Enabling SME resilience in FMCG supply chains

Businesses in Southeast Asia face compounding issues of climate change, regulatory shifts and increasing economic pressures against the backdrop of global geopolitical uncertainties. As businesses race to adapt to these changes, small and medium-enterprises (SMEs) within larger supply chains will need to manage the dual challenges of increasing client and regulatory expectations while addressing disruptive changes on the ground. SMEs are often limited in resources and influence relative to multinational buyers (MNCs) and downstream stakeholders, yet their ability to adapt and thrive in the face of shifting external pressures is not just a matter of the survival of individual businesses but will ultimately determine the broader industry’s collective resilience and sustainability.

Fast-moving consumer goods (FMCG), also known as consumer-packaged goods (CPG), refers to products that are in high demand, sold quickly and affordable. Malaysia and Indonesia are significant actors in the global FMCG sector as producers of more than 80% of global palm oil, an ingredient in approximately 60% of consumer goods. The FMCG sector in Southeast Asia has historically been faced with persistent and complex challenges, such as deforestation and forced labour in palm oil plantations. However, emerging issues like the cascading impacts of climate change threaten to cause lasting disruption to the industry.

The Centre for Impact Investing and Practices (CIIP) and PwC Singapore have collaborated to develop an introductory report to shed light on how SMEs in the FMCG sector from Indonesia, Malaysia and Singapore are perceiving and responding to sustainability-related challenges, such as climate change, regulatory shifts and economic pressures. The objective of this study is to understand, from the SME perspective, the resources, capacities and investments that are required to help bridge the gap between current practices and the future needs of sustainable supply chains in the region.

The sustainability risks faced by SMEs in the FMCG sector can vary widely depending on where they operate, the commodities they trade in and the services they provide. The intention of this overview is not to comprehensively document the material sustainability issues affecting the sector, but rather to identify the common drivers and enablers experienced by different types of stakeholders across the FMCG supply chain.