Many small and medium-sized enterprises (SMEs) in Germany are not well-prepared to meet the potential future demands of banks and savings banks for sustainability indicators during loan negotiations. According to a KfW survey, only 48% of SMEs can currently provide at least one sustainability indicator, such as data on electricity, energy, water consumption, greenhouse gas emissions, or sustainability certifications.
Dr. Elisabeth Grewenig, an SME expert at KfW Research, stated: “The findings show that even providing traditional consumption data poses a challenge for many SMEs.” The survey revealed that only 30% of SMEs could report their electricity consumption and 26% their water consumption. Smaller enterprises face more difficulties in supplying such data.
The KfW SME Panel conducted this special analysis between mid-February and mid-June 2024, receiving responses from 9,556 SMEs across various economic sectors. The survey also found significant uncertainty among SMEs regarding the relevance of sustainability in loan negotiations. Forty-five percent were unable to assess its importance, while 38% believed it would have little or no impact.
Among SMEs engaged in loan negotiations in 2023, only 15% reported being asked by their bank or savings bank for sustainability data. Larger enterprises with over 50 employees were more likely to be asked for such information (34%) compared to micro-businesses with fewer than five employees (13%).
KfW economist Grewenig commented: “In the future, banks and savings banks will pay more attention to sustainability indicators in their lending business if only for regulatory reasons but also out of reputational considerations. It can therefore be expedient for small and medium-sized enterprises to deal with this issue.”
Grewenig further emphasized: “The findings underscore how important it is to quickly gain clarity as to what disclosure requirements small and medium-sized enterprises will be facing in the future. As regulatory requirements are expanded, there is a need to strike the right balance between greater transparency and minimizing the additional burden and to be mindful of the specifics of small and medium-sized enterprises.”