SMEs are failing to reap the benefits of energy efficiency as their ability to invest remains seriously restrained.

The International Energy Agency (IEA) issued its new analysis of the 2025 IEA Industrial Competitiveness Survey – which covered 1000 companies across 14 countries. It found that business leaders view energy efficiency as closely linked to their competitive performance. But the survey also highlights a persistent divide: while large companies are often well positioned to capture these benefits, many that are small and medium-sized face barriers that limit their ability to invest in efficiency and compete on the same terms.

Across all sectors and regions, nearly 80% of companies surveyed said they recognised the value of energy efficiency in strengthening their competitive positions. And in sectors where energy makes up a larger share of total costs, like steel, chemicals and mining, views on the potential benefits of efficiency were even more pronounced.

“The mining sector illustrated this clearly in their survey responses,” the IEA explained. “With energy typically accounting for 20% to 40% of operating expenditures, mining companies reported the highest perceived impact of energy efficiency efforts on enhanced competitiveness. This was particularly evident in responses from mining companies in India and Indonesia, where reliance on relatively expensive off-grid diesel electricity generation makes reducing energy intensity especially valuable.”

When businesses were asked how they would respond to higher energy costs, energy efficiency also emerged as the leading strategic response. Almost 40% of industry leaders ranked energy efficiency as the single most important measure they pursued to offset energy price increases, followed closely by investment in on-site renewables. Yet, as the survey indicated, intentions on energy efficiency do not always translate into action. In response to energy price fluctuations, nearly 30% of companies also said they either scaled back production or passed costs on to customers. These are measures that can erode competitiveness and signal constraints in companies’ ability to invest in efficiency.

While the value of energy efficiency is broadly recognised across industries, companies differ in their capacity to implement supportive measures, with size shaping both the scope and speed of action. Large companies typically adopt long-term, comprehensive strategies backed by greater investment, in-house expertise, and formalised energy management systems. Meanwhile, smaller companies, which have more limited resources, tend to implement individual measures incrementally.

“In our survey, companies with more than 5 000 employees had the highest rate of implementation across every energy efficiency measure assessed, including process optimisation and investing in digital technologies,” the IEA added. “By contrast, small and medium-sized enterprises (SMEs) fell significantly behind, with 40% to 80% reporting an inability to implement any given efficiency improvement.

“This implementation gap has consequences. Companies with fewer than 100 employees reported average savings of around 12% from efficiency actions, compared with average savings of nearly 20% among larger firms. Constrained financial and human resources, as well as less formalised approaches to energy management, limit smaller companies’ ability to identify and deliver improvements. This results in higher energy costs per unit of output and weaker competitiveness.”

The survey added energy efficiency delivers more than just cost savings. More than half of companies surveyed reported that implementing energy efficiency measures reduced maintenance and operational costs, enhanced productivity, provided greater resilience against energy price fluctuations and improved brand reputation. Just under half also reported that energy efficiency actions had a high impact on domestic market access and export sales, and improved access to new customers and finance.

“Here again, company size matters: two-thirds of companies with annual turnover of $1 billion to $5 billion said efficiency measures had a high impact on their productivity, compared with 43% of the companies with turnover below $100 million,” the IEA said. “This points to differences in companies’ capacity to translate efficiency investments into productivity gains.”