ASEAN+3 BOND MARKET FORUM BRIEF No.6Mitigating the Data Gap in Greenhouse Gas EmissionsCalculation for Small and Medium-Sized EnterprisesFEBRUARY 2025IntroductionThe ASEAN+3 Bond Market Forum (ABMF)BriefKEY TAKEAWAYSseries aims to provide insights on regional bond markets,their development,and other topics under the Asian>The importance of greenhouse gas(GHG)Bond Markets Initiative (ABMI)to issuers,investors,emissions calculation for small and medium-sizedmarket intermediaries,regulatory authorities andenterprises (SMEs)extends beyond ongoingpolicymakers,academia,and other interested parties.regulatory compliance.This brief focuses on sustainable finance,which is oneSMEs,which often have resource and capacityof the pillars of the ABMI Medium-Term Road Map,2023-2026.1constraints,need support to address data gaps andthe technical complexity of emissions calculation.With the growing trend of sustainability disclosure,For SMEs,it is practical to consider the estimationcalculating and reporting greenhouse gas (GHG)approach for their GHG emissions calculation.emissions has become increasingly critical.As globalLeveraging accounting data to estimate activities isawareness of climate change intensifies,stakeholderspractical and cost-effective.-including customers,investors,and regulators-aredemanding greater transparency and accountability inThe common use of the estimation approachsustainability practices.The Sustainability Disclosureunderscores the need to enhance databases toaccount for emission factors,especiallyStandards (IFRS)Foundation,published in June 2023,country-specific ones.recommend disclosing GHG emissions in threecategories:(i)Scope 1 for direct GHG emissions that are>Utilizing technology is the key for SMEs'emissionsowned or controlled by an organization;(ii)Scope 2 forcalculation.Start-ups are emerging that canindirect GHG emissions that are generated outside thesupport standardized GHG emissions calculationorganizational boundary but consumed within theand data collection.boundary,such as purchased electricity;and (iii)Scope3 for all other indirect emissions that occur from sourcesIn addition to public support,large corporations andthat are not owned or controlled by the entity but arefinancial institutions can play a pivotal role inpart of its upstream or downstream value chain.Forproviding SMEs with capacity support andsmall and medium-sized enterprises(SMEs),the scopeaffordable technology platforms for data gathering.of GHG emissions reporting may not be as great as thatof large organizations and their reporting may not beThis ABMF Briefwas produced by ABMF Secretariat,led by Satoru Yamadera,advisor,Economic Research and Development ImpactDepartment,Asian Development Bank(ADB).The brief was written by Satoru Yamadera;Thinh Ngoc Tran,financial market specialist(climate financing),Sectors Group,ADB;and Mikko Marl V.Diaz,consultant (research analyst),ADB.Apresentation to ABMFmembers in October 2024 laid the found ation for this brief.ASEAN+3 refers to the 10 members of the Association of Southeast AsianNations (ASEAN)plus the People's Republic of China,Japan,and the Republic of Korea.ADBMitigating the Data Gap in Greenhouse Gas Emissions Calculation for Small and Medium-Sized Enterprisesmandated by regulations;however,regardless ofKey Benefits for Small and Medium-Sized Enterprisesregulatory requirements,it is likely that SMEsOperational improvements and better access toparticipating in global value chains will face pressurefinance.GHG emissions calculation and reporting canfrom large buyers to"voluntarily"calculate their Scope 3significantly impact the financial health of SMEs byemissions.Likewise,banks will ask SMEs to submitrevealing inefficiencies and opportunities for costemissions information because banks also need tosavings.Through better measurement of GHGcalculate their financed emissions under Scope 3emissions and the adoption of sustainable practices,reporting requirementsSMEs can identify areas where energy and resource usecan be optimized,leading to significant reductions inDue to their limited resources,SMEs encounter severaloperational expenses.2challenges in measuring GHG emissions,including datagaps and limited analytical capability.Thus,it is necessaryto establish a common understanding of how to approachASEAN+3 Bond Market Forumthe issue through appropriate and practical estimationThe ASEAN+3 Bond Market Forum (ABMF)wasmethodologies.Available technology solutions should alsoestablished in 2010 under the Asian Bond Marketsbe leveraged to help bridge these gaps.This briefhighlightshow to mitigate the challenges faced by SMEs in terms ofInitiative by the ASEAN+3 Finance Ministers,with aGHG emissions calculation.The brief seeks to incentivizemandate to support the development of regionalpolicymakers to support the implementation of GHGlocal currency bond markets.Since then,ABMF hasemissions disclosure under the IFRS Sustainabilityacted as a platform for dialogue among public andDisclosure Standards set by the International Sustainabilityprivate sector stakeholders in regional bond marketsStandards Board.It also examines key data requirementsand promoted the exchange and evaluation of ideasfor GHGemissions calculation,such as emission factorsamong finance ministries,securities regulators,(EFs),and reviews the progress of the Association ofsecurities exchanges,depositories,custodian banks,Southeast Asian Nations (ASEAN)Member States (AMS)underwriters,and other market intermediaryin setting country-specific EFs.In addition,the brieforganizations.ABMF discussion outcomes havehelped to address common issues and formulateprovides key recommendations from market practitionerson the standardization of the GHG emissions calculationpolicy recommendations.process,laying the foundation needed to enhance climate-The Asian Development Bank publishes therelated disclosure.ASEAN+3 Bond Market Guide series,which wascreated and is updated by ABMF,for interestedThe Importance of Greenhouse Gasparties.The economy-level bond market guidesEmissions Calculation for Small andserve as reference material to leam more aboutMedium-Sized Enterprisesindividual regional markets'development,helpaddress misperceptions,and disseminate regionalThe importance of GHG emissions calculation andbond market information to a larger audiencereporting for SMEs extends beyond regulatoryABMF has proposed,agreed on,and helpedcompliance.It encompasses financial advantages,implement the ASEAN+3 Multi-Currency Bondenhanced supply chain relationships,and improvedIssuance Framework as one practical initiativesustainability risk management.By engaging in robusttoward harmonizing the professional bond marketsGHG accounting,SMEs can increase their access toin ASEAN+3 member economies.green financing,meet the demands of larger companiesAs part of the ABMI Medium-Term Road Map,for Scope 3 emissions data,and proactively manage2023-2026,ABMF received the mandate toclimate-related risks.Despite these benefits,SMEs oftensupport regional efforts on sustainable finance,face challenges such as resource constraints and datausing its platform to facilitate dialogue betweencollection difficulties,which need to be addressed tofully utilize the benefits of GHG reporting.Thispublic and private sector institutions,advocates,and policymakers.ABMF is now in cludingdiscussion sets the stage for a detailed analysis of thesustainable finance subjects in all its publicationbenefits and challenges of GHG emissions calculationseries.and reporting for SMEs.https://www.weforum.org/agenda/2024/09/net-zero-environmental-sustainability-smes-benefits/