SIDBI And D&B To Create Index To Track ESG Among MSMEs
The Small Industries Development Bank of India (SIDBI) and Dun & Bradstreet (DB) will a quarterly SIDBI-D&B Sustainability Perception Index (SIDBI–D&B SPeX) which will be shared with policymakers as a quantitative measurement of the adoption of environmental, social, and corporate governance (ESG) measures among MSMEs and “nudge businesses towards adopting an ESG framework in their business strategy over the coming years,” said SIDBI on Monday.
The index will capture the sentiment of businesses through a survey about the preceding quarter and outlook for the next quarter on various business parameters, which will provide valuable insights on the adoption of an ESG framework, when analysed at an aggregate level, SIDBI noted.
The index later plans to cover the sectoral and sub-sectoral perceptions or aspirations and preparedness where the sectoral enterprises can track themselves in regard to improvement on ESG. Sustainability disclosure and reporting play an important role to help MSMEs and investors to reduce risks across their supply chain and enable an efficient decision-making process, toward greening MSMEs as well as lending institutions, said Sivasubramanian Ramann, Chairman and Managing Director of SIDBI at the launch of the index at an event in Coimbatore on September 30.
Understanding and awareness about ESG is gaining momentum in MSMEs and it is relevant in view of changing scenario related to climate aspects, he added.
Avinash Gupta, Managing Director & CEO – India, Dun & Bradstreet at the event said, “According to a Dun & Bradstreet survey highlighting top compliance and procurement challenges, 51 per cent respondents said they needed more data to verify entities and 43 per cent said it is difficult to identify the application of ESG guidelines within the due diligence processes of the customer. Inefficient data usage and management are at the core of such challenges.”
The survey will track the awareness/sentiment of MSMEs in manufacturing and services (including trading) across India and cover nearly 250 MSMEs every quarter from the D&B/SIDBI database of MSMEs, added Gupta.
Importantly, SIDBI had earlier this month announced multiple partnerships to help MSMEs embrace energy efficiency. The first partnership was with the German development agency Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH for operating a Risk Sharing Facility (RSF) that provides credit guarantees to loans from commercial banks or non-banking financial companies (NBFCs).
The second tie-up was with Technology Information, Forecasting and Assessment Council (TIFAC) to identify scalable green and clean technologies by MSMEs and support them through financing. The third MoU signed with the industry body Confederation of Indian Industry (CII) was also towards promoting clean and green initiatives among MSMEs and facilitating their implementation through SIDBI’s financing schemes.
The programmes are in line with India’s 2030 sustainability goals by the United Nations. As per India’s updated Nationally Determined Contribution (NDC) with respect to the UN’s Framework Convention on Climate Change (UNFCCC), India has to reduce the emissions intensity of its GDP by 45 per cent by 2030, from the 2005 level and achieve about 50 per cent cumulative electric power installed capacity from non-fossil fuel-based energy resources by 2030, according to a Cabinet statement in August this year.