Why MSMEs Matter in the Philippines’ Sustainability Movement

MSMEs make up 99% of Philippine businesses — and their role in sustainability is critical. Here’s why MSMEs must join the ESG movement and how consultants can help.

Published on November 19, 2025

Micro, small, and medium enterprises (MSMEs) are the backbone of the Philippine economy — a fact often repeated but seldom fully understood. They make up 99.6% of all registered businesses, employ 62% of the country’s workforce, and contribute over 40% to the national GDP. They are the sari-sari stores, manufacturers, service providers, logistics operators, exporters, and community-level enterprises that keep the economy running.

Yet when sustainability is discussed in boardrooms or public forums, the spotlight almost always gravitates toward large corporations and conglomerates.
In reality, there is no sustainable Philippines without MSMEs.

This blog explains why MSMEs are a crucial force in the country’s ESG and sustainability transition — and why now is the time for them to strengthen their resilience, reporting practices, and long-term strategies.

The Missing Middle in the Sustainability Conversation

Large corporations dominate sustainability headlines because they are required to publish sustainability reports, comply with frameworks like GRI and IFRS S1/S2, and engage in formal programs like the UN Global Compact, TNFD, and TCFD.

But sustainability is not the exclusive domain of big companies.

In fact, the gaps most visible in our climate and development challenges appear at the MSME level:

Vulnerability to climate shocks (typhoons, drought, flooding)
Carbon-intensive supply chains
Limited access to green financing
Weak documentation and governance structures
High exposure to commodity price volatility
Low-to-no integration of ESG practices

These gaps accumulate — and when MSMEs suffer disruptions, the entire economy feels the impact. A supply chain is only as resilient as its smallest and most vulnerable contributors.

This makes MSMEs not just beneficiaries of sustainability policies — but essential actors whose participation determines the success of the entire national transition.

Why MSMEs Are Central to Climate and Economic Resilience

Image from the United Nations in the Philippines

The Philippines faces annual losses worth billions due to climate-related disruptions. MSMEs, because of their size and capital limitations, are often the first to shut down and the last to recover.

But this can change — and is already changing — as more MSMEs integrate climate-conscious and sustainable practices into their operations.

MSMEs matter because:

They are the largest employers.
If MSMEs collapse due to climate shocks, job losses will destabilize communities and local economies.

They are embedded in every supply chain.
From food production to electronics, pharmaceuticals, construction, and retail — MSMEs are the invisible workforce behind every major industry.

They bring innovation and agility.
While large corporations are often slow-moving, MSMEs can adopt sustainable technologies, practices, and governance structures faster — if given guidance.

They are closest to communities.
MSMEs directly influence local livelihoods, making them an essential bridge between sustainability policies and on-the-ground implementation.

The future of sustainability in the Philippines is not top-down — it will be distributed, inclusive, and MSME-driven.

Sustainability as a Growth Lever for MSMEs, Not a Burden

A common misconception is that sustainability is “too expensive” or “too advanced” for MSMEs.
But increasingly, the opposite is proving true:

Sustainability opens doors — to new markets, certifications, supply contracts, and financing.

Global buyers now require MSMEs to meet minimum sustainability criteria. Institutional investors favor supply chains that can demonstrate climate resilience. Even local consumers are rewarding businesses with ethical and eco-friendly practices.

Sustainability becomes not a compliance cost but a competitive advantage.

For example:

Farmers who adopt climate-resilient practices secure premium prices.
Manufacturers who improve resource efficiency reduce operating costs.
Retail businesses who track waste and emissions gain brand loyalty.
Exporters who align with ESG expectations secure long-term contracts.

The message is clear:
For MSMEs, sustainability is not a luxury. It is an enabler of growth and long-term viability.

Why Sustainability Reporting Matters for MSMEs — Even If They’re Not Required Yet

Although MSMEs are not mandated by the SEC to publish sustainability reports, early adoption has significant benefits:

It prepares them for future regulatory requirements.
Sustainability reporting is expanding globally, and MSMEs will eventually be part of the ecosystem.

It meets the expectations of large companies.
Conglomerates increasingly ask suppliers to disclose environmental, social, and governance impacts.

It attracts financing.
Financial institutions now offer green loans and sustainability-linked financing — but require ESG documentation.

It builds credibility and trust.
Investors, partners, and customers prefer businesses that are transparent and forward-looking.

It strengthens risk management.
Documenting climate risks, resource use, and governance structures helps MSMEs prepare for disruptions.

Even simple ESG reports — starting with materiality, governance, community impact, and resource management — make a powerful difference.

The Reality: MSMEs Want to Adopt Sustainability, But Lack Support

MSMEs often recognize the importance of sustainability but face persistent barriers:

Limited technical knowledge
Lack of dedicated sustainability personnel
Inadequate data management systems
Low awareness of global standards
Perceived high cost of consulting support
Difficulty accessing sustainability financing

This is where capacity-building, partnerships, and consulting support become essential — to make sustainability not only achievable but practical.

How GCSS, Inc. Helps Bring MSMEs Into the Sustainability Movement

As sustainability consultants, GCSS, Inc. works with MSMEs, conglomerates, and publicly listed companies — giving us a panoramic view of what MSMEs truly need to thrive in a sustainability-driven economy.

Our support for MSMEs includes:

Simplified ESG frameworks adapted to MSME realities
Step-by-step sustainability reporting systems
Basic governance and policy templates
Climate risk assessments aligned with TCFD and IFRS S2
Supply chain ESG alignment
Preparation for funding and certification requirements
Capacity-building through workshops and training

We help MSMEs meet global standards without overwhelming their resources — and we help larger companies build stronger, more responsible supply chains by elevating their MSME partners.

This dual approach strengthens the entire Philippine sustainability ecosystem.

A Call to Action: MSMEs Are Not Too Small to Make a Big Impact

Image from the We The Pvblic and bankero.com

The sustainability journey must be inclusive. If MSMEs are left behind, the Philippines will struggle to achieve climate resilience, supply chain integrity, and inclusive economic growth.

But when MSMEs participate:

Communities become more resilient
Local industries become more competitive
Environmental impact decreases
Large companies gain stronger supply chains
The country moves toward net-zero and sustainable development faster

MSMEs are not marginal actors. They are the center of gravity of Philippine sustainability. And the time to support them with knowledge, tools, and guidance is now.

Move Forward With a Trusted Sustainability Partner

Whether you’re an MSME starting your sustainability journey or a large enterprise strengthening its supply chain, GCSS, Inc. is ready to help.

Reach out at sales@gcssinc.com to begin your IFRS- and TCFD-aligned ESG journey. Book your discovery call here and talk to our experts today.

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Let’s build a sustainability movement that includes and is powered by Philippine MSMEs.