Small- and medium-sized enterprises account for over 35% of GDP contributions and around 50% of all global employment, making them fundamental economic actors. Despite their central role, there is tremendous potential for these key actors to assume a larger role in combating localised climate-related challenges. SMEs in emerging markets and developing countries are well positioned to deliver climate action from the ground up through their inclusion of local communities as well as their delivery of climate-smart products and services in essential fields such as clean energy and climate-smart agriculture. This report from SEED offers insights into the contributions of SMEs to climate adaptation and mitigation. As countries seek to achieve the global SDGs and NDCs, this report urges climate finance practitioners and policy-makers to pay greater attention to SMEs as fundamental actors in delivering inclusive climate action.
In this paper, the identification of gaps in climate finance is based on a comprehensive review not only of current climate finance projects, but also of the contributions of SMEs to climate action, drawing on nearly twenty years of experience in providing incubation and acceleration programmes for eco-inclusive enterprises within SEED programmes as well as insights and good practices from the interrelated spheres of SME finance and green finance. This paper provides climate finance practitioners and policymakers as well as local financial institutions and other SME intermediaries (such as incubators, accelerators, business development service (BDS) providers) with tangible recommendations to better understand and leverage the potential of SMEs in meeting climate action objectives from the ground up.