With SMEs in Europe representing 99% of all firms and providing two-thirds of jobs in the private sector, the health of the SME market is a major consideration for the insurance industry.
In conversation with Insurance Business, Lucia Silva (pictured), group chief sustainability officer at Generali, offered a snapshot of the sector and underscored how SME resilience against climate risk is vital to ensuring the stability of the global economy. As it stands, she said, there has been significant progress in European SMEs embracing sustainability efforts, with research Generali conducted with Bocconi showing that sustainability adoption among SMEs across Europe has increased from 34% in 2020 to 44% today.
“The most recent set of findings confirms that SMEs remain committed to their sustainable transition journeys with stable adoption rates despite growing barriers and a complex macroeconomic environment,” she said. “This resilience indicates market maturity and consolidation, as well as highlighting the strength of the commitment among European SMEs to make the green and just transition a reality.”
While there hasn’t been a shift in terms of the sustainability commitment, she said, certain barriers prevent SMEs from further accelerating on this path, including the lack of public incentives, institutional support gaps and limited access to sustainable finance. There are some regional variations in the perceived barriers, and it is also clear that smaller companies face more challenges.
“Nevertheless,” she said, “the overall increase in these obstacles is concerning as it suggests that the shift to sustainability is becoming more complex and there is a growing need for coordinated support from institutions and policymakers to address these issues.”
Touching on the crucial role the insurance and risk management industry has to play in closing the sustainability gap, she noted that climate change impacts everything from our environment to many social aspects, infrastructure as well as lives and livelihoods around the world. The insurance industry is faced with increasing costs due to more frequent and severe natural disasters, which lead to higher premiums and reduced availability of coverage in high-risk areas.
In 2024, global economic losses due to natural disasters amounted to $310 billion, but less than half of these were covered by insurance. In this context, she said, risk assessment and insurance solutions need to keep up with the fast-evolving risk landscape and there is an urgent need for concrete and practical responses.
“Our sector has a key role to play in bridging this gap, by raising awareness of the issue, promoting prevention and offering concrete coverage solutions that enable the efficient restoration of disrupted operational activities and a fast and fair reimbursements for the losses suffered,” she said.
“[…] By aligning our strategic initiatives with the most pressing climate challenges, we are not only protecting our clients but also playing a leading role in shaping the future of insurance in an era of accelerating climate change. In addition, working together with policymakers and the public sector is important to accelerate progress through simplified regulatory frameworks, enhanced public incentives, tailored financial instruments and proactive advisory support.”
As to where SMEs want and need the support of their SME partners, she highlighted that Generali’s White Paper reveals that SMEs perceive significant challenges in adopting a more sustainable approach, particularly due to barriers such as the lack of public incentives (54%) and institutional backing (53%), and access to sustainable finance (53%). These are areas where the public and private sector should strengthen their collaboration with a targeted effort to address SME needs.
“With growing sustainability implementation among SMEs, support needs are also growing,” she said. “Tax incentives and EU public funding are top priorities for 78% and 72% of the SMEs interviewed, respectively. Additionally, 69% of SMEs call for a clear and simplified regulatory framework. To effectively address all aspects of the sustainability transition, a coordinated and comprehensive response across policy, financial, and capacity-building dimensions is essential.”
Looking to the future, Silva underscored that the business case for sustainability remains robust with environmental benefits as the leading benefit, at 83%. Around 75% of surveyed SMEs reported an increase in employee and customer satisfaction, she said, while 67% declared improvements in competitive advantage.
