SMEs that invest in sustainability are more resilient, research shows

News article
Article tags:
  • Sustainability
  • Innovation

Investing in sustainability increases the resilience of small and medium-sized enterprises (SMEs) because they become more creditworthy, according to new research conducted by Vlerick Business School and commissioned by ABN AMRO in Belgium.

Although large companies are under scrutiny from regulators, consumers and the media to become more sustainable, the sustainability transition is unachievable without the involvement of SMEs. Especially since SMEs constitute more than 60% of the value-adding economic fabric in Europe.

A new study conducted by Professor David Veredas and doctoral researcher Dimitrios Kolokas, both from the Centre for Sustainable Finance at Vlerick Business School, investigates the impact of environmental, social and governance (ESG) performance on the credit risk of 350 SMEs in Belgium as a measure of resilience.

The study focuses on the development of a model for SMEs that measures financial and ESG performance. The researchers scored SMEs on their ESG activities based on information taken from their websites and sustainability reports.

The study finds that investing in sustainability pays off, as SMEs become more creditworthy. In fact, on average, an 11% increase in an SME’s ESG performance will decrease its credit risk by 3.5%.

Joachim Aelvoet, Country Director Products & Solutions at ABN AMRO Private Banking Belgium:

“This research is of great importance for lending institutions like ABN AMRO. It confirms and quantifies the trend we have observed since the beginning of the pandemic that sustainability-driven SMEs are more resilient to large shocks, making them more creditworthy.”

These findings were published in the white paper ‘Are sustainability-driven SMEs more resilient? A lending perspective’.

For more information, please go to SMEs that invest in sustainability are more resilient, research shows - ABN AMRO Private Banking Belgium