Businesses, especially micro, small and medium-sized enterprises (MSMEs), continue to face practical challenges in ESG reporting due to costs, the lack of resources and expertise on sustainability reporting, and the complexities around multiple standards and reporting frameworks in use globally.
On 22 June 2023, the Monetary Authority of Singapore (MAS), United Nations Development Programme (UNDP) and the Global Legal Entity Identifier Foundation (GLEIF) announced an initiative to develop digital ESG credentials for MSMEs worldwide to facilitate ESG reporting for this sector. The initiative, named Project Savannah, will produce a multi-jurisdictional proof of concept targeted for launch at the upcoming COP28.
What is being done?
Project Savannah aims to address existing ESG reporting challenges faced by MSMEs by introducing a common framework of ESG metrics to enable MSMEs to produce basic sustainability credentials and to work towards meeting the UN Sustainable Development Goals. Such credentials will form part of the MSMEs' Legal Entity Identifier (LEI) records in the Global LEI System. The use of a common framework and a global data system strengthens the usefulness and accessibility of the MSME data for authorised users worldwide. In addition, the UNDP and MAS will examine and enhance existing capacity-building initiatives to help MSMEs to build up their ESG reporting capabilities.
Given Singapore's existing ESG ecosystem and tools, MAS intends to leverage on platforms such as ESGenome, a digital ESG disclosure platform (reported here), to enable MSMEs to populate their ESG metrics more efficiently and at lower cost, by using data capture technology to pre-fill the metrics where such data is available.
Why is this important?
Project Savannah seeks to alleviate a significant pain point associated with the lack of reliable and comparable sustainability data, especially from MSMEs. Improvements in MSMEs' sustainability reporting will enhance MSMEs' ability to obtain financing and access business opportunities. Closing the MSME data gap benefits larger corporations as well - larger corporations who 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.
Next steps
In the meantime, the MAS, UNDP and GLEIF will engage with various stakeholders including regulators, financial institutions and businesses to refine the scope and execution of Project Savannah. The current target is to produce a multi-jurisdictional proof of concept for launch at COP28 which commences in November 2023.
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