Mumbai: 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.
Assessing Sustainability in Indian MSMEs
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.
Declining Scores Raise Concerns
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.
Bridging the Knowledge Gap
The significant fluctuation in the index is due to a 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.
Call for Financial Incentives
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.”
The Role of SIDBI
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.”
Key Findings
- 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 incentives for adopting sustainable measures.
- 8 in 10 MSMEs feel the need to improve awareness of sustainability measures, policies, and procedures for the 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.
The SIDBI – D&B SPeX report sheds light on the evolving landscape of sustainability perception among Indian MSMEs. As the nation moves towards a more eco-conscious future, the call for monetary incentives to drive sustainable practices becomes increasingly urgent, and organizations like SIDBI remain committed to supporting this transition.
