SMEs: feedback on Green Action Plan
The European Commission has published today an overview on contributions received in response to a public consultation on the Green Action Plan for small and medium sized enterprises (SMEs), which the Commission is due to adopt soon.
The Green Action Plan presents the SME oriented actions proposed at European level to build on the enormous potential that improvements in resource efficiency represent in terms of productivity gains, competitiveness and business opportunities for SMEs. Indeed, the Small Business Act (SBA) highlighted that the EU and Member States should enable SMEs to turn environmental challenges into opportunities. The Green Action Plan proposes to exploit the green opportunities, by improving productivity and driving down costs in European SMEs through resource-efficiency, by supporting green entrepreneurship and by exploiting and developing Europe’s leadership in green processes and technologies.
Respondents highlighted that SMEs lack information on potential resource efficiency improvements, as well as on their cost-efficiency. They also highlighted the importance of building strong partnerships between the different intermediaries in value chains, to share information and knowledge on resource efficiency.
Respondents highlighted the role of clusters and other SME intermediaries, such as co-innovation centres, as providers to SMEs of resource efficiency customised awareness raising, advice and coaching, including concrete guidance and on-location support. SMEs need to better understand not only the environmental case but also the business opportunities that resource efficiency and the circular economy offer to them in terms of increased productivity, new prospects for profitable activities, and globally enhanced competitiveness. Media, including social networks, can help to raise awareness.
The consultation was organised to give the Commission feedback from SMEs on what is working best for them to shape the actions aimed at promoting resource efficiency for and by SMEs to be included in the forthcoming Green Action Plan. As a matter of fact, European SMEs are becoming more resource efficient and are contributing to the transition towards a low-carbon economy, according to the results of the 2013 Eurobarometer survey on “SMEs, resource efficiency and green markets”1 but, what are the most effective actions to help them to turn environmental challenges into business opportunities?
European Council to discuss role of SMEs in industrial renaissance
The overview is published at the eve of the March 20-21th European Council’s discussion of the Commission plan (“for a European industrial renaissance“) to increase the contribution European industry makes to EU GDP from the current level of 15% to that of 20% by 2020. The Communication proposes actions for a more business friendly environment for SMEs, including greater support for SMEs with an emphasis on their access to finance. It also highlights the importance of resource efficiency for competitiveness, and that ensuring a well-functioning internal market and the integration of SMEs into global value chains are critical to allow European industrial policy to deliver on growth and job creation. For example, the potential of clusters, which represent favourable innovation ecosystems for mutually reinforcing groups of SMEs, need to be better exploited as an avenue for solid growth.
Results of consultation
Profile of respondents: small enterprises dominate
175 respondents responded to the public consultation, of which business interests and SMEs account for approximately three-quarters of the contributions (73.15%), while public administrations, both national and regional, provided 8.57% of the replies. The category ‘other’ constituted 11.43% and includes research institutes, trade unions, non-governmental organisations (NGOs) notably from the environmental sector, and a variety of business support agencies, organisations and consultancies. Business organisations (more than 25% of the answers) have responded on behalf of their often substantial membership and their responses were therefore found to carry more weight than those of individual contributors.
Service closeness and help to find partners crucial for resource efficiency
Respondents pointed out that technology and knowledge transfer support (57.15%), resource efficiency consultancy (55.43%) and awareness raising (53.71%) are the services most effective in helping SMEs to be more resource efficient. However, the most commonly offered services are awareness raising (60%), followed by advice about funding possibilities and preparation of proposals for funding (45.14%) and support for technology and knowledge transfer (43.43%). There seems to be a gap between available services and what SMEs find is better for their needs.
Role of the Enterprise Europe Network (EEN) as matchmaker is instrumental
Respondents found that EEN can most effectively help SMEs to become resource efficient through specific matchmaking events promoting the take-up of green technologies (71.3%) and, with an equal score of 70.38%, by featuring resource efficiency and eco-innovation as cross-cutting themes for B2B (business to business) and C2C (clusters to clusters) matchmaking events, as well as by developing strategic collaboration on resource efficiency between the Network and other key partners. Business organisations also rate the improved classification of resource efficiency technologies in the EEN database to offer better partner search services as effective (67.65%). The European Standardisation Organisations also find that EEN could become instrumental in providing information on how standards can help SMEs to become more resource efficient.
SMEs are lost on resource efficiency investment costs
The Flash Eurobarometer 2013 on ‘SMEs, resource efficiency and green markets’ found that 42% of the more than ten thousand respondent SMEs said that their actions to increase their resource efficiency have decreased production costs; 21% said that production costs had increased and 25% said their resource efficiency actions had had no impact on production costs. Most of their investments on resource efficiency were low cost. In the last two years 72% of those SMEs in the Eurobarometer had invested less than 5% of their annual turnover per year to become more resource efficient. Regarding the findings of this public consultation, only a few respondents (12) replied to the open questions on the amount of money they had invested in resource efficiency measures and the timeframe for return on these investments, and the results seem to be in line with the results of the Eurobarometer.
The majority of SME respondents to the public consultation have not tried to estimate the investment cost to improve their resource efficiency because they either never thought of it (35.43%) or thought it was too complicated (30.29%), while another 21.14% report having done so by themselves and only 8.57% had received help from experts.
In terms of the effectiveness of the national and regional actions to help SMEs to estimate the costs of resource efficiency investments, the ones considered most effective are advisory and consultancy services (45.72%). The most important barriers to obtaining financing for resource efficiency investments are found to be the fact that resource efficiency investments are believed to take too long to be financially viable (72%) (for 35.43% of the 175 respondents this is a very important barrier, while for 36.57% it is rather important) and that the financial return is not high enough (65.85%). Business organisations identify an additional important barrier, namely finance providers’ lack of sufficient understanding of resource efficiency investments (78.26%).
However, the findings of this public consultation need to be analysed within the broader perspective of the 2013 Eurobarometer, which clearly stated that most SMEs were satisfied with the return they had received on their investments in resource efficiency (68%), with 12% saying they were ‘very satisfied’.
To overcome barriers to resource efficiency investment, respondent to the public consultation state that the most effective measures are specific financing lines for resource efficiency projects (76%) and instruments to decrease the risk of such projects (70.29%).
National and regional governments emphasize the need for better coordination and sharing of experience across Member States of different types of financing schemes, rather than the establishment of new funding schemes.
The potential to increase resource savings across the value chain
Waste management (89.15%) followed by production operations (86.86%) and recycling (86.28%) are the stages of the value chain where support for resource efficiency is deemed most important. The most important drivers of resource efficiency in the value chains are considered to be large companies (90.86%), followed by SMEs (88.57%) and third party intermediaries offering services (70.28%). However, the view of business organisations is a bit different, rating SMEs (93.48%) as more important drivers than large companies. Clearly, technological centres are considered the most important of the intermediaries in that domain (78.86%).
Are SMEs seizing the business opportunities in a greener economy?
The role of environmental labels in facilitating access to markets for green products and/or services is considered more important (74.86%) than not (20%). Some call for the integration of resource efficiency into existing environmental labels and certification schemes in order to simplify life for consumers and build up their trust.
As concerns local and regional strategies to mobilise all interested actors towards a more resource efficient and low carbon economy in the region, 40% of respondents state they are aware of such initiatives while 33.14% are not. Amongst those who are aware of such initiatives, 72.86% consider the local and regional policy strategies to be effective in helping promote local creation and businesses.
Business organisations and trade unions also stress the skills aspect, which is not directly addressed by the consultation, calling for more information and guidance on ‘green’ skills development on resource efficiency for SMEs to take advantage of green business opportunities.
In general respondents were supportive of the circular economy or industrial symbiosis approach, and they encourage the Commission to support knowledge sharing and commercial cooperation between SMEs on the potentials of such green business models.
Green interest organisations mention non-financial environmental information as another way for businesses to demonstrate their green commitments citing life cycle management, eco-design, environmental footprint, and extended producer responsibility (EPR) schemes as examples, and they emphasize the important role, consumers play in this context. They also advocate the adoption of the EU Environmental Technology Verification (ETV) tool across Europe.
Some respondents refer to green public and private procurement as a means to promote a greener economy as well as the role of high environmental standards by regulation for stimulating green innovation.
SMEs interested in green markets abroad
The most effective support actions to help SMEs promote their green products and/or services in global markets are found to be pre-market entry support (research and market intelligence, finance planning, personnel identification, understanding of local business culture and identifying suitable locations) (84%). The least effective actions are considered to be online information portals for EU SMEs (34.29%), temporary office facilities in target markets (28.57%) and exhibiting in international trade fairs (28%).
With regard to the most effective providers of services for the internationalisation of green products or services, business organisations and cluster organisations are clearly in the lead with 78.86% and 73.15%.
More information at EC DG Entreprise and Industry
In: Growth & Competitiveness