Influence of efficiency gains and compliance increases on sustainability adoption

Mumbai, April 3, 2025: Dun & Bradstreet, a leading global provider of business decisioning data and analytics, along with SIDBI, has released the Sustainability Perception Index (SPeX), referred to as the ‘Green Pulse Indicator’ for the October-December 2024 period. SPeX evaluates MSME’s perception of sustainability across three dimensions: willingness, awareness, and implementation. The SPeX value declined 5.3% in Q4 2024 over Q3 2024. Though awareness and willingness dimensions fell 11% and 12%, respectively from the previous quarter, the implementation dimension rose significantly by 41%.

The overall SPeX value reflects changes across these three dimensions, providing insights into MSME’s understanding, willingness to adopt, and implementation of sustainability measures. An increase in SPeX value indicates improvement in MSME’s perception towards sustainability adoption. A decrease could indicate challenges or a decline in perception.

Sustainability Perception Index (SPeX)

The Green Pulse Indicator

The index ranges from 0 to 100. Higher the index, higher is the level of perception towards sustainability.

Source: SIDBI - D&B Sustainability Perception Index Survey, October -December 2024

Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet, said, "Globally, sustainability regulations are evolving rapidly and MSMEs are recognizing value in sustainability adoption in gaining market share. Global businesses are enabling sustainability adoption through supply chain mandates aligned with international sustainability goals. A higher share of MSMEs reporting limited sustainability familiarity in Q4 versus Q3 highlights their intent to catch up with shifting regulations. 45% of MSMEs seek alternative financial or policy support for increasing adoption, highlighting the need for policy support to drive sustainability adoption. Notably, the perception that sustainability adoption caters only to select global clients has declined, reflecting the broader reach of sustainability mandates worldwide. Although the medium-to-long-term return on sustainability investments remains a barrier, the concerns about uncertain returns are declining with a growing recognition of the long-term benefits."

Dr. R.K Singh, CGM, SIDBI stated, “The Sustainability Perception Index (SPeX), referred as the ‘Green Pulse Indicator’ for October-December 2024 period, indicates an increase in the MSME implementation dimension with a rise of 41% as compared to previous quarter. The implementation cost and capital availability are consistently emerging as a key challenge for MSMEs in adopting sustainable practices. Factors such as environmental labelling and certification, operating procedures, and management buy-in are the least obstacles, reflecting MSMEs keenness to adopt sustainability and seek financial and technical support. Aligned to PANCHAMRIT, to scale up green finance in the MSME ecosystem, SIDBI runs PANCHTATVA missions” viz. (i) Energy Efficiency, (ii) Renewable Energy, (iii) Circular Economy, (iv) E-Mobility and (v) Adaptation (Nature Based Solutions) helping the nation achieving its Nationally Determined Contributions (NDCs) commitments. SIDBI attends to the Greening mandate through “PANCHTOOL” (5 energising pillars) - (i) Financing, (ii) Development, (iii) Risk Mitigant, (iv) Thought Leadership and (v) International Cooperation (Synergy 4 Energy) and is taking its “Greening MSME Ecosystem” agenda forward.”

Highlights of the SPeX Report:

• The SPeX for Q4 2024 declined q-o-q, yet increased y-o-y by 8%, the second highest value in nine quarters since Q4 2022.
• Implementation dimension in Q4 2024 reached its highest level of 58 in the last nine quarters, reflecting progress of MSMEs in adopting sustainability measures.
• 85% of MSMEs are planning to adopt additional sustainability measures in the next two quarters compared with only 49% in the previous quarter. This upward shift is across business sizes, with medium-sized firms leading the way (95%) in their commitment towards sustainability.
• Firms with longer operational histories exhibit high sustainability awareness, willingness and implementation, while newer firms show strong awareness and willingness, but lag in actual implementation.
• The perception that sustainability investments were preferred by select global customers is less pronounced in Q4 compared to Q3, reflecting the expanding scope of global policies and regulations.
• Medium and small sized businesses are keen on building expertise on sustainable business strategies and environmental practices, while micro businesses have also shown intent to enhance expertise in sustainability implementation and policy formulation.
• Established businesses with more than 10 years of operations regard increased stakeholder attractiveness as a primary benefit for adopting sustainability initiatives. Younger businesses with five to10 years of operations indicated lower confidence in cost reduction as a benefit compared to other factors, reflecting concerns about upfront investments and/or challenges in measuring returns on sustainability adoption.
• In 2024, cost reduction (63%), regulatory compliance (59%) and peer pressure (41%) were the key factors influencing sustainability adoption.
• In 2024, medium and small businesses prioritized environment and workforce related sustainability measures over compliance and social welfare, with an average of 76% of MSMEs focusing on these areas.
• In 2023 and 2024, the implementation cost and capital availability consistently emerged as key challenges for MSMEs in adopting sustainable practices. Meanwhile, factors such as environmental labelling and certification, operating procedures, and management buy-in were the least obstacles, reflecting MSMEs are keen to adopt sustainability and seek financial and technical support.