MSMEs in Southeast Asia embrace sustainability for long-term growth

In Singapore on May 7, 2025, the Centre for Impact Investing and Practices (CIIP) released a report highlighting the push for micro, small, and medium enterprises (MSMEs) in Southeast Asia to adopt sustainable practices. This shift is largely driven by commercial motivations such as cost reduction and efficiency improvements, reflecting a growing awareness of the benefits of sustainability within this business segment. The report identifies significant barriers that MSMEs face, such as high initial costs and challenges in recognizing immediate gains from ESG initiatives, evidencing the need for supportive mechanisms and partnerships to help these businesses navigate the complexities of sustainability implementation. The report details five key ecosystem actions necessary to unlock the potential of MSMEs, emphasizing the importance of coordinated efforts across governments, industry associations, and financial institutions. It further reveals that around 50% of MSMEs plan to increase their ESG budgets by 2027, indicating a commitment to improving sustainability, although many companies have yet to experience direct benefits from these practices. The CIIP has pinpointed 21 recognized sustainability practices in areas such as environmental care, social responsibility, and governance, which can guide MSMEs in their journey toward adopting ESG standards effectively. The launch of the report during Ecosperity Week included discussions around how industry associations can play a critical role in providing tailored guidance for MSMEs based on their sector-specific needs. The CIIP has signed a Memorandum of Understanding with the Singapore Fashion Council to improve sustainability within the fashion and textiles sector, demonstrating a proactive approach to cultivating partnerships that facilitate practice sharing and capacity building. In conclusion, while many MSMEs are making strides toward sustainability, practical challenges persist, and there is a clear need for collaborative efforts to provide practical support and resources. The evolving landscape of consumer expectations and MNC standards makes it vital for MSMEs to align with these sustainability practices to ensure long-term viability and maintain competitiveness in their respective markets.