESG clear and simple. This would require the commercial benefits of ESG
practices to be emphasised.
Another enabler
is financing the change. While sustainability-linked loans are increasingly
available, uptake by MSMEs remains low. This suggests that concessional rates
alone are not enough, and investments in innovative MSME-targeted solutions are
needed.
To this end,
venture capital firms and impact investors are a third vital enabler. They play
a crucial role in facilitating ESG adoption across supply chains by providing
catalytic funding to incentivise innovation and reduce the barriers to adopting
such practices.
These investors
are particularly important in backing early-stage solutions and business models
which are priced and designed for MSMEs.
“(These
enterprises’) growing interest in ESG signals a real opportunity to unlock
business resilience and long-term value,” Chan said.
“This report
aims to provide a clearer view of what MSMEs need to succeed (in), and how
ecosystem players, from industry leaders to governments and financial
institutions, can work together to accelerate scalable, sustainable impact,”
she added.
Themed “Impact
for Outcomes – Perspectives from the Ground”, the Impact Investing Roundtable
2025 where the report was released was co-organised by CIIP and Temasek.
Fashioning a
solution
In the same
vein, CIIP on Wednesday signed a memorandum of understanding with the Singapore
Fashion Council (SFC) to advance supply chain sustainability within the fashion
industry – with a particular focus on empowering MSMEs.
Under the
agreement, SFC will lead the development and implementation of three key
initiatives to support the sustainability transformation of the fashion and
textiles sector. CIIP will contribute insights and ecosystem-building support.
The initiatives
comprise:
- a sectoral plan identifying the key
challenges and strategic priorities for the local and regional fashion
industries; - a guidebook with resources and
practical road maps to help companies at different stages of their
sustainability journeys; and - a digital toolkit providing MSMEs
with access to ESG tools to facilitate decarbonisation and broader
adoption of sustainability practices.
Zhang Ting-Ting,
CEO of SFC, said: “The future of fashion lies not just on the runway, but in
the roots of our supply chains. MSMEs are the heartbeat of Asia’s fashion
industry – collective action and practical support are key to meaningful
progress in sustainability.”
She added: “By
partnering with forward-thinking organisations like Temasek Trust’s CIIP, we
are bridging insight with implementation – empowering businesses with the tools
and knowledge to future-proof their supply chains and thrive.”
Source: The Business Times (published
7/5/2025)
June 30, 2025
