Companies, especially micro, small and medium-sized enterprises (MSMEs) continue to face practical challenges in ESG reporting due to the cost, lack of resources and expertise in sustainability reporting, and the complexity surrounding multiple standards and reporting frameworks used worldwide.
On 22 June 2023, the Monetary Authority of Singapore (MAS), United Nations Development Program (UNDP) and the Global Legal Enty Identifier Foundation (GLEIF) announced an initiative to develop digital ESG credentials for MSMEs worldwide to facilitate ESG reporting for this sector. The initiative, called Project Savannah, will deliver a multi-jurisdictional proof-of-concept that will be launched soon COP28.
What is being done?
Project Savannah aims to address the existing ESG reporting challenges faced by MSMEs by introducing a common framework of ESG metrics to enable MSMEs to develop foundational sustainability credentials and work towards achieving the UN Sustainable Development Goals. Such credentials will be part of the MSME programme Legal Entity Identifier (LEI) records in the Global LEI system. The use of a common framework and global data system strengthens the usability and accessibility of the MSME data to authorized users worldwide. In addition, UNDP and MAS will explore and strengthen existing capacity building initiatives to help MSMEs build their ESG reporting capabilities.
Given Singapore’s existing ESG ecosystem and tools, MAS plans to leverage platforms such as ESGenome, a digital ESG disclosure platform (reported here), to enable MSMEs to report their ESG metrics more efficiently and cost-effectively lower costs, by using data capture technology to pre-fill statistics where such data is available.
Why is this important?
Project Savannah seeks to alleviate a significant pain point related to the lack of reliable and comparable sustainability data, especially from SMEs. Improvements in MSME sustainability reporting will increase MSMEs’ ability to obtain financing and access business opportunities. Closing the data gap in MSMEs also benefits larger companies – larger companies that have MSMEs as part of their supply chains will welcome the availability of such data for their own sustainability reporting and for supply chain due diligence purposes.
In the meantime, the MAS, UNDP and GLEIF will work with various stakeholders, including regulators, financial institutions and companies, to refine the scope and implementation of Project Savannah. The current goal is to produce a multi-jurisdictional proof-of-concept for launch on COP28 which starts in November 2023.