MSMEs make strong sustainability gains, but governance still not on the radar

Mumbai, July 1, 2025: Dun & Bradstreet, a leading global provider of business decisioning data and analytics, along with Small Industries Development Bank of India (SIDBI), has released the Sustainability Perception Index (SPeX), for January-March 2025 period. The SPeX, (also known as the ‘Green Pulse Indicator’) evaluates perception of sustainability of micro, small and medium enterprises (MSMEs) across three dimensions: willingness, awareness, and implementation.

The SPeX rose by 14.7% quarter-on-quarter to reach 69 in Q1 2025, marking its highest level in the past 10 quarters. All three dimensions—Awareness (+20%), Willingness (+17%), and Implementation (+2%) increased from Q4 2024, each reaching their highest levels in the last 10 quarters.

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, January - March 2025

Dr. Arun Singh, Global Chief Economist, Dun & Bradstreet, said, “MSMEs have made remarkable strides in their sustainability journey, with awareness, willingness and implementation reaching record highs in Q1 2025 since we started tracking in Q4 2022. From reducing emissions and energy use, to adopting sustainable packaging, these achievements underscore a growing commitment to environmental responsibility. However, our survey shows that compliance with social and governance standards has consistently remained a low priority for MSMEs through 2024 and into Q1 2025, with limited adoption of formal governance frameworks. As MSMEs express the intent to expand their governance efforts, this presents a timely opportunity to strengthen these initiatives. Measures such as simplified certification processes and improved access to technical expertise will be essential to support this shift. Strengthening these enablers is critical to unlocking the next phase of sustainable growth—resilient, future-ready, and aligned with global standards.”

Dr. Ravindra Kumar Singh, Chief General Manager, Green Climate Finance Vertical, SIDBI stated, “Over past 10 quarters, SPeX has endeavored to capture the pulse of MSMEs’ orientation and preparedness to go for sustainable investments. This helps in looking within and aligning green processes, products, and design to meet the expectations of the value chain. SIDBI - D&B Sustainability Perception Index Survey (which we term as “Green Pulse) for the Quarter January – March 2025, has indicated significant enhancement in the SPeX score (from 60 in the QE December 2024 to 69 for the QE March 2025). This rise from 46 (1st edition) to the score of 69 now indicates that enterprises are becoming responsive and are aiming to adopt clean, green, environmentally friendly technologies while also becoming conscious of Environment & Social (E&S) factors. Continuous capacity building and embedded instruments are key to enabling MSMEs' transition to green practices.” SIDBI has mainstreamed Climate Financing and is actively providing long-term financial solutions that enable MSMEs to adopt greener technologies. Each green loan passes through the filters of E&S, Green transitional framework, and green tech stack such that energy saving and/or GHG emissions reductions are tracked”.

Highlights of the SPeX Report:

In Q1 2025, the awareness dimension saw the most significant improvement across all areas—rising 24% from the previous quarter to reach 68, the highest level in the past ten quarters. This reflects the growing understanding of sustainability amongst MSMEs and its relevance to business, as evidenced by several encouraging trends:

• MSMEs are increasingly recognizing the tangible benefits of sustainability, particularly in terms of profitability and cost reduction. Awareness that profitability can be achieved through sustainability initiatives surged from 43% in 2023 to 80% in 2024, and further to 89% in Q1 2025. Similarly, the share of MSMEs associating sustainability with cost savings rose from 44% in 2023 to 85% in Q1 2025—demonstrating a sharp shift in mindset from compliance to business advantage.
• In Q1 2025 awareness of green financing remained relatively high at 53% well above the 37% recorded in mid-2024. Encouragingly, the share of MSMEs accessing green finance rose to 26% in Q1 2025—up from just 7% in Q4 2024.
• At the same time, more MSMEs are tapping into government and institutional support, with adoption rising to 59% in Q1 2025, up from 36% in Q4 and 39% in Q3 of 2024.

MSMEs entered 2025 with renewed determination to embrace sustainability, as reflected in the “willingness” dimension rising to a 10-quarter high of 69 in Q1 2025—up sharply from 59 in Q4 2024. This reflects growing momentum in embedding sustainable practices across operations.

• At the heart of this commitment lies a steadfast focus on Reducing, Reusing, and Recycling initiatives, especially across waste, emissions, water, and energy. This area has topped MSMEs’ agenda since 2023, with 82% identifying it as a priority in Q1 2025—up from 76% in 2024 and 51% in 2023.
• Driving this transition is a simple business case: cost reduction continues to be the most influential factor in adopting sustainability measures. After topping the list in 2023 (81%) and dipping slightly in 2024 (63%), it surged again in Q1 2025, with 78% of MSMEs citing it as a primary motivator.
• Yet, alongside this economic imperative, external forces such as regulations and incentives have gained significant traction. Regulatory influence has grown rapidly, with 80% of MSMEs citing it as a key factor in Q1 2025—up from 53% in 2023 and 59% in 2024. In parallel, the importance of incentives rose notably, becoming the third most influential factor at 63%, compared to just 40% in 2023.
• Encouragingly, intent to build in-house expertise is also on the rise. By Q1 2025, 59% of MSMEs aimed to enhance their capabilities in implementing sustainable environmental practices, up from just 29% at the end of 2023. Similarly, 56% expressed intent to strengthen their supply chain sustainability expertise—an increase of 17% over Q4 2024-—reflecting rising concerns about global trade disruptions.

In Q1 2025, the sustainability journey of MSMEs marked a significant milestone, with the implementation dimension reaching a ten-quarter high of 59—signalling strong momentum in translating sustainability commitments into action.

• This progress is backed by a trend over the past two years, during which MSMEs have steadily reported reductions in the consumption or generation of water, waste, emissions, heat/energy, and raw materials. Many have also adopted more sustainable packaging solutions.
• This positive trajectory continued into Q1 2025, where 68% of MSMEs reported lower emissions, 62% achieved reductions in heat and energy use—the highest level since Q1 2023—and 44% adopted sustainable packaging practices, a record since Q3 2024. These figures highlight growing adoption and deepening integration of environmental practices.
• However, this progress has not come without challenges. Throughout 2023 and 2024, the cost of implementation and limited access to capital have remained persistent obstacles, and they continue to constrain MSMEs' ability to scale sustainability efforts in 2025.
• More recently, new barriers have begun to surface. Technical know-how has become an increasingly pressing issue, with the proportion of MSMEs citing it as a challenge rising sharply from 46% in 2023 to 70% in Q1 2025. At the same time, concerns around environmental labelling and certification have doubled—from 31% to 60%—likely reflecting the mounting pressure on exporters to comply with rapidly evolving international standards.

Methodology

The SPeX value ranges from 0 to 100, an increase in the index value indicates MSME’s enhanced perception towards sustainability. The overall SPeX value reflects changes across these three dimensions, providing insights into MSMEs understanding, willingness to adopt, and implementation of sustainability measures. An increase in SPeX indicates improvement in MSME’s perception towards sustainability adoption. A decrease could indicate challenges or a decline in perception.