Business
Newsday
In the Caribbean, micro, small, and medium-sized enterprises (MSMEs) face challenges navigating the complexities of environmental, social, and governance (ESG) reporting. ESG reporting frameworks are increasingly consolidated for corporates, but the landscape for MSMEs still needs clarification.
The simplified reporting process offered by Project Savannah emerges as an interesting solution for Caribbean MSMEs.
ESG Reporting Challenges
Caribbean MSMEs are expected to disclose their sustainability practices, driven by investor demand, regulatory pressures, and growing awareness of social and environmental impacts. However, MSMEs face challenges such as limited resources for data collection, a need for more expertise in interpreting reporting frameworks, and a shortage of tailored guidance.
Introducing Project Savannah
Project Savannah, launched in 2023 by the UN Development Programme (UNDP), the Monetary Authority of Singapore (MAS), and the Global Legal Entity Identifier Foundation (GLEIF), aims to simplify ESG reporting for MSMEs globally. It offers a common framework of ESG metrics aligned with the UN sustainable development goals (SDGs) and basic ESG digital credentials for MSMEs.
Alternative Frameworks for MSMEs
While Project Savannah provides a tailored approach, alternative ESG reporting frameworks exist. These include the Global Reporting Initiative (GRI), BCorp certification, simplified European Sustainability Reporting Standards (ESRS) for SMEs, voluntary SME ESRS, and the International Sustainability Standards Board (ISSB) standards.
Global Reporting Initiative (GRI)
GRI standards offer a flexible reporting framework suitable for organizations of all sizes, providing comprehensive guidelines for reporting on impacts, management approaches, and performance indicators.
Certified B Corporation Recognition (BCorp)
BCorp certification focuses on social and environmental performance, accountability, and transparency, helping businesses demonstrate commitment to higher standards.
Simplified European Standards for SMEs
The European Financial Reporting Advisory Group (EFRAG) is developing simplified ESRS for SMEs, aiming to make ESG reporting more accessible within the EU.
Voluntary SME ESRS (VSME ESRS)
EFRAG is also developing a voluntary, standardized methodology for SMEs to report on ESG matters, aiming to support SMEs in accessing sustainable finance.
Global Baseline for ESG Reporting
The ISSB’s IFRS S1 and S2 standards provide general sustainability-related disclosure requirements and climate-related disclosure requirements, aiming to create a globally consistent approach to ESG reporting.
Project Savannah’s ESG Framework Alignment
Project Savannah aligns with ISSB / IFRS S1 and S2 standards and the UN SDGs, providing MSMEs with a common framework of ESG metrics. This alignment offers MSMEs an opportunity to meet global sustainability reporting standards.
Role of SDG Impact Standards
SDG Impact Standards complement reporting standards by improving internal governance and management decision-making, ensuring that disclosed information is rooted in robust internal systems and practices.
Roles for Stakeholders
Successful implementation of ESG reporting requires collaboration among regulators, financial institutions, technology providers, and MSMEs themselves to support sustainability journeys.
Standards for MSMEs
While Project Savannah offers a promising pathway, Caribbean MSMEs can explore alternative frameworks, understand the distinction between ESG reporting and sustainability management standards, and foster collaboration among stakeholders to unlock new opportunities and contribute to a sustainable future.
