Mumbai (Maharashtra) [India], October 11: Dun & Bradstreet, a leading global provider of business data and analytics, in collaboration with SIDBI, has unveiled the Sustainability Perception Index (SPeX) for April to June 2024. This latest edition reveals a significant shift in the awareness and perception of sustainability among Micro, Small, and Medium Enterprises (MSMEs) in India. Notably, MSMEs are increasingly recognizing the profitability and cost-saving benefits associated with sustainable practices, particularly focusing on environmental measures over social and governance factors.
The Sustainability Perception Index (SPeX) gauges MSMEs’ views on sustainability across three critical areas: willingness, awareness, and implementation. The index, which ranges from 0 to 100, reflects a higher score indicating a stronger commitment to sustainability. This quarter, the SPeX score held steady at 54, with a marked increase in awareness and implementation scores. The awareness dimension rose to 59, reflecting a 9% increase, while implementation jumped by 35% to reach 49. However, it is noteworthy that overall awareness saw a decline of 17% to 51.
Increased Focus on Environmental Measures
Among various categories of MSMEs, micro businesses have emerged as leaders in adopting sustainability practices. There has been a notable uptick in the percentage of micro firms engaging in sustainability-related activities, such as training on sustainability measures, compliance, ethical sourcing, and recycling practices. Dr. Arun Singh, Global Chief Economist at Dun & Bradstreet, remarked, “Over the past year, MSMEs have become more aware of sustainability, particularly environmental measures, and are increasingly recognizing the profitability and cost-saving benefits of sustainable practices.”
Despite this growing awareness, challenges persist. Many MSMEs report hesitancy in deepening their sustainability efforts due to high costs, limited access to capital, and difficulties in quantifying the benefits of their sustainability initiatives. Dr. Singh emphasized the importance of reducing the costs associated with adopting sustainable practices and increasing funding opportunities, particularly for cleaner production and recycling technologies. He highlighted the government’s recent initiative to establish a Climate Finance Taxonomy as a pivotal move to direct capital toward climate-resilient infrastructure, thereby assisting MSMEs in achieving energy efficiency and emission reduction goals.
MSMEs and Green Investments
According to Dr. R.K. Singh, CGM of SIDBI, the SPeX serves as a tracker of MSMEs’ readiness to invest in green initiatives. He stated, “The stability in the SPeX score indicates the need to scale up and enhance capacity building and awareness on the enterprise side.” He noted that SIDBI has prioritized greening the enterprise ecosystem and that its Panchtatva missions—Energy Efficiency, E-Mobility, Renewable Energy, Circular Economy, and Adaptation Finance—are geared towards encouraging MSMEs to adopt environmental and social (E & S) practices, fostering resilience and competitiveness.
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Key Highlights from the SPeX Report:
- Awareness of sustainability among MSMEs has risen over the past year, with medium, small, and micro firms focusing more on environmental measures.
- A significant portion of medium and small firms believes that sustainability efforts can enhance brand image (89%), improve stakeholder appeal (88%), and boost profitability (84%). However, they express less confidence in cost reductions, with only 78% affirming this benefit.
- Implementation has improved, with micro businesses leading in sustainability practices.
- Notable increases were observed among micro firms in areas such as training, compliance, sourcing from ethical suppliers, and recycling.
- Younger and older MSMEs engage more in environmental measures, while those aged 1-25 years show a stronger focus on labor welfare.
Despite the advancements in sustainability awareness, MSMEs continue to face challenges, particularly in quantifying the benefits of their investments in sustainability. The increasing global demand for sustainable practices serves as a driving force, yet high costs, capital access, and technical expertise remain significant hurdles. As the report underscores, targeted support and funding will be crucial in enabling MSMEs to fully realize the potential benefits of sustainability and contribute positively to environmental and social outcomes.
For a comprehensive look at the findings, the report can be downloaded for free from the Dun & Bradstreet India website.
About Dun & Bradstreet
Dun & Bradstreet has been empowering businesses with data-driven insights since 1841. With a focus on enabling companies to enhance their performance, Dun & Bradstreet continues to support entrepreneurs and businesses in navigating risk and identifying opportunities. For more information, visit www.dnb.com.
About SIDBI
The Small Industries Development Bank of India (SIDBI) plays a pivotal role in developing financial services for the MSME sector, focusing on energy efficiency and cleaner production initiatives to ensure long-term growth and competitiveness.
