UNIDO empowers Philippine MSMEs to turn climate action into a competitive advantage

For many micro, small and medium enterprises (MSMEs) in the Philippines, managing rising energy costs while remaining competitive is an increasingly difficult balancing act, made more challenging recently due to the ensuing energy crisis brought about by global geopolitical tensions. Limited access to efficient technologies, financing and technical expertise often prevents businesses from adopting solutions that could reduce costs and strengthen their long-term resilience.

Recognizing these challenges, the United Nations Industrial Development Organization (UNIDO), in partnership with the Department of Trade and Industry (DTI), is supporting Filipino MSMEs unlock the benefits of energy efficiency through the Transformative Actions for Climate and Ecological Protection and Development (TRANSCEND) Project.

Supported by Germany's International Climate Initiative (IKI), the project is helping lay the foundation for a more climate-smart industrial sector by promoting resource-efficient production, strengthening energy management practices, and supporting the development of a Climate-Smart Industry Roadmap for MSMEs. Beyond reducing energy consumption, the project seeks to help enterprises adopt sustainable business practices and access emerging green financing opportunities.

The initiative will be implemented across selected areas of Batangas, Oriental Mindoro, Panay Island, Misamis Oriental, and Bukidnon, where MSMEs will receive technical assistance, training and practical tools to identify and implement energy-saving measures suited to their operations.

“Through the TRANSCEND Project, UNIDO is assisting MSMEs in turning energy efficiency into a business advantage—reducing costs, improving productivity, and strengthening resilience to negative climate impacts,” said Teddy Monroy, UNIDO Country Representative in the Philippines. “By supporting local enterprises in adopting sound energy management practices and helping develop a Climate-Smart Industry Roadmap, we are creating an enabling environment where businesses can grow sustainably while contributing to the Philippines’ climate ambitions.”

The initiative aligns closely with the Philippine MSME Development Plan 2023–2028, which identifies sustainability as a key driver of enterprise development. As businesses become more energy efficient, they could lower operating costs, improve compliance with environmental standards, and become better positioned to participate in domestic and international value chains where sustainable production is increasingly expected.

MSMEs account for around 99 per cent of registered businesses in the country. Yet many continue to face barriers to adopting low-carbon technologies due to limited information, high upfront investment costs and constrained access to finance. By addressing these barriers, the TRANSCEND Project seeks to demonstrate that climate action is not simply an environmental responsibility but a practical business strategy that delivers measurable economic benefits.

“MSMEs are central to the Philippines’ inclusive economic growth and industrial transformation. As sustainability and resource efficiency increasingly shape markets and value chains, energy efficiency must be recognized not only as an operational measure, but as a strategic pathway toward stronger productivity, resilience, innovation, and competitiveness,” said Edwin Pasahol, Division Chief of the Department of Trade and Industry's Bureau of Small and Medium Enterprise Development (DTI-BSMED). “Through our partnership with UNIDO under the TRANSCEND Project, we are working to translate the country’s climate and sustainability commitments into practical support for MSMEs, providing enterprises with the knowledge, tools, and enabling environment needed to adopt climate-smart practices and access emerging green market and financing opportunities. This partnership reinforces DTI’s commitment to ensuring that the transition toward a low-carbon economy is inclusive, enterprise-driven, and creates meaningful opportunities for MSMEs across the country.”

Over its five-year implementation, the project is expected to generate around 4,000 MWh in energy savings and reduce greenhouse gas emissions by about 3,000 tonnes of carbon dioxide equivalent. These outcomes will contribute to the Philippines' Nationally Determined Contributions under the UN Framework Convention on Climate Change while supporting the country's broader transition towards a climate-resilient, low-carbon economy.

As part of the wider TRANSCEND programme, the initiative demonstrates how strategic investments in innovation, sustainable production and enterprise development can deliver benefits that extend beyond environmental gains. By helping MSMEs become more energy efficient, resilient and competitive, UNIDO and DTI are enabling businesses not only to adapt to a changing climate, but also to unlock new opportunities for inclusive and sustainable industrial growth.