Perceived Benefits And Challenges Of Sustainable Finance Adoption: A Study Of Msmes In Chennai

Abstract

The increasing emphasis on environmental and social sustainability has brought sustainable finance to the top of the business agenda, especially for Micro, Small and Medium Enterprises (MSMEs) in the developing world. This research investigates the perceived advantages and barriers related to the implementation of sustainable finance by MSMEs in the context of Chennai, India. The study seeks to examine the perception of the strategic value of sustainable financing by MSMEs and its barriers to its uptake and implementation.

A quantitative research approach was applied, including a sample of 410 MSME proprietors and financial managers in multi sector through structured questionnaire. The respondents were chosen by stratified random sampling to reflect the manufacturing, services, and trading sectors. (b) To analyze the connections between awareness, perceived benefits, adoption issues and willingness to adopt sustainable financial practices, the authors used SPSS to generate descriptive statistics and regression analysis. Acceptability – The instrument demonstrated good internal consistency (Cronbach’s α =. 86).

Findings showed that 68% recognized greater access to green financing and a stronger brand image as critical advantages of embracing green finance. But 59% still identified lack of awareness and regulatory support, and perceived cost burdens as major obstacles. Also financial literacy and external incentives were positively associated with adoption (p <. 01).

The research findings indicate that there is a need for targeted policy measures, such as information dissemination and outreach, training and capacity building and dismantling obstacles by means of financial incentives, to enable MSMEs to incorporate sustainability in their financial strategies. Further, this paper suggests to develop partnerships and localized sustainability models between public and private sectors, to challenge not only institutional barriers but also availability of information.

The anticipated result is to guide policy-makers and financial institutions on how to enable mainstreaming sustainable finance in urban Indian MSMEs. Increased adoption has the potential to bolster environmental sustainability and economic inclusivity of small businesses.