Only one in ten MSMEs claim to have expertise about the benefits of sustainability adoption

Mumbai, March 27, 2024: The SIDBI - D&B Sustainability Perception Index (SPeX), also known as the "green pulse indicator," increased by around 5% to 55 during October-December 2023 compared to the previous quarter, primarily on account of improved willingness of MSMEs to adopt sustainability measures.

Dun & Bradstreet, a leading global provider of business decisioning data and analytics, along with SIDBI, released SPeX for October – December 2023, which evaluates the perception of sustainability among MSMEs across three key dimensions: willingness, awareness, and implementation. The SPeX index value ranges from 0 to 100, with an increase in index value indicating enhanced perception of MSMEs towards sustainability. The overall SPeX value reflects changes within these dimensions, providing insights into how MSMEs understand, are willing to engage, and implement sustainability measures. An increase in SPeX suggests a positive shift in MSMEs' perception and practices towards sustainability measures. A decrease may indicate challenges or a decline in willingness or implementation.

Arun Singh, Global Chief Economist, Dun & Bradstreet, said, “To enhance the adoption of sustainability practices among MSMEs, it is crucial to provide them with the necessary support for implementation. Beyond financial assistance, there is a need to foster a shift in mindset and ensure a clear understanding of how sustainability measures can benefit their businesses. Large corporations can play a pivotal role by actively encouraging their suppliers to embrace sustainable practices. However, only one in three MSMEs foresee that incorporating sustainability practices will positively impact client retention and acquisition. To address this, large companies can take the lead by mandating collaboration with vendors committed to sustainability, thereby setting benchmarks that inspire MSMEs to follow suit. Our survey further highlights a significant gap, with less than one in three MSMEs having a full grasp of the benefits, despite more than half of them believing that adopting sustainability can lead to increased profitability and cost savings”.

Dr. R.K Singh, CGM, SIDBI stated, “SIDBI - D&B Sustainability Perception Index Survey, October – December 2023 clearly indicates that while there is a slight upward movement in the SPeX score, there is a need to augment the capacity building and awareness efforts on demand i.e. enterprise side. While awareness and willingness remain high for MSMEs on the top of the pyramid, the level of implementation needs a fillip across all sizes of enterprises. Thus, it is important to understand how an enterprise leadership understands the potential benefits of going for sustainable, clean, green, and environment friendly practices / solutions. SIDBI, being a development financial institution (DFI) for MSMEs, is committed to provide all out support to MSMEs moving towards adoption of clean green climate-friendly, climate-tech innovative, sustainable practices & investments. SIDBI’s Panchtatva missions viz. Energy Efficiency, E-Mobility, Solar, Waste2Envttaste (Circular Economy, MSW, CBG, etc.) and Nurture t Nature (developing a trusted, validated stack of clean, green, environment friendly technologies / processes) are oriented to enhance the acceptability amongst MSMEs to Go Green and also adopting E&S practices. SPeX is poised to evolve as a tracker of MSMEs’ intent and preparedness to “Go Green”. We are also reciprocating the aspirations of MSMEs through financial products coupled with digital tools and building lenders capacity. Our efforts are also on to address the sectoral and cluster aspirations.”

Highlights of the SPeX Report:

• The already high gap is further widening between awareness and available expertise to implement sustainable practices.
• Cost reduction is the most important factor for MSMEs to adopt sustainability, consistently for the fifth consecutive survey.
• 42% of MSMEs acknowledge the various benefits of sustainability. However, only 12% claim to have expertise about the benefits of sustainability adoption.
• More than half of the surveyed MSMEs believe that sustainability adoption can lead to higher profitability and cost savings.
• Nearly half of the MSMEs do not have expertise for creating sustainable supply chains, increasing their vulnerability to supply chain shocks.
• Environmental measures are the foremost priority for MSMEs, followed by social measures, with governance ranking lowest in their priorities.
• 27% of respondents are not aware of green financing options available to them.
• 57% of small businesses do not know how to measure their carbon footprint or formulate strategy towards achieving net zero.
• In 2023, 59% of MSMEs have taken environment related measures, while only around 23% have taken social and governance related measures.