What SMEs need now

In order for SMEs to once again play to their strengths in (global) competition, they need good and reliable framework conditions in the current situation - and not sectoral and size-related support measures. According to the research findings of the IfM Bonn, good and reliable framework conditions include three aspects in particular: A consistent reduction of bureaucracy, a SME policy that sees itself as a cross-sectoral policy, and SME-oriented financing of the ecological transformation.

Currently, according to case studies by the IfM Bonn, the fulfilment of bureaucratic obligations at the federal level alone ties up around three percent of the annual turnover of a small company in the mechanical and plant engineering sector, for example. With a turnover of 23.5 million, this is around 705,000 euros - and converted to employment costs ten full-time employees. For a larger company in the same sector with a turnover of 239.5 million euros, the costs for this bureaucratic effort are one per cent (2.48 million euros) or the employment costs for 40 full-time employees. "Even if bureaucracy per se fulfils important economic functions such as ensuring planning and legal certainty or equal treatment, the current scope ties up valuable resources in the companies," the IfM president explains.

However, it is not only regulations at the federal level that contribute to the bureaucratic burden, but also, for example, lengthy planning and approval procedures at the state and municipal level as well as the requirements of self-governing organisations of the economy, standardisation institutes or within value chains. Both the legislator and all other standard-setters should therefore regularly check where bureaucracy can be responsibly reduced.

Assessing the possible consequences of legislative initiatives at an early stage

However, SME policy must also be thought of even more strongly as a cross-sectional policy and the practical consequences must be examined at an early stage already in the conception - e.g. through practice checks and the consultation of relevant stakeholders. Otherwise, there is a danger that the legal requirements initiated in the various ministries will indirectly place a lasting burden on smaller companies in particular. "An example of this is the Supply Chain Sourcing Obligations Act: although smaller companies are currently still exempt from the Supply Chain Sourcing Obligations Act, which has been in force since the beginning of 2023, they are actually affected by it as suppliers - and must provide their larger customers with corresponding data," criticises Prof. Dr. Dr. h.c. Friederike Welter. In a regional survey in the Siegen-Wittgenstein and Olpe region, for example, one third of smaller companies with large companies as customers said they had already been approached for corresponding data in 2022.

Take into account the financing peculiarities of SMEs

According to IfM Bonn, in the recent past a good one in four small and medium-sized enterprises (SMEs) has implemented structural measures to protect themselves from the consequences of climate change or to operate more sustainably. However, further investments are still necessary in the course of the ecological transformation. According to another IfM survey, many SME entrepreneurs want to finance these primarily with the help of loans. In doing so, they mainly seek cooperation with their house bank, with which they have long-standing relationships. The advantage in view of the ecological transformation process: As a rule, the house bank is well acquainted with the business model of the respective company and can take into account the increasing importance of sustainability risks for business success when granting loans.

Through the EU "Strategy for Financing a Sustainable Economy", banks and savings banks are obliged to examine the sustainability of their lending to companies and, for example, to disclose the shares of taxonomy-compliant assets in their portfolio within the framework of the Green Asset Ratio (GAR). Since, at least until 2025, SME loans will be assessed as "brown" across the board, this can lead to savings banks and cooperative banks, which grant a disproportionately high number of SME loans compared to larger commercial banks, being disadvantaged in the GAR calculation. For outsiders, the lower GAR then looks as if the loan portfolio of regional banks is less green than that of large banks, which in turn can distort competition among credit institutions. In addition, the additional information required by lenders also increases the effort for SMEs to collect the necessary information and thus increases the cost of credit. "As a result, this creates unnecessary credit hurdles, which in turn prevents investment and innovation - and thus hinders rather than promotes the transformation that is actually intended," says Prof. Dr. Dr. h.c. Friederike Welter.

The detailed studies "Attitudes and Behaviour of SMEs in the Face of Climate Change", "The Promotion of Sustainable Financing by the EU - Impact on SMEs" and "Bureaucratic Costs of Companies from the Mechanical and Plant Engineering Sector" with all survey results are available on the homepage of the Institute for SME Research (www.ifm-bonn.org).