How India’s MSME landscape can be better equipped to transition to a greener future
It is no secret that we find ourselves amidst a climate crisis that demands our attention and action. With many nations committed to attaining net zero emissions by 2030, time is of the essence. It is one of the primary reasons why there is a pressing need for organizations across the globe to prioritize their ESG (Environmental, Social and Governance) Goals. Net zero goals are ambitious but possible. Among other things, organizations must strive to assess and re-imagine their supply chains. According to a research report by McKinsey, the supply chain of a company offering consumer goods is the major contributor to its aggregate environmental impact. For example, 80 per cent of an organization’s greenhouse gas emissions and 90 per cent of its overall effect on the ecosystem result from run-of-the-mill supply chains. Since it constitutes a significant component of its overall carbon footprint, it is critical to analyze every layer in the supply chain and determine ways to make it more sustainable. Not only will it help future-proofing a business, but it’ll also enhance brand equity.
Here is how we can make India’s MSME landscape better equipped to transition to a greener future.
Facilitating easier availability of capital
Many sustainable practices may be capital-intensive, at least initially. While large organizations may have the funds to support the transition to greener business practices, MSMEs may need help to raise the necessary capital to fund sustainable operations. A practical workaround can be increased green financing and better access to capital for sustainable MSMEs. In addition, support from public financial institutions in the form of green loans can help medium-sized and small businesses accelerate their journey toward a more environment-friendly business model.
Technology to the Rescue
Another critical element of the transition to a sustainable supply chain is leveraging technology. Digitalization has brought about unprecedented reforms in all major sectors of the economy, and it holds the potential to optimize supply chains. Moreover, with real-time visibility and centralized databases, supply chain bottlenecks and pain points can be successfully addressed.
‘Green trucking’ is a fast-emerging concept for sustainable supply chains, and this goes beyond just EV and hydrogen fuel-based fleets. Apart from this, more straightforward solutions such as FTL (Full truck load) are the first step towards supply chain optimization. In addition, reducing empty miles and decreasing fuel waste contributes to overall efficacy.
Technology is also transforming packaging solutions, with companies switching to reusable pallets and containers built for decades and meeting all performance guidelines of spillage-proof, chemical-spills, chemical-resistance, and insulation during harsh shipping ecosystems. For instance, Dow Chemical uses reusable and collapsible drums and containers.
For MSMEs, the road to the future is the path of sustainability. Even without adopting greener practices, MSMEs have many challenges to tackle. However, embracing sustainable business processes may be one of the most pressing issues for MSMEs because it is the only way to future-proof themselves. Fortunately, with the right action plan, MSMEs in India can embrace more environment-friendly business practices without compromising their profitability. This formula will undoubtedly help MSMEs not just survive but thrive in the net-zero future we envision for India.
Source: Financial Express