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

Aug 31, 2023

Synopsis
The index revealed that 8 out of 10 MSMEs feel the need to improve their awareness of sustainability measures, policies and procedures for adoption of sustainable practices.

Atleast 67% of MSMEs said that their level of understanding of sustainability measures has improved since the previous quarter, while 50% claimed they use energy efficient and climate friendly equipment. 50% of them also ask for direct monetary incentive to adopt sustainable measures.These, among other findings, were highlights of the SIDBI - D&B Sustainability Perception Index (SPeX – the green pulse indicator) which 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.

Arun Singh, Global Chief Economist, Dun & Bradstreet said in a statement, “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.”

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."

Highlights of the SPeX Report:

1. 67% of MSMEs said their level of understanding of sustainability measures has improved since the previous quarter.
2. 1 in 4 MSMEs have no internal expertise regarding sustainability measures.
3. Half of MSMEs ask for direct monetary incentive for adopting sustainable measures.
4. 8 in 10 MSMEs feel need to improve awareness of sustainability measures, policies, procedures for adoption of sustainable practices.
5. 73% of the MSMEs are yet to set their sustainability targets.
6. Only 1 in 10 MSMEs are recycling more than 75% of water consumption.
7. MSMEs face a pressing requirement for technical support and capital to embrace sustainability initiatives and these are among their top three challenges.
8. Cost reductions via efficiency gains and external factors are major drivers of MSMEs’ sustainability actions.
9. Positive impact on revenue and employee morale are the top expected positive outcomes of their sustainability actions.
10. Around 50% of MSMEs claimed that they use energy efficient and climate friendly equipment and reduce, reuse and recycle emissions, waste, water, energy.
11. Only 33% stated that they have prompt & full compliance with regulations related to sustainability while only 38% source from ethical suppliers.

[The Economic Times]