Bhoomika Singh
Over the past decade, sustainability has evolved from a buzzword to a crucial component of business strategy. Indian MSMEs, renowned for their agility and entrepreneurial spirit, have realised that adopting sustainable practices is not only ethically responsible but also strategically advantageous. By embracing sustainable initiatives, these enterprises are driving positive change, reducing their carbon footprint, and simultaneously building a stronger future.
The government has made several commitments on national and international platforms to save the environment with the help of various initiatives. One such measure is the ‘Make in India’ with ‘Zero Defect & Zero Effect’ initiative. The programme encourages MSMEs to constantly upgrade their quality standards in products and processes without damaging the environment.
Indian MSMEs are also aware about incorporating sustainable practices into their businesses. According to a report by SIDBI – the D&B Sustainability Perception Index (SPeX) for January – March 2023 stands at 54, eight points higher than the Oct-Dec 2022 level of 46, suggesting a higher level of perception towards sustainability by Indian MSMEs.
To gain deeper insights into the transformative power of sustainable MSMEs, we spoke with a few passionate business owners who have embraced sustainability as a core value. Their insights shed light on the incredible potential of these enterprises and the steps needed to foster their growth.
Embracing sustainability
Nowadays, sustainability or ESG goals inclusion in businesses has become a top priority for Indian companies. Post-pandemic the trend has escalated, especially among MSMEs.
One such small and medium enterprise is Coimbatore based Superfan, which is a Brushless Direct Current (BLDC) ceiling fan maker, incepted in 2012.
According to the company’s Business Head, Mayur Sundararajan, their fans use less than half the electricity compared to a standard fan. Their products can potentially save 16000 MU of electricity annually, which is similar to the demand of a metro like Chennai, resulting in the reduction of 2 lakh tonnes of CO2 emissions.
“Not just our products but our campus too, is designed to be green. No air conditioning units exist, and we use natural lighting for our spaces. Our other practices include rainwater harvesting and maintaining the natural flora and fauna around our premises. Also, our packaging material is devoid of thermocol and plastics,” he says.
Agriculture is another industry with a lot of potential for sustainability. As farming involves various practises that encourage carbon emissions, this is where agri start-ups are discovering opportunities to develop and work. Nutrifresh Farm Tech is one such agri start-up.
It is a hydroponic farm in Pune and Mumbai that is using cutting-edge technology and creative business concepts to create a more sustainable agricultural system.
“We offer a range of hydroponically grown residue and chemical-free fruits and vegetables that promote health and wellness. One of the key sustainable aspects is optimising water usage and fertilizers, reducing energy consumption, and ensuring proper waste management,” says Sanket Mehta, Co-Founder, Nutrifresh.
Similarly, in the retail sector, Zouk, a lifestyle brand, is contributing towards a greener future by offering vegan, cruelty-free products such as bags, footwear, and accessories.
Inspiration behind sustainability integration
When asked what inspired them to include sustainable practises into their operations, these businessmen spoke strongly about their desire to leave behind a positive legacy for future generations.
Pradeep Krishnakumar, Co-Founder of Zouk says, “We came across disturbing videos showing how animal-based leather is made, and we didn’t want to be a part of that cruelty. So, we put in a lot of effort to find an alternative material that could give us a similar product but without any harm to animals. That’s when we decided to work exclusively with vegan leather.”
Sundarajan of Superfan weighs in, saying, “The inspiration stems from the core philosophy of our founders, who are guided by the principle of ‘Do more with less.’ This ethos has fostered a culture of efficiency and resourcefulness within the company, which naturally aligns with sustainable practices.”
While for Nutrifresh, sustainability is a crucial factor for any business. “At Nutrifresh, our inspiration to integrate sustainability stemmed from addressing changing customer needs and market trends, which demanded environmentally responsible products and services,” says Mehta.
While these MSME owners are committed to sustainability, they emphasise the need for support and resources to propel their efforts forward. Access to financing options geared towards sustainable enterprises is frequently requested, as it can be difficult for MSMEs to secure money for green initiatives. They emphasise the significance of government-supported programmes and collaborations with major firms in providing the required financial help and mentorship.
Sustainable developments goals in focus
As we reflect on the stories and perspectives shared by these passionate MSME owners, it becomes clear that their dedication to sustainability goes beyond profit margins. Their ventures exemplify how businesses, regardless of their size, can become powerful agents of change in achieving the SDGs.
Talking about the SDGs their firm focuses on, Sundararajan says, “Versa Drives’ work aligns closely with several United Nations Sustainable Development Goals (SDGs). In particular, we contribute to SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action).
“Zouk contributes to several United Nations SDGs, including Goals 8, 9, and 11,” says Krishnakumar, adding, “Through our efforts, we aim to make a positive impact on these specific SDGs, contributing to a more sustainable and inclusive future.”
A tip for SDG inclusion
Businesses have to strategize before integrating ESG goals into their operations. The MSME owners share a few tips on how to do this. The unanimous message is to start small but think big.
Krishnakumar of Zouk says, “My advice would be to seek help and guidance. Entrepreneurship can be a challenging and isolating journey, but reaching out to experienced individuals can make it easier.”
“It’s about adopting the collective sustainability mindset; it cannot be achieved in isolation. MSMEs should focus on investing in research and development, sustainable and eco-friendly equipment, and green technology to forge ahead and create a unique position in the market as sustainable enterprises,” Mehta advises.
“Creating a strong network and starting collaboration initiatives with like-minded peers and partners can motivate MSMEs to look at the large picture,” he adds.
While Sundarajan suggests starting with small, achievable goals and gradually expanding sustainability efforts in your operations. “Look at every aspect of your operation, from sourcing to production to packaging, and identify areas where you can reduce waste, increase efficiency, and minimize your environmental impact. Invest in technology that can help you to achieve these goals,” he asserts.
Green finance could hasten sustainable growth
India, which has 63 million MSMEs, accounts for about 28 per cent of global GDP, over 40 per cent of exports, and around 45 per cent of industrial output. In this industry, 111 million people are employed. In addition, MSMEs’ energy consumption is equivalent to 20–25 per cent of the energy consumed by India’s large industries sector.
Yet, despite their economic significance and their role in India reaching net-zero emissions by 2070, MSMEs are unable to secure the financing that they need to decarbonise.
According to the Institute for Energy Economics and Financial Analysis (IEEFA), energy costs for the most polluting MSMEs in the manufacturing sector are 10–30 per cent of total production costs, which creates an obvious incentive to invest in energy-efficient plants and machinery and source electricity from cheaper renewable sources. However, MSMEs lack the capacity and financial resources to do this.
MSMEs may be able to acquire green bond money with the aid of a green finance platform. The platform would be governed by a suitable institution, which would issue green bonds and distribute the proceeds to MSMEs through green loans.
It would establish the criteria for a qualified MSME green borrower based on their environmental profile and business activity or their project to reduce the environmental effect. Alternatively, the governing body may lend the proceeds from the green bonds to financial institutions, who would then lend the money to eligible MSMEs. Green loans could include term loans, revolving credit facilities, or other debt instruments.
Overall, Indian MSMEs are increasingly understanding the need for sustainability in their business operations. By embracing eco-friendly practises, these businesses are not only helping to preserve the environment but are also preparing themselves for long-term success.
MSMEs are constructing a better and greener future for themselves and for the nation as a whole by implementing efficient resource management, renewable energy adoption, and socially responsible practises. The sustainability movement among Indian MSMEs is poised to develop with the ongoing backing from the government, industry organisations, and society at large, having a positive influence on both the economy and the environment.
