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1 in 4 MSMEs have no internal expertise in sustainability measures: SIDBI-D&B SPeX report

Among the top two challenges facing MSMEs to embrace sustainability initiatives were the requirement for technical support and capital.

Sustainable business practices: Even as there is a growing awareness among businesses to adopt sustainable practices, 73 per cent of MSMEs are yet to set their sustainability targets while one in four MSMEs have no internal expertise regarding sustainability measures, according to a survey findings on Thursday. The SIDBI – D&B Sustainability Perception Index (SPeX), which examines the assessment of factors contributing to the perception of sustainability in businesses, for the second quarter (April – June) of 2023, noted that only one in 10 MSMEs part of the survey were recycling more than 75 per cent of water consumption.

Among the top two challenges facing MSMEs to embrace sustainability initiatives were the requirement for technical support and capital while half of MSMEs asked for direct monetary incentives to adopt sustainable measures.

Over 250 respondents were part of this survey with 55 per cent micro companies, 34 per cent medium companies and 11 per cent large enterprises. 

Nonetheless, around 80 per cent of MSMEs recognized the importance of raising awareness about sustainability measures, policies, and procedures, said Arun Singh, Global Chief Economist, Dun & Bradstreet. 

“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,” he said. 

The index measuring the awareness, willingness, and implementation related to MSME sustainability measures highlighted that during the June quarter, there was a reduction of 20 per cent in implementation scores, a 17 per cent decrease in willingness scores, and an 11 per cent downturn in awareness scores. 

The index clearly indicates that there is a compelling need to augment the ongoing efforts to increase both awareness and willingness among MSMEs about sustainable development, said R.K Singh, CGM, SIDBI.

“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,” he said. 

According to the survey, 67 per cent of MSMEs said their level of understanding of sustainability measures has improved since the previous quarter while eight in 10 MSMEs felt the need to improve awareness of sustainability measures, policies, and procedures for adoption of sustainable practices. Moreover, around 50 per cent of MSMEs claimed that they use energy-efficient and climate-friendly equipment and reduce, reuse and recycle emissions, waste, water, and energy.