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To meet growing sustainability demands, the Global Reporting Initiative (GRI) and the Philippines Department of Trade and Industry (DTI) have signed a Memorandum of Understanding (MoU) to offer Small and Medium-Sized Enterprises (SMEs) training for enhanced reporting on sustainability-related risks and impacts and improved decision-making. Due to limited resource capacity, skill deficits, and knowledge limitations, SMEs in the Philippines currently find themselves constrained when it comes to meeting sustainability expectations.
Comprising a significant chunk of the economic development and growth of the Association of Southeast Asian Nations (ASEAN) Member States, SMEs contribute over 85% to employment, 44.8% to GDP and 18% to national exports. Through this collaboration between GRI and DTI, it is expected that the series of capacity-building sessions, which will include refreshment on local sustainability policy, and training on facilitating better supply chain management and sustainability procurement will curb the present shortcoming many SMEs in Philippines find themselves in when it comes to delivering on Environmental, Social and Governance (ESG) issues. [1]
The collaboration consists of a five-year program and will target the training of 8,000 SMEs in the Philippines and support over 300 SMEs with the publication of their first sustainability reports. The program ties closely with a pioneering project launched by GRI and the Asian-Institute of Management – Dado Banatao Incubator (DBI) last year designed to also support start-ups in the Philippines use insights from sustainability reporting with the GRI Standards to better identify sustainability improvements, strengthen processes and management, and prepare for incoming sustainability legislation. [2]
In collaboration with the DTI, the forthcoming program by GRI is poised to address several of these existing challenges faced by SMEs in the Philippines. The initiative aims to propel SMEs towards sustainability, a pivotal move that promises enhanced operational efficiency and judicious resource employment. Furthermore, it pledges to open up opportunities for SMEs to access sustainable financing mechanisms, meet growing stakeholder demands for responsible business practices, and comply with evolving sustainability regulations in the Philippines.
What adds to this program is its harmonization with domestic policy, particularly the Green Economic Development (GED) program, which seeks to address resource limitations and elevate SMEs’ commitment to sustainability. By aligning with sustainability-related targets and fostering accurate sustainability reporting, this initiative lays the groundwork for an environment where both domestic and foreign investments could flow towards SMEs at the forefront of driving sustainability-driven solutions.
Moreover, the increased emphasis on improving sustainability reporting is poised to attract green finance opportunities, facilitating the entrance of Filipino SMEs into other sustainability-focused markets across APAC. Simultaneously, it will play a vital role in advancing the principles of the circular economy, propelling SMEs towards a brighter, more sustainable future. [3]
Sustainability reporting has become a standard practice for large multinational companies, with 96% of the world’s largest 250 companies reporting on their sustainability performance. However, SMEs generally lag behind due to the complexity and costs involved. Global initiatives like the United Nations Sustainable Development Goals (SDGs) are pushing for SME sustainability reporting, but only 10-15% of companies using the Global Reporting Initiative (GRI) Sustainability Reporting Standards are SMEs.
GRI’s standards, which are referenced by major stock exchanges, provide a uniform framework for reporting sustainability actions. As sustainability gains importance, SMEs risk losing access to vital financing if they don’t embrace transparent reporting, as investors increasingly rely on it. Moreover, GRI supports SMEs in starting small and growing their sustainability reporting over time, enabling them to contribute to global economies’ sustainability and resilience. [4]
Since 2018, GRI, with support from the Swiss State Secretariat for Economic Affairs (SECO), has been supporting and offering increased capacity and access to better resources, with added training on sustainability reporting using the GRI Standards. In fact, GRI’s additional support is offered through their Competitive Business Program. This initiative empowers SMEs to integrate into global value chains by enhancing their sustainability reporting capabilities.
Beyond capacity-building, GRI collaborates with other larger-scale businesses who do have capacity and better access to resources and skilled knowledge as well as investors to help establish their regulatory framework favoring sustainability. The GRI Standards provide all-sized organizations with a means to showcase their sustainability commitment, assess impacts, improve supply chain access, and align with investors and that is being demonstrated by this collaboration effort with DTI to support not just SMEs in the Philippines but with other regional bodies in Indonesia and Vietnam too. The Competitive Business Program seeks to maintain the competitive edge of SMEs in face of newly released sustainability regulations and mandates.
Overall, GRI’s standards serve as a comprehensive framework for sustainability reporting. Despite their complexity, its universal standards provide a valuable foundation for reporting in the ever-evolving landscape of ESG-related topics.
GRI’s structure, consisting of 34 topic-specific standards, allows for flexibility in updating individual standards without overhauling the entire reporting system. This adaptability enables GRI to incorporate emerging ESG topics and metrics, which under the proposed training with the DTI will serve valuable in SME preparation for future sustainability legislation or mandates that are required. [6]
Furthermore, GRI standards facilitate benchmarking of a company’s ESG performance against industry peers. Since companies within the same industry often prioritize similar material topics, this benchmarking process offers valuable insights into the competitive landscape, aiding in better decision-making. [7]
The significance of GRI lies in its foundational role in ESG reporting, its adaptability to evolving sustainability issues, and its ability to support benchmarking against industry peers. The recent collaboration with the Philippines DTI underscores the importance of GRI in promoting sustainable practices among SMEs and in aiding better decision-making through effective sustainability reporting. Utilizing GRI standards is not only a strategic choice for SMEs but also a means to improve transparency, accountability, and positive impacts.
[3] https://dailyguardian.com.ph/dti-gri-ink-deal-pushing-for-msme-sustainability/
[6] https://www.remotefulness.com/smes-cant-afford-to-ignore-sustainability-reporting/
