This chapter assesses the attitudes and actions of Portuguese SMEs towards the green transition from an international comparative perspective, building on data from the European Commission’s Eurobarometer flash surveys (2013-2021) and the European Investment Bank’s investment surveys (2016-2022). The first section presents the perceptions of business owners about “physical risk”, i.e., the possible impact of climate change on the business. The second section presents information on climate-neutrality strategies and actions at firm level. The third and fourth sections take a deep dive into two main green areas: resource efficiency and the offering of green products and services. The fifth section presents disaggregated information by firm size and sector about these two areas. Conclusions and policy recommendations complete the chapter. An annex presents estimates of the environmental footprint of SMEs in Portugal, building on the work of the OECD project “A pilot dashboard of SME greening and green entrepreneurship indicators”.
The Green Transition of SMEs and Entrepreneurship in Portugal
Abstract
Physical risks
Almost 90% of Portuguese companies (SMEs and large businesses together) believe that weather events will have no impact or only a minor impact on their business. However, Portuguese companies are implementing more measures to build resilience against climate-related risks (e.g., investing to reduce exposure, purchasing insurance products) than SMEs in the EU, including in southern Europe.
Climate strategies, actions and regulations
Almost one in every four Portuguese SMEs has a climate neutrality strategy in place and another one in four is planning to implement such a strategy in the near future (two years), which are slightly better results than the EU and southern European averages. Furthermore, 42% of Portuguese companies set and monitor GHG emission targets – slightly more than the EU average.
Nonetheless, among SMEs with a climate strategy, fewer in Portugal take specific actions towards climate neutrality compared to the EU average, such as reducing carbon emissions or purchasing/developing new carbon-reducing technologies.
Portuguese companies (SMEs and large enterprises together) anticipate a relatively modest impact of new climate regulations on their business. However, a slightly higher share of them than the EU average perceives stricter climate regulations as a risk rather than an opportunity.
Resource efficiency
Resource efficiency is one of the main channels through which SMEs can reduce their environmental footprint. The proportion of SMEs undertaking resource-efficiency actions is lower in Portugal than in the rest of the EU or southern Europe, which is largely due to a significant drop in the number of Portuguese SMEs taking these actions in recent years (2013-2021). The main underlying causes may involve financial constraints, lack of prioritisation, or still that many resource-efficiency actions have already been taken at firm level.
Among Portuguese SMEs undertaking resource-efficiency actions, a larger number than in the rest of the EU invests 6% or more of their turnover in these measures. This suggests that financial constraints might, indeed, be one of the main reasons behind the few SMEs that invest in resource-efficiency measures (i.e., because these actions are costly) or, alternatively, that SMEs that invest in resource efficiency place great importance on this objective and invest accordingly large sums.
More SMEs in Portugal than in the rest of the EU (43% vs. 31%) see a decrease in production costs following the implementation of resource-efficiency actions. However, this proportion has decreased over time (from 60% in 2013), suggesting that main low-hanging fruits in this area have been taken.
Portuguese SMEs make less use of external support to implement resource-efficiency actions than EU and southern European counterparts. When it comes to external support, Portuguese SMEs appear to benefit mostly from private support. However, these figures refer to 2021, before the full implementation of the national recovery and resilience plan, which includes many measures to support the green transition of the business sector.
Green products and services
Slightly fewer SMEs in Portugal than in the rest of the EU report offering green products and services (27% vs. 32%), However, a higher share of Portuguese SMEs plan to offer these products and services in the near future (21% vs. 11%).
Compared to the two benchmark regions, Portugal features a larger proportion of SMEs that specialises in green products and services, as indicated by a share of turnover stemming from this offering above 50%.
Portuguese SMEs rely on little external support for their offer of green products and services, similar to what is observed for resource-efficiency measures. However, also in this case, data stop at 2021, before the rollout of the national recovery and resilience plan, which has the green transition at its core.
Portuguese SMEs report financial incentives as the main policy driver for the launch of green products and services, while market identification and marketing consulting are more important for expanding this offering.
Breakdown analysis by firm size and industry
Mid-sized firms and manufacturing/industrial SMEs are those most likely to undertake resource-efficiency actions in Portugal. However, surprisingly, more than 10% of industrial SMEs do not undertake any resource-efficiency actions.
Resource-efficiency actions have the biggest positive impact on production costs for mid-sized firms and manufacturing firms, which is linked to larger economies of scale in these two business segments.
Mid-sized firms are more likely than others to use external support to undertake energy-efficiency measures, especially private-sector support. Sector-wise, industrial companies are more likely to use external support, both of public and private nature. This is in line with evidence that larger SMEs are more able than smaller ones to find the support they need.
Finally, mid-sized firms and manufacturing firms are more likely than other companies to offer green products and services. However, the share of turnover coming from this offering is smaller in these two business segments than in the others, due to average larger turnover in these two groups.
This chapter gives an overview of the actions that Portugal’s SMEs (small- and medium-sized enterprises) are taking towards the green transition, presenting results from two surveys on the topic. The first and main source is the Eurobarometer flash survey, conducted by the European Commission, on “SMEs, Resource Efficiency and Green Markets”. This survey has so far been conducted five times: 2012 (FL342), 2013 (FL381), 2015 (FL426), 2017 (FL456) and 2021 (FL498)1. For some of the years, the survey has collected data on both SMEs and larger companies, but the results presented in this chapter only cover SMEs. The second source of information is the European Investment Bank’s Investment Survey (EIBIS), which has been carried out annually, starting in 2016. It collects information on both SMEs and large companies; data in this chapter are presented for both groups.
The report focuses on information from the latest surveys, 2021 for Eurobarometer and 2022 for the EIBIS, but trends over time and a breakdown by firm size and industry are also shown for selected indicators. The chapter takes an internationally comparative approach, benchmarking results for Portugal with the EU average and a selection of southern European countries (Spain, Italy and Greece).
The chapter is organised around the following sections. First, it provides an overview of SMEs' perceptions of physical risk, which is defined in the EIBIS as “losses due to extreme climate events, including droughts, flooding, wildfires or storms or changes in weather patterns due to progressively increasing temperatures and rainfalls”. Second, it investigates the existence of climate strategies at firm level, as well as actions undertaken by SMEs to reduce carbon emissions. Third, the chapter addresses the issue of resource efficiency, covering actions, investment, impacts on costs, take-up of external support, and barriers/drivers across the population of Portuguese SMEs. In the Eurobarometer survey, “resource efficiency” is defined as the use of natural resources in a sustainable and environmentally-friendly manner, at all different stages of the production process. Fourth, the chapter provides information on the offer of green products and services, including the overall turnover coming from this offering2. The last section presents, for some of the indicators, disaggregated information by firm size and sector.
Box 2.2provides some methodological information on the nature of the two surveys which have provided the bulk of information for this chapter.
Averages: As a result of the formal process of withdrawal of the United Kingdom from the European Union, the number of countries included in the EU value has changed over the years. For both surveys the EU average contains data from Portugal.
Frequency of the surveys: The Eurobarometer surveys are not provided at a constant frequency. Between the surveys of 2013, 2015 and 2017, there is a gap of only two years, while the 2021 survey is published four years after the previous survey. The frequency of the EIBIS survey is every year.
Multiple answers: For some questions, respondents could provide multiple answers. As a result, the sum of percentage values from all answers may not be 100%. Also, some questions are only submitted to respondents who had provided a given answer to a previous question.
Answer alternatives: For some questions of the Eurobarometer survey, some answer alternatives are left out. This is often the case with answers such as: “Don’t know/not answered”, “Other” and “None”, which were left out unless they offered important insights. For both surveys, answer options are sometimes slightly different over time.
2.2.1. Expected impact of climate change on business (physical risk)
Almost 90% of Portuguese companies (SMEs and large enterprises together) believe that physical risk has either no or minor impact on their business, despite the increasing frequency and intensity of extreme weather events in Portugal. However, at least in part, this might be due to more companies taking measures to build resilience to physical risk in Portugal than in the EU and southern Europe.
As many as 88% of Portuguese companies (SMEs and large companies together) believe that climate change will have no impact or only a minor impact on their business, which is a proportion higher than in the EU (83%) and other southern European countries (79%) (Figure 2.1, panel A). Interestingly, the proportion of Portuguese companies that see a major impact has decreased considerably in the last two years, from 26% to 12%, while the share of those that only see a minor impact has increased correspondingly (from 24% to 36%) (Figure 2.1, panel B).
These figures are perhaps surprising, given the growing intensity and frequency of extreme weather events in Portugal over the last decades, notably heatwaves and droughts, but also floods and the potential long-term impacts of sea level rise that threatens Portugal’s densely populated coastline (World Bank, 2021[1]; Nunes et al., 2019[2]). In fact, Portugal already suffered economic losses of around EUR 13.8 billion from 1980 to 2021 due to extreme weather events, making it the 9th most affected country in the European Economic Area (EEA, 2022[3]).
An optimistic explanation of this lack of concern is that businesses may have already taken pro-active measures against the possible consequences of climate change. In fact, Portugal is ahead of other southern European economies in the development of both broad climate adaptation strategies and practical solutions to reduce exposure to physical risks (Figure 2.2). Furthermore, more Portuguese companies than the EU average report that they have acquired insurance products to offset climate-related losses. Overall, these results suggest that Portuguese companies are aware of the possible impacts of climate change on their business and are taking concrete measures to offset these potential impacts.
Note: The figure displays the answers to the question “Thinking about climate change and the related changes in weather patterns, would you say these weather events currently have a major impact, a minor impact or no impact at all on your business?”. The left panel shows the results of Portugal, EU and southern Europe for the 2022 survey, while the right panel shows the development for Portugal for the 2020, 2021 and 2022 surveys. Note that the question wording was changed for the last year. Respondents could only provide one answer to the question. The questions were asked to all survey respondents. The figure excludes “don’t know” answers. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: EIB Investment Survey.
Note: The figure displays the answers to the question “Has your company developed or invested in any of the following measures to build resilience to the physical risks to your company caused by climate change?”. Respondents could only provide one answer to the question. The questions were asked to all survey respondents. The figure excludes “don’t know” answers. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: EIB Investment Survey.
2.3.1. Climate strategy and climate targets
Compared to other SMEs in the EU, a relatively high share of Portuguese SMEs (24%) already has a climate neutrality strategy in place. Among those without a strategy, 23% plan to introduce one soon – slightly more than SMEs in other EU countries. Moreover, a slightly higher proportion of Portuguese companies (SMEs and large companies together) than the EU average sets and monitors GHG emissions targets.
More Portuguese SMEs (24%) than the EU average (20%) and the average of southern European countries (17%) have a climate-neutrality strategy in place or declare to be already climate neutral (6%, 4% and 3% respectively). Furthermore, 23% of Portuguese SMEs plan to implement such a strategy in the following two years – slightly more than their EU counterparts (Figure 2.3).
Note: The figure displays the results from the question “Does your company have a concrete strategy in place to reduce your carbon footprint and become climate neutral or negative?” from the 2021 survey. Respondents could only provide one answer to the question. The question was asked to all survey respondents. The figure excludes “don’t know” answers. The group “Southern Europe” refers to the average of Spain, Italy and Greece. “Total 'No'” merges the answer options of “No but planning to do so in the next 2 years” and “No and not planning to do so”.
Source: Eurobarometer.
Based on data from the EIBIS survey, which covers both SMEs and large companies, a slightly higher share of Portuguese firms sets and monitors targets related to GHG emissions (42%) than in the EU (41%) and southern Europe (40%). This proportion has been relatively stable in Portugal over the last three years, contrasting with more volatile trends observed in southern Europe (Figure 2.4).
According to recent OECD estimates, Portuguese SMEs account for about 57% of greenhouse gas emissions in the business sector, compared with an OECD average of 37% (OECD, 2023[4]) (see also Annex of this chapter). While this figure is also affected by the industry composition of the SME sector, it clearly points to the importance for Portuguese SMEs to monitor more closely their carbon emissions.
Note: The figure displays the results from the question “Does your company set and monitor targets for its own Greenhouse Gas (GHG) emissions?”. The left panel shows the results of Portugal, EU and Southern Europe for the 2022 survey, while the right panel shows trends over time. Respondents could only give one answer. The question was asked to all survey respondents. The figure excludes “don’t know” answers. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: EIB Investment Survey.
2.3.2. Actions towards climate neutrality
Evidence on the actions of Portuguese SMEs towards reducing GHG emissions and climate neutrality is mixed. Among the SMEs with a climate strategy in place, fewer of them (compared to the two benchmark regions) appear to take concrete climate-neutrality actions. However, a higher proportion of Portuguese companies (large companies and SMEs) than in the EU takes actions to reduce GHG emissions. Different sampling and survey questions may explain this divergence of results.
Among those SMEs that have a climate neutrality strategy, a significant lower share of SMEs in Portugal compared to the EU average takes different actions towards climate neutrality, such as adopting or developing new technologies to reduce carbon emissions. While 53% of European SMEs with a climate strategy actively works to reduce carbon emissions, only 37% of Portuguese SMEs does so (Figure 2.5). One of the actions most often taken by Portuguese SMEs – besides the general reduction of carbon emissions through different measures – is the adoption or purchase of new technological solutions. Additionally, only 9% of Portuguese SMEs offsets carbon emissions, less than the EU average but higher than the southern European average.
Note: The figure displays the results from the question “What actions is your company undertaking to become climate neutral?” from the 2021 survey. The question was asked only to those responding “Yes” to the question " Does your company have a concrete strategy in place to reduce your carbon footprint and become climate neutral or negative?". For this question, multiple answers were possible. The figure leaves out certain answer alternatives (Other/None) to portray only the main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
The EIBIS survey, which also include large companies, draws a different picture revealing Portuguese companies as frontrunners in the EU in most climate actions, including investments in new technology, renewable energy generation, sustainable transport options, and waste minimization (Figure 2.6). The two most common actions among Portuguese companies are waste minimisation or recycling (74%) and energy efficiency investments (54%). This might be due to large companies being significantly more climate-active than SMEs, but it might also be affected by the different climate actions proposed to respondents in the two surveys. For example, it is easier for a company to engage in recycling than to purchase carbon-reduction technologies or engage in carbon-offsetting markets and practices. Similarly, one survey (Eurobarometer) asked the question only to companies with a climate strategy in place, while the other (EIB) asked a similar question to the entire sample.
Note: The figure displays the results from the question “Is your company investing or implementing any of the following, to reduce Greenhouse Gas (GHG) emissions?” for the 2022 survey. For this question, it was possible to provide multiple answers. The question was asked to all survey respondents. The figure excludes “don’t know” answers. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: EIB Investment Survey.
2.3.3. Impact of climate regulations
Slightly more Portuguese companies, SMEs and large companies combined, perceive the transition to stricter climate standards and regulations as a risk (30%) rather than an opportunity (26%).
Portuguese companies (SMEs and large enterprises combined) anticipate a relatively moderate impact of new climate regulations on their business. Forty-three percent of them expects no impact at all in the following five years, which is less than the 52% reported by southern European companies. A higher share of Portuguese companies sees climate regulations as a risk rather than an opportunity (30% vs. 26%) (Figure 2.7).The higher share of Portuguese and southern European companies expecting low impact from these regulations, compared to the EU, can be ascribed to various factors encompassing the nature of the regulations (e.g., the industries to which they are applied, the extent to which SMEs are exempted, etc.) and communication on these regulations (e.g., transparency and dissemination).
Interestingly, when comparing perceptions of physical risks (i.e. the direct impact of climate on business) (Figure 2.1) with those regarding new climate regulations (Figure 2.7), it is clear that the latter are the source of larger expected impacts. One possible reason is the growing role of sustainability reporting requirements, which are increasingly asked both by large buyers in the context of supply chain relationships and by financial institutions in the context of lending and investment relationships.
Note: The figure displays the results from the question “Thinking about your company, what impact do you expect this transition to stricter climate standards and regulations will have on your company over the next five years?”. Respondents could only give one answer. The question was asked to all survey respondents. The figure excludes “don’t know” answers. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: EIB Investment Survey.
2.4.1. Actions3
Portuguese SMEs currently undertake significantly fewer actions towards resource efficiency than other EU SMEs.4 As compared to their peers, they also plan to implement substantially fewer resource-efficiency actions in the future.
In 2021, Portuguese SMEs undertook significantly fewer energy-efficiency actions than their EU and Southern European counterparts, except for recycling (Figure 2.8, panel A). For example, while only 26% of Portuguese SMEs minimised waste, around 64% of European SMEs did so on average. In the future this gap is likely to grow, as indicated by the question on future expected actions (Figure 2.8, panel B). In fact, Portuguese SMEs lag the EU average also when it comes to future actions, especially in areas such as saving materials (9% vs. 41%) and saving water (10% vs. 48%).
The current gap between Portugal and the EU average in this indicator may be partly explained by the downward trend of Portuguese SMEs over the years 2013-2021 when it comes to both actions taken and actions planned (Figure 2.9). Between 2017 and 2020, the percentage of SMEs taking actions towards different energy efficiency measures decreased by at least 25% in each of the following categories: saving energy, saving materials, saving water and minimising waste. The significant drop in Portuguese SMEs planning additional resource-efficiency actions (from at least 57% in 2013 to a maximum of 27% in any category in 2021) points to either a diminishing strategic importance of resource efficiency at firm level or major financial constraints hindering further actions, although some of this drop might also be explained by SMEs having taken already important energy-efficiency actions in recent years5.
This result complements and is consistent with previous findings, showing that Portuguese SMEs, despite having a climate strategy, are less likely to introduce actions towards climate neutrality. In this respect, a recent study has also found that the implementation of resource-efficiency actions by SMEs positively affects the adoption of other decarbonisation measures (Gomes and Pinho, 2023[5]).
Note: The figure displays the results from the questions “What actions is your company undertaking to be more resource efficient?” and “Over the next two years, what are the additional resource efficiency actions that your company is planning to implement?” from the 2021 survey. The questions were asked to all survey respondents. For both questions, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
Note: The figure displays the results from the questions “What actions is your company undertaking to be more resource efficient?” (left) and “Over the next two years, what are the additional resource efficiency actions that your company is planning to implement? (right) from the 2013, 2015, 2017 and 2021 survey. The questions were asked to all survey respondents. For both questions, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends.
Source: Eurobarometer.
2.4.2. Investments
Despite taking fewer actions, Portuguese SMEs report investing a relatively large share of their annual turnover in resource efficiency measures. The share of Portuguese SMEs (among those taking resource-efficiency actions) investing 6% or more of annual turnover in resource efficiency has increased since 2015. Together with the previous finding on “number of actions taken”, this suggests that the cost of resource-efficiency actions, relative to turnover, is high for Portuguese SMEs, or that actions taken are important and demand large investments.
When asked about the amount invested in resource efficiency per year (averaged over the last two years), 23% of the Portuguese SMEs undertaking resource-efficiency actions reported spending 6% or more of their annual turnover, which is almost twice as high as the value for the EU (12%) or southern Europe (13%) (Figure 2.10). Similarly, the share of those investing less than 1% is substantially smaller than in the rest of the EU. The share of Portuguese SMEs investing more than 6% of their turnover in resource efficiency has been increasing since 2015.
According to a study by Demirel and Danisman (2019[6]) – using data on 5 100 European SMEs – significant investments of at least 10% of SME revenue into circular eco-innovations are needed for SMEs to financially benefit from the investment. This makes investments above the 6% threshold positive news for Portuguese SMEs, although it may also signal the high cost of resource-efficiency measures in Portugal compared to other EU countries.
Note: The figure displays the results from the question “Over the past two years, how much have you invested on average per year to be more resource efficient?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". Respondents could only provide one answer. The group “Southern Europe” refers to the average of Spain, Italy and Greece. “Less than 1% and nothing” merges the answer alternatives of “Less than 1%” and “Nothing”. “6% or more” merges the answer alternatives “6- 10%”, “11- 30%” and “More than 30%”.
Source: Eurobarometer.
2.4.3. Impacts on production costs
While the majority of Portuguese SMEs have experienced a decrease in production costs following the implementation of resource-efficiency actions in recent years, overall net savings appear to diminish over time.
Share of Portuguese SMEs that experiences a decrease in production costs following energy-efficiency actions is significantly higher than those of their EU counterparts (43% vs. 31%) (Figure 2.11). Conversely, a smaller share of Portuguese SMEs (26%) than the EU average (31%) experienced an increase in production costs following resource-efficiency actions, which is counterintuitive at first glance and might be linked to the time needed to absorb the initial investment costs of the action.
Over the past years, net savings from resource-efficiency actions seem to have decreased, as 60% of Portuguese SMEs had experienced decreases in production costs following resource-efficiency actions in 2013. This may indicate that SMEs may have already taken the main resource-efficiency actions generating larger returns.
Note: The figure displays the results from the question “What impact have the undertaken resource efficiency actions had on the production costs over the past two years? The production costs have…” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". Respondents could only give one answer. The figure excludes some answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece. “Total Increased” merges the answer-alternatives “Significantly increased” and “Slightly increased”. “Total 'Decreased'” merges the answer alternatives “Significantly decreased” and “Slightly decreased”.
Source: Eurobarometer.
2.4.4. Take-up of external support
Portuguese SMEs benefit less from external support to implement resource-efficiency actions than EU and southern European counterparts. When it comes to external support, Portuguese SMEs benefit more from private than public support, which is in line with the two benchmark regions. Nonfinancial support from the public sector is particularly rare in Portugal, while “public funding” is comparatively more common. The latest figures, however, refer to 2021, before the full implementation of the national recovery and resilience plan, which includes many measures to support the green transition of the business sector.
Most SMEs in Portugal rely on their own means to become more resource efficient. In particular, Portuguese SMEs report using less external support to undertake resource-efficiency measures, as compared to the EU and southern European SMEs (14%, 24% and 25% respectively). However, they also seem to leverage their own financial resources and technical expertise to a significantly lower extent than their counterparts in the other two benchmark regions (Figure 2.12. panel A). The share of Portuguese SMEs leveraging their own resources – both financial and technical ones – has been declining significantly since 2015, while the relatively low share of those relying on external support has remained quite stable (12-15% of Portuguese SMEs) (Figure 2.12, panel B).
Note: The figure displays the results from the question “Which type of support does your company rely on in its efforts to be more resource efficient?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". For this question, it was possible to provide multiple answers. The figure excludes some answer alternatives (Don’t know/No answer/Other) to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
A closer examination of types of external support shows that Portuguese SMEs predominantly benefit from private rather than public assistance to undertake resource-efficiency measures, which is in line with the other two benchmark regions (EU and southern Europe). However, because Portuguese SMEs tend to use less external support overall, the gap between public and private support is smaller in Portugal than elsewhere (Figure 2.13. panel A). Nonfinancial support from the public sector is particularly rare in Portugal (11%, compared to 15% in southern Europe and 23% in the EU), whereas “public funding” is comparatively more common (31%, compared to 36% in southern Europe and 26% in the EU). In recent years, the share of Portuguese SMEs using public funding has remained relatively stable, while fewer and fewer SMEs have benefitted from non-financial public assistance (Figure 2.13. panel B).
With respect to “private support”, the share of SMEs using “private funding from banks, companies and VC funds” to undertake resource-efficiency measures in Portugal is in line with the EU and southern European averages, while non-financial assistance from private consultants, supply chain partners, and business associations/clusters is comparatively less common in Portugal than elsewhere.
Some caveats are needed in the analysis of these figures. First, the most recent figures refer to 2021, before the implementation of Portugal’s National Recovery and Resilience Plan, which covers the period 2021-2026 and includes many policy programmes aimed at supporting the green transition of SMEs (see next chapters of the report). Second, the distinction in the survey between public financial and nonfinancial support may prove difficult to disentangle for an SME, since the two forms of support often come together, and nonfinancial support also involves public funding. Third, SME owners may tend to underestimate the support they receive from the government, especially when this does not come through direct funding such as grants. For example, businesses, especially small ones, may see concessional loans extended through commercial banks as a form of private funding, without noticing the public intervention in the form of interest-rate subsidies.
Note: The figure displays the results from the question “More precisely, which type of external support is it?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding that they are receiving external support to the question "Which type of support does your company rely on in its efforts to be more resource efficient?". For the question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece. “Total 'Public sector'” merges the answer options of “Public funding” and “Non-financial assistance from public administration”. “Total 'Private sector'” merges the answer options of “Private funding from a bank/company/VC fund”, “Private funding from friends/relatives”, “Non-financial assistance from private consulting”, “Non-financial assistance from business associations/clusters” and “Non-financial assistance from supply chain partners”.
Source: Eurobarometer.
2.4.5. Barriers
The most prominent barriers to improving resource efficiency for Portuguese SMEs (those that undertake such actions) are the complexity of administrative procedures, the cost of environmental actions, and the difficulty of adapting to environmental legislation. Relative to their peers in the other benchmark regions, Portuguese SMEs report fewer barriers, which might be one of the reasons for the low take-up of external support.
Overall, a significantly smaller share of Portuguese SMEs reported the existence of barriers to undertaking resource-efficiency actions than other EU SMEs, including from southern Europe. However, the large group of “no answer” to this question might also suggest lack of awareness (Figure 2.14). The most prominent barriers reported by Portuguese SMEs are the complexity of administrative procedures (20%), the cost of environmental actions (17%) and the difficulty of adapting to environmental legislation (17%). The share of Portuguese SMEs facing these barriers has become smaller in recent years (Figure 2.15). Given that this question was only posed to companies undertaking resource-efficiency actions, this suggests that barriers have eased over the last years, for example through improved and better-communicated energy regulations.
Note: The figure displays the results from the question “Did your company encounter any of the following difficulties when trying to set up resource efficiency actions?” from the 2021 survey. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". For this question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
Note: The figure displays the results from the question “Did your company encounter any of the following difficulties when trying to set up resource efficiency actions?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". For the question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends.
Source: Eurobarometer.
2.4.6. Policy drivers
Major policy drivers of resource-efficiency actions among Portuguese SMEs are grants/subsidies, followed by consultancies. Portuguese SMEs tend to report fewer policy drivers compared to benchmark regions, including “soft” drivers such as web information and self-assessment tools.
Portuguese SMEs, on average, report fewer policy drivers of resource efficiency compared to their peers in the EU or southern Europe, which is driven by the quite large group of Portugal’s non-respondents to this question (Figure 2.16). The most significant policy drivers are grants or subsidies (26%), along with consultancies (25%), both of which show however lower values than in other southern European countries (43% and 32%, respectively). On the other hand, very few Portuguese SMEs report databases and self-assessment tools (9% and 8%), which are often freely available, as possible drivers of resource-efficiency actions, which points to some reluctance by Portuguese SMEs to inform themselves about the potential positive effects of resource-efficiency actions. This is likely to be an issue, as there is evidence that resource efficiency is particularly driven by “soft” factors, such as social, regulatory and institutional factors (de Jesus and Mendonça, 2018[7]). Finally, in recent years, Portuguese SMEs have become less likely to mention certain policy drivers, such as technology demonstration, whereas consultancy services and grants/subsidies have slightly gained traction after a low point in 2017 (Figure 2.17).
Note: The figure displays the results from the question “Which of the following would help your company the most to be more resource efficient?” from the 2021 survey. The questions were asked to all survey respondents. For the question, it was possible to provide up to three answers. The figure excludes some answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
Note: The figure displays the results from the question “Which of the following would help your company the most to be more resource efficient?” from the 2013, 2015, 2017 and 2021 surveys. The questions were asked to all survey respondents. For the question, it was possible to provide up to three answers. The figure excludes some answer options to portray only main trends.
Source: Eurobarometer.
This section covers SME participation in the environmental economy6, namely the offer by SMEs of green products and services. The environmental economy has grown faster than the overall economy in the last years in Europe, as shown by the increase in its contribution to GDP (from 1.6% in 2000 to 2.3% in 2018) (Eurostat, 2022[8]).
2.5.1. Offer
Slightly fewer SMEs in Portugal than in the rest of the EU report offering green products and services (27% vs. 32%), which is compensated by a higher share of those that plan to do so in the near future (21% vs. 11%). Nonetheless, SMEs in Portugal also seem to be more doubtful about what constitutes green products and services than counterparts in the two benchmark regions.
A closer look at Portugal’s environmental economy reveals that approximately 27% of Portuguese SMEs reported offering green products or services in 2021, compared to 32% both in the EU and southern Europe (Figure 2.18. Panel A). On the upside, as compared to their peers, a relatively larger share of Portuguese SMEs (21%) that do not yet offer green products and services is planning to do so in the following two years, which points to an increasing recognition of business opportunities in the green economy. However, there also seems to be much higher uncertainty among Portuguese SMEs (20%) on whether they are already offering green products/services (i.e., “don’t know” or “no answer”). Figure 2.18. (Panel B) also shows that the share of Portuguese SMEs offering green products and services increased marginally between 2013 and 2021, from 25% to 27%.
Note: This figure displays the results from the question “Does your company offer green products or services?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked to all survey respondents. Respondents could only give an answer to this question. The group “Southern Europe” refers to the average of Spain, Italy and Greece. “Total 'No'” merges the answer-alternatives of “No but planning to do so in the next two years” and “No and not planning to do so”.
Source: Eurobarometer.
2.5.2. Turnover
While most Portuguese SMEs offering green products and services report that this offering only accounts for a small fraction of their turnover, a growing share of specialised SMEs report making over 50% of their turnover from green products and services.
Similar to EU counterparts, most Portuguese SMEs that offer green products and services report that this offering accounts for less than 10% of their total turnover (Figure 2.19, Panel A). However, in 2021, 31% of Portuguese SMEs reported making over 50% of their turnover from green products/services, a higher share than EU peers (23%). The share of these specialised “green SMEs” has doubled since 2017 (from 14% to 31%), pointing to growing opportunities in Portugal’s environmental economy (Figure 2.19, Panel B).
Note: This figure displays the results from the question “How much did these green products or services represent in your annual turnover of the latest available fiscal year?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding "Yes" to the question "Does your company offer green products or services?". Respondents could only give one answer to this question. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece. “10% or less” merges the answer alternatives of “Up to 5%” and “6-10%”. “11-50%” merges the answer alternatives of “11-30%” and “31-50%”. “More than 50%” merges the answer alternatives of “51-75%” and “More than 75%”.
Source: Eurobarometer.
2.5.3. Exports
A larger share of Portuguese SMEs exports their green products and services to foreign markets than SMEs in the other two benchmark regions.
Around 80% of Portuguese SMEs sell their green products and services in the domestic market, a similar value to the other two benchmark regions. However, a higher share of Portuguese SMEs also exports to foreign markets (Figure 2.20, panel A), which is possibly linked to the relatively small domestic market of Portugal. This export orientation has grown significantly since 2017, as evidenced by a decreasing share of turnover from domestic markets and a growing share from exports (Figure 2.20, panel B).
Note: This figure displays the results from the question “In terms of turnover over the past 2 years, what were the main markets (countries/ geographical regions) for your green products or services?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding “Yes” to the question “Does your company offer green products or services?”. For this question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
2.5.4. Take-up of external support
So far Portuguese SMEs have relied on little external support for their offer of green products and services, which is similar to what was found for resource-efficiency measures.
Similar to what was found in the section on resource efficiency, Portuguese SMEs make little use of external support to offer green products and services: 5% compared to 24% in the EU and 23% in southern Europe (Figure 2.21, panel A). In recent years, the level of external support for green products and services has remained low (Figure 2.21, Panel B) although, as noted earlier, it is possible that the situation has changed since 2021 (the latest year of the survey) due to the launch of the National Recovery and Resilience Plan, which has seen the launch of many programmes supporting the green transition of SMEs.
Note: This figure displays the results from the question “What type of support does your company rely on for the production of its green products or services?” from the 2013, 2015, 2017 and 2021 surveys. The question was asked only to those responding "Yes" to the question "Does your company offer green products or services?". For this question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
When it comes to the typology of external support, Portuguese SMEs mostly receive support from banks, other companies, and VC funds, as well as non-financial assistance from public and private sources (Figure 2.22). On the other hand, public funding and non-financial assistance from supply chain partners are rare among Portuguese SMEs.
Note: This figure displays the results from the question “Which type of external support does your company get for the production of its green products or services?” from the 2021 survey. The question was asked only to those responding that they are receiving external support to the question "What type of support does your company rely on for the production of its green products or services?". For this question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece. “Total 'Public sector'” merges the answer-alternatives of “Public funding” and “Non-financial assistance from public administration”. “Total 'Private sector'” merges the answer-alternatives of “Private funding from a bank/company/VC fund”, “Private funding from friends/relatives”, “Non-financial assistance from private consulting”, “Non-financial assistance from business associations/clusters” and “Non-financial assistance from supply chain partners.
Source: Eurobarometer.
2.5.5. Policy drivers
Financial incentives are the main policy drivers behind the launch of green products and services among Portuguese SMEs, whereas market identification and marketing consulting matter more for the expansion of this offer.
The question on main policy drivers of green products and services was asked both to companies already having such offering (in this case, the question was on key drivers of expansion) and to companies not yet selling these products and services (in this case, the question was on key drivers for launching these new goods and services into the market).
Interestingly, “financial incentives” play a more significant role for the launch of green products and services among Portuguese SMEs than for market expansion (40% vs. 35%). In contrast, market identification (25% vs. 18%) and marketing consulting (24% vs. 13%) are more critical for SMEs that are already selling green products and services and aim to expand their markets (Figure 2.23). Furthermore, compared to the other two benchmark regions, very few Portuguese SMEs report a lack of support measures that could help the offer or expansion of green products and services. This highlights the interest of Portuguese SMEs for this market, as well as the importance of public support. Looking at this variable over time (Figure 2.24), the main emerging trend is the growing importance of “financial incentives” for launching green products and services, while these incentives have lost importance over the last years for market expansion.
Note: The figure displays the results from the questions “What type of support would help you the most to expand your range of green products or services?” and “What type of support would help you the most to launch your range of green products or services?” from the 2021 survey. The first question (expand) was asked only to those responding "Yes" to the question "Does your company offer green products or services?", while the second question (launch) was asked only to those responding "No but planning to do so the next 2 years" or “No and not planning to do so”. For both questions, it was possible to provide two answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
Note: This figure displays the results from the questions “What type of support would help you the most to expand your range of green products or services?” and “What type of support would help you the most to launch your range of green products or services?” from the 2021 survey. The first question (expand) was asked only to those responding "Yes" to the question "Does your company offer green products or services?", while the second question (launch) was asked only to those responding, "No but planning to do so the next 2 years" or “No and not planning to do so”. For both questions, it was possible to provide two answers. The figure excludes certain answer alternatives to portray only main trends. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
This section undertakes a disaggregated analysis by firm size and economic sector, with a focus on the two main areas of “resource efficiency” and “offer of green products and services”. The firm size categories are the conventional micro-enterprises (1-9 employees), small enterprises (10-49 employees) and medium-sized enterprises (50-249 employees), while the industry classification follows the NACE nomenclature, with the following groupings: manufacturing, retail trade, services, and industry7. The analysis in this section only covers Portuguese SMEs in the last year for which data are available (2021).
2.6.1. Resource efficiency by firm size and sector
Actions and investments
Expectedly, mid-sized firms and SMEs in manufacturing and other industrial sectors are those most likely to undertake resource-efficiency actions in Portugal. Surprisingly, however, more than 10% of industry-based SMEs does not undertake any resource-efficiency actions. When it comes to investment levels, significant investments (above 6% of turnover) in resource efficiency are rare across all firm size classes, although micro-enterprises are more likely than others to invest nothing. Finally, services-based firms are more likely to invest larger turnover shares (6% or more) in resource-efficiency actions than firms in other sectors, although 62% of manufacturing SMEs invest between 1-5% of turnover in these actions.
An analysis of resource-efficiency actions by firm size shows that, expectedly, mid-sized firms (50-249 employees) are more likely to undertake “many” or “some” resource-efficiency actions (69%) than small (10-49 employees, 53%) and micro enterprises (1-9 employees, 46%)8 (Figure 2.25, panel A). Likewise, manufacturing SMEs are more likely to undertake at least some resource-efficiency actions (60%) than other industry-based SMEs (53%) or services-based SMEs (39%). Nonetheless, surprisingly, more than one in ten industry-based SMEs do not undertake any actions in this domain (Figure 2.25, panel B).
Note: This figure displays the results from the question “What actions is your company undertaking to be more resource efficient?” from the 2021 survey. The question was asked to all survey respondents. For this question, it was possible to provide multiple answers, which have been grouped here in the following way: “many actions” = 5-8 actions, “some actions” = 3-4 actions. “few actions” = 1-2 actions, and “no actions” = 0 actions.
Source: Eurobarometer.
When it comes to investment levels (Figure 2.26), micro-enterprises are much more likely to invest nothing in resource efficiency than other firm-size groups. However, significant investments (above 6% of turnover) in resource efficiency are rare across all firm size classes. By the same token, investments between 1-5% of turnover are only marginally more common in mid-sized firms (33.6%) than in small and micro enterprises (respectively, 33.6% and 30.1%). Sector-wise, expectedly, manufacturing enterprises are more likely to invest at least 1% of turnover in resource-efficiency measures (62.5% of the total), followed by services-based firms (52.3%). However, surprisingly, services-based firms are more likely than manufacturing firms to invest more than 6% of turnover in these measures (23.1% vs. 20.1%), which might also be the consequence of average lower turnover compared to manufacturing.
Note: This figure displays the results from the question “Over the past two years, how much have you invested on average per year to be more resource efficient?” from the 2021 survey. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". Respondents could only give one answer. In this figure, “6% or more” merges the answer alternatives “6-10%”, “11- 30%” and “More than 30%”.
Source: Eurobarometer.
Impacts on production costs
Resource-efficiency actions have the most positive impact on production costs for mid-sized firms and manufacturing firms.
Resource-efficiency actions are expected to have a positive impact on production costs by reducing energy consumption. This appears to be particularly true for mid-sized and manufacturing companies9, possibly because of larger economies of scale in these two groups within the SME population (Figure 2.7).
Interestingly, across all size groups and sectors, except for mid-sized firms, there is at least one-quarter of cases where resource-efficiency actions have led to an increase in production costs, which may be the result of other concurrent factors beyond the resource-efficiency investment (e.g., increase in raw material costs), the time lag for the investment to generate net positive returns (i.e., higher returns than the initial cost of the investment), or still the low effectiveness of the investment itself.
Note: This figure displays the results from the question “What impact have the undertaken resource efficiency actions had on the production costs over the past two years? The production costs have…” from the 2021 survey. The question was asked only to those responding that they are taking action to the question “What actions is your company undertaking to be more resource efficient?”. Respondents could only give one answer. “Total ‘Increased’” merges the answer-alternatives of “Significantly increased” and “Slightly increased”. “Total ‘Decreased’” merges the answer alternatives of “Significantly decreased” and “Slightly decreased”.
Source: Eurobarometer.
Take-up of external support and barriers
Mid-sized firms are more likely than others to use external support to undertake energy-efficiency measures, especially private-sector support, while there are no strong differences in the take-up of public support across different firm sizes. Sector-wise, industrial companies, excluding manufacturing, are more likely to use external support, both of public and private nature. Mid-sized and manufacturing SMEs are more likely to experience both internal (lack of expertise) and external barriers (lack of supply of inputs and regulatory complexities) to improve resource efficiency.
Mid-sized companies are more than twice as likely as micro-enterprises to use external support for their resource-efficiency actions (30% vs. 13%), with the share of small enterprises lying in between the two groups (19%). Sector-wise, industrial companies, which exclude manufacturing, are the most likely to use external support, although cross-sector differences are less accentuated than across firm sizes (Figure 2.28). Especially in the case of firm size, this is in line with the more general finding that large SMEs are more likely than smaller ones to search for and receive external support, whether this is public or private, as they tend to have stronger internal capabilities to procure these services in the private or public sector.
Note: This figure shows the results from the question “Which type of support does your company rely on in its efforts to be more resource efficient?” from the 2021 survey. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". For this question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends.
Source: Eurobarometer.
When it comes to the type of external support (Figure 2.29), manufacturing and mid-sized companies are more likely to use “private-sector” support. With respect to public support, there are not strong differences in the take-up of these measures across different firm sizes (between 39% and 45%), while these differences are stronger across economic sectors, with “industrial” companies and services-sector companies which are respectively five and four-times more likely to use public support than manufacturing companies in Portugal.
This is surprising given that manufacturing companies are those that should benefit the most from resource-efficiency actions. However, one possible reason could be that, at least until 2021, most resource-efficiency actions supported by the government were horizontal measures applicable to all sectors (e.g., smart lighting, building insulation, etc.) rather than production-specific measures.
Note: This figure displays the results from the question “More precisely, which type of external support is it?” from the 2021 survey. The question was asked only to those responding that they are receiving external support to the question "Which type of support does your company rely on in its efforts to be more resource efficient?". For this question, it was possible to provide multiple answers. The figure excludes certain answer alternatives to portray only main trends. “Total Public sector'” merges the answer-alternatives of “Public funding” and “Non-financial assistance from public administration”. “Total 'Private sector'” merges the answer-alternatives of “Private funding from a bank/company/VC fund”, “Private funding from friends/relatives”, “Non-financial assistance from private consulting”, “Non-financial assistance from business associations/clusters” and “Non-financial assistance from supply chain partners”.
Source: Eurobarometer.
Finally, there are also some interesting differences with respect to the main barriers to resource-efficiency actions. In particular, Portuguese mid-sized and manufacturing firms seem to report more often a larger number of barriers, which might be linked to the more complex environmental requirements and obligations with which they are faced. For example, “complexity of administrative procedures” and “cost of environmental actions” are more often reported by these two groups than the others. Similarly, mid-sized and manufacturing companies are also more likely to report “lack of supply of inputs” and “lack of specific expertise” as barriers to resource-efficiency actions (Figure 2.30).
Note: This figure displays the results from the question “Did your company encounter any of the following difficulties when trying to set up resource efficiency actions?” from the 2021 survey. The question was asked only to those responding that they are taking action to the question "What actions is your company undertaking to be more resource efficient?". For this question, it was possible to provide multiple answers. The figure excludes out certain answer alternatives to portray only main trends.
Source: Eurobarometer.
2.6.2. Green products and services by firm size and sector
Actions and investments
Mid-sized and manufacturing firms are more likely than other companies to offer green products and services. However, the share of turnover coming from this offering is smaller in these two business segments than in the others.
Mid-sized and manufacturing firms are the most likely to offer green products and services than other groups, while micro-enterprises and industry-based companies (excluding manufacturing) are the least likely to offer these products and services (Figure 2.31). However, probably because of their smaller turnover, micro and small enterprises are more likely to report larger shares of turnover coming from green products and services, which points to the existence of specialised green companies in this business segment (Figure 2.32).
Similar patterns are found across sectors. While manufacturing companies are those most likely to sell green products and services (39% of the total), services-based companies are those most likely (61% of those offering green services) to report a very large share of turnover (50%+) originating from this type of offering. This can be ascribed to turnover in manufacturing being on average larger than in services, as well as to the existence of specialised green services companies in the Portuguese economy.
Note: This figure displays the results from the question “Does your company offer green products or services?” from the 2021 survey. The question was asked to all survey respondents. Respondents could only answer one question. The group “Southern Europe” refers to the average of Spain, Italy and Greece.
Source: Eurobarometer.
Note: This figure displays the results from the question “How much did these green products or services represent in your annual turnover of the latest available fiscal year?” from the 2021 survey. The question was asked only to those responding "Yes" to the question "Does your company offer green products or services?". Respondents could only give one answer. In this figure, “10% or less” merges the answer alternatives of “Up to 5%” and “6-10%”. “11-50%” merges the answer alternatives of “11-30%” and “31-50%”. “More than 50%” merges the answer alternatives of “51-75%” and “More than 75%”.
Source: Eurobarometer.
This chapter has presented survey-based evidence on the actions of Portuguese SMEs towards the green transition, benchmarking their performance against SMEs in two other regions: the EU and southern Europe (i.e., Greece, Italy and Spain).
First, the chapter has shown that few Portuguese companies believe that climate change will have an impact on their business. Nonetheless, counterintuitively, many of them are taking actions to protect themselves against the effects of climate change.
Almost a quarter of Portuguese SMEs have a climate-neutrality strategy in place and another quarter plans to develop such a strategy in the following two years. However, when asked about concrete measures, such as reducing carbon emissions or purchasing new carbon-reducing technologies, fewer Portuguese SMEs than in the EU or southern Europe report taking these actions.
Resource efficiency is one of the main channels through which SMEs can reduce their environmental footprint. The share of SMEs undertaking resource-efficiency actions is lower in Portugal than in the rest of the EU or southern Europe, which is the result of a significant drop in this proportion over the last years (2013-2021). The main causes behind this trend may include financial constraints and/or lack of prioritisation at firm level, but also that main resource-efficiency actions (i.e., low-hanging fruits) have already been taken. Compared to the other two benchmark regions, Portuguese SMEs are also less likely to believe that policy support can assist them in their resource-efficiency journey, pointing to the importance of increasing awareness about resource efficiency and related policies in the SME population. This is especially important considering that there are signs that the cost of resource-efficiency measures, relative to SME turnover, is higher in Portugal than in the two benchmark regions; that the impact of these measures on production costs is extremely positive in Portugal; and that Portuguese SMEs make little use of external support to improve resource efficiency (although the latest available data precede the implementation of the national recovery and resilience plan).
SMEs in Portugal are, on average, less likely than in the rest of the EU to offer green products and services. However, Portugal also features a larger proportion of SMEs that specialiseno, in green products and services. Portuguese SMEs report financial incentives as the key policy lever that can support the launch of this offering, while they point to market identification and marketing consulting as more important for market expansion. Like for resource efficiency, Portuguese SMEs seem to make little use of external support to offer green products and services, but also in this case it is important to consider that the latest available data (2021) does not cover the implementation phase of the national recovery and resilience plan (2021-2026), which has the green transition at the core of its agenda.
Finally, a disaggregated analysis by firm size and sector shows that mid-sized firms and manufacturing/industrial SMEs are those most likely to undertake resource-efficiency actions in Portugal. However, surprisingly, more than 10% of industry-based SMEs do not undertake any resource-efficiency actions. Resource-efficiency actions have the biggest positive impact on production costs for mid-sized firms and manufacturing firms, most likely because of larger economies of scale in these two business segments.
Against this backdrop, the following broad policy recommendations are offered, bearing in mind that more specific policy recommendations are presented in the policy chapters of the report.
2.7.1. Policy recommendations
Increase the awareness of SME owners about the possible impact of climate change on their business and the importance of resource efficiency actions to reduce carbon emissions at firm level.
Ensure continued policy support for SME greening, including after the phase-out of the national recovery and resilience plan (2021-2026).
Support the creation and use of web-based tools that help SMEs assess their carbon footprint and provide them with practical suggestions to reduce their carbon emissions (see also chapter 3 of the report).
Continue financial support for resource efficiency actions, also in light of the high cost of these measures relative to SME turnover in Portugal (see also chapter 5).
Strengthen collaboration with national business associations to reach out to the relevant minority (10%) of industry-based SMEs that do not currently engage in any resource efficiency actions.
Reflect the different needs of SMEs launching green products/services for the first time (financial incentives) vs. those expanding their existing offer (market-related advisory services) in green entrepreneurship policies (see also chapters 6 and 7).
References
[7] de Jesus, A. and S. Mendonça (2018), “Lost in Transition? Drivers and Barriers in the Eco-innovation Road to the Circular Economy”, Ecological Economics, Vol. 145, pp. 75-89, https://doi.org/10.1016/j.ecolecon.2017.08.001.
[6] Demirel, P. and G. Danisman (2019), “Eco‐innovation and firm growth in the circular economy: Evidence from European small‐ and medium‐sized enterprises”, Business Strategy and the Environment, Vol. 28/8, pp. 1608-1618, https://doi.org/10.1002/bse.2336.
[3] EEA (2022), Economic losses from climate-related extremes in Europe.
[9] Eurostat (2023), Glossary:Environmental goods and services sector (EGSS), https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Environmental_goods_and_services_sector_(EGSS) (accessed on 2 November 2023).
[8] Eurostat (2022), Environmental economy – statistics on employment and growth, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Environmental_economy_%E2%80%93_statistics_on_employment_and_growth#:~:text=Evolution%20of%20gross%20value%20added%20of%20the%20environmental%20economy,-Gross%20value%20added&text=Gross%20value%20added%20of%20the%20environmental%20economy%20rose%20steadily%20between,in%20all%20years%20after%202014. (accessed on 23 February 2022).
[5] Gomes, S. and M. Pinho (2023), “Can we count on the commitment of European SMEs to achieve SGD12? An exploratory study of business sustainability”, Journal of Cleaner Production, Vol. 425, p. 139016, https://doi.org/10.1016/j.jclepro.2023.139016.
[2] Nunes, L. et al. (2019), “The Evolution of Climate Changes in Portugal: Determination of Trend Series and Its Impact on Forest Development”, Climate, Vol. 7/6, p. 78, https://doi.org/10.3390/cli7060078.
[4] OECD (2023), “Assessing greenhouse gas emissions and energy consumption in SMEs: Towards a pilot dashboard of SME greening and green entrepreneurship indicators”, OECD SME and Entrepreneurship Papers, No. 42, OECD Publishing, Paris, https://doi.org/10.1787/ac8e6450-en.
[1] World Bank (2021), climate knowledge portal, https://climateknowledgeportal.worldbank.org/country/portugal.
This Annex presents estimates of the environmental footprint of SMEs in Portugal, building on the work of the OECD project “A pilot dashboard of SME greening and green entrepreneurship indicators”, which applies a top-down approach to assess the environmental impact of SMEs.
In the dashboard methodology, structural business statistics (i.e. the SME shares of value added) are used to assign GHG emissions and energy consumption to SMEs. In the absence of direct measurement of SME energy consumption or SME carbon emissions, for example through energy consumption surveys, the dashboard approach allows to generate estimates of carbon emissions, energy consumption, energy efficiency, and energy costs for SMEs.
Because carbon emissions and energy consumption vary significantly across industries, estimates are built at two-digit sector level, which is the finest level of sector disaggregation possible in structural business statistics without losing too much information due to missing values (mostly because of data confidentiality issues). Furthermore, publicly available data on GHG emissions and energy consumption do not go beyond two-digit sector-level information, which also acts as a constraining factor on a more refined degree of industry disaggregation. Overall, the dashboard estimates are built using 42 two-digit sectors for GHG emissions and 37 two-digit sectors for energy consumption. The lower number of sectors for energy consumption is the result of sector mergers due to different sector definitions between the structural business statistics database and the energy balances accounts.
The SME share of value-added at two-digit sector level is the main “sector weight” used to measure the amount of GHG emissions and energy consumption assigned to SMEs in a given sector. Thereafter, the two-digit-sector values are summed up to obtain total GHG emissions and energy consumption for SMEs and the respective SME shares in the whole business sector (or manufacturing).
The use of value-added as the sector weight implies a positive relationship between value-added, on the one hand, and GHG emissions and energy consumption, on the other. Whilst this relationship broadly holds for very detailed industry aggregations, it does vary across industries. Moreover, the relationship (at least when value-added is measured in current prices) may also change over time, for example in response to significant changes in energy prices. For example, when the intermediate costs of energy rise, value-added relative to a given unit of emissions or energy use (in volume terms) will fall, depending on the extent to which firms can absorb or pass on the price shock. Moreover, the relationship assumes that all firms use the same technologies in production and have similar economies of scale or purchasing power (i.e., they are able to purchase a single unit of goods or services at the same price), which is not the case. In these respects, size matters, and there are likely to be differences between value-added and emissions or energy-use between firms of different size.
Given these methodological caveats, the OECD dashboard project has calculated the following indicators for Portugal and other European countries:
SME share of greenhouse gas emissions in the business sector.
SME share of energy consumption in the business sector.
SME carbon intensity (GHG emissions intensity), i.e., the level of SME GHG emissions per unit of value added.
SME energy intensity, i.e., the level of SME energy consumption per unit of value added.
SME energy price burden, i.e., the impact of the cost of electricity and natural gas on SME turnover (presented in percentage terms relative to turnover).
Estimates are available for the year 2018, including preliminary estimates on the SME energy price burden for 2022. The time delay is due to the release date of the structural business statistics, which are used to produce the output and employment weights of this methodology.
In this Annex information is presented only for the first two indicators (i.e., SME share of GHG emissions and SME carbon intensity), which are those more directly related to carbon emissions. SME energy-related indicators (i.e., consumption, intensity and price burden) from the dashboard project are, on the other hand, presented in chapter 5 of the report, which deals more closely with energy policies for Portuguese SMEs.
This indicator shows the SME share of GHG emissions in the overall business sector, which includes manufacturing, construction, and services, but excludes agriculture, financial services and public administration activities. The value of this indicator is affected by the size and industry composition of the domestic SME segment. For example, small economies with few large companies and/or economies where SMEs play a comparatively larger role in emission-intensive industries will tend to show higher levels of GHG emissions generated by SMEs.
Figure 2.A.1 shows that Portugal has a larger SME share of GHG emissions than the EU and other southern European countries, such as Italy, Greece, and Spain, pointing to the importance of involving Portuguese SMEs in national green policies. More specifically, Portuguese SMEs account for 56% of GHG emissions in the business sector, compared with 46% in southern Europe (average values of Spain, Italy and Greece) and 37% in the EU as a whole.
Source: OECD calculations based on Eurostat’s Air Emissions Database and Structural Business Statistics.
SME carbon intensity is defined as the ratio between SME GHG emissions over SME value added. It is measured in terms of kilos of carbon-dioxide-equivalent per US dollar of value added. SME carbon intensity, which provides a good proxy for levels of pollution by domestic SMEs, is affected by a number of factors such as the industry composition of the SME business segment (i.e. some sectors, especially in manufacturing, are more carbon- and energy-intensive than others), average efficiency in the production process (i.e. outdated production methods and equipment will result in higher emissions), as well as energy sources in the national energy mix (i.e. at parity of energy consumption, a higher share of renewables will imply lower carbon intensity).
SME carbon intensity in the business sector is 25% higher in Portugal than in southern Europe or the EU, whereas in manufacturing SME carbon intensity is 40% higher in Portugal than the EU average. However, highest SME carbon intensity in manufacturing is found in the southern Europe regional group, primarily due to Greece which is an outlier in the sample (Figure 2.A.2 and Figure 2.A.3). Expectedly, SME carbon intensity is on average higher in manufacturing than in the business sector across both Portugal and the two regional groups of the EU and southern Europe.
SME GHG emissions over SME value added
Note: GHG emissions computed at two-digit sector level based on the application of an output weight corresponding to the SME share of value added. SMEs’ total GHG emissions are then divided by SMEs’ total value added.
Source: OECD calculations based on Eurostat’s Air Emissions Database and OECD Structural and Demographic Business Statistics (SDBS) database.
SME GHG emissions over SME value added
Note: GHG emissions computed at two-digit sector level based on the application of an output weight corresponding to the SME share of value added. SMEs’ total GHG emissions are then divided by SMEs’ total value added.
Source: OECD calculations based on Eurostat’s Air Emissions Database and OECD Structural and Demographic Business Statistics (SDBS) database.
← 1. The results of the 2012 survey have not been taken into consideration for this chapter, since the design of that survey was different from the subsequent ones, making comparability difficult.
← 2. Green products and services are defined as those with a predominant function of reducing environmental risk and minimising pollution and resources, including products with environmental features (organically produced, eco-labelled, with significant recycled content, eco-designed, etc).
← 3. The Eurobarometer survey has two questions regarding SME actions towards resource efficiency. The two questions are the same, with only the time aspect that changes. The first question asks what measures respondents have in place today (panel A, left); the second asks what measures respondents are planning to implement (panel B, right).
← 4. It is worth noting that SMEs may not identify some actions as linked to resource efficiency. For example, measures such as waste reduction or changes in packaging could be understood as cost-saving measures rather than resource-efficiency measures, although they are clearly both.
← 5. However, this can only be a partial motivation since resource-efficiency is a continuous process as new and emerging technologies can make the production process increasingly more resource-efficient.
← 6. Following the definition of the EU, the European environmental goods and services sector (EGSS) consists of a heterogeneous set of goods and services targeting the protection of the environment and the management of natural resources. Environmental goods and services are produced for the main purpose of preventing pollution, repairing damage or reducing natural resource depletion, including supporting activities such as monitoring and communication related to environmental protection and resource management (Eurostat, 2023[9]).
← 7. While manufacturing and retail trade are individual sector classifications in the NACE nomenclature, “services”, in the Eurobarometer survey, include “transport and storage”, “accommodation and food services”, “information and communication”, “financial and insurance activities”, “real estate activities” and “professional, scientific and technical activities”. As to “industry”, in the Eurobarometer surveys, this includes “mining and quarrying”, “electricity and gas supply”, “water supply and waste management” and “construction”, while it excludes “manufacturing”, which is a sector on its own.
← 8. The categorisation: “many actions” = 5-8; “some actions” = 3-4; “few actions” = 1-2; and “no actions” = 0.
← 9. There are obvious overlaps between these two groups.