50% of MSMEs ask for monetary incentives to adopt sustainability – SIDBI – D&B SPeX

The SIDBI – D&B Sustainability Perception Index (SPeX – the green pulse indicator) has been reported at 46 for April – June 2023. This marks a return to the level of 46 observed in October – December 2022, following a peak of 54 during January – March 2023.

SPeX thoroughly examines the assessment of both internal and external factors that contribute to the perception of sustainability in businesses across three key dimensions: awareness, willingness, and implementation.

In the April – June quarter, the index indicates a reduction of 20% in implementation scores, a 17% decrease in willingness scores, and an 11% downturn in awareness scores. The narrative centers primarily around awareness, orientation, and preparedness of MSMEs on sustainability.

The significant fluctuation in the index is due to lack of knowledge about institutional products and internal expertise of enterprises regarding sustainability in different pockets. 8 out of 10 MSMEs feel the need to improve the awareness of sustainability measures, policies and procedures for adoption of sustainable practices.

Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet said, “It is encouraging to see around 80% of MSMEs recognize the importance of raising awareness about sustainability measures, policies, and procedures. However, to improve sustainability adoption by MSMEs in India, the policymakers should provide financial incentives and tax benefits to MSMEs that implement eco-friendly practices. Additionally, creating accessible training programs and workshops focused on sustainable business strategies would empower MSMEs to make informed decisions that positively impact the environment and their bottom line.”

Dr. R.K Singh, CGM, SIDBI stated, “SIDBI – D&B Sustainability Perception Index Survey, April-June 2023 clearly indicates that there is a compelling need to augment the ongoing efforts to increase both awareness and willingness among MSMEs about sustainable development. While awareness and willingness remain high for larger companies, the level of implementation remains low across all sizes of businesses. Even while MSMEs might view the concept of sustainability in a variety of ways, from helpful guidelines for responsible governance to client demand, it is important for MSMEs to be aware of the benefits to adopt sustainable initiatives as part of their business strategy. Thus, it is important to understand how a company’s leadership understands the potential benefits of implementing sustainable initiatives. SIDBI is committed to provide all out support to MSMEs moving towards sustainability, green investments including energy efficiency, cleaner fuel, renewable energy, waste management, adoption of EVs etc in mission mode. While SPeX, the index reflects the preparedness of MSMEs towards sustainability, it will help and guide the policy maker to align with sustainability & green goals and orient MSME participation on larger scale.”

Highlights of the SPeX Report:

• 67% of MSMEs said their level of understanding of sustainability measures has improved since the previous quarter.
• 1 in 4 MSMEs have no internal expertise regarding sustainability measures.
• Half of MSMEs ask for direct monetary incentive for adopting sustainable measures.
• 8 in 10 MSMEs feel need to improve awareness of sustainability measures, policies, procedures for adoption of sustainable practices.
• 73% of the MSMEs are yet to set their sustainability targets.
• Only 1 in 10 MSMEs are recycling more than 75% of water consumption.
• MSMEs face a pressing requirement for technical support and capital to embrace sustainability initiatives and these are among their top three challenges.
• Cost reductions via efficiency gains and external factors are major drivers of MSMEs’ sustainability actions.
• Positive impact on revenue and employee morale are the top expected positive outcomes of their sustainability actions.
• Around 50% of MSMEs claimed that they use energy efficient and climate friendly equipment and reduce, reuse and recycle emissions, waste, water, energy.
• Only 33% stated that they have prompt & full compliance with regulations related to sustainability while only 38% source from ethical suppliers.

About Dun & Bradstreet:

Dun & Bradstreet, a leading global provider of business decisioning data and analytics, enables companies around the world to improve their business performance. Dun & Bradstreet’s Data Cloud fuels solutions and delivers insights that empower customers to accelerate revenue, lower cost, mitigate risk and transform their businesses. Since 1841, companies of every size have relied on Dun & Bradstreet to help them manage risk and reveal opportunity. For more information on Dun & Bradstreet, please visit www.dnb.com.

Dun & Bradstreet Information Services India Private Limited is headquartered in Mumbai and provides clients with data-driven products and technology-driven platforms to help them take faster and more accurate decisions in domains of finance, risk, compliance, information technology and marketing. Working towards Government of India’s vision of creating an Atmanirbhar Bharat (Self-Reliant India) by supporting the Make in India initiative, Dun & Bradstreet India has a special focus on helping entrepreneurs enhance their visibility, increase their credibility, expand access to global markets, and identify potential customers & suppliers, while managing risk and opportunity.

India is also the home to Dun & Bradstreet Technology & Corporate Services LLP, which is the Global Capabilities Center (GCC) of Dun & Bradstreet supporting global technology delivery using cutting-edge technology. Located at Hyderabad, the GCC has a highly skilled workforce of over 500 employees, and focuses on enhanced productivity, economies of scale, consistent delivery processes and lower operating expenses.

Visit www.dnb.co.in for more information.

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About SIDBI:

Small Industries Development Bank of India (SIDBI) in its role as the Principal Development Finance Institution for MSME sector has played a significant role in developing the financial services for MSME sector through various interventions including Refinance to Banks, Credit Guarantee programs, Development of the MFI sector, Contribution to Venture capital/AIF funds, MSME ratings, promoting digital lending ecosystem, etc. The Bank has proactively been working toward Energy Efficiency (EE) in MSMEs since 2005-06 as part of Direct Finance business using support of multilaterals like   World Bank, ADB, GiZ, FCDO, JICA, AFD, KfW etc for energy efficient projects. SIDBI has taken steps to promote Energy Efficiency and Cleaner production in the MSME sector and propose to accelerate its efforts for MSME sector for their survival, growth and competitiveness in long run during prevailing climate related challenges.

Looking to importance of ESG aspects and the need for a simplified, customised ESG risk rating framework, SIDBI has already started integration of ESG framework into its operations. Subsequent to setting up of Green Climate Finance Vertical for prioritised focus, a Board level Committee has been constituted for guidance, oversight and monitoring on ESG, Green Strategy of the bank, including relevant SDGs etc. To lead with the example, SIDBI has set a target to become Carbon Neutral by 2024 and Net Neutral organization in subsequent years.

Through Green Financing products and other developmental activities, SIDBI enables the manufacturers and service providers in MSME sector to adopt green energy efficient technologies helping in lesser waste leading to positive impact on environment and sustainability.