Sustainable Financing Solutions for SMEs

Small and Medium-Sized Enterprises (SMEs) serve as the backbone of our economies, comprising 96% of businesses in Asia and 90% globally, according to data from the World Bank. As the world charts its course towards a net-zero future, these enterprises present a significant sustainability opportunity and play a vital role in transitioning towards lower carbon societies.

In fact, 92% of Indian SMEs are keen on adopting ESG measures to increase their competitive edge, boost their reputation, and attract investors, according to a recent survey conducted by DBS Bank and Bloomberg Media Studios. However, smaller enterprises often face challenges such as limited access to financing, technology, and expertise when it comes to adopting sustainable business practices.

Banks and financial institutions can collaborate with SMEs to fuel their decarbonisation journeys. With India assuming the G20 presidency in 2023, the call for a balance between present economic needs and the well-being of our planet has never been more pronounced.

DBS Bank has been empowering SMEs to become active participants in the global transition to a greener and more sustainable economy. The Bank supports its customers’ transition towards lower-carbon business models by enhancing their access to sustainable finance, and delivering customised solutions to meet their specific needs.

In this engaging podcast series, brought to you by DBS Bank and MoneyControl, we delve into the journey of SMEs, transitioning from "Small Business to Smart Business." Our guest, Yulanda Chung, the Head of Sustainability for the Institutional Banking Group at DBS Bank, shares insights on how SMEs can integrate sustainability into their business practices. She also discusses the pivotal role sustainable financing plays in driving the growth of SMEs.

In 2021, DBS Bank became the first Singaporean bank, and the first among 100 banks globally to sign up to the Net-Zero Banking Alliance (NZBA), committing to align its lending portfolios with net zero emissions by 2050, with interim targets by 2030. Globally, DBS has taken the lead in the sustainable finance arena, setting a target to provide S$50 billion in sustainable financing by 2024. Remarkably, the Bank has already surpassed this goal ahead of schedule. Sustainable finance has become an integral part of DBS Bank’s financing approach. It offers a comprehensive range of financing options geared towards green initiatives.

In the episode, Yulanda discussed how DBS Bank actively encourages SMEs to adopt innovative sustainable practices, reduce energy consumption, manage waste, manage labour relations and build resilient supply chains by leveraging these sustainable financing options. She further elaborated on the growing trend of using supply chain financing solutions to optimise cash flow by extending payment terms and providing suppliers with access to funds at favourable rates. To drive ESG compliance, sustainability-linked KPIs are employed, incentivising suppliers with differential pricing upon reaching sustainability targets.

Moreover, DBS Bank also addresses the funding gap for pioneering start-ups addressing critical social and environmental challenges through its grant programs, empowering these businesses to scale up and create a more positive impact.

Watch the episode to learn more about how SMEs can leverage such grants and sustainable financing options like green loans, green & sustainability-linked trade financing, and renewable energy financing to embark on their journey towards achieving net-zero carbon emissions.

As featured in Moneycontrol