Demystifying Sustainability Reporting for SMEs

For many SMEs, ‘sustainability reporting’ may feel like a corporate buzzword reserved for listed firms. But in today’s market, it is fast becoming a decisive factor for competitiveness. More than 80% of companies in Singapore now consider sustainability important and yet fewer than half have acted, according to the UOB Business Outlook Study (BOS) 2025.

This gap is an opportunity for SMEs. Reporting is not bureaucracy. It is a chance for businesses to tell their story, prove their credibility, and position their business for growth. The team at UOB FinLab understands that once sustainability reporting is done well, it has immense potential to strengthen trust with customers and investors, unlock opportunities with bigger clients, and even highlight ways to cut costs internally.

The Regulatory and Market Push

In Singapore, a regulatory shift now makes reporting more than a voluntary exercise: The Singapore Exchange (SGX) requires all listed companies to report Scope 1 and 2 greenhouse gas (GHG) emissions from the financial year (FY) commencing on or after 1 January 2025, while Straits Times Index (STI) constituents will continue to lead efforts to implement other International Sustainability Standards Board-based (ISSB-based) climate-related disclosures (CRD) from FY2025 and Scope 3 GHG emissions from FY2026.

SMEs may not be mandated yet, but the ripple effects are clear. Larger firms are tightening supply chain requirements, and SMEs will be expected to comply. A 2024 Schneider Electric survey found that 78% of small businesses in Singapore have already lost business due to stricter greenhouse gas compliance standards. Getting ahead now reduces the cost, friction, and risk later.

Globally, reporting standards are rising. The EU’s Corporate Sustainability Reporting Directive (CSRD) extends mandatory disclosures to thousands of companies.

On the demand side, large buyers expect transparency. Research shows that 92% of major buying organisations now require supplier-level ESG disclosures. Locally, the UOB BOS 2025 found that 41% of businesses cited alignment with multinational corporations’ sustainability goals as a key motivator for adopting sustainability practices. Procurement is shifting and SMEs without credible reporting risk exclusion from lucrative contracts.

Turning Reporting into Strategic Advantage

Sustainability reporting is not simply defensive – it can create value. When SMEs disclose even basic environmental data, they speak the language of large buyers, investors, and partners. This signals transparency, risk awareness, and shared values. Credible reporting helps businesses stand out and avoid being filtered out by ESG scorecards in tenders.

Reporting also provides operational insights. For example, Singapore textile SME Ghim Li adopted a digital ESG monitoring platform to qualify for a sustainability-linked loan. The company reduced idle machine run-time, optimised cooling, and tightened waste management by tracking energy use and waste streams, which resulted in cost savings and stronger margins.

Across Southeast Asia, the Centre for Impact Investing and Practices (CIIP) reported that 39% of Southeast Asia’s Micro, Small, and Medium Enterprises (MSMEs) say sustainability practices help cut costs or improve efficiency. This goes to show that reporting builds credibility externally while uncovering efficiency gains internally. Together, these turn reporting into a lever for growth rather than a bureaucratic burden.

Common Barriers and How SMEs Can Overcome Them

SMEs often recognise the value of sustainability but face blockers:

“It’s too complex.”
Reframe: Modern frameworks like the ASEAN Simplified ESG Disclosure Guide (ASEDG) helps businesses begin their ESG reporting in a structured and accessible way. Complexity grows gradually, not all at once.
“It’s too costly.”
Reframe: Many necessary data points already exist (utility bills, waste logs, payroll). The incremental effort lies in structuring them. In practice, companies implementing reporting often recoup costs via efficiency gains.
“It’s only for big companies.”
Reframe: Today, SMEs are being asked for disclosures just to stay in supply chains. If a supplier can’t answer ESG questions, they may lose the contract. Starting small with minimal disclosures is better than being left behind.

The key is to start. Reporting does not need to be perfect or extensive. Even a short, clear summary of sustainability metrics updated annually signals intent and credibility. It sets the foundation for progressively deeper insights over time.

Ecosystems as Enablers

SMEs do not have to navigate sustainability reporting alone. Transformation happens faster when businesses are supported by a network of peers, mentors, and partners – and this is where UOB FinLab can step in.

Since 2015, UOB FinLab has connected over 33,000 SMEs in Singapore and the region to knowledge, networks, and tools. Most recently, SkillsFuture Singapore appointed UOB as its latest SkillsFuture Queen Bee, with UOB FinLab serving as a strategic community enabler. As part of this, we launched the SME Elevate Programme to help SMEs strengthen their business capabilities across digitalisation, innovation, and sustainability.

UOB FinLab’s programmes do more than teach theory – they scaffold progress. SMEs gain the confidence, connections, and continued guidance they need through a vibrant community of mentors, peers, and partners, as they navigate the evolving sustainability regulations and business expectations.

From Compliance to Competitiveness

Sustainability reporting should not be viewed as a compliance burden. It is a strategic tool to articulate values, meet market expectations, uncover efficiencies, and position SMEs for growth. Regulations, customer demands, and supply chain expectations will only intensify.

UOB FinLab understands the challenges SMEs face in starting this journey. That’s why we designed the Sustainability Innovation Programme (SIP) — a practical, hands-on initiative to equip SMEs with curated workshops, expert guidance, and hands-on support to embed sustainability into their operations.

As part of the UOB SkillsFuture Queen Bee’s SME Elevate Programme, SIP offers four modular courses that equip SME leaders with the knowledge and tools to integrate sustainability into their business strategies. The courses cover key areas such as sustainability reporting, carbon management, zero waste, and sustainable financing solutions for business growth – each designed to help participants develop actionable sustainability plans aligned with national goals.

Participants can also tap on the Mentorship Support Grant for guided advisory from experienced mentors and domain experts, gaining hands-on support to embark on their own sustainability projects. The SIP makes sustainability education both accessible and practical, with up to 90% SkillsFuture subsidy available.

Through SIP, UOB FinLab continues to empower SMEs to start small, scale steadily, and grow with confidence in a sustainability-driven economy.

Join the UOB FinLab community at the upcoming SIP this October to learn how sustainability reporting can unlock opportunities for businesses and more.

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