Indian micro, small and medium-sized enterprises (MSMEs) are more willing to engage on matters related to sustainability, however implementation is falling short, a new study by Dun & Bradstreet India has found.
According to the latest SPeX (Sustainability Perception Index) report for Q3 2024, which was undertaken in association with the Small Industries Development Bank of India (SIDBI), MSMEs showed a 30% increase in willingness to engage with sustainability during July-September 2024, while awareness rose by 4% (to 62).
However, implementation of sustainability measures dropped by 15%, falling to 41.
The index ranks firms from 0 to 100, with a higher score indicating a stronger commitment to sustainable business practices. An increase suggests a positive shift in MSMEs’ perception and practices towards sustainability measures, while a decrease may indicate challenges or a decline in willingness or implementation.
‘Financial and technological barriers’
“MSMEs are increasingly committed to sustainability, but financial and technological barriers still hinder real progress,” commented Dr. Arun Singh, global chief economist, Dun & Bradstreet. “In Q3, the SPeX index surged across all business sizes, signalling rising awareness and a shift toward change, particularly among younger firms. However, translating sustainability ambitions into concrete actions remains a significant challenge.
“From overhauling production processes to adapting to new regulations, MSMEs face critical obstacles. To unlock their potential, targeted support is essential, empowering these businesses to turn their green ambitions into impactful realities and drive the transition to a sustainable economy.”
According to the SPeX report, Indian firms demonstrated increased familiarity with environmental and governance (ESG) practices in Q3, with smaller firms generally aligning to this trend. Profitability and stakeholder appeal were recognised as the key benefits of sustainability, with MSMEs particularly noting the positive effect it has on attracting employees, investors, and customers.
The primary motivators for adopting sustainability were cost reduction, efficiency gains and regulatory compliance, with MSMEs increasingly looking at sustainability as a competitive advantage, the report found.
However, despite growing awareness, the proportion of MSMEs likely to implement new sustainability measures in the next two quarters dropped from 79% in Q2 to 49% in Q3.
Green investments
“SPeX endeavours to be a tracker of MSMEs‘ intent and preparedness to go for green investments,” added Dr. R.K Singh, CGM, SIDBI. “This also helps us to customise our solutions aimed at inducing MSMEs to align to value chain expectations on responsiveness.
“[The report] indicates upward movement in the SPeX score, indicates growing orientation to emerge responsive. This would require augmenting the capacity building, orientation and awareness on enterprise side to realise this dream. The level of implementation needs a fillip across all sizes of enterprises.” Read more here.
